Date: 20040402
Docket: T-1893-02
Ottawa, Ontario, this 2nd day of April, 2004
Present: THE HONOURABLE MR. JUSTICE von FINCKENSTEIN
BETWEEN:
MERCK and COMPANY INCORPORATED Appellant
and
BRANTFORD CHEMICALS INCORPORATED
Respondent
REASONS FOR ORDER AND ORDER
BACKGROUND
[1] The appellant, Merck & Co. (Merck), has been the owner of the Canada Patent Number 1,275,349 (349 Patent) for a period of 17 years.
[2] In April 1995, the Federal Court of Appeal affirmed the judgment of this Court that Apotex Incorporated (Apotex) had infringed the 349 Patent. A permanent injunction was granted against Apotex from manufacturing, using and selling its Apo-enalapril tablets in Canada save as to a limited quantity of pre-patent enalapril maleate acquired before the 349 Patent was issued.
[3] Brantford, a manufacturer of bulk fine chemicals used in the manufacture of pharmaceutical products, is a 100% subsidiary of Apotex. In September 1998, it submitted an application (first application) to the Commissioner of Patents (Commissioner) for a compulsory licence for the manufacture and sale of sodium enalapril-sodium iodide (SECIC) and sodium enalapril (SE) which is derived from SECIC. The application was based upon the arguments that (1) the demand for enalapril was not being adequately and reasonably met in Canada and (2) Merck had refused to grant a license to any Canadian manufacturer for this product in a manner which prejudiced the interest of the pharmaceutical industry and the public interest.
[4] On January 29th, 1999, the Commission refused Brandtford's first application on the basis:
- that Brandtford had failed to provide sufficient evidence that the demand for the patented materials were not being met by Merck pursuant to section 65(2)(c) of the Act, and
- that the application was premature in that the respondent had failed to provide sufficient evidence that the applicant had refused to grant a license on reasonable terms pursuant to section 65(2)(d) of the Act.
[5] On February 11th, 1999, Brandtford requested reconsideration of this decision with additional evidence which was denied on February 23rd, 1999, by the Commissioner on the basis that he lacked authority under the Act to consider further evidence in the context of this first application.
[6] On April 28th, 1999, Brantford filed a new application (second application) for a compulsory licence for the 349 Patent. On June 21st, 1999, the Commissioner this time concluded that Brantford had made out a case for relief with this application and directed Brantford to serve the application on Merck in accordance with the Act.
[7] Before the hearing before the Patent Appeal Board (Board) in respect of Brantford's claim for a compulsory license, Merck filed a motion seeking a declaration that Brantford was barred from proceeding on the twin grounds of a) res judicata by way of issue estoppel and b) functus officio.
[8] In a decision dated October 18th, 2002, the Board found that the doctrine of res judicata did not apply because (1) Merck, having only been formally informed of the first application when the Commissioner sent it a copy of his decision, had not been a party to the first proceedings and (2) the facts and allegations made in the second application were materially different from those made in the first application. It also concluded that the doctrine of functus officio did not apply to the second proceedings. Merck is now appealing this decision.
ISSUES
[9] This appeal raises the following issues:
- What is the appropriate standard of review?
- Does the doctrine of res judicata apply to the decisions of the Commissioner under s.68 (2) of the Patent Act, R.S.C. 1985, c. I?
- Does the doctrine of functus officio apply to the Commissioner when making his second decision under s. 68 (2) of the Patent Act?
RELEVANT LEGISLATION
[10] Patent Act, R.S.C. 1985, c. I-2
| Patent Act, R.S.C. 1985, c. I-2
Abuse of rights under patents 65. (1) The Attorney General of Canada or any person interested may, at any time after the expiration of three years from the date of the grant of a patent, apply to the Commissioner alleging in the case of that patent that there has been an abuse of the exclusive rights thereunder and asking for relief under this Act.
What amounts to abuse (2) The exclusive rights under a patent shall be deemed to have been abused in any of the following circumstances:
...
(c) if the demand for the patented article in Canada is not being met to an adequate extent and on reasonable terms;
(d) if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms, the trade or industry of Canada or the trade of any person or class of persons trading in Canada, or the establishment of any new trade or industry in Canada, is prejudiced, and it is in the public interest that a licence or licences should be granted;
Contents of applications 68. (1) Every application presented to the Commissioner under section 65 or 66 shall (a) set out fully the nature of the applicant's interest, the facts on which the applicant bases his case and the relief that he seeks; and (b) be accompanied by statutory declarations verifying the applicant's interest and the facts set out in the application.
Service (2) The Commissioner shall consider the matters alleged in the application and declarations referred to in subsection (1), and, if satisfied that the applicant has a bona fide interest and that a case for relief has been made, he shall direct the applicant to serve copies of the application and declarations on the patentee or his representative for service and on any other persons appearing from the records of the Patent Office to be interested in the patent, and the applicant shall advertise the application in the Canada Gazette and the Canadian Patent Office Record. |
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Loi sur les brevets, L.R.C. 1985, ch. I-2
Abus des droits de brevets 65. (1) Le procureur général du Canada ou tout intéressé peut, après l'expiration de trois années à compter de la date de la concession d'un brevet, s'adresser au commissaire pour alléguer que, dans le cas de ce brevet, les droits exclusifs qui en dérivent ont donné lieu à un abus, et pour demander un recours sous l'autorité de la présente loi.
En quoi consiste l'abus (2) Les droits exclusifs dérivant d'un brevet sont réputés avoir donné lieu à un abus lorsque l'une ou l'autre des circonstances suivantes s'est produite_:
[...]
c) il n'est pas satisfait à la demande, au Canada, de l'article breveté, dans une mesure adéquate et à des conditions équitables;
d) par défaut, de la part du breveté, d'accorder une ou des licences à des conditions équitables, le commerce ou l'industrie du Canada, ou le commerce d'une personne ou d'une classe de personnes exerçant un commerce au Canada, ou l'établissement d'un nouveau commerce ou d'une nouvelle industrie au Canada subissent quelque préjudice, et il est d'intérêt public qu'une ou des licences soient accordées;
Teneur des requêtes 68. (1) Toute requête présentée au commissaire en vertu de l'article 65 ou 66_: a) expose complètement la nature de l'intérêt du demandeur, les faits sur lesquels le demandeur fonde sa requête, ainsi que le recours qu'il recherche; b) est accompagnée de déclarations solennelles attestant l'intérêt du demandeur, ainsi que les faits exposés dans la requête.
Avis (2) Le commissaire prend en considération les faits allégués dans la requête et dans les déclarations, et, s'il est convaincu que le demandeur possède un intérêt légitime et que, de prime abord, la preuve a été établie pour obtenir un recours, il enjoint au demandeur de signifier des copies de la requête et des déclarations au breveté ou à son représentant aux fins de signification, ainsi qu'à toutes autres personnes qui, d'après les registres du Bureau des brevets, sont intéressées dans le brevet, et le demandeur annonce la requête dans la Gazette du Canada et dans la Gazette du Bureau des brevets.
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STANDARD OF REVIEW
[11] As there are no cases directly on point one must giving full consideration to the factors which form part of the pragmatic and functional test as set out in Baker v. MCI [1999] 2 S.C.R. 817 and Dr. Q v. College of Physicians and Surgeons of B.C. [2003]S.C.J/ No. 18 . In this case, the Patent Act contains no privative clause and allows appellants a broad statutory right of appeal. In addition, the Board has no greater relative expertise than the Courts with regards to a legal issue such as whether or not the common law principles of res judicata and functus officio apply in a given set of circumstances. Nonetheless, the Act provides the Board with a wide discretion with regards to procedural issues. Balancing these factors, it appears to me that the appropriate standard of review is reasonableness simplictir.
Res judicata by way of issue estoppel
[12] In Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248 at p. 254, Dickson J. (as he then was) outlined the following three preconditions to a finding of issue estoppel:
1. that the same issue had been decided;
2. that the judicial decision which is said to create the estoppel was final; and
3. that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[13] Clearly the same issue has to be decided here on the first application and the second application, namely, has Brantford made out a case under s. 65 (2) (c) and (d).
[14] However the decision made by the Commissioner is far from final. This is a threshold decision as to whether the application shall proceed to the second stage. There is no lis here, this is akin to an ex parte application.
[15] The rationale for issue estoppel was set out by Binnie J. in Danyluk v. Ainsworth Technologies Inc. (2001) D.L.R. (4th) 193 at 204:
The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry. The appellant chose the ESA as her forum. She lost. An issue, once decided, should not generally be relitigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.
.......
Issue estoppel was more particularly defined by Middleton J.A. of the Ontario Court of Appeal in McIntosh v. Parent, (1924) 4D L R 420 at 422
When a question is litigated, the judgment of the Court is a final determination as between the parties and their privies. Any right, question, or fact distinctly put in issue and directly determined by a Court of competent jurisdiction as a ground of recovery, or as an answer to a claim set up, cannot be re-tried in a subsequent suit between the same parties or their privies, though for a different cause of action. The right, question, or fact, once determined, must, as between them, be taken to be conclusively established so long as the judgment remains.
[16] Given that there was no lis here, no determination, I cannot see how the whole theory or rationale for issue estoppel would apply to a decision by the Commissioner under s. 68(2) .
[17] Additionally Merck was not a party to the first application. It claims to be a privy as it is the owner of the patent. Privy has been defined in the Shorter Oxford Dictionary as, "A person who has a part or interest in any matter action or thing." (Shorter Oxford English Dictionary, 5th Edition, 2002). In this instance Merck has no interest in the application until a determination is made under s. 68 (2). Then it will be served. The former compulsory license provisions under s. 41 of the Patent Act had a similar two step procedure as the current section 67 does. They were more particularly set out in s. 120 of the Patent Rules. Heald J. in Upjohn v. Commissioner of Patents and Novopharm (1985) 63N.R. 136 at para 8 held:
Furthermore this court has held that under this legislative scheme the patentee has no interest in the application under s. 41(4) until the Commissioner forms the threshold opinion.
[18] In my view the same can be set in respect of the compulsory licensing scheme set out in s. 65 to 67 of the present Act. The patentee has no interest until the threshold decision under s. 67(2) is made. Not having an interest, Merck can't claim to be a privy to the first application.
[19] Given that Merck here fails two of the three legs of the Angle test, and given that this is conjunctive test, there is no room for application of the doctrine of re judicata in this case.
[20] Merck also alleges that the Commissioner was functus officio after having rendered the decision on the first application. Whatever the merits of this allegation may be, and in my view there are none, Merck is precluded from making this aguement at this time. By bringing the motion for declaration of res judicata before the Commissioner Merck has effectively attorned to the jurisdiction of the Commissioner. Any claim of functus officio , i.e. arguing that the Commissioner no longer had jurisdiction over this matter, should have either been brought before this court by way of prohibition application or should have been argued by way of a conditional appearance made solely for the purpose of objecting to the jurisdiction of the Commissioner. Neither avenue was followed. Accordingly Merck is now precluded from advancing this rather dubious agreement.
[21] Finally I would like to observe that it is obvious that the original motion and this appeal were brought for delay purposes and that Merck never had a realistic chance to succeed on either of its agreements. The law is quite settled on these issues and the facts here did not lend themselves at all to an aguement based on res judicata or functus officio . Brantford did not ask for cost on a solicitor and his own client basis, had they done so, I would have had no hesitation to make an award on that basis. This court's time is too valuable to be wasted on unmeritorious motions and appeals of this nature.
[22] This motion will therefore be dismissed with costs to Brantford.
ORDER
THIS COURT ORDERS that this appeal be dismissed with costs being awarded in favour of the respondent.
"K. von Finckenstein"
JUDGE
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-1893-02
STYLE OF CAUSE: MERCK AND COMPANY INCORPORATED
v.
BRANTFORD CHEMICALS INC., et al
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: March 31, 2004
REASONS FOR ORDER
AND ORDER : The Honourable Mr. Justice von Finckenstein
DATED: April 2, 2004
APPEARANCES:
Mr. Alexander Macklin FOR THE APPELLANT
Ms. Connie Too
Mr. Harry Radomski FOR THE RESPONDENT
Brantford Chemicals Incorporated
SOLICITORS ON THE RECORD:
Gowling Lafleur Henderston LLP FOR THE APPELLANT
Ottawa, Ontario
Goodmans LLPFOR THE RESPONDENT
Toronto, Ontario
Mr. Mosrris RosenbergFOR THE RESPONDENT
Deputy Attorney General of Canada
Ottawa, Ontario