Date: 20000524
Docket: T-228-97
BETWEEN:
HOECHST MARION ROUSSEL DEUTCHLAND GmbH,
Plaintiff
- and -
ADIR ET CIE and
SCHERING CORPORATION
Defendants
REASONS FOR ORDER
LEMIEUX J.:
A. INTRODUCTION
[1] These reasons relate to a motion made by Adir et Cie ("Adir") pursuant to Rule 75 of the Federal Court Rules, 1998, for an order from this Court granting it leave to file an amended defence and counterclaim to the fresh and amended statement of claim issued by the plaintiff Hoechst Marion Roussel Deutchland GmbH ("Hoechst") as well as granting to Hoechst and to Schering Corporation ("Schering") a defendant in the Hoechst action and plaintiff by counterclaim, leave to file and serve a reply to Adir's re-amended defence and counterclaim. This motion is opposed by Schering.
B. BACKGROUND
[2] The setting for the action commenced by Hoechst in this Court on February 10, 1997, pursuant to subsection 43(8) of the Patent Act (the "Act") were several decisions made on August 8, 1996, by the Commissioner of Patents (the "Commissioner") in conflict proceedings.
[3] The conflict proceedings were carried out under section 43 of the Act to determine, amongst other matters, which inventors first made the invention as defined in conflict claims C-17 to C-40, framed by the Commissioner arising out of patent applications filed by Hoechst, Adir and Schering in 1981.
[4] The invention to which the patent applications relate are novel chemical compounds, and processes to make the compounds, which are claimed useful as angiotensin converting enzyme inhibitors (ACE inhibitors) and the compounds disclosed in the applications include novel derivatives of a type of N-alanyl - octahydroindole -2- carboxylic acid compounds.
[5] The Commissioner's various August 8, 1996 decisions, as noted, resolved the issues in the various conflicts which the Commissioner saw in the patent applications which not only included the named parties but a fourth one known as X-97 who chose to avoid the conflict by cancelling its claims in conflict (conflict claims C-17, C-29, C-30, C-35, C-36, C-37 and C-38).
[6] Because the Commissioner did not include or offer all parties in each conflict claim, some of the decisions of the Commissioner only involved Hoechst and Schering (conflict claims C-18, C-20, C-21, C-22, C-23, C-24, C-31 and C-32); others involved only Hoechst and Adir (conflict claims C-25, C-26, C-27, C-28, C-33 and C-34) while others only involved Schering and Adir (conflict claims C-39 and C-40); finally, conflict claim C-19 involved Adir, Hoechst and Schering.
[7] In his various decisions, the Commissioner made the following awards:
Schering was awarded conflict claims C-18 against Hoechst, C-19 against Hoechst and Adir, conflict claims C-20 to C-24, C-31 and 32 against Hoechst and C-39 and C-40 against Adir. Hoechst was awarded C-25 and C-27 against Adir while Adir was awarded C-26 and C-28 against Hoechst.
[8] Hoechst, in its February 10, 1997 statement of claim attacked the Commissioner's awards in respect of conflict claims C-18, C-19, C-20 to C-24, C-26, C-28 and C-31 and 32 on various grounds including (a) allegations the Commissioner was in error in awarding those claims to others than Hoechst because Hoechst was the first inventor; (b) the disclosure in the specification for the conflict claims are directed or do not support the invention claimed; (c) the awards should be restricted to certain limited and specific compounds and, (d) in the alternative, that the Court approve certain claims not awarded to Hoechst as substitute claims.
[9] Hoechst also attacked the Commissioner's awards in cases where it was not offered to participate in the conflict process and, in this respect, claims C-35 through C-40 are involved. Generally speaking, here, Hoechst raised the same allegations as it did in the case where it had been offered a conflict claim, had participated but was not awarded that claim.
[10] The record indicates various actions were initiated by the parties on the Commissioner's August 8, 1996 various decisions and by order dated May 27, 1997, Joyal J. consolidated Federal Court actions in T-204-97, T-205-97, T-227-97, T-228-97, T-229-97 and T-230-97 and continued such actions as action number T-228-97 (the "action").
[11] Because of Joyal J.'s decision, on June 25, 1997, Hoechst filed a fresh as amended statement of claim and on July 30, 1997, Adir filed a "défense et demande reconventionnelle amendée présentée comme nouvelle défense et demande reconventionnelle à la déclaration amendée de Hoechst".
[12] In its defence to the Hoechst action, Adir answered Hoechst in respect to all conflict claims which Hoechst put in issue in its statement of claim. Then, Adir counterclaimed not only against Hoechst but against Schering.
[13] In its counterclaim, Adir described the compounds which were at issue in the conflict claims. Adir said those compounds could be identified or defined by three components in a chemical formula:
| (1) The shape of the core or moiety; |
| (2) the characteristics of the segment at the beginning of each lateral chain; and |
| (3) the characteristics of the segment at the end of the lateral chain (end chain). |
[14] The compounds in issue may be a single compound or a grouping of them, particularly at the end of an identical lateral chain where extreme variability and a vast number of chemical possibilities and combinations exist including the possibility of substitute compounds. As I understand it, it is the different location of the radical (R) in the lateral chain which allows for the possibility of variation. The radical (R) may be located at the end chain or also at the beginning of that chain. Adir said there were three basic moieties involved in the conflict claims at hand.
[15] In its first counterclaim, Adir raised the issue the compounds and the processes to make them, contained in conflict claims C-17, C-18, C-19, C-24, C-29, C-30, C-35, C-36, C-37 and C-38, constituted a separate invention. In the proposed amendment for which leave is sought, Adir explains why in terms of compound characteristics including references to existing patents.
[16] In its first counterclaim, Adir said the Commissioner erred in formulating the conflict claims and erred in defining the chemical formula for the conflict claims by restricting the scope of the end chains thus excluding compounds which Adir had verified for pharmacological activity.
[17] Adir's first counterclaim then embarked on the area of the predictability of pharmacological activity and said the Commissioner either took into consideration or assumed the fact the parties had synthesized and tested the compounds for pharmacological activity. Adir says the Commissioner erred as to who first achieved this synthesis and testing, and as a result of information obtained on production and discovery, seeks to particularize what previously had been in paragraph 55 of its first counterclaim.
[18] Adir's original counterclaim then addressed each conflict claim in the action. At original paragraph 56, Adir mentions that conflict claims C-18, C-19, C-20 to 24, C-28, C-31, C-32 and C-35 to C-40 were introduced in the action by Hoechst; Adir added all other conflict claims which the Commissioner decided upon. Adir then plead it was the one that synthesized and tested the pharmacological activity in the conflict claims.
[19] In original counterclaim paragraph 65, Adir raised the issue of the utility of the compounds and the impact this might have upon the inventor and said neither Hoechst nor Schering identified the presence of useful pharmacological activity. In a proposed amendment to paragraph 65, Adir seeks to refine its pleading.
[20] Adir's original counterclaim then addressed issues relating to substitution claims and outlined the reasons why it should be accorded the substitution claims identified.
[21] Adir's counterclaim also contained several paragraphs relating to the research activities of the parties tracing its origin through the synthesis of CAPTOPRIL and the resultant products obtained when the CAPTOPRIL structure was modified by Adir and describes the activities of its inventors. Adir also pleads the research activities of Schering and Hoechst and ties its allegations to the demonstration and disclosure of the utility of the invention by Adir's inventors.
[22] Adir also raised in its original counterclaim the issue of grouping and identification of the inventions as well as the support for the conflict claims.
[23] In terms of procedural background, I mention that on or before December 8, 1997, the parties filed affidavits of documents. Also, pursuant to the order of Reed J. on July 14, 1998, the parties further amended their pleadings and filed a supplementary affidavit of documents. Discoveries were held at various times between November 1998 and September 1999. A motion to compel answers on discovery is still outstanding.
THE POSITION OF THE PARTIES
[24] Adir's position is that these amendments are justified because of two intervening events. The first one being that several amendments arise out of answers on discovery by the Schering witness and the second event was the notice given in September 1999 by Hoechst that it was radically reducing the scope of the review it was seeking of the Commissioner's decisions. After amendment which has now occurred, the only conflict claims which are alive in Hoechst's statement of claim are claims C-31 and C-32 where Hoechst now says the Commissioner erred in awarding these claims to Schering in that the disclosure does not support the invention as defined by those claims. In the alternative, the only substitution claim requested from the Court by Hoechst is SC-31-H-8.
[25] Schering partly opposed Adir's amendments. Hoechst did not appear on this motion.
[26] Hoechst said the amendments identified in Schedule A to its written representations ought not to be allowed as they complicate the proceedings by adding new issues, raise issues beyond the jurisdiction of the Court and introduce contradictory positions and admissions. Furthermore, Schering argued if the amendments are allowed, further discovery and delay of the matter from getting to trial will result. Schering did not oppose other amendments.
[27] In particular, Schering, in respect to a number of proposed Adir amendments and referring to specific paragraphs of Adir's proposed amendments, Schering identified the following issues:
| (a) references to claims for which Adir has no support; |
| (b) references to claims not in conflict; |
| (c) no reasonable cause of action re: utility; |
| (d) frivolous matters; |
| (e) activities referred to after the filing of the patent application; and |
| (f) nonsensical pleadings. |
ANALYSIS
[28] Rule 75 provides that "the Court may, on motion, at any time, allow a party to amend a document, on such terms as will protect the rights of all parties". Subsection 75(2) contains limitations on amendments being allowed during or after a hearing.
[29] As I see it, Rule 75 is a codification of the interpretation of a provision in the former Rules and cases decided in other jurisdictions. Décary J.A. in Canderel Ltd. v. Canada, [1994] 1 F.C. 3 at page 10 said this about the way in which the issue should be approached:
| . . . that while it is impossible to enumerate all the factors that a judge must take into consideration in determining whether it is just, in a given case, to authorize an amendment, the general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice. |
| [emphasis mine] |
[30] As to the factors which should be taken into account, Décary J.A. quoted from Continental Bank Leasing Corporation et al. v. The Queen (1993) 93 D.T.C. 298 (T.C.C.) at page 302:
| ... I prefer to put the matter on a broader basis: whether it is more consonant with the interests of justice that the withdrawal or amendment be permitted or that it be denied. The tests mentioned in cases in other courts are of course helpful but other factors should also be emphasized, including the timeliness of the motion to amend or withdraw, the extent to which the proposed amendments would delay, the expeditious trial of the matter, the extent to which a position taken originally by one party has led the other party to follow a course of action in the litigation which it would be difficult or impossible to alter and whether the amendments sought will facilitate the court's consideration of the true substance of the dispute on its merits. No single factor predominates nor is its presence or absence necessarily determinative. All must be assigned their proper weight in the context of the particular case. Ultimately, it boils down to a consideration of simple fairness, common sense and the interest that the courts have that justice be done. |
| [emphasis mine] |
[31] In Canderel, supra, three of the factors which led Décary J.A. to turn down the proposed amendments were: its lateness being asked for at trial, the raising of a new issue and the prejudice which the amendment would cause because of an admission made in the context of a previous pleading which is inconsistent and irreconcilable with the proposed amendment.
[32] I also mention the Federal Court of Appeal's decision in Cardinal et al. v. Canada (1993), 164 N.R. 301 (F.C.A.) where Décary J.A. touched upon an aspect in that case which may find application here because of the argument put forward by counsel for Schering. Décary J.A. said this at paragraph 8:
| The appeals basically concern the deletion from the statement of claim and the addition through amendment of some allegations of fact and of law which are said to be irrelevant or unfounded. Whether we apply here rule 419 (striking out pleadings) or rule 420 (amendment of pleadings) is not really material. We have heard the appeals on the basic assumption that in these areas the court will only strike pleadings or deny amendments in plain and obvious cases where the case is beyond doubt. [emphasis mine] |
CONCLUSION
[33] I am satisfied that Adir should be granted leave to amend as proposed and Hoechst and Schering shall have leave to reply. As I see it, the true purpose of Adir's motion is to refocus and particularize points in controversy between the parties so that the trial of the action is simplified and facilitated arising out of Hoechst's substantial cutting back of its attack on the Commissioner's decision and a new perspective arising out of discovery.
[34] When the entire procedural background is taken into account, including the several separate actions which were initially filed against the Commissioner's decisions and their consolidation into a single action as well as the thrust of Adir's original counterclaim, the real issue in controversy between the parties has always been the conflict claims C-17 through C-40 framed by the Commissioner arising out of separate patent applications where the Commissioner had decided commonality and conflict. The dissatisfaction expressed by all parties about the resolution of these conflict claims, including issues such as whether the Commissioner was correct in excluding certain parties from certain conflict claims as well as the numerous substitute claims asked for, reveals, quite clearly in my mind, the pleadings in this action all have a common source, i.e. the compounds and processes and substitute compounds in complex chemical formulas where interrelated issues exist such as the nature of the invention, entitlement in terms of single compounds or choice of groups at different locations, testing of which compounds and where on the lateral chain, prediction arising out of changes in chemical formulas and substitute claims.
[35] In my view, it is quite proper for Adir to amend its pleading now rather than at trial to reflect its understanding of what transpired in discovery, particularly when it impacts on the relief sought. Otherwise, the trial becomes unfocussed and may proceed on a false premise and gives rise to unnecessary procedural wrangles while distorting the essence of the evidence to be led; this is so where, as in this case, the complexities of the chemical formulas are at the heart of the matter.
[36] Moreover, it would seem that what happened in discovery is the very reason why Hoechst is redefining its action. In the context of a consolidated action involving counterclaims, Hoechst's reduced scope of review of the Commissioner's decision involving the conflict claims cannot serve to insulate relevant issues put forward by Adir and Schering.
[37] As noted, counsel for Schering raised several grounds of objection to specific amendments including grounds which are found in Rule 221 of the Rules which relate to motions to strike. Each point raised by Schering was controverted by counsel for Adir. Whether section 221 can be raised as a defence to a motion to amend is a debatable issue at least in principle but, in any event, the section 221 threshold is high for the moving party. In Nidek Co. c. Visx Inc. (1999), 82 C.P.R. (3d) 289, the Federal Court of Appeal refused to strike where there are arguable issues of mixed law and fact in a pleading. I have set out the nature of the proceedings before the Commissioner and subsequent actions in this Court as well as the nature of the attacks made by the various parties. I cannot conclude in a case where complex facts and legal issues arise that I should deny Adir's motion to amend.
[38] Except as to delay, Schering has advanced no prejudice and none of the factors which would mitigate against granting an amendment are present. I do not ascribe any delay to Adir arising out of this motion; it can even be said this action was not ripe for trial in any event; some procedural steps still need to be completed.
[39] For all of these reasons, Adir's motion is granted with costs.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
MAY 24, 2000