Court File and Parties

COURT FILE NO.: CV-11-429541 DATE: 2016-05-27 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Apotex Inc., Plaintiff/Responding Party AND: Schering Corporation, Sanofi-Aventis, Sanofi-Aventis Deutschland GmbH and Sanofi-Aventis Canada Inc., Defendants/Moving Parties

BEFORE: S. F. Dunphy J.

COUNSEL: N. DeLuca and M. Yasskin, for the Plaintiff G. Gaikis, for Defendants Sanofi-Aventis, Sanofi-Aventis Deutschland GmbH and Sanofi-Aventis Canada Inc M. Richard and L. Aumand, for Schering Corporation

HEARD: April 6, 2016

Endorsement

[1] In 1993, the Government of Canada enacted the “Patented Medicines (Notice of Compliance) Regulations”, SOR/93-133 (the “PMNOC Regulations”). The public policy goals behind these regulations were many. If putting an end to the litigation wars pitting generic drug manufacturers against the major drug firms (sometimes called “originators”) was one of them, it would appear that peace is taking its time to break out. Perhaps, as with the outcome of the French Revolution, it is too soon to tell.

[2] This motion is one further episode in an on-going litigation war between originators and generics that has filled many volumes of case books. It bears a striking resemblance to a case decided by me less than a year ago with the same plaintiff and a different defendant [1]. It is no coincidence. The plaintiff has launched a number of similar claims against various originators holding patents that have proved to be invalid seeking to validate avenues of compensation beyond the limited ones provided in the PMNOC Regulations. The statements of claim are drawn from a single template. On one side and the other, similar issues have been raised and, despite years of litigation, none of the claims has proceeded to trial on the merits. This claim remains at the pleadings stage.

[3] I cannot foresee when the litigation wars among these parties will end. I am confident that this decision will not mark the beginning of the end. However, it is at least time to declare the end of the beginning. While I am striking two claims the plaintiff did not seek to defend that are identical to claims struck in previous, similar cases, I am dismissing the balance of these motions. The legal issues raised in this claim are insufficiently settled to be the object of a pleadings motion.

[4] I am further directing a case conference to be convened forthwith pursuant to Rule 50.13 of the Rules of Civil Procedure to put this claim on track to a resolution. The stakes are large and the parties will very justifiably wish to protect their interests carefully. It is, however, time to get a single trial completed and start the process of obtaining clarity on a number of potentially novel causes of action that have been raised in this and many similar cases.

Facts and overview

[5] The two groups of corporate defendants (Schering Corporation and the three Sanofi-Aventis defendants) each brought separate motions seeking to strike the plaintiff’s claim in whole (Schering) or in substantial part (Sanofi-Aventis) pursuant to Rule 21.01(1)(b) (no reasonable cause of action) and Rule 25.11(b) and (c) (frivolous, vexatious or an abuse of process) of the Rules of Civil Procedure.

[6] This case arises from efforts by the plaintiff to market a new generic drug (Apo-Ramipril) in competition with a drug that was sold in Canada by Sanofi-Aventis (Altace) under an exclusive license from Schering. The plaintiff claims to have been wrongfully delayed by an invalid patent claim from bringing to market its product during which time the defendants reaped profits under what is alleged to have been an unlawful monopoly.

[7] In this action, the plaintiff claims:

a. Treble damages pursuant to s 4 of An Act concerning Monopolies and Dispensation with Penal Laws, etc., R.S.O. 1897, c. 323 (the “Ontario Monopolies Act”);

b. Treble damages pursuant to s. 4 of An Act concerning Monopolies and Dispensation with Penal Laws and the Forfeitures thereof, 1624, 21 Jac. 1, c. 3 (the “UK Monopolies Act”, or, collectively the “Monopolies Acts”)

c. Damages or an accounting of profits under the Trade-marks Act, R.S.C. 1985, c. T-13;

d. Disgorgement of revenues or profits on the basis of unjust enrichment; and

e. Other relief (the so-called “basket clause”).

[8] The last two prayers for relief (unjust and enrichment and the “basket clause”) have already been struck from a very similar Apotex statement of claim in litigation against Eli Lilly and Company. J. Macdonald J. dismissed the “basket clause” claim in Apotex Inc. v. Eli Lilly and Company, 2012 ONSC 3808. The unjust enrichment claim was struck by the Divisional Court and its ruling upheld by the Court of Appeal (leave to appeal to the Supreme Court of Canada denied): Apotex Inc. v. Eli Lilly and Company, 2013 ONSC 5937) aff’d 2015 ONCA 305), leave denied 2016 SCC 940. The plaintiff recognized the applicability of the precedents set by those cases and did not oppose the striking of these claims from its statement of claim. I did not call upon the moving parties to address those two claims.

[9] The defendants initially moved to strike all of the claims of Apotex under Rule 21.01(b) and Rule 25.11(b) and (c) of the Rules of Civil Procedure. The Sanofi-Aventis defendants abandoned their motion to strike the Monopolies Acts claims in light of my prior ruling on those claims in the Apotex Inc. v Eli Lilly and Company et al., 2015 ONSC 5396 matter and so advised the plaintiff prior to the hearing of this motion. In the result, what remained to be argued was a motion by Schering alone to strike the Monopolies Acts claims and the Trade-marks Act claims while Sanofi-Aventis sought only to strike the Trade-marks Act claims.

[10] Schering is the registered owner of a number of patents in Canada. This case concerns a patent issued on March 20, 2001 as No. 1,341,206 (referred to by the parties as the “206 Patent”). Among the compounds claimed by this patent is a drug known as “Ramipril”, an ACE inhibitor used in the treatment of hypertension. Schering licensed its rights under the 206 Patent to Sanofi-Aventis (for the purposes of this motion only, I am treating all of the Sanofi-Aventis defendants as a single entity which, obviously, they are not). Sanofi-Aventis marketed Ramipril under the trade name “Altace” from 1994.

[11] There were a number of patents regarding various formulations and applications of Ramipril apart from the 206 Patent held by Schering. One of them, the “087 Patent” pre-dated the 206 Patent and expired in 2002. In one form or another, the parties have been in litigation over Ramipril and the plaintiff’s desire to manufacture and market a generic version of Ramipril since 2003.

[12] For present purposes, it is sufficient to summarize the regulatory backdrop to this claim at a very high level. A manufacturer proposing to sell a new drug in Canada is required to obtain a Notice of Compliance (or “NOC”) from the Minister of Health pursuant to the Food and Drugs Act, R.S.C. 1985, c. F-27 after providing evidence that the drug is both safe and efficacious. The approval process may follow one of two routes: a “new drug submission” (or “NDS”) or an “abbreviated new drug submission” (or “ANDS”).

[13] As the names suggest, the NDS process is more onerous and requires the submission of voluminous original clinical information to demonstrate the safety and efficacy of the drug. By contrast, the ANDS process permits an abbreviated approval process in respect of a generic version of a drug that has previously been approved under the NDS process. The ANDS applicant is primarily required to establish that its formulation is the chemical and functional equivalent of the previously approved drug.

[14] The PMNOC Regulations were enacted under the Patent Act, R.S.C. 1985, c. P-4. These permit (but do not oblige) a drug manufacturer holding a patent (or license) to add a patent to a “Patent Register” maintained by the Minister pursuant to the regulations. The Patent Register is not a system for validating patents. Where a generic such as Apotex seeks an NOC using the ANDS process in respect of a proposed new drug containing a compound listed on the Patent Register, the Minister may not issue the NOC to the applicant until the listed patent has expired unless the applicant makes an allegation in writing challenging the application of the listed patent to its formulation on one of the listed grounds.

[15] Once the applicant serves a statement of allegations upon the party who placed the patent on the Patent Register, a clock starts. The originator is given 45 days to commence proceedings for an order of prohibition barring the Minister from issuing the NOC until the expiry of the patent. If no application for prohibition is made, the Minister is permitted to issue the NOC notwithstanding the listing on the Patent Register and the generic manufacturer is thus able to market the drug in question without further delay. If an application for a prohibition order is made, then a second clock starts. The Minister is prohibited from issuing an NOC until the prohibition proceedings are terminated or until 24 months have expired (whichever first occurs) unless of course the requested prohibition order is made.

[16] The effect of the PMNOC Regulations is that the originator who places a drug on the Patent Register and who elects to commence prohibition proceedings can delay the entry by the generic into the marketplace for up to 24 months even if it has an invalid patent.

[17] The defendants acknowledge this effect, but submit that it was an intentional outcome of the PMNOC Regulations. They submit that the PMNOC Regulations represent a balancing of interests, noting that generic manufacturers such as the plaintiff are effectively able to piggy-back their ANDS application on the more onerous and time-consuming NDS process that the originator had to undergo in order to establish the safety and efficacy of the original drug. As well, s. 8 of the PMNOC Regulations grants the generic applicant a cause of action against the originator to claim compensation for the period of delay should the originator be unsuccessful in its prohibition proceedings.

[18] One of the principal issues between the parties is whether the cause of action created by s. 8 of the PMNOC Regulations can be considered to be a “complete code” that forecloses any other claim for compensation arising from an invalid patent that has been used to thwart competition, including by adding such invalid patent to the Patent Register.

[19] From the point of view of the plaintiff, actions for compensation under s. 8 do not require the originator to account for monopoly profits earned during the period of automatic protection. This creates an incentive to obtain patents even in circumstances where the claims may be quite open to question. Compensation under s. 8 is determined based on the profits the generic was deprived of rather than by reference to the profits the originator earned during the period it was able to price its product in the absence of competition. Other possible causes of action pursued by the plaintiff would not be so limited as to time period covered or basis of compensation.

[20] I shall refer to the “complete code” issue further below.

[21] Apotex filed its ANDS in respect of Apo-Ramipril on July 22, 2003. Apotex was denied an NOC by reason of the listing on the Patent Register of various patents in respect of Altace or Ramipril by Sanofi-Aventis. Among the patents so listed was the 206 Patent. The plaintiff was thus required to issue notices of allegation in respect of each of the entries on the Patent Register, including the 206 Patent, in order to proceed with its application for an NOC.

[22] Sanofi-Aventis commenced prohibition proceedings in the Federal Court to prevent the Minister from issuing an NOC to Apotex in respect of the notice of allegation served by Apotex for the 206 Patent. Schering was joined to the proceedings as licensor and original holder of the patent in the case of the 206 Patent prohibition proceedings. This may be considered the “first” Federal Court Action (although I gather there were separate actions for each listing on the Patent Register).

[23] The Federal Court prohibition proceedings were dismissed in respect of the 206 Patent on September 30, 2005 on the basis that the patent was invalid. The prohibition proceedings in respect of three other “Ramipril” patents on the Patent Register commenced by Sanofi-Aventis were dismissed on October 27, 2005, November 4, 2005 and June 27, 2006 respectively on the basis that the patents were invalid or were not infringed by Apo-Ramipril. Meanwhile, Sanofi-Aventis had caused two further potentially relevant patents to be added to the Patent Register. The Minister initially took the position that these later additions to the Patent Register also had to be dealt with before an NOC could be issued. Apotex issued allegations and Sanofi-Aventis commenced prohibition proceedings in respect of these two additional patents on January 17, 2006. On December 8, 2006, the Minister determined that Apotex did not need to address these latter two patents after all and issued an NOC to Apotex in respect of Apo-Ramipril on December 12, 2006.

[24] On January 26 2007, Schering and Sanofi-Aventis commenced what I describe as the second Federal Court action, in this case alleging infringement of the 206 Patent against Apotex. This infringement action was commenced notwithstanding Sanofi-Aventis’ unsuccessful attempt to obtain an order of prohibition based upon the same patent in the first Federal Court action. The case was heard together with a similar case against another generic manufacturer (Novopharm Limited). In a judgment released June 29, 2009, Snider J. declared specified claims under the 206 Patent to be void (2009 FC 676). The effect of this in rem judgment was that the 206 Patent was declared to be void ab initio.

[25] Shortly after the decision of Snider J. was released, Apotex commenced an action in the Federal Court for compensation pursuant to s 8 of the PMNOC Regulations (on August 11, 2009). I refer to this as the “third” Federal Court action. In this third action, Apotex initially included claims under the Monopolies Acts and the Trade-marks Act similar to those currently before me. The defendants moved to strike all such claims except the claim under s. 8 of the PMNOC Regulations. In October 2009, Apotex gave notice of its intention to discontinue those other causes of action without prejudice to bringing them in another forum. It maintained only its claim under s 8 of the PMNOC Regulations.

[26] Apotex was awarded approximately $215 million in compensation in respect of its claim pursuant to s. 8 of the PMNOC Regulations. The decision was upheld by the Federal Court of Appeal in 2014 (2014 FCA 68) and a further appeal to the Supreme Court of Canada was dismissed for the reasons given by the Federal Court of Appeal (2015 SCC 20). The plaintiff has been paid the compensation ordered.

[27] In this motion, the moving parties seek to strike out the claims that Apotex withdrew from the third Federal Court action and re-advanced in this Superior Court action. They submit the claims are doomed to fail and should be struck as disclosing no reasonable cause of action under Rule 21.01(b) of the Rules of Civil Procedure. They also submit that res judicata and cause of action estoppel should bar the plaintiff from asserting in this action claims that were asserted but discontinued in the Federal Court action, seeking an order pursuant to Rule 25.11(b) and (c) of the Rules of Civil Procedure.

[28] The parties had no real disagreement about the test to be applied on this motion. A pleading will be struck under Rule 21.01(1)(b) of the Rules of Civil Procedure where it is plain and obvious that the claim cannot succeed. In addition, the court has a broad discretion under Rule 25.11(b) and (c) of the Rules of Civil Procedure to strike out a pleading to prevent an abuse of the court’s process. The disagreement between the parties was with the application of the test to the facts as pleaded in the statement of claim.

Issues to be decided

[29] The following issues are raised by this motion:

a. Has the plaintiff pleaded a cause of action under s. 7 of the Trade-marks Act with a reasonable chance of success?

b. Has the plaintiff pleaded a cause of action under the Monopolies Acts with a reasonable chance of success?

c. Does the plaintiff have a cause of action in any of its claims as against Schering with a reasonable chance of success?

Analysis and discussion

[30] As noted earlier, this motion is very similar to the motion I heard in the Eli Lilly case discussed above (albeit brought by a different set of defendants). It is true that there are some points of difference. These distinctions may well weigh in the balance when the time comes to determine these issues on the merits. Nevertheless, the central premise of my ruling in the Eli Lilly case is applicable to this case as well. Neither the law nor the facts are sufficiently settled or clear to make it “plain and obvious” that the plaintiff’s case is doomed to fail. Some of the theories are novel even if based on an ancient statute. Only time will tell if they are too novel to succeed.

[31] If the law on a matter is unclear or “muddy”, the claim should not be struck at the pleadings stage: Transamerica Life Canada Inc. v. ING Canada Inc., 2003 ONCA 9923, 68 O.R. (3d) 457 (C.A.) (at para. 39). In my view, this is simply not an appropriate case to use Rule 21.01(1)(b) of the Rules of Civil Procedure to prevent the plaintiff from moving forward and attempting to prove its case.

(i) Reasonable cause of action under s 7 of the Trade-marks Act?

[32] Both motions seek to strike the plaintiff’s pleading of a claim under the Trade-marks Act. They do so under three broad arguments. Firstly, it is claimed that the statement of claim is bald and merely repeats the relevant provisions of the statute without adequate particulars. As pleaded, they submit the claim simply cannot succeed. Secondly, it is claimed that s. 8 of the PMNOC Regulations should be considered to be a “complete code” precluding any claim for relief under the Trade-marks Act. Thirdly, it is claimed that the matter of compensation for the alleged harm is now res judicata by reason of the successful claim for compensation made in the third Federal Court action for compensation pursuant to s. 8 of the PMNOC Regulations. No further claims can be brought that ought to have been brought with that claim.

[33] I shall deal with each of these arguments separately.

s. 7(d) of the Trade-marks Act

[34] Pursuant to s. 7(d) of the Trade-marks Act, “no person shall…make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to (i) the character, quality, quantity or composition...of the goods or services”. Section 53.2 of the same Act provides that the court may make any order it thinks just on the application of an “interested person” where it is satisfied an act has been done that is contrary to the Act, including relief by way of recovery of damages or profits or punitive damages.

[35] The statement of claim has pleaded what representations the defendants are alleged to have made in connection in connection with the 206 Patent and the basis upon which the defendants are alleged to have acted jointly or in concert in making those representations. The pleading is faulted for failing to specify in what manner the public was likely misled.

[36] The defendants submit that since the PMNOC Regulations themselves provide for the possibility that a patent listed on the Patent Register may be invalid (s. 7(2)(b)) and provide a remedy therefor (s. 8), there is no likelihood that the public would be misled as to the matters pleaded by the plaintiff. They therefore plead that the claim therefore has no chance of success and, however novel it may be, must be struck.

[37] The allegations in its pleading must at this stage be taken as true. If true, Apotex submits that its allegations of false representations amply support claims for breach of s. 7(d) of the Trade-marks Act against all of the defendants.

[38] Whether Apotex will be able to satisfy a trial judge on the evidence that the representations alleged to have been made were likely to mislead the public or not, I cannot now say. That inference will be for the trial judge to draw. I cannot say by a simple examination of the pleadings whether the public would likely be misled or not. The Trade-marks Act cause of action may be a novel one in this context, but I cannot say that it is one that is necessarily doomed to fail before the plaintiff has had an opportunity to lead evidence to support it.

[39] Further, the weight of jurisprudence is against striking Trade-marks Act claims similar to this in the context of claims that are substantially similar. J. Macdonald J [2], Ducharme J. [3] and Wright J. [4] have each declined to strike claims (or grant leave to appeal as the case may be) in respect of very similar Trade-marks Act claims. In light of those three decisions, I cannot see how I can find that the law is so settled on the matter as to justify striking out the plaintiff’s Trade-marks Act claims here. Where the law is regarding a claim is unsettled or unclear, the Court of Appeal in Transamerica has directed motions judges not to strike the claim at such a preliminary stage.

Complete code

[40] Both moving party defendants take the position that s. 8 of the PMNOC Regulations should be interpreted as a “complete code” governing the consequences of an originator having used the Patent Register to delay the launch of a competitive product [5]. On this theory, they submit that there is no room for any claims arising from a listing of a patent on the Patent Register apart from the remedy provided in s. 8 of the PMNOC Regulations. The general claims premised on s. 7 of the Trade-marks Act must yield to the specific “complete code” found in the PMNOC Regulations.

[41] The same argument was raised before me in the Eli Lilly case in the context of the Monopolies Acts. I do not propose to re-iterate here the reasons I gave in that case for rejecting the complete code argument as the foundation for a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure. My reasons in that case apply with equal force to this case.

[42] The defendants suggest that the weight of judicial opinion on the “complete code” argument has tilted in their favour since my decision in Eli Lilly was released. They submit that the British Columbia Court of Appeal in Low v. Pfizer Canada Inc., 2015 BCCA 506 released on December 8, 2015 has now come down in favour of the “complete code” argument.

[43] The issues in Low were quite different. Low considered a claim for a common law class action claim and did not consider the specific statutory claims advanced by the plaintiff in this case. Our own Court of Appeal expressly declined to endorse the “complete code” theory in relation to the PMNOC Regulations when the Eli Lilly case came before it in its first round of pleadings challenges [6]. The Federal Court of Appeal also implicitly declined to endorse it in relation to the Ontario Monopolies Act: Apotex Inc. v. Warner-Lambert Co. LLC, 2012 FCA 323.

[44] The conclusion that a cause of action created by a regulation could be interpreted as precluding other specific statutory causes of action – both Federal and Provincial - absent a specific, binding statutory direction to that effect is far from plain and obvious. It may be a logical or even desirable outcome from the point of view of public policy generally, but it does not necessarily follow as a matter of statutory construction.

[45] The additional arguments made in this case have not altered the view I expressed in the Eli Lilly case that the “complete code” argument ought not to be decided in the context of a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure. In my view, the law on the question of “complete code” and s. 8 of the PMNOC Regulations is insufficiently settled to permit a claim to be precluded at this preliminary stage on that basis.

Issue estoppel, cause of action estoppel and res judicata

[46] Finally, I cannot agree that the plaintiffs Trade-marks Act claims are plainly or obviously subject to issue estoppel, cause of action estoppel or res judicata as alleged by the moving parties. Apotex had sought to bring both the Monopolies Acts claims and the Trade-marks Act claims together as part of its claim in the third Federal Court action. The defendants both objected to the inclusion of those claims and moved to strike them, citing among other things the lack of Federal Court jurisdiction over the Monopolies Acts claims. The plaintiff discontinued all of the claims except the s. 8 PMNOC Regulations claim without prejudice to bringing them again.

[47] The discontinuance of the claims alone cannot be the basis of a cause of action estoppel. A notice of discontinuance does not as such prevent the party who filed it from bringing another action on the same matter: Audet v. Canada, 2002 FCA 130 at para. 16 and Rule 23.04 of the Rules of Civil Procedure.

[48] Cause of action and issue estoppel require that the same issue or cause of action was determined in the other proceeding. After discontinuance of the other claims in the third Federal Court action, the only cause of action before the court was the claim under s. 8 of the PMNOC Regulations and the only issues were those required to resolve that precise claim.

[49] Section 8 of the PMNOC Regulations creates a very specific cause of action in favour of the “second person” (i.e. the generic applicant for an NOC) against the “first person” (i.e. the originator or licensee who placed the patent on the Patent Register) where an action for prohibition under s. 6 is brought and then withdrawn or discontinued or if an order is made and reversed on appeal. The trigger for the cause of action under s 8 of the PMNOC Regulations is thus the making of an application for an order prohibiting the Minister from issuing a NOC in favour of the “second person” and that application being rejected or withdrawn.

[50] By contrast, the trigger for a cause of action under s. 7(d) of the Trade-marks Act is the use of a description in connection the goods that is false in a material respect and likely to mislead the public as to its character or quality. In this case, it is alleged that the listing of the invalid 206 Patent on the Patent Register was itself a representation that was false in material respects. The defendants are alleged to have acted jointly and in concert in making that listing. The cause of action is thus triggered by the decision to list an invalid patent on the Patent Register, itself a consequence of having procured an invalid patent. This cause of action would be complete whether or not s. 6 PMNOC Regulations prohibition proceedings were ever brought or withdrawn.

[51] While there may be considerable overlap in the factual matrix and the damages claims between an action under the Trade-marks Act and under s 8 of the PMNOC Regulations, the causes of action themselves are on their face separate and distinct. Overlap in damages alone does not result in a conclusion of res judicata or cause of action estoppel.

(ii) Monopolies Acts claims

[52] I fully discussed the Monopolies Acts claims in my decision in the Eli Lilly case. Schering submits that three factors ought to cause me to reconsider my ruling in the Eli Lilly case. Firstly, Schering (correctly) notes that the repeal in Ontario of much of the UK Monopolies Act in 1902 was not brought to my attention in the earlier case. Secondly, Schering submits that the 206 Patent is a “new manufacture” entitled to the benefit of the exemption in s. 5 of the Ontario Monopolies Act. Finally, they submit that having delivered a valid Notice of Constitutional Question, they are entitled to challenge the legislative competence of Ontario to have enacted the Ontario Monopolies Act in light of the exclusive Federal jurisdiction in the matter of “Patents of Invention and Discovery” under s. 91(22) of the Constitution Act, 1867.

[53] Schering is correct that the Ontario statute that repealed most portions of the UK Monopolies Act was not referred to me in the Eli Lilly case. The Ontario Monopolies Act was enacted in connection with a comprehensive updating and revision of the body of English statute law that had been received into Ontario law in 1792. Much of the received law was in archaic language, in Latin or otherwise difficult to access. The Ontario Monopolies Act is materially identical (in modern language) to the UK Monopolies Act for a reason. An Act respecting Imperial Statutes relating to property and civil rights incorporated into the Statute Law of Ontario, 2 Edw VII, 1902, c. 13 and Schedule A to the Revised Statutes of Ontario, 1897 repealed substantial portions of the UK Monopolies Act as these had now been specifically re-enacted (and in modern language) in Ontario as part of that codification and modernization effort.

[54] However, this legislative history does not necessarily alter the status of the UK Monopolies Act as a matter of Canadian law. Even if the subject-matter of the Monopolies Acts were considered to be a matter of exclusive Federal jurisdiction by virtue of s. 91(22) of the Constitution Act, 1867 (a matter that I am not deciding here), Section 129 of the Constitution Act, 1867 continues in force those laws of the uniting colonies that fall within the jurisdiction of the new Canadian Parliament until such time as they are amended or repealed. The issue of whether the Patent Act has impliedly amended or repealed the UK Monopolies Act if and to the extent the latter statute was continued as a matter of Canadian law by s 129 of the Constitution Act, 1867 has not been considered or argued. It is not plain and obvious to me that the UK Monopolies Act has no continuing force of law in Ontario or Canada. The matter is clearly not one of settled law.

[55] I do not consider a pleadings motion to be the proper venue for determining a question as fact-specific as whether the 206 Patent can be considered to be a matter of “new manufacture”. The record suggests considerable room for doubt on that subject given the existence of the (expired) 087 Patent. Further, it is not at all clear that the exemption in s. 5 of the Ontario Monopolies Act applies in the case of a patent that has been found to be void ab initio.

[56] Finally, the alleged unconstitutionality of the Ontario Monopolies Act is by no means plain and obvious. Although Schering has cleared the hurdle of s. 109 of the Courts of Justice Act, R.S.O. 1990, c. C.43 by delivering a Notice of Constitutional Question, it has not cleared the hurdle of demonstrating that the Ontario Monopolies Act is ultra vires in its entirety.

[57] The decision of Snider J. invalidating the 206 Patent was an in rem decision that had the effect of invalidating that patent ab initio. Parliament has not legislated as to the consequences of an invalid patent generally.

[58] The mere existence of a patent can have the sort of chilling effect upon the marketplace described by Binnie J. in Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77 (at para. 45). It is not plain and obvious to me that an Ontario statute regulating the consequences upon property and civil rights in the Province for having asserted a void monopoly is beyond the legislative competence of the Province of Ontario. The Patent Act confers no immunity upon the holder of an invalid patent. Apotex submits that only valid patents protected by the Patent Act can be considered to be sheltered from the general condemnation of the common law and the Monopolies Acts as an unlawful restraint of trade.

[59] Whether the PMNOC Regulations can be considered to have the effect of occupying the field of determining the consequences of asserting an invalid patent and whether the field is one open to be occupied exclusively under the authority of s. 91(22) of the Constitution Act, 1867 is not a matter of settled law.

[60] The Ontario Court of Appeal in Gilbert Surgical Supply Co. v. F.W. Horner Ltd., 1960 ONCA 851, 34 C.P.R. 17 (Ont. C.A.) found the law insufficiently settled and clear to justify striking out a claim under the Ontario Monopolies Act in 1960. The Federal Court of Appeal was of the same opinion in 2012 in Apotex Inc. v. Warner-Lambert Company LLC, 2012 FCA 323. It would be inappropriate at this early stage in the proceedings to strike a similar claim on this basis.

[61] For the foregoing reasons as well as those previously given by me in the Eli Lilly matter, I would decline to strike the plaintiffs claims under the Monopolies Acts at this early stage.

(iii) Claims against Schering adequately pleaded?

[62] Schering pleads that while it held the 206 Patent, it was Sanofi-Aventis as exclusive licensee who took the step of listing the 206 Patent on the Patent Register under the PMNOC Regulations and it was Sanofi-Aventis who marketed and sold Altace in Canada. For its part, Schering pleads that it has never held an NOC for a Ramipril product in Canada and never made any representations to the Canadian public. Further, Schering pleads that the Federal Court has already rejected the attempt by Apotex to affix it with joint liability under s. 8 of the PMNOC Regulations. Finally, Schering pleads that the 206 Patent was only one of several patents placed upon the Patent Register that had the cumulative effect of delaying the plaintiff’s entry on the market. It cannot be made responsible for delay arising from other patents than its own.

[63] Schering’s pleas regarding its lack of direct activity in Canada – if properly proved – may well form the basis of a defence. That, however, is not the test on a pleadings motion such as this. It is the pleadings in the statement of claim that are assumed to be true, not those in the statement of defence.

[64] Further, Schering is alleged to have variously directed, authorized, assisted and co-operated with the other defendants in taking the actions and bringing the proceedings that had the effect of hindering or delaying the plaintiff in bringing its product to market or in allegedly violating the Trade-marks Act. These are allegations of direct action in Canada.

[65] Schering’s claim that the matter of joint liability is res judicata does not withstand scrutiny. The only matter the prothonotary decided in releasing Schering from the third Federal Court action was that the definition of “first person” in the PMNOC Regulations does not extend to someone alleged to have acted jointly with or directed the first person. That finding does not settle the question of whether joint liability may be claimed under any other causes of action, including the Monopolies Acts or the Trade-mark Act. The matter of joint liability cannot be considered to be res judicata.

[66] Apotex has pleaded elements of the Monopolies Acts and Trade-mark Act claims that may be sufficient to attribute joint liability to Schering if proved. It would be premature at this preliminary stage to find that the claim against Schering is doomed to fail before the facts have been developed.

[67] These claims have not been determined on the merits in prior proceedings involving Schering before the Federal Court and there is no abuse of process in continuing the claims before the Superior Court where all of the remaining issues between the parties can be aired.

Disposition

[68] For the foregoing reasons, I am dismissing the defendants’ motions save and except for the relief claimed (and not opposed by Apotex) in respect of the “basket clause” and the unjust enrichment claims. Paragraph 1(e) and paragraphs 77-80 from the statement of claim shall therefore be struck. These two motions are otherwise dismissed.

[69] With the exception of the two issues conceded by Apotex at the outset, none of the objections raised by the defendants are matters that ought to be decided at this early stage in the proceedings under Rule 21.01(1)(b) or Rule 25.11 of the Rules of Civil Procedure in light of the unsettled nature of the applicable law. As tempting as it might be to wade into what are very interesting questions of law, it would not be in the interests of justice to do so. The cost would be a substantial risk of this case dissolving into a series of legal issues wending their separate way through the appeal process while the fact-finding mission of the trial judge is carved into ever-smaller segments. The risk in that event is less rather than more judicial efficiency to say nothing of additional delay. The correct and most efficient course of action in my view is to have the entire claim and all of its discrete legal issues determined at once.

[70] There are no “knock-out” blows to be administered here. There are no gains in judicial efficiency to be had by seeking to determine legal issues too early in the process. The risk of bifurcation and inordinate delay is simply too large. Where the legal issues are as novel or unclear as they are here, the correct course is to have them resolved together on the merits. It makes little sense to send the issues up through the appeal chain one at a time instead of allowing a trial judge to issue a single, comprehensive ruling that appeal courts will be able to assess and digest as an intelligible whole.

[71] As the sixth anniversary of the issuance of this statement of claim looms, it is time to move past the stage of attacking pleadings. This case at least needs to start down the road towards an orderly resolution on the merits. I am therefore exercising my discretion under Rule 50.13 of the Rules of Civil Procedure to convene a case conference forthwith to consider means of expediting the preparation of this case for trial.

[72] The parties are directed, through their counsel, to make an appointment before me in the month of June at 4:30pm on any convenient day that my assistant can confirm in my calendar. If there is difficulty in setting a date, I shall resolve it on written submissions to be received within 15 days of the release of these reasons. Clients will not be required to attend, but responsible counsel will. The objective will be to settle a timetable for getting this matter listed for trial.

[73] Apotex has been substantially successful on this motion. It did not oppose the defendants’ motions in relation to the unjust enrichment claim or the “basket clause”. The plaintiff might have done better to amend its statement of claim outright to delete these two claims after their fate became clear instead of simply offering a passive “no contest” approach.

[74] At the conclusion of the oral argument of this motion, I asked the parties to give some thought as to how they wish to address the issue of costs on this and similar motions going forward. If the parties are unable to resolve the issue of costs in light of my comments, I shall receive written submissions and an Outline of Costs from the plaintiff within 30 days of the date of release of these reasons. The defendants shall have a further 14 days to respond. If any party requires an extension of time, they may request it by contacting my assistant in writing (copied to the other parties). Submissions should be restricted to FIVE pages in length not counting any Outline of Costs. Cases need not be attached if available on.

S. F. Dunphy J.

Date: May 27, 2016

[1] Apotex Inc. v Eli Lilly and Company et al., 2015 ONSC 5396 [2] Apotex Inc. v. Eli Lilly and Co., 2012 ONSC 3808 [3] Apotex Inc. v. Eli Lilly and Co., 2013 ONSC 1135 [4] Apotex Inc. v. Merck & Co. Inc. et al., unreported decision released October 2, 2013 in CV-12-454107 and CV-12-454108. [5] The moving parties did not appear to apply the same “complete code” approach when bringing the second Federal Court action against Apotex for patent infringement after having been denied an order of prohibition in the first. [6] Apotex Inc. v. Eli Lily and Company, 2015 ONCA 305