Apotex Inc. v. Eli Lilly and Company et al., 2015 ONSC 5396
COURT FILE NO.: CV-11-420115
DATE: 20150827
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Apotex Inc., Plaintiff/Responding Party
AND:
Eli Lilly and Company and Eli Lilly Canada Inc., Defendants/Moving Parties
BEFORE: Sean F. Dunphy J.
COUNSEL: G. Gaikis and A. Mandlsohn, for the Defendants/Moving Party
N. De Luca and M. Yasskin, for the Plaintiff/Responding Party
HEARD: August 11, 2015
ENDORSEMENT
Introduction and Overview
[1] Can a case brought under a nearly four hundred year old statute be considered “novel”? This case asks the court to decide whether a venerable old statute or its 118 year old descendant are mere items of academic curiosity or living, breathing statutes with relevance in the 21st Century. The defendants have brought a Rule 21.01(1) motion to strike out a cause of action founded on these statutes, claiming it is “plain and obvious” the action cannot succeed. Having concluded that it is premature to consign these statutes to the history books before Parliament or a court have had a on opportunity to consider them in detail upon a proper factual background, I am dismissing this motion and permitting the plaintiff to proceed to trial with its claims based upon these statutes.
[2] A singular moment in the evolution of British and thus Canadian constitutional laws was the enactment by King James I of the Statute of Monopolies in 1624. By this statute[^1], the practice of British monarchs of selling monopolies by way of letters patent issued under the Royal Prerogative was abolished. The Province of Ontario thought enough of this venerable statute in 1897 to re-enact it[^2], or at least a slightly modernized version of it, and it remains on the statute books in Ontario to this day.
[3] While the two statutes contain much language that is archaic, they offer a potentially powerful tool to the plaintiff in that a successful plaintiff acting under those statutes may claim double costs and treble damages. In addition, these statutes offer the plaintiff an alternative means of recovery should the defendants’ various objections to its other claims prevail. The matter is thus of more than academic interest to the plaintiff and of course to the defendant who would rather remove that Sword of Damocles and not see the advantage it seeks from the defences it wishes to advance blunted by these ancient and potentially broader statutes.
[4] For convenience, I refer to both the 1624 statute and the 1897 Ontario re-enactment of it as the “Monopolies Acts” collectively and the “1624 Act” or the “Ontario Monopolies Act” separately.
Procedural and Factual Background
[5] In a motion under Rule 21.01(1) of the Rules of Civil Procedure, I must take the facts as I find them in the Statement of Claim. The following is an abbreviated summary of the claim as it relates to the Monopolies Acts claims.
[6] The plaintiff Apotex Inc. is a Canadian “generic” pharmaceutical manufacturer. Eli Lilly Canada Inc. and its parent company Eli Lilly and Company (collectively “Lilly”) are also pharmaceutical manufacturers.
[7] In 2001, Lilly obtained a patent (the “735 Patent”) under the Patent Act, R.S.C. 1985, c. P-4 for the use of an existing drug known as atomoxetine in the treatment of ADHD. Lilly commenced the marketing of this drug under the trade name “Strattera” in late 2004 and proceeded to sell this drug at allegedly monopoly prices until 2010.
[8] By October 10, 2008 Apotex had developed its own version of atomoxetine. But for actions taken by Lilly, the competing drug manufactured by Apotex would have been able to be offered for sale as of that date.
[9] Describing the means by which Lilly was alleged to have prevented Apotex from marketing its competing drug requires a description of the scheme of the Patent Act and the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the “NOC Regulations”) made pursuant to that Act. What follows is a highly simplified and abbreviate summary of quite complex regulations. It is doubtless somewhat over-simple and imprecise. However, it will serve for present purposes.
[10] In order to sell a new drug in Canada, a Notice of Compliance (“NOC”) from the Minister must be obtained. So-called “originators” and “generics” have different technical requirements to satisfy in making their application which are not material here.
[11] The originator is permitted to add an approved drug to a list of drug patents and uses maintained by the Minister known as the Patent Register. Inclusion on the patent register requires the patent holder to take the step of adding it to the list. There is no obligation to do so.
[12] If a generic submits an application for an NOC in respect of an already approved drug which is also on the patent register, it may either await expiry of the patent or submit a statement in writing challenging the right of the patent to have been included on the patent register. Among the grounds that may be alleged are the invalidity of the patent.
[13] Where the generic makes such a challenge in writing, the originator then has a period of 45 days to commence an application in Federal Court for an order of prohibition under s. 6 of the NOC Regulations prohibiting the Minister from issuing the requested NOC. If such an application is brought by the originator under s. 6, s. 7 of the NOC Regulations provides that the Minister may not issue the NOC until the proceeding is withdrawn, discontinued or dismissed (subject to a two year time limit).
[14] Subection 8(1) of the NOC Regulations provides:
“If an application made under subsection 6(1) is withdrawn or discontinued by the [originator] or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the [originator] is liable to the [generic applicant] for any loss suffered during the period”.
[15] Lilly commenced the required proceeding for an order of prohibition under s. 6 of the NOC Regulations in 2008.
[16] Apotex was not the only party with an interest in marketing a version of atomoxetine to treat ADHD. Another generic manufacturer brought a Federal Court proceeding to seek an order declaring the 735 Patent to be invalid. That action succeeded and a judgment was issued under the Patent Act declaring the 735 Patent to be invalid and void on September 14, 2010.
[17] The Minister issued Apotex its NOC on September 21, 2010.
[18] On October 29, 2010, the proceeding of Lilly for a prohibition order under s. 6 of the NOC Regulations was dismissed.
[19] This statement of claim was issued on February 11, 2011 and amended on August 9, 2012. In this claim, Apotex asserted the following causes of action:
a. An action for damages pursuant to the Monopolies Acts;
b. An action for damages under s. 8 of the NOC Regulations;
c. An action for damages under s. 53.2 of the Trade Marks Act, R.S.C. 1985, c. T-13;
d. Relief arising from unjust enrichment; and
e. “Such further and other relief”.
[20] In respect of the Monopolies Acts claims, it is alleged in paragraph 35 and 36 of the Statement of Claim as follows:
“35. Apotex states that, had the ‘735 Patent not been improperly issued, the Defendants would not have been able to list the ‘735 Patent on the Patent Register against Strattera and, accordingly, Apotex would have been in a position to and would have received a NOC for Apo-Atomoxetine capsules earlier than September 21, 2010 and, in fact, on or about October 10, 2008.
- Apotex therefore states that it has been hindered, grieved, disturbed and disquieted by occasion and pretext of the ‘735 Patent and is entitled to treble damages in respect thereof, which damages will be particularized prior to trial.”
[21] No Statement of Defence has yet been filed. Instead, Lilly has sought to strike out all of the Statement of Claim except the claim under s. 8 of the NOC Regulations.
[22] By reasons for decision issued on July 25, 2012 (reported at 2012 ONSC 3808) Macdonald J. declined to strike out the unjust enrichment claim or the Trade Marks Act claims but struck the so-called “basket clause” claim. Lilly had sought to strike the Monopolies Acts claims in the same motion as well, but MacDonald J. was unable to hear that motion in the time available.
[23] Lilly sought leave to appeal from Macdonald J.’s decision. Leave was denied in respect of the challenge to the Trade Marks Act claim but allowed in respect of the unjust enrichment claim by Ducharme J. on February 22, 2013 (2013 ONSC 1135. On September 24, 2013, the Divisional Court allowed Lilly’s appeal and struck Apotex’s unjust enrichment claim from the Statement of Claim.
[24] In overturning Macdonald J.’s ruling, Grace J. referred to the ruling of Quigley J. in Apotex Inc. v. Abbott Laboratories Ltd. et al., 2013 ONSC 356 which had been upheld by the Court of Appeal at 2013 ONCA 555.
[25] It was Apotex’s turn to appeal. Leave to appeal from the Divisional Court decision was granted by the Court of Appeal on January 27, 2013. The hearing of the appeal occurred on September 10, 2014 with reasons released on May 5, 2015. The Court of Appeal upheld the Divisional Court ruling but on different grounds. Feldman J.A. found that the unjust enrichment claim was fatally flawed due to the lack of a “corresponding deprivation” on the part of Apotex.
[26] The present Notice of Motion under Rule 21.01(1) of the Rules of Civil Procedure seeks to strike out only the Monopolies Acts claims. The Notice of Motion was issued on March 24, 2014 after leave to appeal to the Court of Appeal on the unjust enrichment claim had been granted but before the hearing or a decision. The parties appeared before Stinson J. on June 10, 2014 to hear Lilly’s motion that its motion herein by adjourned until after the Court of Appeal ruling on the unjust enrichment matter.
[27] Without diving too deeply into past interlocutory history, Stinson J. felt that the Court of Appeal decision might have significant impact on this motion. Among the arguments that Lilly made on this motion is the “complete code” argument to the effect that s. 8 of the NOC Regulations is a “complete code” of rights and responsibilities arising from delay to market claims in the area of patents. This argument had met with some success in the Apotex Inc. v Abbott Laboratories Ltd. et al. (supra) matter before Quigley J. of the Divisional Court. It was argued that a temporary stay until after the Court of Appeal ruling would be in the interest of justice. If the Court of Appeal endorsed the complete code argument to dismiss the unjust enrichment claim, the same reasoning might also apply to the Monopolies Acts claims. As it turns out, the Court of Appeal ended up ruling on different grounds and, at least on my view of their decision, left the “complete code” argument in relation to s. 8 of the NOC Regulations for another day.
Issues
[28] The question I have to determine on this motion is this whether based upon a generous reading of the Statement of Claim as it currently stands, and assuming all of the allegations contained therein to be true, it is “plain and obvious” that the plaintiff has no cause of action under either or both of the Monopolies Acts. I have broken this down to three questions that I have considered separately:
a. What is the test on Rule 21.01(1) Motions?
b. Are the Patent Act and the NOC Regulations a “complete code” which preclude claims under the Monopolies Acts entirely?
c. Do the Monopolies Acts apply at all?
Analysis and Discussion
(i) Test on Rule 21.01(1) Motions
[29] There is no dispute between the parties as to the proper test to be employed on motions under Rule 21.01(1) of the Rules of Civil Procedure. I find myself writing this phrase quite often and yet Rule 21.01(1) motions proliferate – both the serious and the frivolous. Invariably, one side argues with all the passion and force they can muster that a matter is plainly and obviously black while their opponent maintains with equal force and vigour that it is even more plainly and obviously white.
[30] A convenient source for the principles to be applied in these cases in the Supreme Court of Canada decision in R. v. Imperial Tobacco Canada, 2011 SCC 42, [2011] 3 S.C.R. 45 where McLachlin C.J. reviewed Rule 21.01(1) and its analogue in other Canadian jurisdictions. The test is whether “it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action” or that “the claim has no reasonable prospect of success”: Imperial Tobacco at para. 17. Other formulations along the same lines have been tried, but the weight of jurisprudence favours those simple summations of it.
[31] While endorsing the “plain and obvious” test on Rule 21.01(1) motions, Imperial Tobacco also admonished the courts that the Rule is to be employed with care in the presence of possibly novel causes of action: “Valuable as it is, the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed…The approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial” (Imperial Tobacco, supra, at para. 21).
[32] The underlying rationale behind the rule was described by McLachlin C.J. in the following terms:
“19. The power to strike out claims that have no reasonable prospect of success is a valuable housekeeping measure essential to effective and fair litigation. It unclutters proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial.
- This promotes two goods – efficiency in the conduct of the litigation and correct results. Striking out claims that have no reasonable prospect of success promotes litigation efficiency, reducing time and cost. The litigants can focus on serious claims, without devoting days and sometimes weeks of evidence and argument to claims that are in any event hopeless. The same applies to judges and juries, whose attention is focused where it should be – on claims that have a reasonable chance of success.” (Imperial Tobacco, supra, at paras. 19-20)
[33] I have quoted the rationale advanced by McLachlan C.J. at length to highlight how inapplicable to the current circumstances much of the rationale underlying Rule 21.01(1) of the Rules of Civil Procedure is here. A key feature of the defendants’ argument is the very similarity in the factual foundation of the Monopolies Acts claim and the remaining claims in the Statement of Claim. Substantially the same factual inquiry into substantially the same issues will be undertaken in discovery and at trial regardless of what decision I render here. There is no economy in terms of focus and attention on argument since of course bringing such motions consumes precisely the same (or more) time and runs the added risk of having to do it twice. The parties are going to have their innings at bat on this issue before a judge at some point – whether at trial or on a Rule 21.01(1) motion as has been done here. I would be hard pressed to find that triggering a decision at this point, particularly with the very significant risk of a re-match at trial, advances the efficiency or economy of the litigation process.
(ii) “Complete Code” Argument
[34] The respondents submit that the Patent Act and the NOC Regulations are a “complete code”. They strongly rely on the decision of the Quigley J. in the Divisional Court in the Apotex Inc. v. Abbott Laboratories Ltd. case (supra). While acknowledging that the Court of Appeal has yet to explicitly adopt Quigley J.’s approach and dismissed the unjust enrichment claim here on different grounds, they nonetheless suggest that the reasoning of Quigley J. is persuasive and should be applied here.
[35] I start by noting that the Patent Act by itself hardly looks like a complete code. Beyond stating in s. 63 that a patent once ruled to be invalid “shall thereupon be and be held to have been void and of no effect, unless the judgment is reversed”, the statute is quite mute on the consequences of an invalid patent as regards a frustrated competitor or consumer. The NOC Regulations provide an indirect code to some degree – if an originator brings a proceeding under s. 6 to prohibit the Minister from issuing an NOC to a competitor, then the originator may have to compensate the competitor if that proceeding is unsuccessful. The NOC Regulation is silent about the consequences of an invalid patent if no such proceeding is commenced under s. 6 thereof.
[36] The Court of Appeal considered the “complete code” argument of the defendants at some length in its May 5, 2015 reasons confirming the dismissal of the plaintiff’s unjust enrichment claim. I do not propose to re-iterate Feldman J.A.’s discussion of that argument at length here (c.f. 2015 ONCA 305 at paras. 26 et seq.). At para. 35, Feldman J. A. summarized the situation as regards this argument as follows:
“To summarize, the Divisional Court in this case and the Federal Court of Appeal have both held that the Patent Act and the [NOC Regulations] constitute a complete code with respect to available remedies for a breach of the Patent Act or its regulations. However, the British Columbia Court of Appeal in Low rejected that proposition, at least to the extent that it would preclude a potential common law right of action by consumers.”
[37] Feldman J.A. provided a concise summary of the current score card on the question in the passage cited above: Divisional Court and Federal Court leaning to “yes”, British Columbia Court of Appeal leaning towards no. As regards common law actions, I view the jurisprudence as inconclusive.
[38] The plaintiff’s factum contains a number of grounds for distinguishing Quigley J.’s decision: the motion was a summary judgment motion, not a Rule 21.01(1) motion; the unjust enrichment claim there was precluded based on a settlement agreement about which there was a factual foundation; he left the door open for some common law actions such as abuse of process; he was not considering a statutory cause of action. The plaintiff’s able arguments – as well as the defendants’ responses to them – all appear to me to be well and good but in my mind simply reinforce the basic proposition that the law is not yet settled.
[39] Our Court of Appeal has not yet been presented with a case requiring it to rule squarely on the matter. There being no binding decision from that Court here, I cannot view the matter as settled. It will be decided by our Court of Appeal when it must be or by the Supreme Court of Canada in due course. At this point, I need only conclude that it is hardly plain and obvious that the “complete code” argument will carry the day.
[40] It seems to me that the argument against summary dismissal of common law actions is even stronger in the case of statutory causes of action which is what we are faced with here under the Monopolies Acts.
[41] The defendants submit that the factual basis of the claim pleaded under the Monopolies Acts is the same as the claim under s. 8 of the NOC Regulations. Parliament has already considered the matter and the NOC Regulations strike a delicate balance. Paraphrasing Quigley J., they submit that allowing a Monopolies Acts claim would frustrate Parliament’s policy scheme and that s. 8 is part of a complete and comprehensive scheme that supplies both the duty and the adjudicative machinery to deal with it.
[42] The flaw in this argument is twofold.
[43] Firstly, the “duty” in the claim advanced under the Monopolies Acts is not supplied by the NOC Regulations in s. 8 or at all. Section 8 imposes a duty to pay compensation on a party who brings a prohibition proceeding unsuccessfully under s. 6 of that same regulation. The obligation to compensate arises from an unsuccessful court action that Lilly was in no way obliged to have commenced. The plaintiff received its NOC from the Minister before the s. 6 proceedings of Lilly (which did not even raise the issue of the validity of Lilly’s patent) were dismissed. The plaintiff’s case as framed does not plead or rely upon the subsequent outcome of the judicial review proceeding under the NOC Regulations. Rather, the elements of the plaintiff’s claim under the Monopolies Acts are
a. Lilly procured an unlawful patent which purported to grant it a monopoly as described in article 1 of the Monopolies Acts. In this regard, the plaintiff argues that the effect of the judgment invalidating the 735 Patent was that the patent as registered shall “be and held to have been void and of no effect” under s. 62 of the Patent Act;
b. From this initial step in procuring an unlawful monopoly though an invalid letters patent, Lilly was enabled to take subsequent steps to grieve or disquiet the plaintiff by putting the monopoly into exercise, use or execution. Such steps included causing the 735 Patent to be added to the Patent Register.
c. Since Apotex was “grieved, disturbed or disquieted” in its business by reason of Lilly initially obtaining and then seeking to use or exercise its unlawful monopoly, Apotex claims a right of action under art. 4 of the Monopolies Acts.
d. Lilly continued to grieve or disquiet Apotex until the NOC was issued on September 21, 2010.
[44] The trigger of the claim is thus taking the voluntary step of procuring what is now proved to have been an unlawful monopoly by way of void letters patent and then putting that unlawful monopoly into use, exercise or execution in such a manner as to grieve or disquiet Apotex. Apotex was not prevented from receiving an NOC by any action of the Minister. It was prevented from receiving it by reason of the voluntary decision of Lilly to seek an invalid patent and then to place its invalid patent on the Patent Register. The trigger for the s. 8 claim under the NOC Regulations is the dismissal, discontinuance or withdrawal by Lilly of its prohibition application under s. 6.
[45] The outcome of Lilly’s prohibition application is irrelevant to Apotex’s claim but is the condition sine qua non of a claim under s. 8 of the NOC Regulations.
[46] It appears to me at least arguable that there are two separate and distinct causes of action at play here, even if there is substantial overlap between them.
[47] Section 8 of the NOC Regulations makes an originator potentially liable for damages if it elects to take the step of insisting upon its claimed patent right by placing its patent on the Patent Register by commencing an proceeding for a prohibition order under s. 6 of the NOC Regulations. If they do nothing, the NOC will be issued at the end of the 45 day waiting period. Even in that case, it may be that a competitor could argue that they have been “grieved” by being made to wait the 45 days which they would not have had to do had the originator not wrongfully placed the invalid patent on the Patent Register in the first place. They may also be able to show they were “grieved” by the mere existence of the void patent.
[48] By contrast to s. 8 of the NOC Regulations, Article 4 of the Monopolies Acts speaks directly to the question of the consequences of invalid monopolies including those under invalid letters patent from the outset. Anyone obtaining an unlawful monopoly by reason of a commission or letters patent is prohibited from doing anything to seek to exercise that monopoly. A valid patent is a lawful monopoly because the Patent Act makes it so; an invalid patent has no such protection from the Monopolies Act and, arguably, the Patent Act is silent on the point.
[49] Secondly, the “complete code” argument is harder to sustain where the contest is between a specific statute and a subordinate regulation. This would seem even more difficult where neither the regulation nor the statute under which it was enacted purport expressly to exclude the prior statute.
[50] There are many instances of claims existing side by side with remedial provisions in statutes. Trustees in Bankruptcy commonly resort to provincial fraudulent conveyances legislation despite having detailed statutes to work with under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (which creates similar rights under, among others, s. 95). It is not unheard of for a given situation to give birth to causes of action under more than one statute.
[51] Parliament in the Patent Act has not explicitly purported to foreclose actions under the Monopolies Acts. Whether it has done so by necessary implication in authorizing the NOC Regulations to be enacted by the Governor in Council remains to be seen but seems to me to be sufficiently uncertain to preclude a decision at this point under Rule 21.01(1) of the Rules of Civil Procedure.
(iii) Do the Monopolies Acts apply at all?
[52] While written in the archaic English of the Shakespearean era, the preamble to the 1624 Act is clear enough as to the purpose of the statute. Paraphrasing and modernizing the spelling, the preamble notes that although His Majesty had in 1610 already abolished monopolies as being contrary to law and commanded that none should presume to move His Majesty “for matters of that nature” in future, many such grants had nevertheless been unduly obtained and unlawfully put into execution. Article 1 of the 1624 Act therefore declared that “all monopolies and all commissions graunts licenses charters and letters patents …to any persons for the sole buying selling makings workings or usingse of any thinge within this Realme …are altogether void and of none effecte and in noe wise to be putt in ure or execution”.
[53] Article III of the 1624 Act provided that “all person and persons …shall stand and be disabled and uncapable to have use exercise or putt in ure any monopolies of any such commission graunt license charters letters patent…”. Finally Article IV provided that “if any person …shall be hindered greeved disturbed or disquieted…by occasion or pretext of any monopolie, or of any such commission graunt license [etc.]…and will sue to be releeved in or for any of the premises”, then such person shall have a claim under this statute and “shall recover three tymes soe much as the damages which he or they susteyned by means or occasion of being soe hindered greeved disturbed or disquieted” as well as double costs.
[54] In short, while the King may from time to time find himself persuaded to listen to the demands of certain of his subjects and grant an unlawful monopoly despite having already vowed not to, anyone attempting to use such a monopoly will find him or herself on the receiving end of a treble damages law suit with double costs and in the civil courts. Had Penelope such sanctions with which to threaten her troublesome suitors, Odysseus might have had a more peaceful homecoming.
[55] The first question to consider is whether the 1624 Act is still alive in some or all of Canada.
[56] The laws of England as they stood on October 15th, 1792 were received into the laws of Upper Canada (now Ontario) in all matters relative to property and civil rights: Property and Civil Rights Act, R.S.O 1990, c. P.29. Similar “statutes of reception” were enacted by the other colonies on different dates – I have not sought to puzzle my way through the status of English law through Lower Canada following the union of Upper and Lower Canada prior to Confederation. I confine my comments here to Upper Canada and Ontario. Section 129 of the Constitution Act, 1867 continued in force all of the laws in force in any of the four colonies unless later amended or repealed.
[57] It seems to me to be arguable that the 1624 Act is a matter of property and civil rights and was thus among the body of laws incorporated into Upper Canada in 1792 by the Property and Civil Rights Act. The defendants have provided me with case law suggesting that the 1624 Act is a penal or enforcement provision: M&I Door Systems Ltd. v. Indoco Industrial Door Co. Ltd., (1988) 22 C.P.R. (2d) 445 (FC-TD); Alberta Shuffleboards (1986) Ltd. v Alberta 1992 CanLII 14187 (AB KB), [1992] A.J. No. 701 (Q.B.). The comments to that effect in both cases are accompanied by little in the way of persuasive reasoning to suggest that the means of reception of English law into Upper Canada (Property and Civil Rights Act) or an analogous statute was raised or discussed. I can’t view this slender body of case law as settling the matter. It is at least arguable that the 1624 Act became part of the laws of Upper Canada in 1792 and survived through to the Constitution Act 1867.
[58] The defendant also argues that the 1624 Act applies only to England and Wales and was repealed in 1969. On both grounds, they argue the plaintiff cannot claim a cause of action arising under it today. In my view, neither argument carries any weight. If the 1624 Act was not a law of England received into Upper Canadian law by the Property and Civil Rights Act, then it stayed in England and missed the boat across the Atlantic. It was not the laws of Scotland or Ireland that were transmitted. It was the laws of England, at least in relation to property and civil rights. By the same token, amendments to the law so received after the date of reception are irrelevant. It has been a very long time since Westminster could affect the laws of Canada. In 1969 it could only do so in very narrow circumstances.
[59] I find that it is not plain and obvious that the 1624 Act is not in force in Ontario and other parts of Canada.
[60] Absent the preamble and with more modern English, the Ontario Monopolies Act is materially identical to the 1624 Act. There is no question of validity raised about the Ontario statute – it has not been repealed and is thus still in force.
[61] Assuming the two statutes are in force, the next question is do they apply?
[62] The theory of the plaintiff’s case is thus that the defendants obtained what proved to be an unlawful patent. They cannot shelter their subsequent acts under the authority of the Patent Act because their patent was found to be void ab initio. Whatever rights they claimed to use to disquiet or grieve competitors, whether under the Patent Act or otherwise, were without lawful foundation and can claim no shelter from the Monopolies Acts. On the strength of that unlawful patent, the defendants proceeded to “have use exercise” or “putt in ure” their unlawful monopoly right by taking the entirely optional and voluntary step on their part of causing it to be placed on the Patent Register where the foreseeable and indeed intended effect of such registration was to cause the plaintiff to be grieved in carrying on its lawful business (obtaining an NOC and selling the product they sought to sell). The plaintiff therefore claims the benefit of the damages provided for in Article IV whose entire purpose was to dissuade suitors from leading Her Majesty astray in this fashion.
[63] Can it be said that such a case is bound to fail?
[64] The defendants urge that the Monopolies Acts do not apply to patents. They point to the exemption in s. 5 of the Ontario Monopolies Act for patents in respect of “new manufactures” within Ontario. A similar but differently worded exception (“true and first inventor”) is found in the 1624 Act. The short answers to this argument are that the 735 Patent was never a valid patent nor was it in respect of a “new manufacture” or “true first inventor”. At the risk of oversimplification, the void patent was in respect of a new use of an old drug. While there may be arguments available that putting an old drug to new use can enable one to be a “true and first inventor”, that question certainly strikes me as a matter that is less than plain and obvious.
[65] Lilly also submits that the Ontario statute should be read down or construed in such a fashion as to avoid infringing on Federal patent jurisdiction. The same response – that the claim arises from the invalidity of a patent, not the validity of one – is made by the plaintiff. The plaintiff further replies and I agree that in the absence of a Notice of Constitutional Question under s. 109 of the Courts of Justice Act, R.S.O. 1990, c. C.43 I cannot proceed to find that the Ontario Monopolies Act is ultra vires.
[66] In my view, I must give weight to the 1960 decision of the Ontario Court of Appeal in Gilbert Surgical Supply Co. Ltd. and Gilbert v. Frank W. Horner Ltd. (1960) 1960 CanLII 851 (ON CA), 34 C.P.R. 17 (Ont. C.A.). In Gilbert, the plaintiff sought treble damages under the Ontario Monopolies Act, for actions taken by the defendant to enforce an allegedly invalid patent. The claim bears striking similarities to the present claim and is set forth at length in the headnote to the report of the case. Aylesworth J. A. noted that the “action is a novel one and with all respect, I cannot agree that the respondent has shown the case to one within the Rule; I am unable to conclude at this stage of the litigation that the appellants’ action cannot possible succeed or that clearly and beyond all doubt, no reasonable cause of action has been shown” (at p. 21).
[67] Gilbert was one of the cases that Wilson J. applied in Hunt v. Carey Canada Inc. 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959 (at paras. 26-27) when re-affirming the “plain and obvious” test for motions under Rule 21.01(1) of the Rules of Civil Procedure.
[68] In the face of Gilbert (supra), Hunt v. Carey Canada Inc. (supra) and the plain words of the (two) Monopolies Acts, I cannot conclude that it is plain and obvious that no claim can be advanced under either or both of those statutes today.
Disposition
[69] Accordingly, I dismiss this motion with costs. The parties have provided me with their respective outline of costs.
[70] These are both sophisticated litigants. Indeed, they are sophisticated in litigating with each other. I have no doubt that neither side was surprised by the Costs Outline of the other. Indeed, the two outlines were reasonably close to each other. The plaintiff claimed $52,031.00 in fees on a partial indemnity basis while the defendants provided an outline of $35,933.74 in fees (in both cases excluding HST). Disbursements of each were within cab fare of each other ($1014.24 vs $1005.01). These outlines have been produced with neither side having the benefit of knowing the outcome of the hearing.
[71] The plaintiff has been successful and has preserved the right to advance a significant claim of some importance to it. They are entitled to costs on a partial indemnity basis in my view.
[72] Among the factors I have been asked to take into account by the defendants are the fact that the plaintiff’s claim includes claims for recovery of their (unsuccessful) opposition to the motion of the defendants before Stinson J. to stay the hearing of this motion pending the decision of the Court of Appeal. As it turns out, the actual decision of the Court of Appeal had little of the anticipated impact on this hearing that the defendants had expected when successfully arguing for the stay. I fault neither party for their position on that June 10, 2014 motion, the costs of which are before me today.
[73] The defendants also suggests that I take into account the larger number of senior counsel deployed by the plaintiff, the higher ratio of work performed by senior vs junior counsel (i.e. efficiency), the total amount of time spent compared to the defendants and the total of the claimed amount for the type of motion. For these reasons, they suggest it is appropriate to reduce the plaintiff’s costs closer to their own outline.
[74] The scales might be said to tip the other way were I to observe that the defendants pursued this motion knowing that the plaintiff’s Trade Mark claim and NOC Regulations claim had both survived pleadings attack and would thus be proceeding. Those two causes of action raise substantially similar factual issues to the Monopolies Acts claims that the defendants sought to strike with this motion. Indeed, that very similarity was a large part of their argument. It is open to me to question whether a Rule 21.01(1) motion was worth the incremental delay here even if I fully appreciate the defendants’ reasons for bringing it.
[75] I don’t view this factor as being one warranting a punitive award of costs by any stretch. However, it is a factor that I consider to warrant some (small) amount of weight.
[76] Both outlines have included costs of the various CPC appearances as well as the hearing before Stinson J. on the stay motion and I view myself as having jurisdiction to award costs on the motion including all such appearances.
[77] On balance, and considering the factors in Rule 57.01 of the Rules of Civil Procedure, I have decided to adjust the claim of the plaintiff down somewhat but not as far as asked by the defendants. I fix costs on this motion at $49,014.24 inclusive of fees and disbursements. This is payable within 30 days as provided by Rule 57.03(1)(a) and bears normal post-judgment interest.
Mr. Justice Sean F. Dunphy
Date: August 27, 2015
[^1]: “An Act concerning Monopolies and Dispensations with penal Lawes and the Forfeyture thereof”, 21 Jac. I, c. 3 [^2]: “An Act concerning Monopolies and Dispensation with penal laws, etc.”, R.S.O. 1897, c. 323