Merck & Co. and Merck Frosst Canada Inc. v. Apotex Inc., (1993) 69 F.T.R. 209 (TD)

• Judge: MacKay, J.
• Court: Federal Court (Canada)
• Case Date: September 24, 1993
• Jurisdiction: Canada (Federal)
• Citations: (1993), 69 F.T.R. 209 (TD)

Merck & Co. v. Apotex Inc. (1993), 69 F.T.R. 209 (TD)

MLB headnote and full text

Merck & Co. Inc. and Merck Frosst Canada Inc. (plaintiffs) v. Apotex Inc. (defendant)

(T-2408-91)

Indexed As: Merck & Co. and Merck Frosst Canada Inc. v. Apotex Inc.

Federal Court of Canada

Trial Division

MacKay, J.

October 21, 1993.

Summary:

Merck & Co. of the United States is the largest innovative pharmaceutical company in the world. Merck developed an anti-hypertensive drug known as enalapril. In 1987, Merck's Canadian subsidiary, Merck Frosst, obtained a Notice of Compliance (NOC) from the Minister of National Health and Welfare which allowed the manufacture and sale of the drug in Canada. In 1990, Merck obtained a Canadian patent for the drug. Merck Frosst was the exclusive Canadian licensee and sold the drug under the trademark "Vasotec". In 1987, Apotex began commercial development of the same drug to be sold under the generic name "Apo-Enalapril". Substantial quantities of bulk raw materials were purchased in 1989 and 1990, prior to the issuance of Merck's Canadian patent. In 1990, Apotex applied to the Minister under the compulsory licensing scheme for a NOC which would permit the manufacture and sale of "Apo-Enalapril". Apotex anticipated receiving the NOC for "Apo-Enalapril" by the end of 1992. In 1991, Merck commenced an action against Apotex for patent infringement relating to the manufacture and sale of "Apo-Enalapril" in Canada and the Caribbean. Apotex submitted that, inter alia, it had a defence under s. 56 of the Patent Act because the bulk chemicals used in the manufacture of "Apo-Enalapril" were purchased and the enalapril produced before Merck received its Canadian patent. By the latter half of 1992, Apotex had manufactured several million "Apo-Enalapril" tablets. In 1993, the Minister complied with an order of mandamus and issued an NOC for "Apo-Enalapril" to Apotex. Apotex was ready to commence sales in Canada. Merck then applied for an interlocutory injunction pending disposition of its action for patent infringement. In the alternative, it sought an order directing Apotex to maintain an account of production and sales of "Apo-Enalapril".

The Federal Court of Canada, Trial Division, declined to grant an interlocutory injunction. However, the court did direct Apotex to maintain appropriate records and accounts pending the trial of the matter.

Estoppel - Topic 391

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Effect of decision on application for interim or interlocutory injunction - Apotex applied for a Notice of Compliance (NOC) (compulsory licence) - Mandamus issued directing the Minister to provide the NOC - Merck, the patent holder, appealed - Merck applied for a stay pending the appeal - The Federal Court of Appeal set aside the stay on the ground Merck would not suffer irreparable harm - In a parallel action for patent infringement, Merck applied for an interlocutory injunction - Apotex submitted that the application should be dismissed because the Federal Court had already determined that there would not be any irreparable harm - The Federal Court of Canada, Trial Division, held that the application was not barred by issue estoppel - See paragraphs 24 to 28.

Injunctions - Topic 1607

Interlocutory or interim injunctions - Requirement of strong prima facie case - Merck sued Apotex for infringing a drug patent - Merck applied for an interlocutory injunction - The Federal Court of Canada, Trial Division, stated that "[i]t is now well settled that for this court the test or standard for assessing whether an interlocutory injunction should issue is that set out by Stone, J.A., for the Court of Appeal in Turbo Resources Ltd. v. Petro Canada Inc. (1989), 91 N.R. 341; 24 C.P.R.(3d) 1" - In Turbo Resources, the Court of Appeal adopted the "serious issue to be tried" standard of the American Cyanamid case as the threshold requirement instead of the "strong prima facie case" standard - See paragraph 29.

Injunctions - Topic 1610

Interlocutory or interim injunctions - General principles - Circumstances when injunction will not be granted - "Vasotec" was the leading antihypertensive drug in Canada - Merck held the patent and sold "Vasotec" under a Notice of Compliance issued by the Minister of National Health and Welfare - Apotex began to develop a generic version to be sold as "Apo-Enalapril" - Merck sued Apotex for patent infringement - Apotex obtained an NOC (compulsory licence) and was ready to commence sales - Merck applied for an interlocutory injunction - The trial of the main action could be held within six months - Apotex would only have the product on sale for a short period before the trial - The Federal Court of Canada, Trial Division, declined to grant the injunction - However, Apotex was directed to maintain adequate records.

Injunctions - Topic 1615

Interlocutory or interim injunctions - General principles - Delay - Merck began to sell a certain drug - Apotex began development of a generic copy - Apotex applied to the Minister for a Notice of Compliance (NOC) (compulsory licence) which would allow sales in Canada - Merck patented the drug and sued for patent infringement - Some two years later, the Minister issued an NOC to Apotex - Apotex was ready to commence sales - Merck applied for an interlocutory injunction - Apotex submitted that Merck's delay in bringing the interlocutory application was ground for denying relief - Merck submitted that there was no delay in that the potential for irreparable harm only became manifest when Apotex received the NOC - The Federal Court of Canada, Trial Division, held there had not been any undue delay - See paragraph 50.

Injunctions - Topic 1616

Interlocutory or interim injunctions - Serious issue to be tried - [See Injunctions - Topic 1607 ].

Injunctions - Topic 1616

Interlocutory or interim injunctions - Serious issue to be tried - Merck began to sell a certain drug - Apotex began development of a generic copy - Apotex obtained a large quantity of bulk chemicals - Merck obtained a patent for the drug - Merck sued for patent infringement on the ground that Apotex was manufacturing a copy in Canada and selling it in the Caribbean - Apotex submitted that it had a defence under s. 56 of the Patent Act in that it was using bulk chemicals received before Merck's patent was granted - Apotex objected to Merck's application for an interlocutory injunction on the ground that there was not a serious issue to be tried - The Federal Court of Canada, Trial Division, held that there was a serious issue to be tried - See paragraphs 30 to 32.

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - Merck developed an anti-hypertensive drug that became the most valuable, in terms of sales, prescription drug in Canada - Apotex began development on a generic copy before Merck received its Canadian patent - Merck sued Apotex for patent infringement - Apotex received regulatory approval for its version and was ready to commence sales in Canada - Merck applied for an interlocutory injunction - Merck claimed that the sale of a virtually identical copy of its capsules would cause irreparable harm to its goodwill and reputation because Apotex's could be an inferior product - Also, Merck could lose 50% of its market to Apotex's generic version - The Federal Court of Canada, Trial Division, held that Merck failed to establish irreparable harm - See paragraphs 33 to 42.

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - Merck developed an anti-hypertensive drug that became the most valuable, in terms of sales, prescription drug in Canada - Apotex developed a generic copy before Merck received its Canadian patent - Merck sued Apotex for patent infringement - Apotex received regulatory approval for its version and was ready to commence sales in Canada - Merck applied for an interlocutory injunction - Apotex submitted that an interlocutory injunction would cause it irreparable harm in that it could lose its position as the first generic producer to market that drug - Also, much of its inventory would have to be destroyed because of its short shelf life - The Federal Court of Canada, Trial Division, held that Apotex failed to establish irreparable harm - See paragraphs 39 to 41.

Cases Noticed:

Apotex Inc. et al. v. Canada (Attorney General) et al. (1993), 64 F.T.R. 186 (T.D.), refd to. [para. 14].

Apotex Inc. v. Merck & Co. and Merck Frosst Canada Inc. (1992), 66 F.T.R. 36, refd to. [para. 17].

Apotex Inc. v. Merck & Co. and Merck Frosst Canada Inc. (1993), 66 F.T.R. 245 (T.D.), consd. [para. 24].

Apotex Inc. v. Merck & Co. and Merck Frosst Canada Inc. (1993), 161 N.R. 157 (F.C.A.), consd. [para. 25].

Turbo Resources Ltd. v. Petro Canada Inc. (1989), 91 N.R. 341; 24 C.P.R.(3d) 1 (F.C.A.), appld. [paras. 29, 49].

British Columbia (Attorney General) v. Wale et al. (1986), 120 N.R. 212 (B.C.C.A.), affd. 120 N.R. 208 (S.C.C.), consd. [para. 29].

American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396; [1975] 1 All E.R. 504 (H.L.), refd to. [paras. 33, 45].

Syntex Inc. v. Novopharm Ltd. (1991), 126 N.R. 114; 36 C.P.R.(3d) 129 (F.C.A.), refd to. [paras. 33, 47, 51, footnote 3].

Cutter Ltd. v. Baxter Travenol Laboratories of Canada Ltd. (1980), 47 C.P.R.(2d) 53 (F.C.A.), refd to. [para. 42].

Eye Masters Ltd. v. Shopper's Optical (1992), 56 F.T.R. 274; 44 C.P.R.(3d) 459 (T.D.), dist. [para. 43].

Eye Masters Ltd. v. Ross King Holdings Ltd. - see Eye Masters Ltd. v. Shopper's Optical.

Risi Stone Ltd. v. Omni Stone Corp. (1988), 22 C.P.R.(3d) 458 (Ont. H.C.), refd to. [para. 44].

Boutique Au Coton Inc. Bac v. Pant-O-Rama Inc. (1987), 14 F.T.R. 147; 17 C.P.R.(3d) 409 (T.D.), refd to. [para. 44].

Allergan Pharmaceuticals Inc. v. Bausch & Lomb Inc. (1985), 7 C.P.R.(3d) 209 (T.D.), dist. [para. 45].

Cabot Corp. et al. v. 3M Canada Inc. (1987), 10 F.T.R. 210; 15 C.P.R.(3d) 247 (T.D.), dist. [para. 45].

Lubrizol Corp. et al. v. Imperial Oil Ltd. et al. (1989), 25 F.T.R. 33; 22 C.P.R.(3d) 493 (T.D.), dist. [para. 46].

Imperial Chemical Industries plc et al. v. Apotex Inc. (1989), 101 N.R. 147; 27 C.P.R.(3d) 345 (F.C.A.), refd to. [para. 47, footnote 3].

Statutes Noticed:

Federal Court Rules, rule 324(1) [para. 53]; rule 469 [para. 1].

Patent Act, R.S.C. 1985, c. P-4, sect. 56 [para. 31, footnote 2].

Patent Act Amendment Act, 1992, S.C. 1993, c. 2, sect. 55.2 [para. 15].

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, generally [paras. 15, 38].

Authors and Works Noticed:

Sharpe, Robert J., Injunctions and Specific Performance (1983), pp. 213 to 214 [para. 29, footnote 1].

Counsel:

Alexander Macklin and Emma Grell, for the plaintiff;

Harry Radomski and Malcolm Johnston, for the defendant.

Solicitors of Record:

Gowling, Strathy & Henderson, Ottawa, Ontario, for the plaintiff;

Goodman & Goodman, Toronto, Ontario, for the defendant.

This application was heard on September 24, 1993, in Ottawa, Ontario, by MacKay, J., of the Federal Court of Canada, Trial Division, who delivered the following decision on October 21, 1993.