Canada: Motion To Amend Pleadings Granted; Motion For Bifurcation Denied (Intellectual Property Weekly Abstracts Bulletin: Week of July 30, 2012)

ACTIONS

Motion to Amend Pleadings Granted; Motion for Bifurcation Denied
Apotex Inc. v. H. Lundbeck A/S
Drug: escitalopram

The Court recently translated a decision from April regarding a motion to amend a statement of claim and a motion to bifurcate in an impeachment proceeding. The Court granted the motion to amend and denied the motion for bifurcation.

The proposed amendments sought to add a new party (the proposed supplier of Apotex' active pharmaceutical ingredient) to the claim. The Court held that it is in the interest of justice in ensuring efficient use of judicial resources and avoiding a multiplicity of pleadings and the risk of contradictory judgments that this amendment be permitted. The Court also held that there had been no delay in filing the motion to amend the pleadings; however, even if there had been, there was not any prejudice that could not be compensated in costs. The Court considered some of the procedural choices made by Apotex and held that a party, as sophisticated as Apotex, "must be taken to accept the possible consequences of the procedural choices it makes, and cannot be heard to complain that these consequences are prejudicial to it."

Regarding the bifurcation motion, Lundbeck undertook to forego its entitlement to damages and claim only Apotex and Pharmachem's profits, in the event that infringement is found; taking the risk that its entitlement to those profits could be successfully opposed. The Court held that had this concession not been made, there would have been justification for a bifurcation order.

SECTION 8

Pleadings for Disgorgement of Profits and for an Accounting of Profits in s. 8 Damages Not Struck in Ontario Court
Apotex Inc. v. Eli Lilly and Company
Drug: atomoxetine

In this case, Apotex has claimed damages in Ontario Court pursuant to, inter alia, section 8 of the NOC Regulations. Lilly brought a motion to strike out parts of Apotex' statement of claim. The motion was mainly dismissed.

In the underlying proceeding, Lilly's application for prohibition was dismissed for mootness and not because Apotex' allegations of invalidity were found to be justified. Thus, Lilly argued in its motion to strike that section 8 does not apply in the circumstances. The Court held that it was not plain and obvious that the dismissal for mootness could not come within the ambit of section 8 of the NOC Regulations. Thus, it did not strike the claim.

Lilly also asserted in its motion that the claim should be struck as the material facts relating to the damages claim were not pled. However, the Court held that a basic pleading of damages was present and it was implicit in the pleadings that Apotex was ready to come to market. To require more than the basic pleading would require Apotex to plead evidence, which is contrary to the Rules. Lilly also tried to strike the pleadings regarding unjust enrichment and disgorgement of profits. However, the Court held that this claim had a reasonable chance of success and that it was not scandalous, frivolous or vexatious or an abuse of process. Thus, the claims were not struck.

Lilly moved to strike Apotex' claims pursuant to the Trade-marks Act. Apotex is asserting, inter alia, that in alleging in the NOC proceeding that the patent was properly listed on the Patent Register and that the patent would be infringed, Lilly made statements that were materially false and misleading and intended to discredit the business wares and services of a competitor. Furthermore, as a result of these alleged violations of the Trade-marks Act, Apotex alleges that Lilly made profits it would not otherwise have made and is claiming those profits. The Court held that whatever Lilly may have thought when listing the patent on the Patent Register, the subsequent determination that the patent was void ab initio means Lilly did not hold a patent and had no right to register it. Thus, there is a reasonable prospect that Lilly can be held to have made assertions which, by reason of the retroactive voiding of the patent, were false. Thus, the Court held that the claim has a reasonable prospect of success.

The Court also held that absolute privilege applies for statements made in court proceedings; however, it is unclear whether that applies for listing a patent on the Patent Register. Thus, the relevant pleadings were not scandalous, frivolous or vexatious or an abuse of process and they were not struck. The Court also held that the question of whether starting the proceeding falls within absolute privilege or an exception to that absolute privilege is also something that should not be resolved by means of motion at this early stage of the litigation. Thus, the pleading was not struck.

The claim to damages or an accounting of profits as may be otherwise available at law was struck as it had no supporting allegations of fact.

Other Cases of Interest

Second Judicial Review of Maintenance Fee Payments for Wrong Patent
Repligen Corporation v. The Attorney General of Canada

This is a second judicial review commenced by Repligen for a second refusal by the Commissioner of Patents ("Commissioner") to correct errors made in maintenance fee payment documents. In the first judicial review application, the Court determined that the Commissioner did not consider relevant factors in determining whether to make the corrections pursuant to section 8 of the Patent Act.

The Commissioner made a redetermination of the issue and again refused to make the correction. In arranging for a service to pay required maintenance fees, the patent number was incorrectly provided. Maintenance fee payments were then made against the wrong patent, owned by Rolls-Royce PLC, and the Repligen patent lapsed. The Commissioner refused to correct the error, citing concerns that making the correction could negatively affect the rights of others. The first judicial review was commenced in respect of this refusal.

The Court in this second judicial review noted that the appropriate standard of review is correctness for the interpretation of section 8 of the Patent Act, and the application of the law of the facts involves a review based on reasonableness. The Court determined that the Commissioner should have taken into consideration that Repligen had paid the prescribed maintenance fees, although to the wrong patent. The Court considered that Repligen's interests were completely discounted by the Commissioner on the basis of a lack of due diligence. The Court indicated that the approach taken by the Commissioner requires a standard of perfection in terms of fee payments, which would render section 8 of the Patent Act unnecessary.

Accordingly, the Court submitted the matter to a different decision maker within the Patent Office, indicating that the Commissioner should take into account the interests of Repligen and Rolls-Royce, as both parties attempted to comply with maintenance fee provisions.

Other Industry News

Health Canada has published a Draft Guidance Document – Acetylsalicylic Acid Labelling Standard. Comments are due September 25, 2012.

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