Apotex Inc. v. Sanofi-Aventis, (2010) 364 F.T.R. 131 (FC)

• Court: Federal Court (Canada)
• Case Date: February 18, 2010
• Jurisdiction: Canada (Federal)
• Citations: (2010), 364 F.T.R. 131 (FC);2010 FC 182

Apotex Inc. v. Sanofi-Aventis (2010), 364 F.T.R. 131 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. FE.014

Apotex Inc. (plaintiff) v. Sanofi-Aventis (defendant)

(T-644-09)

Sanofi-Aventis and Bristol-Myers Squibb Sanofi Pharmaceuticals Holdings Partnership (plaintiffs) v. Apotex Inc., Apotex Pharmachem Inc. and Signa Sa de CV (defendants)

(T-933-09; 2010 FC 182)

Indexed As: Apotex Inc. v. Sanofi-Aventis

Federal Court

Tabib, Prothonotary

February 18, 2010.

Summary:

Apotex Inc. started action T-644-09 against Sanofi-Aventis, seeking both a declaration that the product it intended to manufacture and sell in Canada would not infringe Sanofi-Aventis' Canadian Patent '777, and a declaration that the patent was invalid. One month later, Sanofi-Aventis and Bristol-Myers Squibb Sanofi Pharmaceutical Holdings Partnership ("Sanofi") started action T-933-09 against Apotex Inc. and Apotex Pharmachem Inc. ("Apotex") alleging that Apotex was already infringing the patent. The parties requested that early trial dates be set. The actions were consolidated and the trial was set to begin in April 2011. By this motion, Apotex sought to "consolidate" its statement of claim in T-644-09 and its defence to the T-933-09 action into a single defence and counterclaim to the T-933-09 action, with additional amendments and deletions.

A Prothonotary of the Federal Court granted Apotex leave to serve and file, no later than three days from the date of the order, an amended statement of defence and counterclaim, with the additional amendments and deletions which the court found proper and on terms and conditions set out by the court.

Courts - Topic 4011

Federal Court of Canada - Jurisdiction - General - Equitable relief - [See Practice - Topic 1842 ].

Courts - Topic 4012

Federal Court of Canada - Jurisdiction - General - Claims outside Court's jurisdiction - [See Practice - Topic 1842 ].

Courts - Topic 4029

Federal Court of Canada - Jurisdiction - Federal Court - Patents of invention - [See Practice - Topic 1842 ].

Fraud and Misrepresentation - Topic 6

Fraudulent misrepresentation (deceit) - General principles - What constitutes deceit or fraudulent misrepresentation - By this motion, Apotex sought to "consolidate" its statement of claim in its action for impeachment and declaration of non-infringement, and its defence to Sanofi's infringement action, into a single defence and counterclaim, with additional amendments - The amendments included new grounds of defence relating to set-off, including the tort of deceit - A Prothonotary of the Federal Court disallowed the proposed amendment - Apotex failed to plead an essential component of the tort of deceit - "The tort of deceit is distinct from the tort of negligent misrepresentation, in that it includes a necessary element of fraud or moral wrongdoing ... The essential elements of the tort of deceit are the following: A false statement, knowledge of the falsity, an intention to deceive, reliance by the plaintiff and damage caused by the reliance" - In the proposed pleadings, there was no allegation anywhere of any statement of fact, let alone of a false one, having been made - See paragraphs 53 to 55.

Fraud and Misrepresentation - Topic 446

Fraudulent misrepresentation (deceit) - Practice - Pleadings - [See Fraud and Misrepresentation - Topic 6 ].

Fraud and Misrepresentation - Topic 4090

Practice - Pleadings - Amendment to plead fraud - [See Fraud and Misrepresentation - Topic 6 ].

Patents of Invention - Topic 3505

Infringement actions - Approach used by court to determine if patent infringed - In the context of a motion to add a defence of limitation, a Prothonotary of the Federal Court stated that "[i]t is not plain and obvious to me that a monetary loss is an essential element or requirement for a cause of action for patent infringement to arise. Indeed, an injunction is one of the remedies available in a patent infringement action, regardless of whether or not a loss was suffered. ... I cannot agree that the mere fact that damages are an available remedy must, plainly and obviously, mean that for the purpose of section 39(1) of the Federal Court Act, those damages can be characterized as a constituent element of the cause of action, such that the place where they were suffered determines the applicable limitation" - See paragraph 24.

Patents of Invention - Topic 8087

Practice - Pleadings - Amendments - Apotex sued Sanofi, seeking a declaration that the product it intended to manufacture and sell in Canada, made with clopidogrel bisulfate and/or clopidogrel besylate, would not infringe Sanofi's Canadian patent '777, and seeking a declaration that the patent was invalid - Sanofi sued Apotex, alleging that Apotex was already infringing the patent - The actions were consolidated and streamlined - Sanofi objected to Apotex's motion for leave to "consolidate" into a counterclaim to Sanofi's action, Apotex's action for impeachment and declaration of non-infringement - A proposed paragraph to be added by Apotex specifically pled the experimental use and related exceptions to infringement provided for in the Patent Act and at law - A Prothonotary of the Federal Court permitted the amendments, but on condition that Apotex provide particulars of the quantities claimed for each exemption, and of the material facts in support of each exemption agreed - The pleading as proposed was no more than a bare recital of "one or more" of the common law or statutory exceptions that "would" exempt certain uses of clopidogrel from infringement - It did not allege that the exemptions in fact applied - See paragraphs 15 to 17.

Patents of Invention - Topic 8087

Practice - Pleadings - Amendments - By this motion, Apotex Inc. sought to transport allegations from its claim for a declaration of non-infringement in an action where only it was the plaintiff, to a counterclaim in an action where it and Apotex Pharmachem Inc. were defendants - In moving the claim, Apotex Inc. included Apotex Pharmachem Inc. in the scope of its declaration of non-infringement - A Prothonotary of the Federal Court noted that the proposed amendment would have to be modified to be restricted to Apotex Inc. - The factual allegations supporting Apotex Inc.'s request, imported from its action, were in respect of Apotex Inc.'s product and intended manufacture only - A declaration that Apotex Pharmachem's product would not infringe was therefore plainly and obviously unsustainable - See paragraphs 19 and 20.

Patents of Invention - Topic 8087

Practice - Pleadings - Amendments - [See Fraud and Misrepresentation - Topic 6 , Practice - Topic 2105 and all Practice - Topic 2123.1 ].

Patents of Invention - Topic 8186

Practice - Costs - Entitlement - By this motion, Apotex sought to "consolidate" its statement of claim in its action for impeachment and declaration of non-infringement, and its defence to Sanofi's infringement action, into a single defence and counterclaim, with additional amendments - A Prothonotary of the Federal Court stated that "[t]he lateness of Apotex's motion, the unreasonable nature of a large part of the amendments sought and the generally accepted principle that the costs of amendment should be borne by the amending party all militate in favour of awarding the costs of this motion to Sanofi, at the high end of Column IV of the Tariff, and including a provision for the assistance of second counsel" - Further, it was a condition of leave to amend being granted that Apotex pay the costs of Sanofi of preparing, serving and filing an amended reply and defence to counterclaim in response to the amended pleading, in any event of the cause - See paragraphs 99, 100.

Practice - Topic 1842

Pleadings - Counterclaim and set-off - Set- off - Effect of claim of set-off - In intellectual property proceedings, a party sought to amend its pleadings to add three defences of set-off - A Prothonotary of the Federal Court stated that "set-off is the process whereby two mutual claims for money are set-off against each other to produce a balance before any party is called upon to execute its obligation. ... Canadian law recognizes two general types of set-off: Legal or statutory set-off, and equitable set-off. Whereas it seems that equitable set-off may be a substantive defence, it is plain that legal, or statutory set-off is a procedural defence and not a substantive defence to an action ... The provision of a procedural means to assert a right does not vest the Court with jurisdiction it would not otherwise have to hear, determine and enforce the substantive matter brought before it through that procedural means" - It was, however, "arguable" that a defence of set-off that met the criteria for equitable set-off could be considered a substantive defence, and thus amenable to be considered, even though it would not independently fall within the court's jurisdiction - See paragraphs 34 to 38.

Practice - Topic 1850

Pleadings - Counterclaim and set-off - Set-off - Equitable set-off - A Prothonotary of the Federal Court referred to the criteria for equitable set-off, as found in the jurisprudence, and stated that "It appears that the requirement that the equitable ground go to the very root of the Plaintiff's claim is what raises equitable set-off to the level of a substantive defence, allowing it to be asserted even where the cross-claim is not otherwise enforceable by reason of limitations ... and allowing it to be used even against an assignee, avoiding the requirement of mutuality which is a condition of statutory set-off ... The possibility of equitable set-off having the status of a true substantive defence ... now appears to have been generally accepted" - See paragraphs 39 and 40.

Practice - Topic 2105

Pleadings - Amendment of pleadings - Prejudice or presumed prejudice - What constitutes - By this motion, Apotex sought to "consolidate" its statement of claim in T-644-09 and its defence to Sanofi's T-933-09 action into a single defence and counterclaim to the T-933-09 action, with additional amendments - Trial dates had been set aside over six months ago - Apotex took the view that its amendments were sought at an "early stage" (discoveries had not yet been completed) and could not prejudice Sanofi or the conduct of the streamlined proceeding - A Prothonotary of the Federal Court disagreed with the characterization - If all of the proposed amendments were allowed, Sanofi was more likely than not to be prejudiced, either as a result of a compressed schedule and of having to fit more evidence into the same allotted trial time, or as a result of a delayed trial - However, the likelihood of prejudice depended on the number and nature of the amendments that were permissible - Further, even if all or most of the amendments were found to be proper, prejudice could be avoided or mitigated by imposing conditions - Accordingly, the court considered each proposed amendment to determine whether, apart from the potential prejudice to Sanofi, they were otherwise appropriate - On final analysis, the court was not convinced that allowing the amendments which it found proper would effectively cause prejudice to Sanofi that could not be compensated by costs - See paragraphs 6 to 14, 97.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - Apotex moved to "consolidate" its statement of claim in its action against Sanofi (for a declaration of non-infringement and patent invalidity), and its defence to Sanofi's action (for patent infringement), into a single defence and counterclaim to Sanofi's action, and to add a defence of limitation; namely, that if s. 55.01 of the Patent Act (six year limitation period) did not apply, then the two year limitation provided by the Ontario Limitation Act applied, as the cause of action arose entirely in Ontario - Apotex sought to add allegations of fact, including that the product in question "was manufactured, sold and used (if at all) ... solely in Ontario" - A Prothonotary of the Federal Court held that the pleading was not plainly and obviously deficient at law for failing to allege that the damage was suffered in Ontario - Even as regarded the alleged export of the product in question, Apotex's failure to plead the location of the alleged export was not a fatal flaw to its plea of limitation - Indeed, the proposed pleadings had the potential to substantially narrow the issues in dispute and the scope of discoveries - See paragraphs 21 to 30.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - Apotex moved to "consolidate" its claim in its action against Sanofi (for a declaration of non-infringement and patent invalidity), and its defence to Sanofi's infringement action, into a single defence and counterclaim to Sanofi's action, and to add three defences of set-off, based on the "break fee" contained in the "March 2006 Agreement", the tort of deceit, and abuse of process - A Prothonotary of the Federal Court agreed that cross-claims arising out of matters over which the court would not have jurisdiction (the tort of deceit and the claim for the "break fee", if brought as independent actions/counterclaims) "could perhaps arguably be raised as a defence of set-off in this Court, but if, and only if, they meet the jurisprudential criteria to qualify as a defence of equitable set-off" - See paragraphs 32 and 33 - Accordingly, to the extent any of Apotex's claims could constitute equitable set-off, it was not plain and obvious that the court would not have jurisdiction to consider same as a defence to Sanofi's action - The court turned to consider each proposed claim of set-off - In the end result, the court disallowed the proposed new grounds of defence - See paragraphs 41 and 42.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - Apotex alleged that it entered into the "2006 Agreements" with Sanofi to settle litigation between them in the U.S. involving the drug at issue in these proceedings - Apotex moved to "consolidate" its claim in its action against Sanofi (for a declaration of non-infringement and patent invalidity), and its defence to Sanofi's infringement action, into a single defence and counterclaim to Sanofi's action - Apotex proposed to add a defence of set-off, based on the "break fee" contained in the "March 2006 Agreement" by which Apotex submitted that Sanofi agreed to limit any claim "related to" infringing U.S. sales - A Prothonotary of the Federal Court disallowed the proposed amendment - The court had no jurisdiction to hear and determine the claim - The "break fee" became due simply as a result of the U.S. State Attorney General declining to approve the "March 2006 Agreement" - It was plain and obvious that the contractual claim for payment of the "break fee" had no connection with the claim for infringement asserted by Sanofi - It was equally clear that there was no equitable ground to that claim - The fact that the "break fee" was allegedly due to be paid to Apotex in no way impeached Sanofi's claim - In any event, raising a claim based on the "break fee" was clearly abusive and vexatious, because the claim was already being prosecuted in another jurisdiction (New Jersey) - See paragraphs 43 to 48.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - Apotex moved to "consolidate" its claim in its action against Sanofi (for a declaration of non-infringement and patent invalidity), and its defence to Sanofi's infringement action, into a single defence and counterclaim to Sanofi's action - Apotex's initial defence alleged that it entered into agreements with Sanofi to settle litigation between them in the U.S. involving the drug at issue in these proceedings, and that Sanofi, through the "Liability Exposure Provision", agreed that its recovery was to be limited to fifty percent of Apotex's net sales of the drug in the U.S. - Apotex moved to add a claim for set-off based on the tort of deceit, going to its contention that Sanofi misled it as to the meaning and application of the "Liability Exposure Provision" - A Prothonotary of the Federal Court disallowed the proposed amendment - The court had "very serious doubts" that the claim would constitute an equitable set-off, as the alleged tort did not impeach Sanofi's claim for patent infringement - In any event, the court was otherwise convinced that Apotex's claim could not succeed on the facts as pleaded, and was, furthermore, scandalous and vexatious - See paragraphs 49 to 52.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - Two pharmaceutical companies, Apotex and Sanofi, were engaged as adversaries in U.S. patent infringement litigation - They arrived at a series of agreements to settle the litigation, each assisted by their respective counsel - A Liability Exposure Provision of one of those agreements limited Apotex's monetary liability in the event that it commenced potentially infringing sales of the product in question in the U.S. - Regulatory approval was declined with respect to the agreement - In this proceeding, Apotex moved to amend its pleadings to state that it was in a relationship of sufficient proximity with Sanofi "that it was reasonably foreseeable that if [Sanofi] misled Apotex about the Liability Exposure Provision ... harm to Apotex would ensue" - A Prothonotary of the Federal Court considered the pleadings based on the tort of negligent misrepresentation - There were no facts pleaded on which a special relationship might be found - Further, there were no allegations that Apotex relied on Sanofi's representations as to the effect of the Provision - The pleadings failed to plead any fact upon which a finding of an untrue, inaccurate or misleading misrepresentation could be made - In the result, the claim of set-off on the basis of negligent misrepresentation "has not the slightest chance of success, and is frivolous and vexatious" - See paragraphs 56 to 66.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - By this motion, Apotex sought to "consolidate" the claim in its action against Sanofi (for a declaration of non-infringement and patent invalidity), and its defence to Sanofi's infringement action, into a single defence and counterclaim to Sanofi's action - It also wished to plead that Sanofi's action was an abuse of process, having caused it damages that should be set-off against any award made in favour of Sanofi - A Prothonotary of the Federal Court disallowed the proposed amendment because it failed to plead the required element of unlawful or improper purpose - The alleged improper purpose was "discouraging" Apotex's challenge to the validity of the very patent which Sanofi claimed had been infringed by Apotex - There could be no abuse where an action was taken, as here, to assert a right in response to an action by which the very foundation of the right was sought to be impugned - Accordingly, it was unnecessary to consider whether the abuse of process amounted to equitable set-off, or whether there was sufficient authority to hold that the court arguably had jurisdiction over any counterclaim sounding in abuse of process - See paragraphs 67 to 73.

Practice - Topic 2123.1

Pleadings - Amendment of pleadings - Statement of defence - Adding new defence - [See Fraud and Misrepresentation - Topic 6 ].

Torts - Topic 6252

Abuse of legal procedure - Abuse of process - Elements - A Prothonotary of the Federal Court stated that "[t]he tort of abuse of process requires that the litigation be pursued, not for the legitimate purposes of the claim asserted, but 'for an ulterior or collateral purpose. It is defined as the misusing of the process of the courts to coerce someone in some way entirely outside the ambit of the legal claim upon which the court is asked to adjudicate '"- See paragraph 71.

Cases Noticed:

Canada v. Maritime Group (Canada) Inc. et al., [1995] 3 F.C. 124; 185 N.R. 104 (F.C.A.), refd to. [para. 23].

Telford v. Holt, [1987] 2 S.C.R. 193; 78 N.R. 321; 81 A.R. 385, refd to. [para. 36].

Coba Industries Ltd. v. Millie's Holdings (Canada) Ltd., [1985] 6 W.W.R. 14; 20 D.L.R.(4th) 689 (B.C.C.A.), refd to. [para. 39].

Canada Trustco Mortgage Co. v. Pierce et al. (2005), 197 O.A.C. 369; 254 D.L.R.(4th) 79 (C.A.), refd to. [para. 40].

Eli Lilly and Co. et al. v. Apotex Inc. (2009), 351 F.T.R. 1; 2009 FC 991, refd to. [para. 40].

Innovation and Development Partners/IDP Inc. v. Canada (1992), 53 F.T.R. 73 (T.D.), refd to. [para. 40].

Castlemore Marketing Inc. v. Intercontinental Trade and Finance Corp. et al. (1996), 108 F.T.R. 306 (T.D.), refd to. [para. 40].

Bristol-Myers Squibb Co. et al. v. Apotex Inc., [2008] F.T.R. Uned. 870; 2008 FC 1196, refd to. [para. 40].

Dorsch v. Weyburn (City) et al. (1986), 43 Sask.R. 46; 23 D.L.R.(4th) 379 (C.A.), refd to. [para. 61].

Sulzinger v. Alexander (C.K.) Ltd., [1972] 1 O.R. 720 (C.A.), refd to. [para. 61].

Tractor Supply Co. of Texas LP et al. v. TSC Stores LP (2009), 341 F.T.R. 157; 2009 FC 154, affd. (2009), 399 N.R. 1; 2009 FCA 352, refd to. [para. 68].

Levi Strauss & Co. et al. v. Roadrunner Apparel Inc. (1997), 221 N.R. 93; 76 C.P.R.(3d) 129 (F.C.A.), refd to. [para. 71].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 76].

Statutes Noticed:

Federal Courts Rules, rule 186 [para. 36].

Authors and Works Noticed:

Derham, S. Rory, The Law of Set-Off (3rd Ed. 2003), pp. 93 to 105 [para. 40].

Fridman, Gerald Henry Louis, The Law of Torts in Canada (2nd Ed. 2002), pp. 362 [para. 61]; 610 [para. 57]; 747 [para. 53]; 748 [para. 54].

Palmer, Kelly Ross, The Law of Set-Off in Canada (1993), pp. 5 to 9 [para. 36]; 9 to 12 [para. 40].

Counsel:

Nando De Luca and Sandon Shogilev, for the plaintiff, Apotex Inc.;

Marc Richard and Cristin Wagner, for the defendant, Sanofi-Aventis.

Solicitors of Record:

Goodmans, LLP, Toronto, Ontario, for the plaintiff, Apotex Inc.;

Gowling Lafleur Henderson, LLP, Ottawa, Ontario, for the defendant, Sanofi-Aventis.

This motion was heard at Ottawa, Ontario, on February 9 & 11, 2010, by Tabib, Prothonotary, of the Federal Court, who delivered the following order and reasons for order, dated February 18, 2010.