Canada: Class Action Certification Against Pfizer For An Allegation Of Unlawful Abuse Of The Patent System Is Overturned (Intellectual Property Weekly Abstracts Bulletin — Week Of December 14)

Last Updated: December 18 2015
Article by Chantal Saunders, Beverley Moore and Adrian J. Howard

Most Read Contributor in Canada, September 2016

Patent Decisions

Class action certification against Pfizer for an allegation of unlawful abuse of the patent system is overturned

Low v. Pfizer Canada Inc., 2015 BCCA 506

The British Columbia Court of Appeal has overturned the certification of a class action relating to the drug Viagra, dismissing the action.

The Supreme Court of Canada found Pfizer's patent for Viagra to be invalid in 2012. The plaintiff Low commenced the proceeding by claiming that Pfizer had unlawfully abused the patent system, and as a result of its unlawful conduct, Pfizer had overcharged the purchasers of Viagra. Low brought the proposed class action on behalf of British Columbia purchasers of Viagra who were allegedly overcharged during the period January 1, 2006 to November 30, 2012. The Court noted that the defined class period in this litigation appears to correspond roughly to the period during which Teva sought a notice of compliance for generic sildenafil, but was prevented from doing so by reason of the prohibition proceedings initiated by Pfizer.

The Chambers Judge had found that the application did disclose a valid cause of action in intentional interference with economic relations and unjust enrichment. The Chambers Judge further found that because the Patent Regulatory Regime is silent as to consumer rights and remedies for breach of the Patent Act, it cannot be a complete code.

The BC Court of Appeal held that the Patent Regulatory Regime does not confer a direct benefit or protection on a consumer, nor does the legislation confer an express right on a consumer. Therefore, one cannot apply the proposition that the absence of an enforcement mechanism in the legislation at issue may be taken as implying a common law private cause of action by a consumer.

The BC Court of Appeal further noted that there is no common law tort of breach of statute, and that such breaches should be generally subsumed in the law of negligence. Low's claim was characterized as fundamentally a claim for breach of statute which is said to arise out of "abuse of the Patent system."

Ultimately the BC Court of Appeal held that in circumstances such as these--where Parliament has comprehensively legislated a particular area of the law — the reasonable inference is that it did not intend to extend rights of recovery beyond those embodied in the regime.

In the alternative, the BC Court of Appeal held that the claim did not disclose a cause of action in unlawful interference with economic relations. This is because a breach of statute must be otherwise actionable and a generic has no actionable claim against a brand name manufacturer for unjust enrichment or disgorgement of profits, because the Patent Regulatory Regime is a complete code.

In the further alternative the BC Court of Appeal held that the claim did not disclose a cause of action in unjust enrichment, because a complete statutory code excludes equitable claims in unjust enrichment. Even if the BC Court of Appeal did not consider the Patent Regulatory Regime a complete code, the claim in unjust enrichment still would not be allowed to proceed because of the existence of a juristic reason. In short, the Court determined that the contracts between Pfizer and the purchasers provided a juristic reason and the plaintiff has pleaded no facts to suggest the price was the fundamental fact on which the contracts were based.

Decisions re motions to strike upheld: Agreement with ratiopharm does not preclude Teva Section 8 Claim

Pfizer Canada Inc. v. Teva Canada Limited, 2015 FCA 257
Drug: sildenafil

The Pfizer appellants (Pfizer) appealed the decision of the Court denying their motion for summary judgment in respect of the action by Teva Canada Limited (Teva) pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations (Regulations). The issue in Pfizer's motion related to whether an Agreement between the parties prevented the action by Teva. The Court granted Teva's parallel motion for summary judgment, holding that Pfizer could not assert the Agreement in respect of Teva's claim.

Pfizer commenced an application pursuant to the Regulations against Novopharm. A later application against ratiopharm was settled by an Agreement. Novopharm subsequently changed its name to Teva, and amalgamated with ratiopharm and several other companies. The application against now Teva was dismissed by the Supreme Court of Canada. Pfizer consented to the issuance of a Notice of Compliance to ratiopharm in accordance with the Agreement. The ratiopharm product has subsequently been discontinued. Teva brought this action for lost sales of its sildenafil product. Pfizer argued that the Agreement prevented Teva from bringing the action.

The Court of Appeal agreed with the Court that the Agreement does not relate to a claim for damages in respect of the Teva sildenafil product. The Court of Appeal held that, even if the Agreement should not be construed to relate only to the specific Court file commenced against ratiopharm, it could only be understood to include litigation by ratiopharm or possibly ratiopharm's successors. The Court of Appeal discussed the effect of the amalgamation and held that, while Teva is bound by the Agreement, the Agreement could not be rewritten to apply to litigation that was excluded from the Agreement at the time of execution of the Agreement. The appeal was dismissed.

Decision to dismiss motion to strike portions of statement of defence and counterclaim upheld on appeal

Teva Canada Limited v. Pfizer Canada Inc., 2015 FCA 280

A Prothonotary dismissed a motion by Teva Canada Limited (Teva) to strike certain paragraphs in the statement of defence and counterclaim by the Pfizer appellants (Pfizer). The Court dismissed the appeal by Teva and Teva appealed to the Court of Appeal. The Court of Appeal held that there is uncertainty in the state of the law with respect to the interpretation of section 8 of the Patented Medicines (Notice of Compliance) Regulations, and as such, declined to interfere with the findings below that the issue was not plainly and obviously devoid of merit.

Appeal from motion to compel answers arising from discovery dismissed

Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2015 FC 1292

The appellants (Hospira) brought a motion to compel answers to 354 questions refused or taken under advisement at the discovery of the respondents (Kennedy) in a patent impeachment action. The Prothonotary who heard the motion ordered answers to 19 of the questions, and Hospira appealed in respect of 85 findings. The Court set out the standard of review and then refused to consider the motion on a de novo basis, finding that the decision as a whole is not clearly wrong. The Court then considered whether any of the findings by the Prothonotary were clearly wrong, and found that none were. The appeal was dismissed, with costs fixed at $6,500 to the respondents in any of the event of the cause.

Trademark Decisions

Infringement suit for SCOTT dismissed due to lack of evidence of confusion and no loss of goodwill

Scott Technologies Inc. v. 783825 Alberta Ltd., et al, 2015 FC 1336

The Federal Court has dismissed the Plaintiff's claims for infringement and passing off pursuant to sections 7(b), 7(c), 19, 20 and 22 of the Trademarks Act, for the word marks SCOTT and AIR-PAK, and a stylized SCOTT.

It was described that the Plaintiff Scott deals in self-contained breathing apparatus (SCBA) often sold to fire and security customers. There are three different levels of training available to maintain the SCBA.

The Defendants' business began as a business filling and repairing fire extinguishers. The business was originally named "Scott Safety Supply Services". The owner subsequently offered other services, including SCBA service and rentals, after taking field level maintenance training on the Plaintiff's device.

On June 16, 2000, Scott Safety Supply Services Ltd. entered into an "in-house repair center agreement" with Scott Technologies, giving it "the right to inspect, repair, and service" the Scott SCBA it owned.  That agreement continued until it was terminated by Scott Technologies effective December 31, 2003.

On September 30, 2011, the Plaintiff demanded that Scott Safety Supply Services Ltd. "discontinue all use of the trade-mark and tradename SCOTT alone, or as part of any trade-mark, trade name or any other commercial designations in association with your business."

On December 3, 2012, Scott Safety Supply Services Ltd. [Old Scott Safety] sold substantially all of its assets to Scott Safety Supply Services Inc. [New Scott Safety] for $24,850,000.  Thereafter, Scott Safety Supply Services Ltd. changed its name to 783825 Alberta Ltd.  A term of the sale agreement is that Old Scott Safety and Brent Stark indemnify New Scott Safety against all costs arising from this litigation.

The claims in passing off and infringement were dismissed due to a lack of evidence regarding confusion despite the fact that the defendants' business has operated in a market in which the Plaintiff has been doing business for more than 20 years.

The claim to depreciation of goodwill was equally dismissed because the Plaintiff offered no evidence that it has lost or had any sale impacted by the defendants' trade-mark.

The Court noted that had it found that the defendants had breached the Plaintiff's trademark SCOTT, the Court would not have awarded any damages in light of the admission that there have been none. The Court also would not have ordered injunctive relief because it is an equitable and discretionary remedy, and in the Court's view, the Plaintiff waited too long. The Court stated that, "[a] business cannot lie in the weeds, allowing another to carry on and invest in and grow its business, and then spring up and enlist the aid of the court when it suits its purposes, claiming it has been unfairly treated."

Decision to not register U-BOX WE-HAUL and U-BOX for being confusing with U BOX IT is upheld on appeal

U-haul International Inc. v. U Box It Inc., 2015 FC 1345

U-haul was unsuccessful in its appeal of a decision of the TMOB to refuse to register two applications for trademarks, namely U-BOX WE-HAUL and U-BOX, for use in association with "moving and storage services, namely, rental moving, storage, delivery and pick up of portable storage units."

The Board found that there was a reasonable likelihood of confusion between the Applicant's impugned trademarks and the U BOX IT trademark registered by the opponent, U Box It Inc. for use in association with "garbage removal and waste management services."

U-haul submitted new evidence on appeal in an attempt to show that no business advertises or provides both garbage removal/waste management services and moving/storage services. The new evidence consists of random samples from the Yellow Pages, sourced from a number of Canadian cities and regions, with dates ranging from 2008-2014. The samples are advertisements included in categories related to moving and storage, and garbage removal and waste management. The Court held that this new evidence does not affect the reasoning of the Board or the findings of fact therein, particularly given the Board's tacit recognition that the parties' channels of trade are basically distinct. Consequently, the new evidence had insufficient probative significance to justify a de novo review of the decisions.

On this basis, the Court found the decision to be reasonable, and upheld the decision refusing to register the applications.

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