Canada: The SCC Monitor (19/04/2016)

A Commentary On Recent Legal Developments By The Canadian Appeals Monitor


Since our last post, the Supreme Court of Canada (SCC) has granted leave in a couple significant cases that will be of interest to our readers:

Douez v. Facebook: Like or Dislike?

The SCC recently granted leave to appeal from the judgment of the B.C. Court of Appeal in Douez v. Facebook ("Douez"), which likely garnered "dislikes" from online businesses and service providers who rely on choice of law and forum selection clauses in their Terms of Use agreements.

Coverage of the lower court decisions are available on our snIP/Its blog here and here.

By way of background, the Plaintiff in Douez commenced an action alleging that Facebook violated users' privacy by using their name and images in paid advertisements without consent. Facebook applied for a stay of proceedings on the basis that its Terms of Use contained a forum selection clause whereby the user agreed to resolve any claim in the federal courts of Santa Clara County, California. The stay was denied by the trial judge, but overturned on appeal. The Court of Appeal found that the forum selection clause should be enforced and the proceeding stayed; the Plaintiff was free to bring the action in California. The Plaintiff sought leave to appeal.

The SCC has agreed to hear this matter. This appeal will give the Court the opportunity to address the issue of jurisdiction in relation to forum selection clauses more generally, and to decide whether this particular lawsuit can proceed in B.C. or if it must be filed in California. Depending on the manner in which the issues are framed, this appeal may also provide an opportunity to grapple with some of the technology issues confronting global online businesses and service providers.

AstraZeneca v Apotex: Questionable Utility

As reported here on our snIP/ITs blog, the SCC also granted leave to appeal from the FCA's decision in AstraZeneca Canada Inc et al v Apotex Inc et al. Very briefly, this case involves a dispute between AstraZeneca, who owns the "653 patent" for a drug called Nexium used in treatment of gastric acid and reflux conditions, and Apotex who sought to be allowed to sell its generic version of the drug. At trial, the Federal Court found Astra's patent was invalid for lack of utility. That finding was upheld by a unanimous FCA. In this appeal, the SCC will have to assess the correct or applicable standards for patent utility in Canada and whether a "promised utility" doctrine properly exists.


The SCC has also refused leave in a number of noteworthy cases, including the following:

The case of Adamson v. Canadian Human Rights Commission, involved a challenge to the mandatory retirement rule ("MRR") in the collective agreement that governed Air Canada pilots' employment on the basis that it constituted age discrimination contrary to the Canadian Human Rights Act. At issue in the case was whether the mandatory retirement rule captured a bona fide occupational requirement under section 15(1)(a) of the Act and/or whether 60 was the normal age of retirement for similarly situated pilots pursuant to section 15(1)(c) of the Act, either of which would be a defence to the pilots' challenge under the legislation as it stood at the time.1

The decision of the Canadian Human Rights Tribunal refusing the pilots' challenge at first instance, primarily on the basis of 15(1)(c), led to five applications for judicial review. The Federal Court hearing those applications set aside the Tribunal's decision in part. The Federal Court held that the Tribunal had misinterpreted a previous Federal Court case with very similar facts, and in so doing, had misidentified the proper comparator group for the section 15(1)(c) analysis.

The FCA overturned the Federal Court's ruling, holding that the lower court had improperly substituted its own opinion on the proper interpretation of the jurisprudence for that of the Tribunal and thereby effectively applied a correctness as opposed to a reasonableness standard of review. The FCA held that the Tribunal, as a specialized administrative body, was entitled to its preferred reading of the case law as long as its reading was reasonable. Moreover, the FCA held that the prior case in question was not binding on the Tribunal, which was faced with a different factual and evidentiary record, despite the similarities. The FCA held that the jurisprudence merely informed the range of reasonable options open to the Tribunal, and the Federal Court was obliged to apply the reasonableness standard to the Tribunal's decision.

The SCC has refused leave to appeal in this case. As a result, the FCA's decision and guidance will continue to govern on the precedential value of analogous case law on a specialized administrative Tribunal and on the standard of review applicable where a Tribunal interprets case law within its expertise.

The SCC also refused leave from the FCA decision in Pfizer Canada Inc. et al. v. Teva Canada Limited. This case involves a commercial dispute about the scope of a settlement agreement resolving a dispute under the Patented Medicines (Notice of Compliance) Regulations ("NOC Regulations"). The matter stems from the amalgamation of generic pharmaceutical companies Novopharm Limited and ratiopharm inc. (along with several other companies) to form Teva in 2010.

Prior to the amalgamation, Pfizer brought applications under the NOC Regulations to prevent the Minister of Health from issuing a Notice of Compliance to Novopharm and ratiopharm for their generic versions of Pfizer's Viagra product (Novo-sildenafil and ratio-sildenafil, respectively). Pfizer entered into a settlement agreement with ratiopharm by which ratiopharm consented to a prohibition order until the expiry of Pfizer's patent. Novopharm, on the other hand, successfully opposed Pfizer's application in court, and obtained a Notice of Compliance for its product.

After the amalgamation, Teva brought an action against Pfizer for section 8 damages for lost sales of Novo-sildenafil (now Teva-sildenafil) for the period that it was kept off the market by Pfizer. Pfizer brought a motion for summary judgment on the basis that the claim was barred by the settlement agreement, which was binding on Teva as ratiopharm's successor.

Both the lower court and FCA found that, while the settlement agreement is binding on Teva, the scope of the agreement only covers ratio-sildenafil. The FCA held that, at the time that the agreement was entered into, the parties could not intend to cover another generic company's products. Pfizer's motion for summary judgment was therefore dismissed.

Marshall v. United Furniture Warehouse Limited Partnership was an attempted consumer protection class action. The Plaintiffs sought to certify a class action in B.C. against United Furniture and its related companies, in part, on the basis that they mislead consumers about a "cash voucher" program. Each customer had a different experience in the stores, as oral representations were made in addition to written representations.

The certification judge found that there were insufficient common issues between the purported class members and refused certification. It was held that the combination of written and oral representations "render[ed] a determination of this issue one for individual inquiry".

A unanimous panel of the Court of Appeal affirmed the lower court's decision. In so doing, the Court underscored that claims based on individual representations to different individual class members, as opposed to a specific representation to an entire class, will be unlikely to raise common issues that would support certification as a class action. This decision reaffirmed the necessity of commonality of experience to justify a class action.

The Supreme Court of Canada has refused leave to appeal in this case.


[1] It is worth noting that section 15(1)(c) of the Act was repealed in 2011 and the MRR was removed from subsequent iterations of the collective agreement between the parties in this case.

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