COURT FILE NO.: CV-11-429541
DATE: 20130307
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: APOTEX INC., Plaintiff
AND:
SCHERING CORPORATION, SANOFI-AVENTIS, SANOFI-AVENTIS DEUTSCHLAND GmbH AND SANOFI-AVENTIS CANADA INC., Defendants
BEFORE: Stinson J.
COUNSEL:
Julie Rosenthal and Daniel Cappe for Apotex Inc., responding party
Gunars A. Gaikis and Andrew E. Mandlsohn for Sanofi-Aventis, Sanofi-Aventis Deutschland GmbH and Sanofi-Aventis Canada Inc., moving parties
No one appearing for Schering Corporation, defendant
HEARD: February 4, 2013
ENDORSEMENT
[1] In their notice of motion, the moving parties (“Sanofi”) sought an order striking Apotex Inc.’s (“Apotex”) statement of claim, or in the alternative, a stay of this action pending the outcome of the appeal taken by Sanofi to the Federal Court of Appeal from the decision of Snider J. of the Federal Court of Canada in Apotex Inc. v. Sanofi-Aventis, 2012 FC 553, [2012] F.C.J. No. 620 (F.C.) (the “Federal Court Action”), and any appeal therefrom. On the day of the hearing, counsel for the Sanofi informed the court of its intention to refocus its submissions due to the recent decision of Quigley J. in Apotex Inc. v. Abbott Laboratories Limited, 2013 ONSC 356, released January 15, 2013. Counsel stated that while Sanofi would not oppose a stay, it would no longer actively pursue this or any other alternative relief, focusing instead on its request for an order striking the statement of claim.
[2] Despite this advice from counsel, I directed both sides to address the issue of a temporary stay. At the close of submissions on that topic, I ordered a temporary stay of the proceedings in this matter pending the outcome of the appeal of Snider J.’s decision in the Federal Court Action, with reasons to follow. These are those reasons.
Background
[3] The case at bar and the Federal Court Action both trace their origins to problems encountered by Apotex in trying to bring to market a generic version of a pharmaceutical drug known as Rampiril, a drug used to treat hypertension. Sanofi held or holds patent rights in relation to a brand-name version of Rampiril. It therefore took active steps to oppose efforts by its rival Apotex to offer for public sale its generic version, Apo-Rampiril.
[4] In the Federal Court Action, the decision of Snider J. (that is now under appeal by Sanofi) awarded damages to Apotex pursuant to s. 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the “Regulations”). That claim arose because, although Apotex received regulatory approval for its generic version (Apo-Ramparil) in 2004, it was unable to start selling it until December 2006. This was due to the fact that Sanofi had exercised its rights under the Regulations to initiate a “prohibition proceeding”, which automatically resulted in a statutory stay prohibiting Apotex from selling Apo-Ramipril until the resolution of the prohibition proceeding. At the conclusion of the prohibition proceeding, Sanofi’s objection was found to be invalid. As a consequence, Apotex was entitled under s. 8 of the Regulations to claim compensation for the losses it suffered by reason of the delay in bringing its product to market.
[5] Among the issues addressed by Snider J. was the determination of what share of the Ramipril market Apotex would have captured had it been able to sell Apo-Ramipril during the period of delay that arose due to Sanofi’s unfounded objection, and what losses it suffered as a result. In her 300-paragraph decision, Snider J. canvassed a substantial volume of fact and expert testimony and a range of legal questions. Despite reaching conclusions on a number of issues, Snider J. was unable to finalize the quantum of damages, that is, the correct measure of compensation for the losses Apotex suffered as a result of the unfounded delay in selling Apo-Ramipril. Based on her conclusions as to the applicable principles, Snider J. left it to the parties to determine the amount of s. 8 damages Sanofi was to pay. Sanofi has appealed Snider J.’s decision and so the issues addressed in that case are not yet finally resolved, the principles governing the damage award in favour of Apotex have not yet been finally determined, and the calculation of Apotex’s damages is not yet final.
[6] In the present action, Apotex has advanced what it asserts are additional damage claims arising from Sanofi’s attempts to delay Apotex bringing Apo-Ramipril to market. It claims treble damages pursuant to s. 4 of An Act Concerning Monopolies and Dispensing with Penal Laws, and the Forfeitures thereof, 1624 21 Jac. I, c. 3 (the “UK Statute of Monopolies”) and treble damages pursuant to s. 4 of An Act Concerning Monopolies and Dispensing with Penal Laws, etc., R.S.O. 1897, c. 323 (the “Ontario Statute of Monopolies”). It further seeks damages or an accounting of Sanofi’s profits, pursuant to s. 53.2 of the Trade-marks Act, RSC 1985, c. T-13. Apotex also seeks disgorgement of Sanofi’s profits generated from the sale of Rampiril as a consequence of the improper issuance of a patent and/or the delay in Apotex being permitted to sell Apo-Ramipiril due to Sanofi’s invocation of the Regulations.
[7] In reviewing the extensive materials filed by the parties in relation to this motion, the extensive overlap between the two proceedings became apparent to me. I became concerned that issues not yet finally resolved in the Federal Court Action had a direct bearing on the issues in this case. I also became concerned that litigating like issues in two parallel proceedings could be undesirable due to the risk of inconsistent outcomes and an undue duplication of effort and consumption of judicial resources. For these reasons, at the outset of the hearing before me I directed both sides to address the issue of the desirability of a temporary stay pending the final disposition of the Federal Court Action.
Stay of Proceedings
[8] Although the moving parties no longer actively pursue a stay of the proceedings, the court can issue a stay on its own initiative, as provided for in s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C. 43:
s. 106. A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.
[9] In Hollinger International Inc. v. Hollinger Inc., [2004] O.J. No. 3464 at para. 5 (S.C.J.), Farley J. summarized the relevant factors a court will consider when deciding whether to issue a temporary stay pending the resolution of another proceeding:
(a) whether there is substantial overlap of issues in the two proceedings;
(b) whether the two cases share the same factual background;
(c) whether issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources; and
(d) whether the temporary stay will result in an injustice to the party resisting the stay.
See, more recently, Catalyst Fund Limited Partnership II v. IMAX Corp., [2008] O.J. No. 3776 (S.C.J.) and Dadouch v. Bielak, 2011 ONSC 1583, [2011] O.J. No. 1095 (S.C.J.).
[10] Courts will also be reluctant to grant a stay if the result of the stay is to deny the plaintiff access to the courts or to substantially delay or impair the plaintiffs right to have his or her case heard: Campeau v. Olympia & York Developments Ltd., [1992] O.J. No. 1946 (Gen. Div.).
[11] The discretionary nature of this type of stay motion was described by Stratas J.A. in Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc., 2011 FCA 312, [2011] F.C.J. No. 1607 (F.C.A.) at para. 5:
This Court deciding not to exercise its jurisdiction until some time later. When we do this, we are exercising a jurisdiction that is not unlike scheduling or adjourning a matter. Broad discretionary considerations come to bear in decisions such as these. There is a public interest consideration - the need for proceedings to move fairly and with due dispatch - but this is qualitatively different from the public interest considerations that apply when we forbid another body from doing what Parliament says it can do. As a result, the demanding tests prescribed in RJR-MacDonald do not apply here. This is not to say that this Court will lightly delay a matter. It all depends on the factual circumstances presented to the Court. In some cases, it will take much to convince the Court, for example where a long period of delay is requested or where the requested delay will cause harsh effects upon a party or the public. In other cases, it may take less. [Emphasis in original.]
[12] Against the foregoing backdrop, I turn to a consideration of the factors relevant to the granting of a temporary stay in the present case.
(a) Whether there is substantial overlap of issues in the two proceedings
[13] There is a substantial overlap between many of the issues in the present proceeding and those before Snider J. in the Federal Court Action. Key among these is the determination of the amount of compensation properly recoverable by Apotex as a result of Sanofi’s conduct which delayed Apo-Ramipril from reaching market. As well, many of the same factual and legal questions raised in the Federal Court Action will again arise in the present case.
[14] The present action will involve questions regarding the proper basis for determining what amount of damages (if any) would properly compensate Apotex or would be payable by Sanofi in respect of each of the current claims. When trying these claims the trial judge will need to consider the interaction among the various heads of damage, as well as the principle of avoiding double recovery (save where it is properly permitted). Another important element of the damage calculation in the present case will be the compensation already awarded to Apotex in the Federal Court Action. The mere fact that that compensation was awarded pursuant to a statutory cause of action under the Regulations does not negate its relevance or significance for purposes of the assessing Apotex’s recoverable damages in the present case. If Apotex has already “been made whole” by reason of the amounts awarded to it under the statutory cause of action, that element may (and likely would) be a factor to take into account when determining how much more (if any) damages it should be awarded in the present case.
[15] Additionally, it is conceivable, if not likely, that certain findings of fact decided in the Federal Court Action will be relevant, if not dispositive, of the like issues in the present case, based on principles of res judicata and issue estoppel. The determination by the Federal Court of applicable principles for calculation of damages may likewise be relevant.
(b) Whether the two cases share the same factual background
[16] It is self-evident that the factual foundation of the damage claims in the present action overlaps significantly with that of the Federal Court Action: both are concerned with the impact of Sanofi’s conduct in trying to exclude Apo-Rampiril from the market. That conduct was, in the Federal Court Action, found to have caused Apotex damages, that were (or were to be) calculated pursuant to the findings of Snider J. Each of the heads of relief advanced in the present action seeks damages arising from the same conduct, albeit on the basis of different (and disparate) legal theories and some additional factual complaints. Some of the present claims rely on statutory causes of action (eg. the UK and Ontario Statute of Monopolies or the Trade-marks Act) while others are based on common law or equitable principles. Common to all of these claims, however, is the correct assessment and calculation of Apotex’s recoverable damages. Also, the parties in both proceedings are identical, with the exception of the first-named defendant in this action (Schering Corporation, which has not been served with the Statement of Claim).
(c) Whether issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources.
[17] The outcome of the Federal Court Action is likely to resolve at least some of the issues raised in the current action, resulting in a significant saving of judicial resources and legal expenses that would have otherwise been expended to address the same issues in this action. Issuing a stay of the current proceedings would also avoid the risk of inconsistent outcomes between this court and the Federal Court. Most importantly, the final outcome of the Federal Court Action, and in particular the damage calculation in that case, can and should be taken into account in arriving at the proper damage award in the present case. The result of the other proceeding may also provide the parties with a basis for reaching a compromise of the present action, thereby obviating the need for any additional judicial or legal resources to be devoted to this dispute.
[18] It may (and likely would) also be prudent for the parties to await the outcome of the appeal of Quigley J.’s decision in Apotex Inc. v. Abbott Laboratories Ltd., on which the moving parties now base this motion, as a number of relevant issues, particularly whether s. 8 damages under the Regulations is a complete code, will no doubt be relevant to the present matter.
(d) Whether the temporary stay will result in an injustice to the party resisting the stay.
[19] As Stratas J.A. noted in Mylan Pharmaceuticals, the court will not lightly delay a matter, as the court is mindful that parties who have legitimate claims are entitled to come to court in the expectation that they will be dealt with as expeditiously as the available resources will permit. That said, the court has a duty and responsibility to see that cases proceed in an orderly fashion so that the limited available judicial resources are applied in the most effective fashion for all litigants. The present case involves a commercial dispute and a monetary claim between two substantial corporate parties. The issues regarding the ability of Apotex to market Apo-Rampiril have long since been resolved. Thus this case no longer involves a potential public interest in the availability of the generic product.
[20] While granting a temporary stay will delay the date upon which Apotex may eventually recover such damage award in this action as it may be properly due, that is the only readily identifiable impact of a stay. Moreover, the length of the temporary stay sought should not be substantial, nor is it outside the parties’ control. Rather, it will be tied to the pace at which the parties choose to pursue the determination of the appeal in the Federal Court Action. Apart from timing, there is no suggestion that Apotex will otherwise suffer an injustice or be denied access to the court. The nature of its claim and the fact it is already engaged in litigation in the Federal Court that must be resolved before the present case can be decided dictate that the present case be put on hold temporarily. Pre-judgment interest will continue to accrue on the damage claim.
Conclusion
[21] The foregoing analysis supports the conclusion that a temporary stay is warranted in this case. It was for these reasons that I stayed the plaintiff’s action pending the outcome of the appeal taken by the defendants to the Federal Court of Appeal from the decision of Snider J., and any appeal therefrom.
[22] I am conscious that the parties came to court on February 4, 2013 prepared to argue numerous other issues, including the potential availability of limitation period defences, among other points. At the end of the day, however, their dispute comes down to money, a subject over which there is always room for compromise. I have analyzed above the need for finality in the Federal Court Action before there can be a judicial determination of the possible amount of any damage award in the present case. Once that finality is achieved, each side will have the opportunity to assess whether and to what extent further litigation of the present claim, as opposed to compromise, would be the better course of action. In view of that possibility, in the interests of conservation of judicial resources and in the absence of any urgency or injustice, I did not ask counsel to argue those additional issues and I do not intend to address them. Once the outcome of the Federal Court Action is known and the temporary stay is lifted, should the parties consider it necessary or advisable to litigate the remaining issues, they may renew the defendants’ motion in relation to them.
[23] I have also noted that the parties may wish to wait for the outcome of the appeal in Apotex Inc. v. Abbott Laboratories Ltd. before proceeding with this present action, as it will likely provide appellate authority on a number of matters at issue in the present case. In any event, in view of Sanofi’s decision to “refocus” its motion and its reliance on that decision, it would be appropriate for revised factums to be filed so that the arguments on both sides may be suitably focused when (and if) the defendants’ motion is next before the court.
[24] In the circumstances, having granted the temporary stay on the foregoing basis, I am not seized of those portions of the matter that have yet to be the subject of argument. Costs are reserved to the judge who decides the motion, if and when it is argued, or to the trial judge.
Stinson J.
Date: March 7, 2013