Recent Decisions December 2007

I. FEDERAL COURT DECISIONS

(a) Patents

1. Nu-Pharm v. Her Majesty the Queen, AG Canada, and the Director-General, Therapeutic Products Directorate of Health Canada, September 28, 2007, 2007 FC 977 (Hugessen J.) Summary Judgment/Dismiss Action/ Judicial Review/ Revival of Application/ Extension/ Patented Medicines (Notice of Compliance) Regulations

Motion by the Crown for summary judgment to dismiss Nu-Pharm's action for damages in relation to the Director-General's decision to advise Drug Benefit Managers and Colleges/Registrars of Pharmacists that the NOC for Nu-Enalapril was no longer valid and that the sale of the drug was unlawful. Nu-Pharm previously filed and discontinued an application for judicial review against the Minister regarding this issue. The Crown argued that since Nu-Pharm's claim depends on whether the Director-General had authority for his actions, it could only be brought by way of judicial review and not by an action. Nu-Pharm sought alternative remedies to either revive its discontinued judicial review application, get an extension to start a new application or have the present action converted into a judicial review application and then converted into an action pursuant to s. 18.4(2) of the Federal Courts Act.

Held:  Motion allowed and action dismissed, however judgment stayed for 30 days to allow Nu-Pharm to seek an extension to file a new judicial review application. The grounds invoked by the Crown in support of its motion for summary judgment are essentially procedural in nature. The Court is under an obligation to make every attempt to allow a plaintiff’s claim to be decided on its merits. Rules 3 and 57 make it plain that a plaintiff should not be put out of court simply because the wrong procedure was employed. The alternative remedies sought by Nu-Pharm are currently unavailable since there were no grounds to set aside the discontinuance. There is no credible suggestion that the plaintiff's discontinuance was filed in error or in other than full knowledge of the facts. Nu-Pharm has not showed that it met the requisite conditions to obtain an extension of time to file a new application long out of time. In order to convert the action into a judicial review application and then re-convert it into an action requires the granting of an extension of time and a finding that the conditions for conversion of an application into an action had been met and neither is the case here.

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2. Sanofi-Aventis v. Minister of Health, AG Canada and Laboratoire Riva, October 1, 2007, 2007 FC 1156 (Aalto P.) Motion to Dismiss/ Application for Judicial Review/ Standing/ Patented Medicines (Notice of Compliance) Regulations

Motion brought on behalf of Riva for an order dismissing Sanofi's application for judicial review (“Application”). The Application sought to review an alleged “decision” in a letter from Health Canada to Riva which stated that Riva would not have to wait for approval of Pharmascience’s submission before receiving its NOC provided that Riva had met all of its obligations under the Regulations. The applicant sought to quash the “decision” and require the Minister to advise Riva that a NOC would not issue until the requirements of the Regulations had been met and Pharmascience had received a NOC. Riva argued that: (i) the letter did not contain a decision of a federal board, commission or tribunal giving rise to the remedy sought; and (ii) there was no duty owed by the Minister to the applicant and the applicant had no standing because it was not directly affected by the Minister’s position. The applicant attempted to show it had standing by arguing that the position set out in the letter was one of interpretation of the Regulations that impacted on the potential liability of the applicant under the Regulations. The applicant also argued it should be granted public interest standing.

Held:  Motion allowed. It is “plain and obvious” that the Application cannot succeed. The letter does not contain a “decision”; it is a letter from counsel for the Minister addressed only to counsel for Riva regarding matters not involving the applicant. It only advises Riva what the Minister may do if certain events transpire. It is not a final decision of the Minister but merely an advance indication of a ministerial position. The applicant does not have standing. Judicial review is not available to a party that is not directly affected by the decision at issue (s. 18.1 Federal Courts Act). To be directly affected, the matter involved must be one that affects the applicant’s legal rights or imposes legal obligations on it or prejudices it directly. A commercial advantage conferred on a third party by the government does not give rise to standing to commence a judicial review application. A party seeking public interest standing must demonstrate that it has a direct or genuine interest in the matter.

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3. Pfizer and Warner-Lambert v. Minister of Health and Ranbaxy, October 5, 2007, 2007 FC 898 (Snider J.) Infringement/ Saccharin Doctrine/Validity/Sufficiency/Section 27(3)(b) Patent Act/Patented Medicines (Notice of Compliance) Regulations

Application by Pfizer to prohibit the Minister from issuing a NOC to Ranbaxy in respect of its Ran-Atorvastatin, which contains the amorphous form of atorvastatin calcium, until after the expiry of Pfizer's 018 and 455 patents. Pfizer's 018 patent claims and protects crystalline forms of atorvastatin calcium while the 455 patent claims a process for making amorphous atorvastatin calcium from the crystalline Form I atorvastatin of the 018 patent. Pfizer contended that Ranbaxy used one of the patented crystalline forms as an intermediate in the process to make the amorphous material contained in Ran-Atorvastatin and that Ranbaxy infringed the process described in its 455 patent. Ranbaxy asserted that it infringes neither of the patents and that the 455 patent is invalid for insufficiency. It alleged that its intermediates are not the patented form of atorvastatin hydrate claimed in the 018 patent. It further argued that it did not infringe by its manufacture of Ran-Atorvastatin in India because the Saccharin doctrine is limited to process claims and is not extended to apply to products that are used off-shore as intermediates. With respect to the 455 patent, Ranbaxy argued that the phrase "removing the solvent to afford said amorphous atorvastatin" does not cover both evaporative and precipitative techniques for creating the final product. It further argued that the 455 patent was insufficient since it did not teach the methodology for making the necessary seed of crystalline Form I atorvastatin required to make amorphous atorvastatin. Pfizer argued that in addition to the 018 patent forming part of the state of the art, there was reference to another patent that provided the relevant instructions.

Held:  Application allowed with respect to the 018 patent but dismissed with respect to the 455 patent. The relevant claims of the 018 patent are limited to the crystalline Form I atorvastatin calcium hydrate. Although Pfizer could only show a possibility that the Ranbaxy intermediates were hydrates, the fact that experts showed that they matched the patented Form I substance on all X-ray powder diffraction peaks, and as confirmed by other testing methods, provides strong evidence that the intermediates are hydrates. Use of the patented crystalline Form I atorvastatin calcium in India as an intermediate constitutes infringement of the 018 patent under Canadian patent law. There is no reason why the application of the Saccharin doctrine should be limited to process claims, although a court must proceed cautiously when either off-shore products or processes are concerned. There must be a strong link established between the use of the patented process or product and the product sold in Canada. The court should consider: 1) the importance of the product or process to the final product sold in Canada; 2) whether the final product actually contains all or part of the patented product; 3) the stage at which the patented product or process is used; 4) the number of times the patented product or process is used; 5) the strength of the evidence demonstrating that, if carried out or used in Canada there would be infringement, with the benefit of the doubt going to the party using the product or process where there is ambiguity. Although none of the Ranbaxy intermediates constitute any element of the end product, this is not sufficient to conclude that it does not infringe. The role of the intermediates in the process of manufacturing Ran-Atorvastatin is not insignificant or incidental as they are used three times, during the final three stages of the process. Without the intermediates Ranbaxy would not have been able to produce its amorphous form of atorvastatin.

With respect to the 455 patent, the relevant claims are for a process where the solid amorphous atorvastatin is formed prior to the removal of the solvent by evaporative techniques only. The failure of the inventors to refer to any other method of removal is strong evidence that they intended evaporative techniques to be essential without contemplating other methods of solvent removal. However, Ranbaxy's allegation of non-infringement is not justified since the issue of claim construction was not addressed in its expert affidavit nor its NOA. The 455 patent is invalid due to insufficiency. The 455 patent provides no direction on how to make the seed (or crystalline Form I atorvastatin calcium) and one skilled in the art could not produce amorphous atorvastatin using only the instructions contained in the disclosure. Pfizer cannot rely on a reference that was added after the 455 patent issued. Although patents that a skilled addressee would discover in a reasonable and diligent search usually form part of the "common general knowledge", the 018 patent did not as it issued the same day as the 455 patent and was not initially referenced therein.

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4. Sanofi-Aventis v. Pharmascience, Minister of Health and Schering, October 17, 2007, 2007 FC 1057 (Mactavish J.) Issue Estoppel/ Second NOA/ Special Circumstances/Patented Medicines (Notice of Compliance) Regulations

Application by Sanofi to prevent Pharmascience from alleging invalidity of its 206 patent (“Patent”) in a second NOA. Sanofi relied on Pharmascience v. Canada, 2007 FCA 140, which held that a generic drug manufacturer wishing to challenge the validity of a patent owned by an innovator company via the Regulations must do so by "putting its best foot forward". Pharmascience countered that Sanofi was estopped from asserting the validity of its patent by the combined effect of the present Court's decision involving a different generic, where it was found that allegations of invalidity in regard to the Patent at issue were justified, and the Federal Court of Appeal's decision in Sanofi-Aventis v. Novopharm, 2007 FCA 163 ("Novopharm"), which held that it is an abuse of process for an innovator company to assert the validity of a patent in a NOA under the Regulations involving one generic, if the same allegation of invalidity had already been found to be justified in an earlier proceeding involving a different generic. Although Pharmascience conceded that the requirements for issue estoppel were present in the case, they submitted that "special circumstances" existed permitting the Judge to exercise her discretion and allow them to challenge the validity of the patent on new grounds. Pharmascience asserted that the previous decision in Aventis Pharma v. Apotex, 2005 FC 1283 ("Apotex"), which was a prohibition proceeding involving the same patent and a different generic where the prohibition application was dismissed, and the Novopharm decision, when taken together, amounted to a change in law that qualified as a "special circumstance". Pharmascience also argued that it would be unfair if it were the only generic unable to benefit from the combined effect of Apotex and Novopharm in relation to the Patent.

Held:  Application allowed. Pharmascience's initial allegation of invalidity had been finally determined and issue estoppel should operate to preclude it from making further allegations of invalidity. Although Mactavish J. found that in very limited circumstances there is discretion not to apply issue estoppel, she disagreed that such discretion should be applied in the present proceeding. First, Apotex did not amount to a change in law since decisions made under the Regulations are not in rem decisions, do not decide the question of validity, and are not binding on other judges in subsequent NOC proceedings. Second, in Novopharm, the Court had merely applied existing law relating to abuse of process to the facts. The type of 'change in the law' needed to justify relief from the application of issue estoppel occurs when the result in a later decision dictates that the findings in an earlier decision were clearly wrong. In making the decision to challenge the validity of the patent and not 'put its best foot forward', Pharmascience knew or should have known that if it was unsuccessful in its attack in the first instance, it would be precluded from advancing other grounds of invalidity in the future. The Court noted that Pharmascience was not without options as it could still bring an impeachment action.

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5. Eli Lilly Canada v. Novopharm, Minister of Health and Eli Lilly, October 23, 2007, 2007 FCA 329 (Sexton J.A.) Application for Intervener Status/ Factors/ Patented Medicines (Notice of Compliance) Regulations

Applications for intervener status by four parties in the appeal and on the motion to dismiss the appeal as being moot. The appeal involves a NOC proceeding concerning an allegation of insufficiency of disclosure made by Novopharm regarding a selection patent owned by Lilly. The Trial Judge held that Lilly failed to demonstrate that the allegation was unjustified. A NOC issued to Novopharm, which led to the motion by Novopharm to dismiss the appeal as being moot.

Held:  Applications dismissed. Sexton J.A. noted that to succeed, the proposed interveners had to demonstrate how their participation in the proceedings would assist in the determination of a factual or legal issue related to the proceeding. Interventions in NOC proceedings should only be done in the clearest of cases and only where it is obviously warranted. The Court applied the six factors to be considered on a motion to intervene as set out in CUPE v. Canadian Airlines [2000] F.C.J. No. 220. After considering these factors, the interests of justice would not be well served by allowing the interventions. None of the interveners were directly affected; it was not clear that there is a veritable public interest; there is no apparent lack of efficient means to submit the question to the Court; the appellant and the respondent, Novopharm, are quite able to defend their respective positions; it is not apparent how the interests of justice would be better served by the interventions and the proceedings will be lengthened with no apparent justification; and finally, the Court is quite able to decide the appeal without the proposed interveners. It was emphasized that proceedings under the Regulations are intended to be summary and of short duration.

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6. Eli Lilly Canada v. Novopharm et al., November 5, 2007, 2007 FCA 359 (Sexton, Pelletier, Ryer JJ.A.) Motion to Dismiss Appeal/Mootness/Issuance of NOC/ Selection Patent/ Sufficiency/ Comparative Data/ Discretion to Hear Moot Appeal/Patented Medicines (Notice of Compliance) Regulations

Motion by Novopharm to dismiss an appeal of the June 5 Order (the “Order”) of Hughes J. on the ground that the appeal is moot. The Order dismissed Lilly’s application for an order prohibiting the Minister from issuing a NOC to Novopharm. Hughes J. held that Lilly was unable to establish that the allegation by Novopharm that its selection patent was invalid, by reason of insufficient disclosure, was not justified. After the Order, the Minister granted a NOC to Novopharm. The main challenge by Lilly was in regards to Justice Hughes' finding that the law of Canada requires that the specification of a selection patent must contain comparative data demonstrating the advantages of the selected class over the class disclosed in a previous patent. The two issues in the present proceeding were whether the appeal was moot, and if found to be moot whether the Court should exercise its discretion to hear the appeal. Lilly advanced three arguments for why its appeal was not moot: (a) Hughes J. decided the case on an issue not raised by the parties, giving rise to procedural unfairness; (b) a live issue continues to exist between the parties as Novopharm can rely on the Order to obtain subsequent NOCs; and (c) based on the Court’s decision in Sanofi-Aventis Canada v. Novopharm 2007 FCA 163 this appeal would affect the rights of Novopharm with respect to other generics. With regard to the second issue, Lilly argued that the Order would affect the validity of other patents and patent applications in Canada by adding a retroactive test for sufficiency of disclosure for selection patents.

Held:  Motion allowed. The appeal was moot and the Court declined to exercise its discretion. Once the prohibition application is dismissed, the Minister is acting entirely lawfully in issuing a NOC to the generic pursuant to s. 7(1) of the Regulations. Once the NOC has issued, there is no provision under the Regulations that permits the Court to retroactively prohibit its issuance. No procedural unfairness was found as Novopharm did raise the issue of insufficiency of disclosure in its NOA. The Court was not persuaded by Lilly’s second and third arguments as the possibility that other generics, or even Novopharm, could rely on the decision in subsequent proceedings does not make the appeal not moot. Regarding the second issue, the Court applied three factors to decide whether to exercise the discretion to hear a moot appeal: (i) presence of an adversarial context; (ii) concern for judicial economy; and (iii) need for the Court to be sensitive to its role as the adjunctive branch in the political framework. The adversarial context between the parties could be found in Lilly's infringement action and not the present proceeding. It makes little sense to hear moot appeals especially given the taxing nature of NOC proceedings on judicial resources and the fact that the main issue would be the subject of infringement proceedings already in progress. It is settled law that decisions under the Regulations cannot be taken as an in rem determination of the validity of patents. NOC proceedings are not intended to be substitutes for infringement actions, it is inappropriate to rely on NOC proceedings to set binding precedent on controversial and uncertain questions in patent law. NOC proceedings are supposed to be summary in nature. In dissent, Pelletier J.A. disagreed that the Court should decline to exercise its discretion given that the decision under appeal was an authoritative statement of law that raised a doubt as to the validity of any selection patent that does not contain comparative data in support of the advantage claimed in the patent.

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7. DBC Marine Safety Systems v. Commissioner of Patents and AG Canada, November 5, 2007, 2007 FC 1142 (Mosley J.) Section 73(1)(a) Patent Act/ Good Faith Exception/ Discretion/Judicial Review/Court’s Jurisdiction/Deemed Abandonment

Application for judicial review of a notice issued by the Commissioner declaring a patent application abandoned for failure to respond to an examiner’s requisition by the prescribed deadline. The examiner issued an office action that contained two requisitions. Three days before the deadline to reply, the applicant’s patent agent filed a response which, due to an oversight, only responded to one of the requisitions. This resulted in a deemed abandonment pursuant to s. 73(1)(a) of the Patent Act, and the twelve month period for reinstatement started. Notice was not provided to the applicant or to its agent that the application was deemed to have been abandoned. The annual maintenance for the application was submitted and accepted; the applicant was not informed after the payment was made that the application was abandoned at that time. The respondents stress that they have no interest in whether this particular patent application is reinstated or not. From the respondents’ point of view, the key issue is whether the Court has jurisdiction to review a non-discretionary outcome mandated by operation of law.

Held:  Application dismissed. The applicant failed to respond to both requisitions, despite the clear indication in the office action that failure to do so would result in abandonment. Replying in good faith to one requisition in an office action containing two is not the equivalent of replying in good faith to both; the Patent Act allows for no “good faith” exception to the requirements of s. 73 (1)(a) where there has been a failure to respond to a requisition. The applicant contended unsuccessfully that where an applicant has failed to adequately respond to a substantive requisition it is necessary for the examiner to issue a final action under r. 30. The abandonment and reinstatement provisions of the Act do not allow for the exercise of discretion by the Commissioner but impose obligations upon the applicant that must be met. This lack of discretion includes the inability to set a new point to begin the period in which the reinstatement occurs. Where an applicant fails to respond to a requisition and the application is not reinstated within the year provided to rectify the situation, the patent application is abandoned as a matter of law; there is no discretionary decision which is reviewable by the Court.

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(b) Trade Marks

1. Sadhu Singh Hamdard Trust v. Reg. TMs et al., November 2, 2007, 2007 FCA 355 (Pelletier, Létourneau, Ryer JJ.A.) Opposition/ Section 56 Appeal/ Section 57 Expungement/ Section 39(3) Trade-marks Act/Section 18 Federal Courts Act

The appellant filed a request for an extension of time within which to oppose a trade mark application but the request was never dealt with by the Registrar. The application issued to registration before the would-be opponent (the appellant) became aware that an extension had not been granted. The appellant filed a motion with the Federal Court seeking an extension of time to file a Notice of Appeal from the decision of the Registrar that allowed the registration. The Trial Division refused to do so and the appellant appealed to the Court of Appeal.

Held:  Appeal dismissed. The appropriate course of action for the appellant is an expungement action under s. 57. There was no decision of the Registrar that can be appealed from. The appellant’s opposition proceedings have been overtaken by the registration of the mark.

Section 39(3) of the Trade-marks Act provides the appellant with an adequate alternate remedy which justifies the Court in refusing to exercise its jurisdiction under s. 18 of the Federal Courts Act. Moreover, the Court has held, most recently in Bacardi. v. Havana Club Holdings, 2004 FCA 220, that registration is not to be put into question in the course of opposition proceedings.

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2. Louis Vuitton v. Lin et al., November 14, 2007, 2007 FC 1179 (Snider J.) Damages/Counterfeit Goods/Default Judgment

Motion for default judgment in a trade mark and copyright infringement action. The defendants did not file a statement of defence. The plaintiff had previously obtained judgments against the defendants but the defendants continued to infringe. 

Held:  Maximum award of statutory damages granted with respect to the copyright infringement because the defendants’ bad faith warrants a higher award and there is a need to deter others from similar conduct. The damages suffered by the plaintiff as a result of the trade mark infringement are not quantifiable because one cannot assess the damage done to the plaintiff’s reputation by the counterfeit products and one cannot assume that the plaintiff would have had sales if the defendants had not been selling (since someone who is willing to pay the price of a counterfeit is not likely to be willing to pay the much higher price for the authentic product). An assessment of the defendants’ profits was made difficult due to the lack of participation by the defendants so the Court compensated in part by also awarding a high quantum of punitive damages.  Solicitor-client costs were also awarded.

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(c) Practice

1. Robbins & Myers Canada v. Torque Control Systems and Andrew Wright, September 24, 2007, 2007 FC 957 (Lafrenière P.) Conflict of Interest/ Patent Infringement/ Patent Prosecution/Duty of Loyalty

Motion by the plaintiffs, Robbins & Myers, seeking an order to disqualify the law firm of Ridout & Maybee from acting for the defendants due to a conflict of interest.  As part of their defence to the plaintiff's claim of patent infringement, the defendants challenged the validity of the patent. A lawyer at Ridout & Maybee had previously drafted and filed the patent application from which the patent in dispute issued while working at another firm. The defendants opposed the motion on the grounds that their solicitors never had any relationship with Robbins because Robbins was merely the assignee of the rights to the invention and application and that their solicitors were not privy to any confidential information that would give rise to a conflict of interest.

Held:  Motion granted. The Prothonotary held that the lawyer was privy to confidential information not disclosed in the text of the patent and that the fiduciary duty of loyalty owed by a lawyer to a former client continues after termination of the solicitor-client relationship such that a lawyer may not act in a manner that will injure the former clients in matters involving the prior representation. A lawyer who represents a party in applying for a patent may not thereafter represent another party in an action against his former client's interests arising out of, or closely related to, the patent at issue. Such conduct would involve the lawyer in the representation of interests directly in conflict with those of the first client for whom he acted as counsel and to whom he still owes a duty of loyalty. The solicitors for the defendant were tainted by this conflict of interest because there was no evidence that proper safeguards had been put in place to prevent the lawyer in question from disclosing confidential information relating to the invention or patent application to other members of the firm.

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2. Bayer Healthcare and Bayer v. Sandoz Canada, September 26, 2007, 2007 FC 964 (O’Keefe J.) Appeal of Discretionary Orders of Prothonotaries

Appeal by the defendant (Sandoz) from an order of Lafrenière P. which granted a motion brought by the plaintiffs to strike paragraphs of the defendant’s statement of defence. The relevant paragraphs of the statement of defence had alleged that certain claims were broader than the invention disclosed. Sandoz had relied on statements from an inventor that were made during the course of the prosecution of a U.S. patent application.

Held:  Appeal dismissed. Discretionary orders of prothonotaries ought not to be disturbed on appeal unless a) the questions raised in the motion are vital to the final issue of the case, or b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based on a wrong principle or upon a misapprehension of the facts. The Prothonotary had disagreed with the defendant’s argument that statements made during prosecution of a corresponding patent application may be relevant to the issues of what the inventor had invented. The Prothonotary was correct in striking the paragraphs of the statement of defence.

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3. H-D Michigan and Harley-Davidson v. Jamal Berrada and 3222381 Canada, October 2, 2007, 2007 FC 995 (Aalto P.) Bifurcation/Consent

Plaintiffs seek an order for bifurcation with the defendants’ consent.

Held:  Motion will be dismissed unless counsel provide proper materials in a timely fashion in support of the order. There are a number of factors that must be considered with respect to bifurcation and this motion has not dealt with any one of them. Consent is only a factor for consideration where a case for bifurcation has already been made out. If this were a specially managed proceeding then the case management judge or prothonotary might have been able to make the requested order without evidence, based on his/her knowledge of the case.

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4. M.K. Plastics v. Plasticair, October 5, 2007, 2007 FC 1029 (Tremblay-Lamer J.) Assessment of Costs/Column IV/Rule 420

Motion pursuant to r. 403(1) by the defendant requesting directions to be given respecting the assessment of costs. The plaintiff commenced an action for patent infringement and the defendant counterclaimed for a declaration that the plaintiff's patent was invalid. Both the plaintiff's action and the defendant's counterclaim were dismissed with costs to the defendant. The defendant submitted that it was entitled to costs at the upper end of Column IV due to the importance of the litigation, the complexity of the legal issues, the preparation for trial, and the testimony of expert witnesses. Additionally, the defendant contended that it was entitled to double costs as it offered a favorable settlement, which was neither revoked nor accepted by the plaintiff at the commencement of trial. The plaintiff claimed that the matter raised in the case was not of greater importance than in most intellectual property cases; that it also submitted an offer to the defendant before trial; that the defendant's conduct was improper and vexatious, increasing the amount of work that the plaintiff had to carry out; and that the disbursements claimed by the defendant were exaggerated.

Held:  Party and party costs should bear a reasonable relationship to the actual costs of litigation. Therefore, the amount that the defendant had spent in fees and disbursements in defending the action should be taken into consideration. The present case did not raise any complex legal issues, or at least no more complex than most intellectual property cases. On the issue of the importance of the litigation, it was held that it is the legal significance of the case, not the economic and business significance to the parties, which must be considered. Thus the fact that the litigation had a business or economic significance to the defendant was not relevant to the assessment of costs. The amount of work in an action is also a primary consideration in awarding increased costs, however in patent cases specifically, it was held that this factor is a necessary consequence of the nature of the particular patent, and therefore not a determinative factor. Although it was found that the defendant's conduct did cause delay in this action, it did not merit a departure from Column III of Tariff B. The costs for additional counsel, travel and expert fees by defendants were found to be justified, reasonable and necessary. The defendant's offer to settle was rejected by the plaintiff, which triggered r. 420 - the award of double costs to the defendant.

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5. Merck v. Apotex and Minister of Health, October 9, 2007, 2007 FC 1035 (Gibson J.) Motion to Review Costs/Federal Court Rule 400(3)/Federal Court Rule 414/Standard of Review/Excessive Expert Disbursements/Benchmark Principle/Patented Medicines (Notice of Compliance) Regulations

Motion by Merck under r. 414 for a review of the costs award on an underlying application related to a NOA from Apotex to Merck. Mosley J. dismissed the underlying application with costs to Apotex. Apotex served and filed a Bill of Costs for fees and disbursements that was supported in part by reference to the market size of the product. Although Merck argued that the economics underlying the litigation were not relevant on a costs assessment, Gibson J. disagreed stating that r. 400(3) allows the Court to consider any matter it considers relevant in exercising its discretion as to costs. The assessment officer substantially allowed Apotex's claimed costs. The grounds for review cited by Merck include disbursements related to experts, prior art, travel, photocopy, and others (computer searches, courier/postage, etc.). For expert disbursements, Merck alleged that the amount claimed by Apotex was unsupported and unreasonable. The claimed hours by Dr. Langer and his associate Dr. Lipp far exceeded the claimed hours of Apotex's other experts. Since Dr. Lipp did not file an expert affidavit, his role in supporting Dr. Langer was unknown to Mosley J. and Merck until Apotex delivered their Bill of Costs.

Held:  Motion allowed in part. The allowable assessment was further reduced. The standard of review applicable to a decision of an assessment officer is twofold: first, whether the assessment officer committed an error in principle; and second, whether the amount assessed is so unreasonable that an error in principle must have been the cause. Regarding fee disbursements for each of Apotex's experts, Gibson J. found that the assessment officer's decision to allow the disbursement for five of the seven experts was not 'so unreasonable that an error in principle must have been the cause'. For Drs. Langer and Lipp, Gibson J. found that the arbitrary rejection by the assessment officer of a reduction in the number of hours devoted to the production of Dr. Langer's expert affidavit constituted an error in principle or an element that was 'so unreasonable that an error in principle must have been the cause'. The "benchmark" or "band principle" was applied to reduce the allowable disbursements for the two experts. This principle states that in order to be fair to the adverse party liable for payment, a relationship should exist between the fees allowed in payment for opinions where there is a 'common denominator' in the nature of the opinions sought. Dr. Langer's lower hourly rate from a related proceeding was used as a 'benchmark' to reduce his allowable hourly rate. No change was made to Dr. Lipp's hourly rate since it was already lower than the rates of the other experts. The combined hours of Drs. Langer and Lipp were reduced to match the average hours of the other Apotex experts and apportioned between the two using the ratio established by their respective billable hours initially claimed. No reviewable error was found on the other grounds for review.

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6. Eli Lilly and Apotex v. Shionigi, October 10, 2007, 2007 FC 1041 (Hughes J.) Section 7 Canada Evidence Act/Expert Witnesses

Apotex brought a motion to permit it to introduce evidence of more than ten expert witnesses at trial. The plaintiffs oppose the motion asserting that Apotex has not demonstrated that it requires in excess of ten experts.

Held:  Motion allowed. The issue is whether the Canada Evidence Act (s. 7) limits the number of experts that a party might lead to five in the proceeding as a whole, or in respect of each issue in a proceeding. Given the jurisprudence, it is reasonable to conclude that a proper interpretation of s. 7 is to limit each party to five expert witnesses in the proceeding as a whole subject to the direction of the Court to have the number increased. The Court found that Apotex has shown more than a prima facie case that it requires up to five more experts than the original ten due to the competition law issues and possible need for rebuttal.

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7. Altana v. Novopharm and Minister of Health, October 23, 2007, 2007 FC 1095 (Phelan J.) Appeal and Cross-appeal/Number of Expert Witnesses/Section 7 Canada Evidence Act/Patented Medicines (Notice of Compliance) Regulations

Appeal and cross-appeal of a Prothonotary's order where the central issue was whether a party is permitted, without leave of the Court, to have 5 expert witnesses "per issue" in a case or 5 experts "per case" pursuant to s. 7 of the Canada Evidence Act ("CEA"). Novopharm filed a NOA on Altana against two of its patents. Altana served Novopharm with affidavits from 13 expert witnesses and two fact witnesses without leave of the Court. Novopharm moved for an order that Altana comply with the 5 witnesses per case rule imposed by s. 7 of the CEA. Altana denied that it was in breach of s. 7 but moved, by cross-motion, for leave to file all expert evidence tendered, if it was found that leave was required. While the Prothonotary believed that s. 7 should be interpreted as limiting each party to 5 expert witnesses regardless of the number of issues requiring expert evidence, she considered herself bound by the decision in Merck & Co. v. Canada 2003 FC 1511 which she understood to have concluded that s. 7 limits a party/side to 5 experts per issue unless leave of the Court is obtained. The Prothonotary dismissed Altana's motion for leave to admit more than 5 expert witnesses per issue. Both sides appealed; Novopharm sought to restrict Altana to 5 experts per case and Altana sought leave to rely on more than 5 experts per issue.

Held:  Prothonotary's order set aside; s. 7 should be read as limiting each side to 5 experts in the case subject to the Court's leave to vary that number. Phelan J. engaged in a comprehensive review of the Court's jurisprudence on the interpretation of s. 7 and concluded that the Court had been proceeding on a somewhat qualified endorsement of the "5 experts per issue" principle. Phelan J. considered the issue of judicial comity and concluded that it would be appropriate for the Court to consider s. 7 more directly in light of recent authority. Applying a purposive approach to the interpretation of s. 7, the Court concluded that it was intended to limit the number of experts with two critical limitations. The first was that it applied to trials or other proceedings, and the second was an absolute numerical restriction of 5. Given this interpretation, the courts should not generally give the provision an interpretation that broadens the limitation. Not only is there no reference in s. 7 to "issues", but it would be inconsistent with the overall intent of the provision to expand the restriction by reading in the words "per issue" while also giving the Court the discretion to expand the number of experts. There is no conflict between the complexity of NOC proceedings and the purpose of s. 7. The needs and complexities of each case are dealt with through the exercise of discretion. There is no merit to the argument that s. 7 restrictions do not apply to judicial review/NOC proceedings as s. 7 specifically refers to a "trial or other proceeding".

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8. MGM Well v. Mega Lift, November 2, 2007, 2007 FC 1134 (Hugessen J.) Appeal of Prothonotary’s Order/Leave to Intervene

Appeal by a non-party, MLS, against paragraphs of an order made by a prothonotary following a status review. MLS is a 50% shareholder of the defendant MLI. The plaintiff had a filed a statement of claim in this action alleging that MLI had infringed a number of claims of its patent. Subsequently, on consent the Alberta Court of Queen’s Bench ordered MLI wound up. The order purported to give MLS leave to intervene in the present action and to “defend, compromise or discontinue in the Federal Court Action as it deems advisable in its sole and absolute discretion”. The order of the prothonotary indicated that the action shall continue as a managed proceeding, that MLS shall forthwith take the appropriate and required steps to obtain standing to carry on the proceeding and that the plaintiff is dispensed from the requirement to serve and file a reply and defence to the counterclaim pending further order or direction of the Court.

Held:  Motion dismissed. The order was procedural and does no more than indicate to MLS that if it wishes to exercise the powers purported to have been given to it by the Alberta Court it must take steps to become a party to the action.  The suggestion by MLS that non-compliance with the order might put them at risk of being found in contempt is not true. The order does not require MLS to do anything, and the most serious consequence of non-compliance would be default judgment. It is up to MLS as to whether or not it wishes to exercise control over the conduct of MLI’s defence and counterclaim, but if it does, it must do so in the manner specified by the order.

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9. Ratiopharm v. Wyeth et al. and Minister of Health, November 9, 2007, 2007 FCA 361 (Nadon, Sharlow, Ryer JJ.A.) Motion to Increase Costs/Reconsideration of Prior Judgment/ Federal Court Rule 397(1)(b)/ Column III Costs/Patented Medicines (Notice of Compliance) Regulations

Motion by Ratiopharm pursuant to Federal Court Rule 397(1)(b) for reconsideration of a prior judgment. Ratiopharm also sought an order providing directions to the assessment officer to increase costs. The prior judgment was the result of a prohibition application commenced by Wyeth following receipt of a NOA from Ratiopharm. After filing evidence and cross-examinations, Ratiopharm brought a motion pursuant to s. 6(5)(a) of the Regulations to dismiss Wyeth's prohibition application. Ratiopharm sought costs with regard to dismissal of the prohibition application on a solicitor and client basis. The Federal Court allowed Ratiopharm's motion in part but made no order as to costs. Ratiopharm appealed the judgment seeking an order to dismiss the prohibition application in its entirety with costs. While Ratiopharm was successful on its appeal and the prohibition application was dismissed with costs, Ratiopharm asserted that the Court of Appeal's prior judgment failed to address its request for costs on the dismissal of the prohibition application. With regard to increased costs, Ratiopharm pointed to the large number of expert affidavits Wyeth filed, however said nothing about the complexity of the case and why a departure from the general rule was warranted. Wyeth argued that Ratiopharm could and should have presented its motion under s. 6(5)(a) of the Regulations in a more timely manner and that the length of proceedings was a direct result of its failure to do so. Wyeth also argued that if costs were to be awarded to Ratiopharm, they should be assessed in accordance with Column III of the table to Tariff B as there was no evidence to support Ratiopharm’s claim for costs at the high end of Column IV.

Held:  Motion allowed in part. The judgment was amended on the issue of costs for the dismissal of the prohibition application as the Court conceded that it failed to deal with costs on the prohibition application. Motion for directions to the assessment officer for increased costs denied. There was no basis to depart from r. 407, which provides that costs shall be assessed in accordance with Column III of the table to Tariff B. Neither the importance and complexity of the issues, nor the amount of work were such as to warrant an order of increased costs. Ratiopharm did not provide evidence to support its claim for costs at the high end of Column IV to Tariff B. The Court referred to the principles applicable to a motion for increased costs as set out in Consorzio Del Prosciutto Di Parma v. Maple Leaf Meats, [2003] 2 F.C. 451.

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II. OPPOSITION BOARD DECISIONS

1. Minix v. Redouane Fakir, July 9, 2007 (Carrière) Confusion

Application for SALMONQUEST for fish steaks, fish products, cooking equipment, providing membership in a salmon club, delivering salmon products to homes and offices, etc. based on a combination of use and proposed use. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark SEAQUEST registered for food namely fish.

Held:  Application refused with respect to all of the edible fish wares; opposition rejected regarding the remaining wares and services. The opponent evidenced use of its mark whereas the applicant did not. The opponent’s line of fish includes salmon. The channels of trade of the parties’ food items would be similar whereas they would not be the same regarding the applicant’s remaining wares and services.

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2. Axon Development v. I.C. Axon, July 16, 2007 (Carrière) Confusion

Proposed-use application for I.C. AXON for computer based training services in the field of health. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark AXON registered for computer software.

Held:  Opposition rejected. The opponent’s software is aimed at the trucking industry and on the basis of the differences between the nature of the parties’ wares/services and their respective channels of trade, the Board Member found that confusion was not reasonably likely.

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3. Tac v. K.M. Thomas, July 24, 2007 (Bradbury) Confusion

Use-based application for TAC SYSTEMS for access control systems namely locks, card readers, biometric readers, switches, computer hardware and software use [sic] for controlling access into restricted areas. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark T.A.C. & Design registered for apparatus and instruments, namely thermometers, light sensors, air flow regulators, computers and computer software used in building automation systems …

Held:  Application refused. The marks resemble each other to a high degree, their wares are related (if not identical) and the applicant has filed neither evidence nor argument.

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4. Novartis v. Arachnova, July 26, 2007 (Bradbury) Confusion

Proposed-use application for ARADERM for pharmaceutical and veterinary preparations for the treatment of dermatitis and related dermatoses. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark ESTRADERM registered for estradiol administered by means of a patch or bandage attached to the skin of humans.

Held:  Opposition rejected. The differences between the marks, combined with the differences between their wares, are sufficient to make confusion unlikely.

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5. Tai Foong v. La Maison Sami T.A. Fruits, July 27, 2007 (Carrière) Confusion/Packaging/Interlocutory Injunction

Proposed-use application for TROUT HEAD & Design for rice. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark OX HEAD & Design registered for rice.

Held:  Application refused. The design features are the dominant portion of each trade mark and these are strikingly similar. The overall packaging used by the applicant is not relevant in an opposition. A provincial court judgment dismissing an application by the opponent for an interlocutory injunction is not relevant due to the differences between the two proceedings.

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6. Harrison Pet Products v. Poplar Valley Organic Farms, August 3, 2007 (Bradbury) Confusion

Use-based application for GENESIS FEED for certified organic grains and legumes as processed feed for horses and livestock, and the production and sale of certified organic grains and legumes as processed feed for horses and livestock. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark GENESIS registered for pet food products for dogs and cats.

Held:  Application refused because there is a high degree of resemblance between the marks, their products are related, their potential channels of trade overlap, and the opponent’s mark has been used since an earlier date.

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7. André Gingras v. Krikor Hairabedian, August 8, 2007 (Carrière) Inadmissible Evidence/Descriptiveness

Use-based application for ENCAN DIRECT for purchase and sale of used vehicles. ENCAN disclaimed. Opposition based, inter alia, on s. 12(1)(b).

Held:  Application refused. Neither party’s evidence was in the form of an affidavit or statutory declaration, resulting in there being no evidence before the Registrar. However dictionary definitions supported a conclusion that the mark is either clearly descriptive or deceptively misdescriptive of the applicant’s services.

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8. Havana Club v. Havana Cappuccino, August 8, 2007 (Carrière) Descriptiveness/Place of Origin

Use-based application for HAVANA for iced coffee. Opposition based, inter alia, on s. 12(1)(b).

Held: Opposition rejected. The opponent introduced evidence to show that Cuba produces coffee plus two British dictionaries that list Havana as a name for Cuba. The Board Member accepted that Canadians would know that coffee is produced in Cuba and that Havana is a city in Cuba. However, he did not accept that the average Canadian would as a matter of first impression think that the applicant’s iced coffee originates from Havana. The Board Member noted that there was no evidence concerning the actual place of origin of the applicant’s wares and no evidence that the city of Havana is known as a source of iced coffee.

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9. Amberes v. L.S. Recreational Distributors, August 10, 2007 (Bradbury) Confusion

Proposed-use application for SCORPION INDUSTRIAL SAFETY FOOTWEAR for footwear namely, safety work boots and safety work shoes. Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark ESCORPION Design registered for ladies’ suits and other items of clothing.

Held:  Opposition rejected due to the differences between the parties’ wares. There was no evidence that the parties’ channels of trade would overlap or any evidence that the opponent’s mark had become known to any extent.

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10. Valcom Manufacturing v. 1465539 Ontario, August 24, 2007 (Bradbury) Confusion

Use-based application for VELCOM for ttelecommunication services; providing electronic mail and messaging services over a global computer network; providing electronic file transfer services over global computer networks… and website development services relating to the foregoing.  Opposition based, inter alia, on s. 12(1)(d) due to confusion with the opponent’s mark VALCOM registered for antennas, transformers, amplifiers, electrical filters and electrical cable sets.

Held:  Opposition rejected primarily because of the differences between the opponent’s wares and the applicant’s services. “In today’s computer-focused society, the fact that promotion of the opponent’s wares includes by means of the Internet and promotional DVD disks and the fact that its wares have some computer components are not in themselves enough to indicate a link between the opponent’s wares and the applicant’s services or to make confusion likely.”

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11. Jivan Foods v. Summer Kitchen Fine Foods, August 29, 2007 (Bradbury) Distinctiveness

Use-based application for KISS THE COOK for food products, namely cooking and grilling sauces. Opposition based, inter alia, on distinctiveness, because the opponent had used KISS THE COOK in association with pasta sauce prior to the material date.

Held:  Application refused. Although the applicant is the first user of the mark and its mark may be distinctive of its wares in parts of Canada, the activities of the opponent prior to it becoming aware of the applicant were sufficient to negate the distinctiveness of the applicant’s mark in certain parts of the country.

An appeal has been filed.

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12. Investek Canada Mortgage v. Investec Solutions, August 30, 2007 (Bradbury) Confusion/Use with Services

Proposed-use application for INVESTEC for newsletters, credit cards, financial services… Opposition based, inter alia, on s. 16 due to confusion with the mark INVESTEK CANADA previously used by the opponent in association with financial services.

Held:  Application refused. Although the opponent had not sold any of its services prior to the material date, it had promoted its services in association with its mark and its services were available to be performed; the opponent thus met its evidential burden. The applicant filed neither evidence nor argument and therefore did not meet its legal burden.

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13. Steven Debus v. Givn’r Promotions Group, August 30, 2007 (Bradbury) Evidential Burden

Use-based application for GIVN’R for t-shirts…; designing and sewing custom apparel for corporate clients. Opposition based on distinctiveness and s. 30.

Held:  Opposition rejected. As there was no evidence from the opponent, the opponent did not meet its evidential burden.

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14. Alltemp Products v. Bit Holder, August 30, 2007 (Bradbury) Confusion/Section 30(e/Proposed Use by a Licensee) 

Proposed-use application for ROTOMOTION for drill attachments, bit holders and drill drivers. Opposition based, inter alia, on s. 16 due to confusion with ROTOM previously used by the opponent for electric motors and components and s. 30(e). 

Held:  Application refused. The applicant satisfied its onus to show that, on a balance of probabilities, confusion between the marks is unlikely, primarily because of the differences between the parties’ wares and the state of the marketplace, as well as the differences between the marks. However, the s. 30(e) ground succeeded because the cross-examination revealed that it was always intended that the mark would be used by a licensee but the application made no reference to a licensee.

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15. Gen-X Sports v. 9013-0501 Quebec, September 14, 2007 (Bradbury) Section 30(i)

Proposed-use application for ORAGE RIDER’S EDGE Design for back packs, t-shirts, hoods…ski and snowboard accessories, etc. Opposition based, inter alia, on s. 30(i) because the applicant had never included snowboard items in its applications for its ORAGE marks until it became aware of the opponent’s application for RAGE for snowboard items.

Held:  Opposition rejected. The opponent did not meet its initial burden. The applicant could have been satisfied that it was entitled to use its mark for snowboard items. It matters not that it has not sold such items in the past. (The applicant’s position in another proceeding is that the opponent’s mark is confusing with the applicant’s mark as applied to non-snowboard items.)

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16. Battistini v. Chatzidimos, September 24, 2007 (Bradbury) Distinctiveness/Section 30(b)

Use-based application for THIRD VERSE for musical sound recordings, … providing a website on a global computer network featuring information about performances, recordings, appearances, the biography, and other information about musical performers and recording artists. Opposition based, inter alia, on non-distinctiveness because the opponent previously used THIRD VERSE for website services and s. 30(b).

Held:  Application refused with respect to “providing a website on a global computer network featuring information about performances, recordings, appearances, the biography, and other information about musical performers and recording artists”. Opposition rejected with respect to remaining wares and services. The opponent failed to satisfy its initial burden with respect to its s. 30(b) ground; claims that the applicant’s band was merely a hobby band that had not performed any significant shows were irrelevant to the issue of whether the applicant’s dates of first use were correct. It is also not relevant that the applicant had not obtained any business registrations.

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17. Liverton Hotels v. Alicorp, September 25, 2007 (Bradbury) Confusion/Telephone Database Searches

Proposed-use application for DIVAS Design for biscuits and wafers. Opposition based, inter alia, on s. 12(1)(d) due to confusion with DIVA registered by the opponent for restaurant services.

Held:  Opposition rejected. The average consumer is not likely to assume that the source of the biscuits/wafers is also the source of the restaurant services because DIVA is an ordinary dictionary word and there is no evidence that the opponent markets any food items outside of its restaurant or that it would be common in the restaurant industry to do so. Telephone database searches are not evidence that the listed business names have been brought to the attention of consumers in the marketplace in Canada.

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18. Orchid v. Calpis, September 27, 2007 (Bradbury) Confusion

Application for AMEEL for milk, milk products … soda water, ginger ale. Opposition based, inter alia, on s. 12(1)(d) due to confusion with AMĒ registered by the opponent for mineral waters and aerated waters, non-alcoholic beverages etc.

Held:  Opposition rejected. Confusion is not likely due to the differences between the marks and bearing in mind that the opponent has not shown that its mark has acquired any reputation.

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III. SECTION 45 DECISIONS

1. Blake Cassels & Graydon v. Finanz St. Honoré, August 2, 2007 (Sprung) Sufficiency of Evidence/Special Circumstances

LOVE’S BABY SOFT registered for a variety of cosmetic preparations.

Held:  Registration restricted to those wares for which use was shown. Although the copies of the invoices showed the wrong corporate name, the affiant explained that this was because they were printed off a computer and the computer defaulted to the current name of the company even though the invoices predated the name change. The withdrawal of certain products pending a product redevelopment does not qualify as special circumstances that excuse an absence of use.

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2. Canadian Council of Professional Engineers v. Benjamin Moore, August 8, 2007 (Sprung) Sufficiency of Evidence/Licensees

UNE TOUCHE DE GĒNIE registered for paint.

Held:  Registration maintained. Although the affiant stated at one point of his affidavit that the mark is used, this does not negate the clear statements elsewhere that the mark was used during the relevant time period. The affiant also stated that the registrant sells the paint to retailers who are licensed to sell its paints. The requesting party’s argument that the registrant was therefore required to indicate that it controlled the character/quality of the paint failed because 1) there was no indication that the retailers manufactured the paint or labeled it and 2) the registrant is relying on its own use of the mark, i.e. through its sales to the retailers, not on any sales by the retailers. 

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