T-2408-91
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA INC.
Plaintiffs
- and -
APOTEX INC.
Defendant
Let the attached certified transcript of my Reasons for Order delivered orally from the Bench at Ottawa, Ontario on February 6, 1996 be filed to comply with section 51 of the Federal Court Act.
| OTTAWA |
| February 12, 1996 Judge |
Court File No. T-2408-91
IN THE FEDERAL COURT OF CANADA
(TRIAL DIVISION)
B E T W E E N :
MERCK & COMPANY INC. and
MERCK FROSST CANADA INC.
(Plaintiffs)
- and -
APOTEX INC.
(Defendant)
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R E A S O N S F O R O R D E R
(ON APPLICANT'S MOTION TO ADJOURN)
Given Orally by the Honourable Madame Justice McGillis
on the 6th day of February, 1996,
Federal Court, Courtroom #2,
90 Sparks Street,
in the City of Ottawa,
in the Province of Ontario.
APPEARANCES:
Alexander Macklin, Q.C.
Emmanuel Manolakis, Esq. Counsel for the Plaintiffs
Harry Radomski, Esq.
Richard Naiberg, Esq. Counsel for the Defendant
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REASONS FOR ORDER
McGILLIS, J:
Counsel for Apotex Inc. ("Apotex"), has applied for an adjournment of various interlocutory motions brought by Merck and Co. Inc. and Merck Frosst Canada Inc. ("Merck").
In order to place this matter in context, the background must be reviewed.
On September 20, 1991, Merck commenced an action against Apotex for the infringement of Canadian Patent No. 1,275,349 with respect to the manufacture and sale by Apotex of its brand of enalapril maleate tablets.
On November 4, 1993, Mr. Justice MacKay dismissed a motion by Merck for an interlocutory injunction on terms which required Apotex to maintain and produce certain sales and production records in respect of enalapril and enalapril maleate in bulk and dosage form. He also ordered Apotex to provide certified quarterly statements as to the quantity of enalapril and enalapril maleate remaining in its possession, from April 1, 1994 until the trial of the action or further order of the Court.
The trial of the action was conducted before Mr. Justice MacKay in March and April 1994. By Judgment dated December 22, 1994, Mr. Justice MacKay found that Apotex had infringed the Merck patent. He ordered, among other things, that Apotex would be permanently enjoined from infringing the claims of the Merck patent.
Following issuance of the Judgment of Mr. Justice MacKay, Apotex made an application for a stay of the permanent injunction. An interim stay was granted by Mr. Justice MacKay on December 23, 1994. On January 9, 1995, he lifted the interim stay and ordered that the permanent injunction was in force.
By Judgment dated April 19, 1995, as amended on May 16, 1995, the Court of Appeal allowed the appeal by Apotex with respect to certain findings made by Mr. Justice MacKay, and issued a permanent injunction against Apotex.
By motion dated September 6, 1995, Merck requested the issuance of an order to confirm that the November 4, 1993 Order of Mr. Justice MacKay concerning the maintenance and production of records by Apotex was still in effect and to enforce its terms. Apotex had refused to comply with the Order of Mr. Justice MacKay following the date of the issuance of his Judgment on the liability aspect of the action. Apotex filed a motion on October 12, 1995, seeking an order that the November 4, 1993 Order of Mr. Justice MacKay was spent or dissolved, or to limit its application to certain lots and material.
On December 5, 1995, Mr. Justice MacKay held that his Order dated November 4, 1993 remained in effect. He further ordered Apotex to maintain and provide to Merck its records with respect to all enalapril or enalapril maleate which was in the possession or control of Apotex until April 19, 1995, as well as with respect to certain lots and bulk material purchased from the foreign customer of Delmar Chemicals Inc. until July 6, 1995. Merck was not required to return any of the documents previously produced by Apotex pursuant to the Order dated November 4, 1993. In all other respects, the motions by the parties were dismissed. In particular, Mr. Justice MacKay refused the request of Apotex to stay the operation of his Order dated November 4, 1993.
Apotex has appealed the Order dated December 5, 1995 of Mr. Justice MacKay. Counsel for Apotex advised the Court that he was taking steps to expedite the appeal and expected that it would be heard in March 1996. He has indicated in his written materials on this motion that the appeal raises a serious question of law.
Counsel for Merck has made at least six written requests for compliance with the Order dated November 4, 1993, as varied by the Order dated December 5, 1995. To date, no records have been produced by Apotex pursuant to the Order dated December 5, 1995. Counsel for Apotex has refused to produce the requested documentation on that basis that the validity of the Order dated December 5, 1995 of Mr. Justice MacKay has been challenged on appeal, and that the appeal would be rendered nugatory if the confidential information were to be produced prior to a decision on appeal.
I hasten to add at this juncture that my review of the procedural background in this matter has been brief. Indeed, there have been other motions brought by the parties, particularly in relation to an alleged contempt of court by the officers of Apotex. Merck has also brought a motion in the Court of Appeal to clarify or vary the terms of the permanent injunction. The motion will be heard by the Court of Appeal on March 6, 1996. For the purpose of the disposition of the motions before me, I need not refer to these matters in any greater detail.
Due to his understandable frustration at the refusal of Apotex to produce the documentation required by the two Orders of Mr. Justice MacKay, counsel for Merck has brought three motions. In his motions, counsel for Merck has requested the Court to issue an order for a Writ of Sequestration under Rule 1903 of the Federal Court Rules, an order under Rule 1904 requiring Apotex to comply with the two Orders of Mr. Justice MacKay, and an order under Rules 470 and 471 for an Anton Pillar order and other relief.
In response, counsel for Apotex has brought motions seeking the issuance of orders adjourning the motions brought by Merck, and staying the two Orders of Mr. Justice MacKay until the disposition of the appeal by the Court of Appeal from the order dated December 5, 1995.
At the outset of the proceedings before me, counsel for Apotex acknowledged the concerns expressed by counsel for Merck relating to the preservation and safe-keeping of documents and materials covered by the Orders dated November 4, 1993 and December 5, 1995 of Mr. Justice MacKay. Counsel for Apotex therefore undertook that the documents and samples of enalapril maleate requested by Merck would be gathered, sealed and deposited with the Court, or a mutually agreeable depository, pending the resolution by the Court of Appeal of the appeal of the Order dated December 5, 1995. He further undertook that a person designated by Merck would be given access to the materials to confirm that all categories of the requested materials had been deposited.
Counsel for Merck submitted that the proposed undertaking would not provide him with all of the information which he required. In support of his submission, he indicated that Apotex has continued to infringe the Merck patent, despite the judgment and the permanent injunction issued by the Court of Appeal, by continuing to acquire enalapril maleate for manufacture and sale. In particular, Merck has clear documentary evidence of at least one acquisition by Apotex of 101.6 kilograms of bulk enalapril maleate which appears to have been acquired shortly after the hearing of the trial. This acquisition was not disclosed to the trial judge. Documentary evidence also indicates the subsequent sale of approximately 37 kilograms of this material. Counsel therefore submitted that, without the disclosure sought, Merck would be unable to confirm the extent to which its rights under the patent have been infringed, or the extent to which the Orders of the Trial Division and the Judgment of the Court of Appeal have been breached.
Since counsel were unable to resolve the matter on the basis of the undertaking offered by counsel for Apotex, I proceeded to hear their submissions on the motion by Apotex requesting an adjournment of the motions of Merck and a stay of the Orders of Mr. Justice MacKay pending the disposition of the appeal.
In support of his motion for an adjournment, counsel for Apotex argued that the disclosure to Merck of the contents of the confidential information in its records, prior to the determination by the Court of Appeal of the validity of the Order dated December 5, 1995 of Mr. Justice MacKay, would render the appeal nugatory on the basis that the confidential information, once disclosed, could never be retrieved. I agree with this submission. Furthermore, in my opinion, it would be inappropriate to order the disclosure of the documentation in question given the outstanding challenge on appeal to the validity of the very Order under which production is sought.
With respect to the submission of counsel for Merck to the effect that he needs to know the substance of the requested documentation for various reasons, it is important to note the purposes for which Mr. Justice MacKay issued his Order. In his Reasons for Order dated December 5, 1995, Mr. Justice MacKay stated as follows:
| "The purposes of the Order, in the context in which it was issued prior to trial, in my view, can be said to be to ensure that records are available for the purposes of this action, particularly for the determination of damages, or at Merck's election, calculation of profits of Apotex, arising from any infringement of Merck's patent interests. Infringement has been found but damages or profits have not yet been assessed. By Order on consent in advance of trial that assessment is to be determined by a reference. Until that reference is concluded the maintenance of records by Apotex pursuant to the terms of the Order of November 4, 1993, continues to be important. The purpose of ensuring availability of records for assessment of damages or profits is not yet fulfilled and in my opinion the Order in question remains effective for that purpose." |
A review of these reasons confirms that the principal concern of Mr. Justice MacKay was to ensure the preservation or protection of documents, in order to permit the Court to make an appropriate determination of the damages suffered or profits lost by Merck.
I am satisfied that the undertaking offered to the Court by counsel for Apotex will ensure that the relevant documentation and materials will be preserved under confidential seal until the disposition of appeal by the Court of Appeal. I am further satisfied that Apotex will meet the concerns outlined by Mr. Justice MacKay in this Reasons for Order dated December 5, 1995 by depositing the relevant documentation and materials under seal with the Court.
In the circumstances, I am prepared to grant the requested adjournment. It is unnecessary for me to order a stay of the Order dated December 5, 1995 of Mr. Justice MacKay.
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THIS IS TO CERTIFY THAT
the foregoing is a true
and accurate transcription
of the record, made to the
best of my skill and ability.
"David Nash"
David Nash, C.C.R.