In June 2009, the Federal Court of Appeal (FCA) upheld the
Federal Court of Canada's decision in the patent infringement
case of Laboratoires Servier v. Apotex Inc., (
F.C.J. No. 1094, aff'd  FCA 222). In its decision, the
Court dismissed a counterclaim by the defendant, Apotex, alleging
that the settlement agreement leading to the relevant patent's
issuance constituted a conspiracy to lessen competition and an
offence under Canada's Competition Act. Although in
this case the Court held that the defendant had failed to support
its allegations with sufficient evidence, it specifically
contemplated that under the right circumstances, a patent
settlement agreement might amount to a conspiracy under the
The relevant patent in the Laboratoires Servier case was
issued following lengthy conflict proceedings involving patent
applications filed by ADIR, Schering Corporation (Schering) and
Hoechst Aktiengesellschaft (Hoechst). The parties all became
involved in Federal Court proceedings in which they were granted
the right to contest any aspect of the Commissioner of Patents'
determinations regarding the parties' respective rights in
relation to the subject matter of the conflict claims. Following
examinations for discovery, the parties entered into Minutes of
Settlement resolving the actions, and a Federal Court order was
issued on consent, allocating the claims among ADIR, Schering and
Hoechst. The result of the claims awarded to ADIR was the patent
that Apotex allegedly infringed.
Apotex argued that the settlement agreement was unlawful because it
was entered into specifically to avoid the result that either no
relevant claims would be issued or that overlapping claims would be
issued. Apotex also argued that had the conflict proceedings been
decided by the Court rather than settled, ADIR might never have
obtained any exclusive patent rights, and therefore that the
issuance of the patent probably granted ADIR greater market power
than it would otherwise have had.
Both the Federal Court and the FCA rejected Apotex's arguments
as speculative. Apotex had not provided any evidence of the alleged
probability that the agreement resulted in greater market power
than would otherwise have existed. The FCA noted that the Federal
Court could have awarded the claims in issue precisely as they were
allocated in the settlement agreement. More importantly, every step
of the process-from the applications of each of the parties,
through the settlement process, the order allocating the claims,
and the issuance of ADIR's patent-was in accordance with
ADIR's rights under the Patent Act and the Federal
Courts Rules. The FCA had "some difficulty
conceptualizing that an agreement effecting a remedy that was open
to the court to grant and was placed before the court for its
approval could constitute an offence under the Competition
Despite this holding, the FCA was careful to keep the door open for
potential Competition Act challenges to settlement
agreements involving intellectual property, saying there could be
"circumstances where a settlement agreement could constitute
the 'something more' contemplated in the Eli Lilly
In the Eli Lilly cases, the FCA reinstated a counterclaim
by Apotex that had been previously struck by the Federal Court of
Canada. In doing so, the FCA characterized the facts at issue [i.e.
an assignment of patent rights alleged by Apotex to result in an
undue lessening of competition contrary to the Competition
Act's conspiracy provision (s. 45)] as including
"evidence of something more than the mere exercise of patent
rights" and therefore not beyond the application of the
conspiracy provision. In a separate decision later in the same
case, the FCA again concluded that "the assignment of a patent
may, as a matter of law, unduly lessen competition."
It is interesting to note that the FCA's approach is similar to
that of Canada's Competition Bureau. The Competition Bureau has
taken the position that the general provisions of the
Competition Act (such as criminal conspiracy and
bid-rigging, as well as civilly reviewable conduct such as abuse of
dominance, tied selling, market restriction, exclusive dealing,
resale price maintenance and refusal to deal), apply to conduct
that involves "something more" than the "mere
exercise" of an intellectual property right. The Bureau
defines the "mere exercise" of an intellectual property
right as the "exercise of the owner's right to
unilaterally exclude others from using the IP, as well as the use
or non-use of IP by the owner." Once conduct ceases to be
unilateral, including, for example, the assignment or licensing of
intellectual property rights, the Competition Bureau has advised
that the Competition Act's general provisions may
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The Federal Court dismissed a motion by Apotex seeking particulars from Allergan's pleading relating to the prior art, inventive concept, promised utility and sound prediction of utility of the patents at issue.
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