Harris v. Glaxosmithkline Inc. et al. [Indexed as: Harris v. GlaxoSmithKline Inc.]

106 O.R. (3d) 661

2010 ONCA 872

Court of Appeal for Ontario,

Rosenberg, Moldaver and Karakatsanis JJ.A.

December 20, 2010*

• This judgment was recently brought to the attention of the editors.

Torts -- Abuse of process -- Plaintiff bringing action against defendants for damages for abuse of process based on fact that she was unable to buy cheaper generic version of drug manufactured by defendants while proceedings by defendants against generic manufacturer were outstanding in Federal Court -- Motion judge properly striking statement of claim and dismissing action -- Plaintiff not party to any legal process initiated by defendants -- Statement of claim also alleging no overt act outside of alleged abusive process -- Abuse of process claim bound to fail. [page662]

Torts -- Conspiracy -- Plaintiff bringing action against defendants for damages for conspiracy based on fact that she was unable to buy cheaper generic version of drug manufactured by defendants while proceedings by defendants against generic manufacturer were outstanding in Federal Court -- Motion judge properly striking statement of claim and dismissing action -- Defendants' predominant purpose in bringing Federal Court proceedings not to injure plaintiff -- Plaintiff unable to show unlawful act on part of defendants -- Plaintiff not having viable claim for conspiracy.

Waiver of tort -- Wrongdoing -- Plaintiff bringing action against defendants for damages for abuse of process based on fact that she was unable to buy cheaper generic version of drug manufactured by defendants while proceedings by defendants against generic manufacturer were outstanding in Federal Court -- Motion judge properly striking claim and dismissing action -- Plaintiff unable to point to any predicate wrongdoing on part of defendants -- Predicate wrongdoing essential element of waiver of tort.

The plaintiff was a user of the drug Paxil, which was manufactured and sold by the defendants. Between 1999 and 2003, the defendants filed six Notice of Compliance ("NOC") Proceedings in the Federal Court against several generic drug makers who sought to introduce a generic equivalent of Paxil into the Canadian market. Upon the commencement of an NOC Proceeding, the Minister of Health is automatically enjoined from issuing an NOC to the generic drug manufacturer for a period of up to 24 months from the date of the filing. The defendants were unsuccessful in four of the six proceedings and discontinued the other two. However, by virtue of the automatic stays, the defendants retained the exclusive right to market Paxil during the four years in question. The plaintiff brought a proposed class action against the defendants alleging causes of action in abuse of process, conspiracy and waiver of tort. She claimed that she had suffered damages as a result of the postponement of the sale of the generic drug as she was required to purchase Paxil at a "supra-competitive price" during that period. The defendants moved successfully for an order striking out the claim and dismissing the action. The plaintiff appealed.

Held, the appeal should be dismissed.

The motion judge properly found the following to be the constituent elements of the tort of abuse of process: (1) the plaintiff is a party to a legal process initiated by the defendant; (2) the legal process was initiated for the predominant purpose of furthering some indirect, collateral and improper objective; (3) the defendant took or made a definite act or threat in furtherance of the improper purpose; and (4) some measure of special damage has resulted. The first element was not satisfied as the plaintiff was not a party to a legal process initiated by the defendants. The third element was also not satisfied as there was no overt act outside of the alleged abusive process. It was plain and obvious that the claim for abuse of process could not succeed.

To make out a conspiracy to injury, the defendant's predominant purpose must be to inflict harm on the plaintiff. It is not enough if harm is the collateral result of acts pursued predominantly out of self-interest. It was plain and obvious that the plaintiff could not establish that the defendants' predominant purpose in bringing the Federal Court proceedings was to injure her. The defendants' predominant purpose was to lawfully advance its self-interest. Even if the defendants acted with bad intentions in bringing the NOC Proceedings, there can be [page663] no liability when the defendant merely employs regular legal process to its proper conclusion. Moreover, the plaintiff could not show a wrongful act on the part of the defendants. The NOC Proceedings were not contrary to law or to statute. They were proceedings that the defendants were at liberty to bring. The motion judge correctly concluded that it was plain and obvious that the plaintiff did not have a viable claim for conspiracy.

Waiver of tort requires some predicate wrongdoing. There was none to be found in this case. The motion judge correctly dismissed the waiver of tort claim.

APPEAL from the order of Perell J. (2010), 2010 ONSC 2326, 101 O.R. (3d) 665, [2010] O.J. No. 1710 (S.C.J.) striking a statement of claim and dismissing an action. [page664]

Cases referred to

Metrick v. Deeb, 2003 CanLII 804 (ON CA), [2003] O.J. No. 2221, 172 O.A.C. 229, 16 C.C.L.T. (3d) 298, 123 A.C.W.S. (3d) 831 (C.A.) [Leave to appeal to S.C.C. refused [2003] S.C.C.A. No. 378], consd

Other cases referred to

Apotex Inc. v. Merck & Co. Inc., [2009] F.C.J. No. 712, 2009 FCA 187, [2010] 2 F.C.R. 389, 76 C.P.R. (4th) 1, 178 A.C.W.S. (3d) 212, 2010EXP-3842; Aronowicz v. Emtwo Properties Inc. (2010), 98 O.R. (3d) 641, [2010] O.J. No. 475, 2010 ONCA 96, 258 O.A.C. 222, 64 B.L.R. (4th) 163, 316 D.L.R. (4th) 621; AstraZeneca Canada Inc. v. Canada (Minister of Health), [2006] 2 S.C.R. 560, [2006] S.C.J. No. 49, 2006 SCC 49, 272 D.L.R. (4th) 577, 354 N.R. 88, J.E. 2006-2157, 52 C.P.R. (4th) 145, 151 A.C.W.S. (3d) 682, EYB 2006-110778; Belsat Video Marketing Inc. v. Astral Communication Inc., 1998 CanLII 14783 (ON SC), [1998] O.J. No. 654, 54 O.T.C. 84, 81 C.P.R. (3d) 1, 77 A.C.W.S. (3d) 732 (Gen. Div.); Canada (Competition Act, Director of Investigation and Research) v. Warner Music Canada Ltd., 1997 CanLII 3725 (CT), [1997] C.C.T.D. No. 53, 78 C.P.R. (3d) 321 (Comp. Trib.); Crofter Hand Woven Harris Tweed Co. v. Veitch, [1942] A.C. 435, [1942] 1 All E.R. 142 (H.L.); Positive Seal Dampers Inc. v. M. & I. Heat Transfer Products Ltd. (1991), 1991 CanLII 7266 (ON SC), 2 O.R. (3d) 225, [1991] O.J. No. 3383, 33 C.P.R. (3d) 417, 26 A.C.W.S. (3d) 208 (Gen. Div.); Reach M.D. Inc. v. Pharmaceutical Manufacturers Assn. of Canada (2003), 2003 CanLII 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062, 227 D.L.R. (4th) 458, 172 O.A.C. 202, 17 C.C.L.T. (3d) 149, 25 C.P.R. (4th) 417, 123 A.C.W.S. (3d) 411 (C.A.); Roman Corp. v. Hudson's Bay Oil and Gas Co., 1973 CanLII 15 (SCC), [1973] S.C.R. 820, [1973] S.C.J. No. 70, 36 D.L.R. (3d) 413

Statutes referred to

Competition Act, R.S.C. 1985, c. C-34, ss. 32 [as am.], 79(5) Food and Drugs Act, R.S.C. 1985, c. F-27 [as am.] Patent Act, R.S.C. 1985, c. P-4 [as am.]

Rules and regulations referred to

Food and Drug Regulations, C.R.C., c. 870, Part C, Division 8, C.08.004 Patented Medicines (Notice of Compliance) Regulations, SOR/ 93-133, ss. 5(1) [as am.], 6(1) [as am.], (5)(b) [as am.], 7(1)(e), 8 [as am.] Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 21, 21.01(1)(a), (b)

Authorities referred to

Fleming, John, The Law of Torts, 9th ed. (North Ryde, N.S.W.: LBC Information Services, 1998)

William V. Sasso, Jacqueline A. Horvat and Professor Ed Morgan, for appellant. David W. Kent, W. Brad Hanna and Geoff Moysa, for respondents.

The judgment of the court was delivered by

MOLDAVER J.A.: -- Introduction

[1] The respondents (collectively "GSK") are a group of related companies engaged in the business of pharmaceutical research and development, as well as the manufacture and sale of pharmaceuticals. One of GSK's products is Paxil, a prescription drug used to treat anxiety, depression and other disorders.

[2] The appellant, Ms. Harris, is a Paxil user. She is the representative plaintiff in a class action in which she, and other Paxil users, contend that from 1999 to 2003, GSK misused a process under the Patent Act, R.S.C. 1985, c. P-4 to delay the entry into the Canadian market of a less expensive generic equivalent of Paxil. During that four-year period, Paxil users were required to buy Paxil at a "supra-competitive" price for which they now seek to hold GSK accountable.

[3] In her claim on behalf of the class, the appellant alleges three causes of action against GSK: (1) abuse of process; (2) conspiracy; and (3) waiver of tort.

[4] In April 2010, GSK moved under rules 21.01(1)(a) and (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for an order striking out the appellant's claim and dismissing the action. On April 22, 2010, Perell J., of the Superior Court of Justice, granted GSK's motion. He did so on the basis that the pleadings did not disclose a viable cause of action against GSK. In his view, it was plain and obvious that the action could not succeed.

[5] The appellant challenges that ruling on appeal. In essence, she submits that the motion judge made the following five errors: (1) he misdirected himself on the constituent elements of the tort of abuse of process; (2) he erred in holding that the facts as pleaded did not and could not establish the tort of conspiracy; (3) he misdirected himself in holding that a waiver of tort claim could not succeed absent a predicate wrongdoing; [page665] (4) he overstepped his mandate on a Rule 21 motion by making findings of fact that he was precluded from making; and (5) he erred in summarily disposing of important and novel issues of law in the absence of a full and complete factual record.

[6] For reasons that follow, I am satisfied that the motion judge was correct in dismissing the action against GSK. In short, I agree with him that the pleadings do not disclose a viable cause of action against GSK. Accordingly, I would dismiss the appeal.

Background

[7] The reasons of the motion judge are detailed and comprehensive. It is unnecessary to duplicate them. Most of the heavy lifting has been done. By way of background, I consider it sufficient to outline, in summary form, the regulatory regime by which GSK is governed and the salient facts that the appellant and other Paxil users rely on in support of their claim against GSK.

The Regulatory Regime

[8] The marketing of drugs in Canada is governed by the Food and Drugs Act, R.S.C. 1985, c. F-27 ("FDA") and the Patent Act. The FDA deals with the safety and efficacy of drugs. Regulations made under that Act (the Food and Drug Regulations, C.R.C., c. 870, Part C, Division 8, C.08.004) provide that a drug cannot be marketed in Canada unless and until the Minister of Health has issued a Notice of Compliance ("NOC") in respect of it.

[9] The Patent Act deals with intellectual property issues relating to patented drugs and their subsequent generic copies. The Patented Medicines (Notice of Compliance) Regulations, SOR/ 93-133 ("PM(NOC) Regulations") provide that all patents pertaining to a drug for which a NOC has been issued may be listed in the Patent Register. These regulations further provide for a process whereby the interests of innovator patentees are balanced against the competing interests of generic manufacturers.

[10] A subsequent manufacturer that wishes to market a generic version of a patented drug can simply wait for the relevant patents to expire. Alternatively, s. 5(1) of the PM(NOC) Regulations allows a manufacturer to serve a Notice of Allegation ("NOA") on the patentee asserting that the listed patents [page666] are invalid and/or will not be infringed by the proposed generic equivalent.

[11] Section 6(1) of the PM(NOC) Regulations provides that a patentee who receives a NOA may challenge the allegations made by the generic manufacturer by applying for judicial review in the Federal Court (a "NOC Proceeding"). In the NOC Proceeding, the patentee disputes the NOA and asserts the validity and/or infringement of the patent in issue. The patentee is given an opportunity to demonstrate that the allegations set forth in the NOA are "not justified".

[12] Upon the commencement of a NOC Proceeding, s. 7(1)(e) of the PM(NOC) Regulations takes effect and automatically enjoins the Minister from issuing a NOC to the generic drug manufacturer for a period of up to 24 months from the date of the filing.

[13] If the patentee prevails in a NOC Proceeding, the Minister is enjoined from issuing a NOC to the generic manufacturer prior to the expiry of the patent in issue. Alternatively, the court may dismiss a NOC Proceeding if it finds that the patent is invalid or would not be infringed, or that the patent holder has failed to show that the allegations in the NOA are not justified. In that event, the Minister may immediately issue a NOC for the generic product.

[14] A possible check on the automatic 24-month stay contemplated by the filing of a NOC Proceeding is found in s. 6(5)(b) of the PM(NOC) Regulations. Under that provision, the court may dismiss a s. 6(1) application on the ground that "the application is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process".

[15] Another check on patentees who choose to institute NOC Proceedings is found in s. 8 of the PM(NOC) Regulations. Under that provision, where a NOC Proceeding is withdrawn or discontinued or is ultimately dismissed, the unsuccessful patentee is liable to the generic drug manufacturer for any losses the generic manufacturer may have suffered due to its inability to market its product during the stay period. The PM(NOC) Regulations do not, however, provide any form of relief to other persons or entities, including consumers who may have been adversely affected by a patentee's choice to instigate a NOC Proceeding.

[16] In Apotex Inc. v. Merck & Co. Inc., [2009] F.C.J. No. 712, 2009 FCA 187, the Federal Court of Appeal commented on the balance the PM(NOC) Regulations seek to achieve between the need for effective patent protection and the timely entry of generic drugs into the marketplace. The automatic stay that [page667] arises from the commencement of a NOC Proceeding is part of that balance. Its counterpart is the s. 8 obligation on the patentee to pay damages to a delayed generic entrant if the NOC Proceeding fails. At paras. 54 and 55 of his reasons, Noel J.A., for the court, recognized that "the automatic 24- month stay was capable of being used in a manner which does not advance patent protection" and "given the scheme, it is the patentee who has both the carriage of the proceeding and the interest in its dilatory prosecution". At para. 56, Noel J.A. quoted from AstraZeneca Canada Inc. v. Canada (Minister of Health), 2006 SCC 49, [2006] 2 S.C.R. 560, [2006] S.C.J. No. 49, in which Binnie J., for the court, made the following observations, at para. 39:

By imposing the 24-month delay called for by the NOC Regulations, the decision of the Federal Court of Appeal undermines achievement of the balance struck by Parliament between the objectives of the FDA . . . and regulations thereunder (making safe and effective drugs available to the public) and the Patent Act and its regulations (preventing abuse of the "early working" exception to patent infringement). Given the evident (and entirely understandable) commercial strategy of the innovative drug companies to evergreen their products by adding bells and whistles to a pioneering product even after the original patent for that pioneering product has expired, the decision of the Federal Court of Appeal would reward evergreening even if the generic manufacturer (and thus the public) does not thereby derive any benefit from the subsequently listed patents. (Emphasis added)

[17] Binnie J.'s concerns about the commercial strategy of the innovative drug companies seeking to evergreen their products did not escape Noel J.A.'s attention. According to Noel J.A., s. 8 of the PM(NOC) Regulations was enacted to address the concerns mentioned by Binnie J. and others as to the various ways patentees might attempt to misuse the NOC regulatory regime. At paras. 58 to 60 of his reasons, Noel J.A. made the following observations:

Section 8, by imposing on first persons a liability for the losses suffered by a second person, as a result of the operation of the automatic stay, when a prohibition application is withdrawn, discontinued or is ultimately unsuccessful, alleviates these concerns[.]

By the same logic, [that a first person no longer has an exclusive interest in delaying the progress of a NOC Proceeding], a first person no longer has an exclusive interest in triggering the operation of the automatic stay by reference to patents which are not properly listed . . . or to "evergreen" a patented drug in order to perpetuate the benefit which the PM(NOC) Regulations provide . . . As a result of section 8, a first person must focus on the issue of infringement and consider the strength of its position before initiating a prohibition proceeding.

This promotes the use of the PM(NOC) Regulations for the purpose for which they are intended: the prevention of infringement. Significantly, it [page668] does so in a manner which is consistent with maintaining the balance [of making safe and effective drugs available to the public and protecting the rights of patentees].

Monopoly Rights of Patentees

[18] In considering the rights of patentees, it is essential to differentiate between a monopoly, in the anti-competitive, unlawful sense of the word, and an intellectual property right, such as a patent. For present purposes, the distinction is important because the appellant, in her claim, makes numerous references to GSK's "monopoly" in respect of Paxil and the resulting "supra-competitive" prices GSK was able to charge.

[19] The distinction between intellectual property rights and unlawful anti-competitive acts is well-established in competition law. For example, s. 79(5) of the Competition Act, R.S.C. 1985, c. C-34 provides that "an act engaged in pursuant only to the exercise of any right or enjoyment of any interest derived under the . . . Patent Act . . . is not an anti- competitive act". See, also, Canada (Competition Act, Director of Investigation and Research) v. Warner Music Canada Ltd., 1997 CanLII 3725 (CT), [1997] C.C.T.D. No. 53, 78 C.P.R. (3d) 321 (Comp. Trib.), at p. 9 C.P.R., where, in discussing intellectual property rights, the tribunal stated that "[t]he right granted by Parliament to exclude others is fundamental to intellectual property rights and cannot be considered to be anti- competitive."

[20] While the normal exercise of an intellectual property right is not an "abuse of dominance" under the Competition Act, Parliament was alive to the fact that those rights can be used inappropriately. Section 32 of the Act gives the Federal Court broad remedial powers to address the use of intellectual property rights in ways that "unduly lessen" competition. This reflects recognition that intellectual property rights can be used in unlawfully anti-competitive ways. What then is the nature of a drug patent? It is a time-limited, statutorily- authorized monopoly on the production and sale of certain medicines. The patent-holder's right to exclude others is fundamental to the nature of the patent, but those anti- competitive characteristics are dealt with in the statutory scheme of the Competition Act.

[21] It is against this statutory and legal framework that the appellant's claim against GSK must be assessed.

The Failed NOC Proceedings

[22] Between 1999 and 2003, GSK filed six NOC Proceedings in the Federal Court against several generic drug makers who sought to introduce a generic equivalent of Paxil into the [page669] Canadian market. None of the NOC Proceedings were successful. However, by virtue of the automatic stays that took effect upon their filing, GSK retained the exclusive right to market Paxil during the four years in question.

[23] Referring to the NOC Proceedings as "objectively baseless", the appellant claims that GSK initiated them so that GSK could continue to charge consumers a "supra-competitive" price for Paxil. In doing so, GSK used the court process for an improper collateral purpose and caused damage to the class members -- hence the abuse of process claim.

[24] As for the conspiracy claim, the appellant alleges that GSK engaged in a course of conduct, the predominant purpose of which was to cause injury to the class members by forcing them to pay a "supra-competitive" price for Paxil during the years 1999 to 2003. Alternatively, the appellant claims that GSK's use of the regulatory NOC process was unlawful, it was directed at the class members and GSK should have known in the circumstances that the class members would be injured, as indeed they were.

[25] Finally, with respect to waiver of tort, the appellant claims the right to waive damages for the torts of conspiracy and abuse of process and, instead, to seek disgorgement of any profits made by GSK over the four-year period from 1999 to 2003. In this regard, the appellant claims that GSK's conduct constitutes an "affront to good conscience and require[s] a restitutionary disposition that will satisfy equity in the circumstances of this case as pleaded".

[26] As indicated, the motion judge rejected each of the claims put forward by the appellant. In his view, the statement of claim did not disclose a viable cause of action against GSK. I agree and now consider the claims asserted.

Abuse of Process

[27] At para. 48 of his reasons, the motion judge defined the constituent elements of the tort of abuse of process as follows:

The case law authorities establish that there are four constituent elements to the tort of abuse of process: (1) the plaintiff is a party to a legal process initiated by the defendant; (2) the legal process was initiated for the predominant purpose of furthering some indirect, collateral and improper objective; (3) the defendant took or made a definite act or threat in furtherance of the improper purpose; and (4) some measure of special damage has resulted: Hawley v. Bapoo (2005), 2005 CanLII 36451 (ON SC), 76 O.R. (3d) 649 (Ont. S.C.J.) at para. 86, var'd (2007), 2007 ONCA 503, 156 C.R.R. (2d) 351 (Ont. C.A.); Metrick v. Deeb (2002), 14 C.C.L.T. (3d) 297 (Ont. S.C.J.) at para. 9, aff'd (2003), 2003 CanLII 804 (ON CA), 172 O.A.C. 229 (C.A.), leave to appeal ref'd, [2003] S.C.C.A. No. 378, 195 O.A.C. 398n (S.C.C.); Scintilore Explorations Ltd. v. Larache, 1999 CanLII 14948 (ON SC), [1999] O.J. No. 2847 (S.C.J.); P.M. Perell, "Tort Claims for Abuse of Process" (2007) 33 Adv. Q. 193 at p. 193; J. Irvine, "The Resurrection of Tortious Abuse of Process" 47 C.C.L.T. 217. [page670]

[28] In my view, the motion judge correctly defined the elements of the tort of abuse of process. His conclusion finds support in academic writings and an established line of authorities.

[29] The appellant referred to this court's decision in Metrick v. Deeb, 2003 CanLII 804 (ON CA), [2003] O.J. No. 2221, 172 O.A.C. 229 (C.A.), leave to appeal refused [2003] S.C.C.A. No. 378, as authority for the proposition that the tort of abuse of process consists of only two elements: (1) using the legal process for an improper or collateral purpose; and (2) the need for a definite act or threat in furtherance of the illegitimate purpose.

[30] Those two elements were taken from a passage in Fleming, The Law of Torts, 9th ed. (North Ryde, N.S.W.: LBC Information Services, 1998), at p. 668, which the court referred to as "instructive". In its brief endorsement, the court directed its attention to the second of the two elements and found that it had not been made out on the evidence.

[31] Metrick should not be taken as authority for the proposition that the tort of abuse of process consists of only two elements. The court in that case was not called upon to consider the constituent elements of the tort. It was simply responding to the particular issues raised in that case, one of which related to the need for a definite act or threat in furtherance of the illegitimate purpose. In that regard, the court found [at para. 3] the following quote from Fleming instructive: "Some such overt conduct is essential, because there is clearly no liability when the defendant merely employs regular legal process to its proper conclusion, albeit with bad intentions" (emphasis added).

[32] As we shall see, that principle is applicable to the case at hand, both as regards to the tort of abuse of process and also the tort of conspiracy.

[33] Having concluded that the motion judge correctly identified the constituent elements of the tort of abuse of process, the appellant's claim necessarily founders on the first element. In short, she was not a party to the NOC Proceedings.

[34] In addressing the first element of the tort, the motion judge explored what he referred to as the "many policy reasons" against eliminating it and extending the tort of abuse of process to non-parties. For present purposes, it is unnecessary to outline the policy reasons he explored. I only mention the fact that he considered policy matters because that is one of the complaints the appellant raises in support of her argument that the motion judge misidentified "mutuality" as one of the constituent elements of the tort of abuse of process. In short, the appellant submits that the motion judge was not entitled on a Rule 21 [page671] motion, absent an evidentiary record, to consider policy matters. In doing so, he engaged in unwarranted speculation.

[35] I disagree. In the factum she filed on the motion, the appellant took the position that there were "no policy reasons for denying those persons [non-parties] the right to say that they were abused and to recover damages they have suffered as a result". That being so, she cannot fault the motion judge for taking up the issue.

[36] Be that as it may, even if the appellant is correct that the motion judge should not have entered into the realm of policy, his doing so occasioned no harm. The constituent elements of the tort of abuse of process remain the same and the motion judge would have come to the same conclusion had he said nothing about policy considerations.

[37] The motion judge also found that the third element of the tort of abuse of process was not made out on the pleadings. At para. 72 of his reasons, he made the following observations, with which I agree:

In the case at bar, based on the allegations pleaded in the statement of claim, there is no overt act outside of the alleged abusive process. From a reading of the statement of claim, all that can be said is that GSK made an application under s. 6 of the NOC Regulations, which automatically triggered the injunctive provisions of s. 7 of the regulation, which, in turn, delayed the entry of generic drugs into the market but exposed GSK to a claim under s. 8 of the regulation. Ms. Harris submits that the overt act outside the NOC Proceeding was GSK's act of continuing to sell Paxil at supra-competitive prices, which is to say the act of selling at prices untouched by competition. That overt act, however, is not outside the NOC Proceedings. The act of bringing a NOC Proceeding is precisely the act of prohibiting competition so that sales may continue untouched by competition or at what Ms. Harris likes to call supra- competitive pricing.

[38] For these reasons, I am satisfied that the motion judge correctly determined that the tort of abuse of process was not made out on the pleadings.

Conspiracy

(i) Conspiracy to injure [See Note 1 below]

[39] To make out a conspiracy to injure, the defendant's predominant purpose must be to inflict harm on the plaintiff. It is not enough if harm is the collateral result of acts pursued predominantly out of self-interest. The focus is on the actual intent [page672] of the defendants and not on the consequences that the defendants either realized or should have realized would follow.

[40] In Roman Corp. v. Hudson's Bay Oil and Gas Co., 1973 CanLII 15 (SCC), [1973] S.C.R. 820, [1973] S.C.J. No. 70, at p. 830 S.C.R., Martland J. quoted with approval Lord Simon L.C.'s statement of the law in Crofter Hand Woven Harris Tweed Co. v. Veitch, [1942] A.C. 435, [1942] 1 All E.R. 142 (H.L.), at pp. 444-45 A.C.:

The question to be answered, in determining whether a combination to do an act which damages others is actionable, even though it would not be actionable if done by a single person, is not "did the combiners appreciate, or should they be treated as appreciating, that others would suffer from their action," but "what is the real reason why the combiners did it?" Or, as Lord Cave puts it, "what is the real purpose of the combination?" The test is not what is the natural result to the plaintiffs of such combined action, or what is the resulting damage which the defendants realize or should realize will follow, but what is in truth the object in the minds of the combiners when they acted as they did.

[41] In Belsat Video Marketing Inc. v. Astral Communication Inc., 1998 CanLII 14783 (ON SC), [1998] O.J. No. 654, 81 C.P.R. (3d) 1 (Gen. Div.), at para. 53, Rosenberg J. observed that steps taken for the purpose of protecting a party's trade or business interests amount to legitimate promotion of a self-interest and, hence, do not give rise to the tort of conspiracy to injure:

If the real purpose of a combination is not to injure the plaintiffs but to forward or defend the trade of those who enter into it, then no wrong is committed and no action will lie although damage to another ensues, provided that no resort is made to unlawful means in carrying out such purpose. An ordinary commercial transaction, the predominant purpose of which is to advance economic interests, does not constitute a conspiracy even though the complaining party may suffer an economic loss as a result. (Emphasis added)

See, also, Positive Seal Dampers Inc. v. M. & I. Heat Transfer Products Ltd. (1991), 1991 CanLII 7266 (ON SC), 2 O.R. (3d) 225, [1991] O.J. No. 3383 (Gen. Div.), at pp. 237-38 O.R., per Anderson J.

[42] In the case at hand, it is difficult to discern from the appellant's pleading what the appellant alleges was GSK's predominant purpose in bringing the NOC Proceedings. Para. 57 of the amended statement of claim, reproduced in full below, reads as follows:

Some, but not all, of the defendants' predominant purposes, concerns, motivations and intentions were to: (a) cause each of the Class Members to pay the Overcharge so that they would receive more income from the sale of Paxil than they would have if there was a generic equivalent for sale in Canada during the Class Period; [page673] (b) suppress, delay and eliminate competition in the supply and sale of a generic equivalent in Canada in order to cause each of the Class Members to pay the Overcharge; (c) maintain their monopoly in the sale of Paxil in order to maintain its supra-competitive price during the Class Period; (d) harm Class Members by requiring them to pay the Overcharge; (e) receive directly or indirectly increased revenue from the sale of Paxil; and (f) avoid detection and conceal the conspiracy from Tracey and the other Class Members and the regulatory authorities in Canada. (Emphasis added)

[43] Assuming that there can be more than one "predominant" purpose, a cursory examination of para. 57 of the amended statement of claim shows that there is considerable overlap in five of the six alleged "predominant" purposes. (Para. 57(f) is a non-sequitur. It relates to how the conspiracy was meant to operate.)

[44] Stripping the five "predominant purpose" clauses to their essentials, the discernable predominant purpose would appear to be that GSK engaged in a course of conduct designed to obtain the highest possible price from consumers with a view to maximizing its revenue from the sale of Paxil -- in other words, a classic commercial purpose that cannot amount to a conspiracy to injure even though, as a result, there is an economic impact on consumers.

[45] GSK submits that this is where the distinction between an anti-trust monopoly and the rights accruing to a patentee must be borne in mind. To the extent GSK's predominant purpose in bringing the NOC Proceedings was to extend the patent rights it had enjoyed in relation to the sale of Paxil, GSK submits that that conduct could not amount to a conspiracy to injure. The PM(NOC) Regulations permitted GSK to do just that. GSK was entitled to defend the validity and scope of its patents. The fact that a patent confers on its owner the power to exclude others certainly has economic implications. But, as GSK points out, those implications are necessarily consequential and, in any event, intended by Parliament and thus not unlawfully anti- competitive.

[46] Viewed through that lens, GSK submits, correctly in my view, that the appellant "cannot convert the legitimate interest of a patentee in protecting (and monetizing) its intellectual property rights into anti-competitive monopoly practices in order to conjure up the improper predominant purpose required for the tort of conspiracy". [page674]

[47] The motion judge agreed with GSK's submissions on this issue. At para. 86 of his reasons, he stated:

The resort to a NOC Proceeding is a part of the ordinary competition between innovators and generic manufacturers. The case law establishes that provided that there are no unlawful acts, an ordinary commercial transaction with the predominant purpose of advancing one's own economic interests does not constitute a conspiracy even though a party or a third party may suffer an economic loss. (Authorities omitted)

And, at para. 89:

GSK is not a public authority, a non-government organization, a charity, or a not-for-profit organization. It is a business enterprise with the purposeful activity of making money, which activity is not wrongdoing. As alleged in Ms. Harris' statement of claim, all of GSK predominate purposes are connected to GSK advancing its own self-interest by making money, which is normal and a norm for for-profit enterprises. In my opinion, it is plain and obvious that Ms. Harris cannot establish an intent to injure simply from the fact that GSK continued to make money from her and from others by acting in its own self interest and availing itself of the statutory rights under s. 6 of the NOC Regulations to protect existing patents while exposing itself to the attendant statutory liability under s. 8 of the NOC Regulations.

[48] I agree with those statements by the motion judge and would simply add that even if GSK acted with bad intentions in bringing the NOC Proceedings, as Fleming points out, at para. 31 above, "there can be no liability when the defendant merely employs regular legal process to its proper conclusion".

(ii) Conspiracy to do an unlawful act

[49] The motion judge gave the appellant the widest possible berth in respect of this allegation. He tested her complaint against this court's decision in Reach M.D. Inc. v. Pharmaceutical Manufacturers' Assn. of Canada (2003), 2003 CanLII 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062 (C.A.), where Laskin J.A., for the court, held, at paras. 52 and 53, that the concept of "illegal or unlawful means" is broad enough to include the doing of an act that the person or entity is "not authorized to do" or "at liberty to commit".

[50] Applying that test to the case at hand, the motion judge stated the following, at para. 94 of his reasons:

In the case at bar, GSK's NOC Proceedings were not contrary to law or to statute. GSK's NOC Proceedings were the opposite of unauthorized; they were proceedings that GSK was entitled to bring. In other words, they were acts that GSK was at liberty to commit. The NOC Proceedings are actually a response to NOC's initiated by Apotex and two other generic manufacturers. GSK has a statutory right to show that the generic manufacturer's allegations are "not justified." [page675]

[51] I agree with the motion judge's characterization of GSK's conduct. It follows that the pleadings do not substantiate a conspiracy based on unlawful means.

(iii) The sham litigation argument

[52] Having determined that the appellant's abuse of process and conspiracy allegations could not stand, the motion judge went on to consider the six cases in which GSK had commenced NOC Proceedings. Of those six cases, four were determined on their merits [See Note 2 below] and, in each instance, the courts found in favour of the generic manufacturers. GSK had failed to establish that all of the allegations set out by the generic manufacturers in their NOAs were unjustified.

[53] The motion judge analyzed the four decisions, although he was not asked to do so by the parties. He did so because the appellant, in her submissions, had characterized the NOC Proceedings instituted by GSK as "frivolous", "meritless", "sham litigation", "spurious" and "objectively baseless". In the opinion of the motion judge, it was those allegations that form [at para. 105] "the lynchpin allegations of all of the claims against GSK". With that in mind, the motion judge analyzed the four decisions in which GSK was unsuccessful and, at para. 105 of his reasons, he stated, "[I]n my opinion, it is plain and obvious that these allegations are patently ridiculous and incapable of proof."

[54] The appellant argues that it was wrong for the motion judge to analyze the four decisions on his own motion. Of greater importance, she submits that it was not open to the motion judge on a Rule 21 motion to find, based on his review of the four decisions, that the appellant's "sham litigation" allegations were [at para. 105] "patently ridiculous and incapable of proof". According to the appellant, that finding, which exceeded the scope of the motion judge's mandate, coloured his perception of the appellant's claims and tainted his analysis of them.

[55] I agree with the appellant in part. In my view, it was open to the motion judge to look at the four decisions since they formed part of the record before him. I further think he was entitled, based on his review of those decisions, to conclude that the NOC Proceedings were not, on their face, sham proceedings. What he could not do, in my respectful view, was to use them to conclude that the plaintiff's allegations to the opposite effect [page676] "were patently ridiculous and incapable of proof". That finding could only be made on a full record.

[56] That said, I am satisfied that the motion judge's error was harmless. His findings in relation to the four decisions are obiter. They form no part of the analysis that led him to conclude, correctly in my view, that the pleadings as framed disclose no viable cause of action against GSK in tort.

[57] Accordingly, I would not give effect to this aspect of the appellant's argument.

(iv) Waiver of tort

[58] At para. 102 of his reasons, the motion judge dismissed the waiver of tort claim because, in his view, "it is plain and obvious that there is no predicate wrongdoing upon which to base a plea of waiver of tort".

[59] In concluding that there must be a predicate wrongdoing to substantiate "waiver of tort", the motion judge relied on this court's decision in Aronowicz v. Emtwo Properties Inc. (2010), 98 O.R. (3d) 641, [2010] O.J. No. 475, 2010 ONCA 96, where Blair J.A. stated, at para. 82, "Whether the claim [waiver of tort] exists as an independent cause of action or whether it requires proof of all the elements of an underlying tort aside, at the very least, waiver of tort requires some form of wrongdoing" (emphasis added).

[60] I agree with the motion judge's analysis and conclusion.

Conclusion

[61] The motion judge determined that the amended statement of claim disclosed no viable cause of action against GSK. Hence, he concluded that it was the plain and obvious that the action against GSK could not succeed. I agree. Accordingly, I would dismiss the appeal.

Costs

[62] The parties are not seeking costs. Accordingly, there will be no order as to costs.

Appeal dismissed.

Notes

Note 1: GSK concedes, for purposes of this appeal, that wholly owned affiliated companies can enter into the type of agreement required to found a conspiracy.

Note 2: GSK discontinued the fifth and sixth proceedings.