Syntex Pharmaceuticals International Ltd. v. Medichem Inc., (1990) 105 N.R. 48 (FCA)

• Judge: Urie, Marceau and MacGuigan, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: January 15, 1990
• Jurisdiction: Canada (Federal)
• Citations: (1990), 105 N.R. 48 (FCA)

Syntex Pharm. Intl. v. Medichem Inc. (1990), 105 N.R. 48 (FCA)

MLB headnote and full text

In The Matter Of a licence under subsection 41(4) of the Patent Act R.S.C. 1980, c. P-4;

And In The Matter Of an application by Medichem Inc., Weston, Ontario for a licence under the following Canadian patents owned by Syntex Pharmaceuticals International Limited. [See printed version for List of Patents at 105 N.R. 48]

And In The Matter Of the decision of the Commissioner of Patents dated June 6, 1986,

No. J2324-41(4)-754.

Syntex Pharmaceuticals International Limited (appellant) v. Medichem Inc. (respondent)

(A-407-86)

Indexed As: Syntex Pharmaceuticals International Ltd. v. Medichem Inc.

Federal Court of Appeal

Urie, Marceau and MacGuigan, JJ.A.

January 15, 1990.

Summary:

Medichem applied to the Commissioner of Patents under s. 41(4) of the Patent Act for a licence under 19 patents owned by Syntex. Medichem contemporaneously applied for licences from six other patentees of the same drug. Medichem served a notice of application on Syntex respecting the Syntex licence and Syntex filed a counter-statement. The Patent Rules did not permit or require service of the application or counter-statements in the companion licence applications, therefore, Syntex claimed to be deprived of its right to reply to any adverse allegations which might be made against it or to make submissions respecting matters affecting its rights. Syntex applied to prohibit the Commissioner from considering Medichem's application on the ground that without documentation on the six other licences there was a denial of natural justice.

The Federal Court of Canada, Trial Division, in a judgment reported 3 F.T.R. 60, dismissed the application. The Commissioner's delegate then considered the application, granted the licence sought and fixed the royalty at 4/7 of 1%. Syntex appealed.

The Federal Court of Appeal allowed the appeal and remitted the matter to the Commissioner for reconsideration on the ground that, inter alia, the procedure employed breached the rules of natural justice.

Administrative Law - Topic 2406

Natural justice - Procedure - Interrelated proceedings - Medichem applied to the Commissioner of Patents under s. 41(4) of the Patent Act for a licence under 19 patents owned by Syntex - Medichem contemporaneously applied for licences from six other patentees of the same drug - Syntex was not entitled under the Patent Rules to be served with the applications and counter-statements respecting the other six applications - Syntex claimed this procedural deficiency violated the principles of fundamental justice - The Federal Court of Appeal held that fundamental justice required that, at a minimum, Syntex should have been informed of the content of the other patentees' counter-statements and should have been given an opportunity to respond to them - Failure to provide Syntex with the counter-statements may well have deprived it of the knowledge necessary to enable it to respond in its counter-statement even to the issue of whether there should be a grant of licence or not and what conditions should be imposed - See paragraphs 17 to 26.

Civil Rights - Topic 8006

Canadian Bill of Rights - Interpretation - Right to fair hearing in accordance with principles of fundamental justice - Medichem applied to the Commissioner of Patents under s. 41(4) of the Patent Act for a licence under 19 patents owned by Syntex - Medichem contemporaneously applied for licences from six other patentees of the same drug - Syntex was not entitled under the Patent Rules to be served with the applications and counter-statements respecting the other six applications - Syntex claimed it was deprived of its right to a fair hearing in accordance with the principles of fundamental justice, as required under s. 2(e) of the Canadian Bill of Rights - The Federal Court of Appeal held that s. 2(e) was not violated - See paragraphs 14 to 16.

Patents of Invention - Topic 5520

Compulsory licences - Food and medicine - Denial of licence - For "good reason" - Medichem applied to the Commissioner of Patents under s. 41(4) of the Patent Act for a licence under 19 patents owned by Syntex - The Commissioner could refuse to grant a licence where there was no "good reason" for issuing one - Syntex tendered evidence to show Medichem was the "alter ego" of Apotex Inc., a company with an allegedly deplorable history of failing to discharge its licence obligations to Syntex and other patentees - The Commissioner's delegate, in granting a licence, stated that the evidence was irrelevant - The Federal Court of Appeal held that the evidence was relevant to the issue of whether there was "good reason" not to issue the licence and that there was no bar to piercing the corporate veil - See paragraphs 27 to 41.

Patents of Invention - Topic 5662

Compulsory licences - Application - Concurrent applications - [See Administrative Law - Topic 2406].

Patents of Invention - Topic 5744

Compulsory licences - Royalties - Fixing of - General - The Federal Court of Appeal referred to the relevant considerations in fixing the royalty for a compulsory licence - See paragraphs 52 to 57.

Cases Noticed:

American Home Products Corporation v. I.C.N. Canada Limited (1985), 5 C.P.R.(3d) 1, refd to. [para. 7].

American Home Products Corporation v. Commissioner of Patents et al. (1983), 71 C.P.R.(2d) 9, appld. [para. 14].

Magnasonic Canada Ltd. and Anti-Dumping Tribunal, Re (1972), 30 D.L.R.(3d) 118, refd to. [para. 25].

Frank W. Horner Ltd. v. Smith, Kline & French Laboratories Ltd. (1983), 52 N.R. 294; 79 C.P.R.(2d) 1 (F.C.A.), refd to. [para. 32].

Nedco Ltd. v. Clark (1973), 43 D.L.R.(3d) 714 (Sask. C.A.), refd to. [para. 35].

Tunstall v. Steigmann, [1962] 2 Q.B. 593, refd to. [para. 36].

Rainham Chemical Works Ltd. v. Belvedere Fish Guano Company Limited, [1921] 2 A.C. 465, refd to. [para. 38].

American Home Products Corp. v. I.C.N. Canada Ltd. (No. 2) (1988), 84 N.R. 69; 19 C.P.R.(3d) 257 (F.C.A.), refd to. [para. 52].

American Home Products Corp. v. Novopharm Ltd. (1988), 19 C.P.R.(3d) 279, refd to. [para. 53].

Takeda Chemical Industries Ltd. v. Novopharm Ltd. (1988), 19 C.P.R.(3d) 278, refd to. [para. 53].

Upjohn Co. v. Novopharm Ltd. (1988), 19 C.P.R.(2d) 274, refd to. [para. 53].

Otsuka Pharmaceutical Co. Ltd. v. Torcan Chemical Ltd. (1988), 91 N.R. 118; 20 C.P.R.(3d) 35 (F.C.A.), refd to. [para. 53].

Smith, Kline & French Laboratories Ltd. v. Apotex Inc. (1987), 17 C.P.R.(3d) 449, refd to. [para. 53].

Statutes Noticed:

Canadian Bill of Rights, R.S.C. 1970, App. III, sect. 2(e) [para. 14, footnote 2].

Patent Act, R.S.C. 1970, c. P-4, sect. 41(4), sect. 41(5), sect. 41(14) [para. 14].

Patent Act, R.S.C. 1985, c. P-4, sect. 39(4), sect. 39(5) [para. 14, footnote 1]; sect. 39(15) [para. 14, footnote 3].

Patent Rules, rule 118(1), rule 119, rule 120(1), rule 121, rule 122 [para. 18].

Authors and Works Noticed:

Compendium of Pharmaceutical Specialties 1985 [para. 50].

Merck Index [para. 50].

Counsel:

Conor D.M. McCourt, for the appellant;

Malcolm Johnston, Q.C., for the respondent;

Michael Ciavaglia, for the Attorney General of Canada.

Solicitors of Record:

McCarthy & McCarthy, Toronto, Ontario, for the appellant;

Malcolm Johnston & Associates, Toronto, Ontario, for the respondent;

John C. Tait, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the Attorney General of Canada.

This appeal was heard on November 1-3, 1989, before Urie, Marceau and MacGuigan, JJ.A., of the the Federal Court of Appeal.

On January 15, 1990, Urie, J.A., delivered the following judgment for the Court of Appeal.