On January 30, 2009, the Federal Court of Appeal (FCA) clarified
the circumstances under which a partial waiver of privileged
material can result in an implied complete waiver of
privilege. The FCA's decision in Merck & Co. Inc.
et al. v. Apotex Inc. et al. (2009 FCA 27) was an
interlocutory decision in a patent infringement case.
The issue arose in the context of examination for discovery in
respect of the patent dispute, which relates to the manufacture of
a drug called lovastatin. This drug is produced by certain
micro-organisms, and the production of lovastatin from the
Aspergillus terreus micro-organism is covered by a
Canadian patent owned by the plaintiff, Merck & Co. Inc.
(Merck). Merck had apparently carried out some tests, for the
purpose of the litigation, to improve its understanding of the
process used by the defendants. As the tests were conducted for the
purpose of the litigation, information about the tests qualified
for protection under the litigation privilege. The purpose of the
litigation privilege is to create a zone of privacy in relation to
pending or apprehended litigation, to facilitate investigation and
preparation of a case for trial by the adversarial advocate.
At an examination for discovery, Merck's representative
answered certain questions relating to these tests. Apotex then
asked further questions regarding the tests, which the Merck
representative refused to answer, asserting that the information
It is clear that before the Merck representative had answered
any questions about the tests, the entirety of the information was
privileged, and Merck did not have to answer questions about them.
However, when Merck answered certain questions about the tests,
this privilege was partially waived. When a partial waiver of
privilege has occurred, the law requires that the privilege in
issue be completely waived if permitting some of the information to
remain privileged would lead to inconsistency or unfairness.
This rule exists because the purpose of privilege is to preserve a
zone of privacy for certain types of information. Privilege does
not exist to enable litigants to unfairly and inconsistently
disclose and rely on the favourable elements of these types of
information, while maintaining the secrecy of the unfavourable
In overturning the Federal Court decision, the FCA took issue
with the lack of identification of any particular inconsistency or
unfairness that might arise if the partial waiver of privilege
stood. The FCA noted that the Federal Court decision simply invoked
the concepts of consistency and fairness, but did not explain
In contrast, the FCA carefully examined possible unfairness to
the defendants, and found that no unfairness could
result. Merck could not make use if its own partial responses,
and the test information itself, if it were to be relied on, would
have to be disclosed well in advance of trial. Having found no
actual unfairness to the opposing party, the Court of Appeal held
that fairness and consistency did not require the complete waiver
of privilege. Accordingly, the additional information about
the test, sought by Apotex, could remain undisclosed.
The case is a reminder of the care that must be taken when
issues of privilege arise. Partially waiving privilege is a
significant strategic decision, and the possible ramifications of
such a decision must be carefully considered.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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