Ottawa, Ontario, October 25, 2006
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
and
APOTEX PHARMACHEM INC.
REASONS FOR ORDER AND ORDER
[1] This is an appeal by Apotex Inc. and Apotex Pharmachem Inc. (referred to collectively as “Apotex”), from a decision of a prothonotary refusing to strike Novartis AG’s statement of claim.
Background
[2] By statement of claim dated August 18, 2006, Novartis initiated an action against Apotex for patent infringement with respect to Canadian patents numbered 2,026,599 (the “‘599 patent”), and 2,351,999 (the “‘999 patent”).
[3] The ‘599 and ‘999 patents relate to processes that can be used in the making of terbinafine (including its hydrochloric salt). Terbinafine is an anti-fungal compound.
[4] The patents also relate to processes that can be used to make intermediate compounds that can be used in the making of terbinafine.
[5] After having been served with Novartis’ statement of claim, Apotex brought a motion for an order striking the statement of claim, and, in the alternative, for an order requiring Novartis to provide particulars.
[6] In concluding that the statement of claim should not be struck, the prothonotary was satisfied that Apotex knew the case that it had to meet.
[7] Moreover, the prothonotary was satisfied that Apotex had sufficient material facts to plead over. As a consequence, the motion to strike the statement of claim was dismissed, and particulars were not ordered.
[8] Apotex now appeals that portion of the prothonotary’s order refusing to strike the statement of claim, submitting that the prothonotary erred in law and misconstrued the statement of claim in finding that it complied with the Federal Courts Rules, which require that a pleading set out all pertinent material facts to support the pleaded cause of action.
[9] No appeal has been taken with respect to the refusal of the prothonotary to order Novartis to provide particulars.
Standard of Review
[10] Where a discretionary order of a prothonotary is vital to the final issue in a case, the decision should be reviewed on a de novo basis: see Merck & Co. Inc. v. Apotex Inc., [2003] F.C.J. No. 1925, 2003 FCA 488 at ¶ 18-19. However, where the decision under review is not vital to the final issue in the case, it ought not to be disturbed on appeal unless the order is clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts: Merck, at ¶ 19
[11] Apotex says that the refusal to strike a statement of claim is a matter that is vital to the final issue in the case. As a consequence, Apotex says that the matter should be reviewed on a de novo basis. In support of its position, Apotex relies on a number of decisions of this Court in cases such as Vogo Inc. v. Acme Window Hardware Ltd. et al., [2004] F.C.J. No. 1042, 2004 FC 851, and AstraZeneca Canada Inc. v. Apotex Inc., [2005] F.C.J. No. 74, 2005 FC 43.
[12] In contrast, Novartis submits that the refusal to strike a statement of claim is not vital to the final issue in the case. As a result, Novartis says, the court should not intervene unless that decision was clearly wrong, in that it was based on an error of law or a misapprehension of the facts.
[13] Because I am of the view that, reviewing the matter on a de novo basis, I would come to the same conclusion as did the prothonotary, it is not necessary to decide the issue of the appropriate standard of review.
Analysis
[14] The first question to resolve is whether the prothonotary applied the correct test in deciding whether Novartis’ statement of claim should be struck.
[15] In this regard, I note that in Pharmaceutical Partners of Canada Inc. v. Faulding (Canada) Inc., [2002] F.C.J. No. 1305, 2002 FCT 1010, Justice Layden-Stevenson was called upon to determine whether a prothonotary had applied the appropriate test in refusing to strike a statement of claim. Justice Layden-Stevenson found that by asking herself whether the statement of claim provided the defendant with sufficient information as to enable it to plead over, the prothonotary had applied the correct test.
[16] This is, of course, precisely the test that the prothonotary applied in this case. As a result, Apotex has not persuaded me that the prothonotary erred in law by applying the wrong test in refusing to strike Novartis’ statement of claim.
[17] The next question, then, is whether the statement of claim sets out all the necessary pertinent material facts to support the pleaded cause of action. Apotex says that in this case, the statement of claim simply recites various claims of the ‘599 and ‘999 patents, and alleges that Apotex’s activities infringe these claims, without explaining how it is that Apotex is alleged to have infringed upon the patents.
[18] As a consequence, Apotex says, the action is an improper fishing expedition, by which Novartis hopes to gain commercial information regarding Apotex’s activities through the discovery process.
[19] In support of its position, Apotex points out that the basic requirements for pleading a cause of action in patent infringement have been described in the following terms:
In general, under our system of pleading, a statement of claim for an infringement of a right should clearly show:
(a) facts by virtue of which the law recognizes a defined right as belonging to the plaintiff, and
(b) facts that constitute an encroachment by the defendant on that defined right of the plaintiff.
If the statement of claim does not disclose those two elements of the plaintiff's cause of action, it does not disclose a cause of action and may be disposed of summarily.
(See Dow Chemical Co. v. Kayson Plastics & Chemicals Ltd. (1966), 47 C.P.R. 1 (Ex.Ct.) at 11, and Precision Metalsmiths Inc. v. Cercast Inc. [1967] 1 Ex. C.R. 214.)
[20] Apotex also refers to Northern Telecom Ltd. v. Reliable Electric Co., [1986] 1 F.C. 211 (F.C.A.), which held that in an action for patent infringement, a plaintiff must provide particulars as to what is being alleged to be the substance of the invention in issue.
[21] In particular, Apotex relies on the following passage from that decision, where Chief Justice Thurlow, writing for the Federal Court of Appeal stated:
… I do not understand and I do not agree with the view that to require a plaintiff to put a construction on his claims at the initial stage of a proceeding to enforce his patent rights would be improper. It is undoubtedly the function of the court at trial to construe the claims in the light of the evidence as to the prior art and determine what they cover, but that is at a different stage and is an entirely different matter from requiring a patentee to describe a right that he asserts even if to do so requires him to put on his claims a construction which he considers they bear and which he will be urging the court to adopt.
[22] As Justice Layden-Stevenson noted in the Pharmaceutical Partners case referred to above, decisions such as those in Dow Chemical Co., Precision Metalsmiths Inc. and Northern Telecom Ltd. strongly suggest that unless a statement of claim is structured in the manner proposed by Apotex in this case, it will be considered deficient and will be struck.
[23] However, as Justice Layden-Stevenson observed, the difficulty with this proposition is that:
[These] cases preceded the decision in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, which articulated the test to be applied before a pleading is struck. Hunt v. Carey has been repeatedly applied in various decisions of this Court and in appellate and trial Courts across the country. As a result, and notwithstanding the desirability of proper pleading, the standard or test for striking a pleading has been determined. It was recently described by the Federal Court of Appeal in Shubenacadie Indian Band v. Canada (Minister of Fisheries and Oceans), 2002 FCA 255, [2002] F.C.J. No. 882. Mr. Justice Sexton, speaking for the Court, determined that although a pleading may be very broad and encompassed in general terms, it should not be struck out so long as a cause of action, however tenuous, can be gleaned from a perusal of the statement of claim. The onus, on the party moving to strike, is heavy and it must be shown that it is beyond doubt that the case cannot possibly succeed at trial. Similarly, in Sweet v. Canada (1999), 249 N.R. 17 (F.C.A.), Mr Justice Décary, speaking for the Court, stated that although some elements may be missing and others incomplete, if the pleading contains enough information to allow the opposing party to know with some certainty the case to be met, the pleading will not be struck.
[24] In this case, Novartis’ statement of claim alleges that in manufacturing terbinafine, Apotex has used the processes and compounds claimed in the ‘599 and ‘999 patents, and has thus infringed the product and process claims contained in those patents.
[25] Novartis has also pleaded facts related to the manufacture and sale of Apotex’s terbinafine, which is sold under the “Apo-terbinafine” trade name.
[26] In addition, Novartis has identified the process that it alleges that Apotex is using in manufacturing Apo-terbinafine, and has described that process in the appendix attached to its statement of claim.
[27] In these circumstances, even considering this matter de novo, I am satisfied that Novartis’ statement of claim provided enough information so as to allow Apotex to know, with some certainty, the case that it had to meet, and to allow it to plead over.
Conclusion
[28] For these reasons, this appeal is dismissed, with costs of the appeal to Novartis.
ORDER
THIS COURT ORDERS AND ADJUDGES that Apotex’s appeal is dismissed, with costs.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1330-06
STYLE OF CAUSE: NOVARTIS AG v.
APOTEX INC. and APOTEX PHARMACHEM INC.
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: October 17, 2006
APPEARANCES:
Mrs. Lindsay Hill FOR THE APPELLANT
Mr. Marc Richard FOR THE RESPONDENT
SOLICITORS OF RECORD:
GOODMANS LLP FOR THE APPELLANT
Barristers and Solicitors
Toronto, Ontario
GOWLING LAFLEUR HENDERSON LLP FOR THE RESPONDENT
Barristers and Solicitors
Ottawa, Ontario