Date: 19981103
Docket: T-366-98
Between:
AB HASSLE, ASTRA AB and ASTRA PHARMA INC.
Applicants
AND
THE MINISTER OF NATIONAL HEALTH AND WELFARE
RHOXALPHARMA INC.
and
TAKEDA CHEMICAL INDUSTRIES, LTD.
Respondents
REASONS FOR ORDER
RICHARD MORNEAU, ESQ., PROTHONOTARY:
Introduction
[1] This is a motion on behalf of the Applicants (Astra) requesting an order confirming that the affidavit evidence of David Gardner and Louis Cartilier filed on behalf of the Respondent RhoxalPharma Inc. (RhoxalPharma) is not confidential and is not subject, therefore, to the Protective Order issued on April 29, 1998 in this proceeding (the Protective Order).
[2] In these reasons for order, I have paid great attention to refer to the evidence and information in issue in such a way as to not undermine the protection thus far ascribed by the parties to this evidence and information pursuant to the Protective Order.
The Parties
[3] Astra collectively owns several patents. These patents purport to disclose the invention of omeprazole tablets, a gastric acid reduction medicine.
[4] RhoxalPharma is a generic manufacturer and distributor of pharmaceutical products. RhoxalPharma intends to market and sell in Canada a version of omeprazole tablets which allegedly does not infringe the Astra patents.
[5] Although Andrx Pharmaceuticals, Inc. (Andrx) is not a party to the instant proceeding, it is a generic drug company whose main goal is to create and develop new pharmaceutical dosage formulations. Andrx has allegedly developed a novel and innovative pharmaceutical formulation of omeprazole tablets which does not infringe the Astra patents. Andrx has agreed to supply this non-infringing pharmaceutical formulation to RhoxalPharma for sale and distribution in Canada. At the time Astra brought the present motion, the fact that Andrx was the supplier of RhoxalPharma was evidenced in the public record, therefore no more a confidential matter.
[6] The Respondents the Minister of National Health and Welfare and Takeda Chemical Industries, Ltd. have shown no interest in the motion at bar although both were served with all relevant materials.
The Facts
[7] On February 19, 1998, RhoxalPharma sent Astra a Notice of Allegation stating that no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling of its tablets containing omeprazole.
[8] By Originating Notice of Motion dated March 5, 1998, Astra initiated this proceeding to prohibit the Respondent, The Minister of National Health and Welfare, from issuing a Notice of Compliance to RhoxalPharma in respect of its omeprazole tablets (the Prohibition proceeding).
[9] Before disclosing its evidence, RhoxalPharma presented on April 20, 1998 a motion for an order protecting and maintaining the confidentiality of certain documents to be filed in the course of the Prohibition proceeding.
[10] The evidence before the Court in support of the April 20, 1998 motion consisted, essentially, of an affidavit of Mark Lachovsky, General Manager of RhoxalPharma, sworn March 25, 1998 (the Lachovsky affidavit), his cross-examination thereon as well as a confidentiality agreement between RhoxalPharma and its supplier, Andrx.
[11] In his affidavit, Lachovsky states basically that:
| - he is General Manager of RhoxalPharma and, as such, has knowledge of the facts deposed to; |
| - the particulars of the non-infringing process, or pharmaceutical composition and all of other relevant distinctions alleged in support of RhoxalPharma's Notice of Allegation for its omeprazole tablets, including the details of RhoxalPharma's supplier, constitute important trade secrets and valuable proprietary, commercial and scientific information to RhoxalPharma and its supplier. RhoxalPharma has always maintained such information strictly confidential. The public disclosure of this information will prejudice both RhoxalPharma and its supplier by allowing their competitors to make use of this information for their own commercial interests contrary to the interests of RhoxalPharma and its supplier. RhoxalPharma undertakes to its supplier to maintain confidentiality in respect of all confidential information it receives from them. |
(my underlinings)
[12] It was based on the Lachovsky affidavit and relying, in part, on the following statement found in the reasons for order of Justice MacKay in Apotex Inc. v. Wellcome Foundation Ltd. (1993), 51 C.P.R. (3d) 305, at 311 (the Apotex test) that the Court issued the Protective Order:
| In my view, it is sufficient demonstration of the need for a confidentiality order in relation to information to be produced, if the moving party believes that its proprietary, commercial and scientific interests would be seriously harmed by producing information upon which those interests are based. |
[13] On April 29, 1998, by endorsing a draft order submitted, as requested, by counsel for RhoxalPharma, the Court issued the Protective Order on the belief, one must agree, that the particulars of the alleged non-infringing process would be disclosed in RhoxalPharma's evidence yet to be produced at that time.
[14] The Protective Order permits any party to designate information as confidential (Confidential Information) in which event such information is subject to the terms of the Protective Order.
[15] The Protective Order provides that any other party has the right to challenge the confidential character of Confidential Information (Challenged Information). In the event of a challenge to the confidentiality of designated Confidential Information, the Protective Order stipulates that the party asserting confidentiality shall have the burden of proving on a balance of probabilities that the information is in fact confidential.
[16] The relevant paragraphs of the Protective Order read as follows:
| 2. Any document or thing, relating to the identity of RhoxalPharma's supplier of omeprazole or the process, components and formulae by which RhoxalPharma's omeprazole tablets are made, that is produced by any Party and any answer made by any Party relating thereto during or for the purpose of this proceeding, including any Examination and any Exhibit marked in this proceeding (hereinafter collectively referred to as the "Information") may be subject to this Order. |
| 3. Subject to paragraph 4 hereof, any Party who reasonably believes that information is confidential to it shall have the right through its counsel to designate such information as "Confidential" (hereinafter referred to as "Confidential Information") in which event such information shall thereafter be subject to the terms of this Order, subject to the right of any other Party to enter its divergence of view thereon and, if necessary, to challenge the confidential character thereof (hereinafter collectively referred to as "Challenged Information"). |
| 4. Confidential information shall, subject to any determination or adjudication of the confidential character of any Challenged Information, be segregated from other Information being submitted to this Court and shall be submitted to the Court. [...] |
| 14. This Order shall not be construed: |
| (a) to prevent any individual or Party or its otherwise respective counsel from making use of information which was lawfully and without legal restriction in its possession prior to the date of this Order; |
| (b) to apply to information derived independently of disclosure hereunder; |
| (c) to apply to information which any individual or Party or its counsel lawfully and without legal restriction obtained from a person having the right to disclose such information; |
| (d) to prevent any individual or Party or its respective counsel to seek a determination or adjudication of the confidential character of any Challenged Information. |
| 15. Nothing in this Order shall foreclose or limit any Party: |
| (a) from asserting that any information designated as "Confidential" pursuant to this Order is, in fact, not confidential; [...] |
| 17. In the event of a challenge to the confidentiality of designated Confidential Information, the Party asserting confidentiality shall have the burden of proving on a balance of probabilities that the information is, in fact, confidential; |
| 18. In the event of a challenge to the confidentiality of designated Confidential Information, Confidential Information shall not include information which: |
| (a) is or was public knowledge or part of any public record, or which becomes public knowledge or part of any public record by means not in violation of the provisions of this Order or of the law; |
| (b) is or was acquired lawfully from a person not a Party to this action in circumstances not governed by an obligation of confidence; |
| (c) is or was already known to the receiving Party, affiliates, its counsel or experts; or |
| (d) is or was independently developed by the receiving Party, its counsel or experts. |
| (my underlinings) |
[17] I note, in passing, that the Protective Order has been appealed to the Federal Court of Appeal by RhoxalPharma.
[18] Subsequent to the issuance of the Protective Order, RhoxalPharma designated as Confidential Information the affidavits of David Gardner and Louis Cartilier.
[19] By the motion under study, Astra challenges the confidentiality of that affidavit evidence of RhoxalPharma.
[20] For all relevant purposes, one can assume that the Gardner and Cartilier affidavits contain the same information. With respect to RhoxalPharma alleged non-infringing omeprazole tablets, it consists of the list of ingredients or, in other words, the pharmaceutical formulation or composition of the tablets, along with some elements of the process, that is the weight and percentage of those ingredients and their segmentation into four (4) different parts, using the terms "tableting", "granulation", "coating" and "coat" (the Challenged Information).
[21] In response to the motion at bar and to prove that the Challenged Information is confidential, RhoxalPharma filed the affidavit of Scott Lodin, the Vice-President and General Counsel of Andrx, and relied also on the Lachovsky affidavit, which was relied upon by RhoxalPharma for the purpose of obtaining the Protective Order (see paragraphs 10 to 12, supra).
[22] For its part, Astra filed the affidavit of Dr. Christopher Rhodes, a professor of applied pharmaceutical sciences, and, as uncontested by RhoxalPharma, a person skilled in the art of pharmaceutical formulation, including the subject matter of the Astra patents.
The Issue
[23] The issue to be resolved on this motion is whether, pursuant to paragraph 17 of the Protective Order, RhoxalPharma has established, on a balance of probabilities, that the Challenged Information is, in fact, confidential so as to be protected by the Protective Order.
Analysis
[24] Firstly, counsel for RhoxalPharma argued that since the Challenged Information falls clearly within the elements covered by paragraph 2 of the Protective Order and since that information was not of the type mentioned in or excluded by paragraphs 14 and 18 of the Protective Order, no additional debate is needed to conclude that the Challenged Information is indeed confidential and thus warrants the protection afforded by the Protective Order.
[25] I cannot accept that argument.
[26] Surely, it is not contested that the Challenged Information is of the type contemplated by paragraph 2 of the Protective Order. Similarly, that information is not of the type covered by paragraphs 14 and 18 of the Protective Order.
[27] However, I am of the view that these conclusions are not determinative for the purpose of paragraph 17 of the Protective Order. In the final analysis, this paragraph calls for a demonstration of the confidential character of some information even though in theory this information is encompassed by paragraph 2 of the Protective Order.
[28] Counsel for RhoxalPharma asserted also that, should he fail under his first argument, he was satisfied that for the purpose of paragraph 17 of the Protective Order, RhoxalPharma's evidence filed in support of the confidentiality of the Challenged Information meets the test laid down in Apotex, supra, paragraph 12.
[29] That is the test that Astra suggested should be met by RhoxalPharma. I agree.
[30] Therefore, for the purpose of paragraph 17 of the Protective Order, I must be satisfied that RhoxalPharma has in fact established on a balance of probabilities that its proprietary, commercial and scientific interests would be seriously harmed by disclosing or declassifying the Challenged Information.
[31] This test, by nature, implies at the outset that the Challenged Information has been treated by RhoxalPharma as confidential and has not been the subject of public disclosure. As a matter of fact, paragraph 18(a) of the Protective Order, cited at paragraph 16, supra, is also to that effect.
[32] On that point, and although Astra has established that the ingredients forming part of the Challenged Information are all commonly used in pharmaceutical tablets, I am satisfied, based on the evidence, that except for the name of RhoxalPharma's supplier, RhoxalPharma, at all relevant times, has treated the Challenged Information as confidential.
[33] This allows us to concentrate now on the issue of harm that would be caused should the Challenged Information be disclosed.
[34] As mentioned above, see paragraph 21, supra, RhoxalPharma offered the affidavits of Mark Lachovsky and Scott Lodin to sustain the burden of proof it faces under paragraph 17 of the Protective Order.
[35] As to Mr. Lachovsky's evidence, upon reading his affidavit and the transcripts of the two cross-examinations on his affidavit, one can gather that as general manager of RhoxalPharma, he is not an expert in the relevant subject matter, i.e., in the art of pharmaceutical compositions and process used to make such compositions. This, of course, is not in and by itself conclusive. Indeed there is more.
[36] He has not seen RhoxalPharma's proposed process and his knowledge of it is based on internal discussions at RhoxalPharma and with RhoxalPharma's supplier. He could not recall if he had seen the affidavits of Gardner and Cartilier, to wit the Challenged Information, prior to swearing his affidavit. He also asserted that from his point of view, anything related to formulation development or process is always viewed as confidential.
[37] In cross-examination, Mr. Lachovsky stated categorically that it is his opinion "absolutely" that a person skilled in the art of pharmaceuticals can use the Challenged Information to make RhoxalPharma's proposed tablets.
[38] When challenged, however, that opinion faded considerably.
[39] Indeed, when asked where the process conditions are, he replied "They're not there". When asked which ingredient one should take first, he replied "I'm not an expert". When asked "You have a belief that a skilled person can use the [Challenged Information], and without any other information can reproduce RhoxalPharma's tablet", he responded "No". He stated that one needs the whole standard operating procedure. While he believes that the Challenged Information will give an expert a "tremendous head start", he cannot provide specifics as to what information in it will give someone a head start on the basis that he is not an expert. He agrees that the Challenged Information does not include what he referred to as a "non-infringing process" in his affidavit. He also agrees that the "particulars" referred to in paragraph 4 of his affidavit are not found in the Challenged Information. The basis for his saying in his affidavit that the information constituted a trade secret is that "in our business, everything that we look at is strictly confidential". If someone asks him to sign a Confidentiality Agreement and the next day sends him a formulation, then he is "convinced it's a trade secret".
[40] Therefore, I cannot but give little weight to the assertions of Mr. Lachovsky.
[41] From my perspective, the same conclusion must apply to the assertions advanced by Mr. Scott Lodin, the Vice-President and General Counsel of Andrx.
[42] In his affidavit, Mr. Lodin states that:
| 4. The affidavit of David Gardner submitted in this proceeding contains a detailed description of a new pharmaceutical dosage formulation developed by Andrx Pharmaceuticals, Inc. [...] |
| 5. The disclosure of Andrx Pharmaceuticals, Inc.'s confidential and proprietary information relating to the new pharmaceutical dosage formulation that is described in the Affidavit of David Gardner and other supporting documents and affidavits, to persons not bound by the Protective Order in the present proceeding could damage Andrx Pharmaceuticals, Inc.'s competitive position in the market and could result in serious damage, financial and otherwise to Andrx Pharmaceuticals, Inc. |
| (my underlinings) |
[43] However, in cross-examination, Mr. Lodin was brought to admit that:
| - he does not have any scientific or technical educational training. He does not have any expertise in the subject matter of pharmaceutical compositions or processes to make pharmaceutical compositions. |
| - He is in charge of legal affairs at Andrx and is not involved in the scientific or technical side, with the exception of legal matters, of Andrx' research and development work. |
| - He has only "passing familiarity" with the information given to RhoxalPharma by Andrx. He does not have the knowledge to know what is detailed and what is not, in respect of whether RhoxalPharma was given detailed process information. |
| - When asked for his opinion as to whether a skilled person could use the Challenged Information to actually make the tablet that Andrx has in mind, he responded "potentially". |
| - While he thought that the Challenged Information would give an expert "a leg up if they were trying to make this product", he did not know the details of the process necessary to make the product. |
| - When asked whether the Challenged Information contains sufficient information to enable one to actually make the tablets, he responded, |
| I do not know whether this is sufficient alone to allow one to do so. That is just not my expertise ... I will admit I don't know that, yes. |
| - With reference to the ingredients, he could not tell which ingredient is mixed with which other ingredient and in which order they are mixed. |
[44] For its part, Astra submitted the affidavit of Dr. Christopher Rhodes. As mentioned above, see paragraph 22, supra, he is a professor of applied pharmaceutical sciences and considers himself to be a person skilled in the art of pharmaceutical formulation. His expertise has not been challenged under the present motion. In addition, one must note that this type of expertise was submitted in evidence only by Astra. Dr. Rhodes's evidence is to the effect that there is nothing proprietary, valuable or useful with respect to the Challenged Information and that the Challenged Information does not provide sufficient process information, that is the recipe to properly mix the ingredients, to enable a person skilled in the art of the formulation of omeprazole to identify or foretell the process intended to be used by Andrx or RhoxalPharma in respect of RhoxalPharma's proposed omeprazole tablets.
[45] Dr. Rhodes specifically disagrees with Mr. Lachovsky's assertion that the "particulars" of a process are disclosed in the Challenged Information. Similarly, he disagrees with Mr. Lodin's assertion that the Challenged Information contains a detailed description of a new pharmaceutical dosage formulation.
[46] As a matter of fact, Dr. Rhodes maintains that the Challenged Information gives no helpful instructions on the proposed process. For instance, he asserts that the Challenged Information does not designate what ingredients are intra-granular and what are extra-granular (wet granulation typically involves some dry mixing), nor does it provide specifications for granule size, drying time, drying temperature or equipment type and settings. Absent such critical information, he suggests that it would be virtually impossible that anyone skilled in the art could use the Challenged Information to replicate the proposed RhoxalPharma product. As the Challenged Information does not provide sufficient information to permit a skilled person to understand how to make RhoxalPharma's proposed tablets, the Challenged Information by itself can have no value to anyone, including RhoxalPharma and Andrx. The public disclosure of the Challenged Information therefore would not result in any damage or prejudice to either Andrx or RhoxalPharma.
[47] Even Mr. Lachovsky testified during one of his cross-examinations that, in the course of his employment, he has seen instructions in respect of pharmaceutical compositions. He has seen the level of detail that is provided in such instructions, which would describe in detail every step necessary to permit one to actually make the product, including process conditions, temperature, equipment, which ingredients are to be mixed with which other ingredients and in which order they are to be mixed. He asserted that the Confidential Information does not provide such instructions.
[48] On cross-examination, Dr. Rhodes seized the opportunity to state that without specific information on how to process the ingredients, one would be fumbling in the dark and it was, consequently, highly improbable that a skilled person could replicate the RhoxalPharma's product based on this incomplete information. Dr. Rhodes disagreed, therefore, that an expert could make a very good educated guess as to how the ingredients should go together. On this point he said:
| I think that anyone would find it extremely difficult to make any reasonable guess, any estimate. There are so many possibilities, so many processing variables that, without additional data, it would only be wild guesses. It would be shooting at the target and having no idea whether you are anywhere near it. |
| (my underlining) |
[49] I do not believe or concede that Dr. Rhodes's position is undermined by the fact that at one point in his cross-examination he was brought to assert that a person versed in the field with the Challenged Information in hand would be better off than having nothing. In my mind, this caveat by Dr. Rhodes is only an expression of realism. Surely, having the Challenged Information is better than having no information at all. However, this is in my opinion far from establishing that the disclosure of the Challenged Information "would" cause harm to RhoxalPharma.
[50] In my opinion, RhoxalPharma's affidavit evidence under the present motion does not prove on a balance of probabilities that the Challenged Information is, in fact, confidential. I give little weight to that evidence not so much because it was submitted through business persons, as counsel for RhoxalPharma referred to Messrs. Lachovsky and Lodin, as opposed to experts, but because the evidence offered was very speculative in nature.
[51] For the foregoing reasons, Astra's motion shall be granted, with costs in the cause.
[52] Now, as the affidavits of David Gardner and Louis Cartilier have been filed into the record by RhoxalPharma under the protection of the Protective Order, pursuant to rule 398(1)(a) of the Federal Court Rules, 1998 and to the verbal motion made by counsel for RhoxalPharma, I agree that the accompanying order be stayed for ten (10) days from its issuance in order to allow RhoxalPharma the opportunity to appeal the present decision or to deal otherwise with the aforementioned affidavits.
[53] At the end of the hearing, counsel for Astra requested verbally an extension of the time to complete the cross-examination in this proceeding, the whole as provided in point c) of this Court's order of April 29, 1998. However, I was given to understand that counsel are presently working outside the schedule set forth in the April 29, 1998 order. Therefore, I shall not contemplate that request any further and I invite counsel to make a proper motion to this Court in order to secure a new schedule for the purpose of bringing this proceeding to a state of readiness.
Richard Morneau
Prothonotary
MONTREAL, QUEBEC
November 3, 1998
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.:
STYLE OF CAUSE:
T-366-98
AB HASSLE, ASTRA AB and ASTRA PHARMA INC.
Applicants
AND
THE MINISTER OF NATIONAL HEALTH AND WELFARE
RHOXALPHARMA INC.
and
TAKEDA CHEMICAL INDUSTRIES, LTD.
Respondents
PLACE OF HEARING:Ottawa, Ontario
DATE OF HEARING:October 1, 1998
REASONS FOR ORDER BY RICHARD MORNEAU, ESQ., PROTHONOTARY
DATE OF REASONS FOR ORDER:November 3, 1998
APPEARANCES:
Gunars A. Gaikis for the Applicants
Martin F. Sheehan for the Respondent RhoxalPharma Inc.
SOLICITORS OF RECORD:
| Smart & Biggar Toronto, Ontario |
for the Applicants |
| Martineau Walker Montreal, Quebec |
for the Respondent RhoxalPharma Inc. |
| Morris Rosenberg Deputy Attorney General of Canada |
for the Respondent The Minister of National Health and Welfare |