Case Conference Endorsement

COURT FILE NO.: CV-11-429541 DATE: 20190227 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: S. F. Dunphy J.

COUNSEL: Nando De Luca and Jerry Topolski, for the Plaintiff Gunars Gaikis, for the Defendants Sanofi-Aventis, Sanofi-Aventis Deutschland GmbH and Sanofi-Aventis Canada Inc Marc Richard, for the defendant Schering Corporation

HEARD at Toronto: February 27, 2019

[1] The defendants appeared before me today seeking directions for the hearing of motions either filed or intended to be filed in relation to the Reply filed by the plaintiff.

(a) Background

[2] This case has been around for some time – since 2011. The related litigation between the parties has been going on for many years before that time. I reviewed some of the background to this case in my decision dealing with a motion to strike it: 2016 ONSC 3407. In addition, this case has a number of siblings. Similar cases built on similar theories none of which have yet been thoroughly tested before a court are wending their way through the system involving many of the same counsel.

[3] There are a number of issues in common between these related cases. The central thread that connects them is a patent that has been found to be invalid and a claim arising from the profits made by the holder of the invalid patent while exploiting that invalid patent or for the profits the plaintiff was prevented from earning by reason of that invalid patent. The claims are premised on “An Act concerning Monopolies, and Dispensation with penal laws, etc.”, (Ontario) R.S.O. 1897, c. 323 and the English statute “An Act concerning Monopolies and Dispensations with Penal Laws, and the Forfeitures thereof”, 1624, 21 Jac. I, c. 3 (collectively, the “Monopolies Acts”) as well as the Trade-Marks Act, R.S.C. 1985, c. T-13. The Monopolies Acts potentially providing for treble damages, the amounts involved in this and similar claims could easily surpass $1 billion.

[4] In this case, the invalidity of the defendants’ patent had been decided by the Federal Court in 2009, a decision that was upheld by the Federal Court of Appeal with leave to appeal denied by the Supreme Court of Canada.

[5] I had set a goal some time ago of case managing this case to the point of actually getting it set down for trial without further delay. We were tantalizingly close to achieving that milestone. Discoveries had been held and setting the matter down for trial awaited only the resolution of a variety of objections that had arisen during the discovery process For better or for worse, a tectonic shift in the playing field was about to take place. In June 2017 the Supreme Court of Canada overturned the “promise doctrine”: AstraZeneca Canada Inc. v. Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 942. This doctrine was central to the original 2009 decision of Snyder J. declaring the defendants’ patent invalid as well as a number of other patent invalidity decisions.

[6] The defendants took the view that the Supreme Court of Canada decision amounts to a change in the law and sought leave to amend their Statement of Defence to plead the doctrine of special circumstances. The equitable doctrine of special circumstances would potentially permit the defendants to avoid the effect of the in rem invalidity decision of the Federal Court at least as regards further damages claims if doing so would produce an inequity having regard to the subsequent change in the law. The Court of Appeal agreed with this position and granted them leave to amend accordingly: Apotex Inc. v. Schering Corporation, 2018 ONCA 890.

[7] The defendants have duly amended their Statement of Defence and pleaded the equitable doctrine of special circumstances as a basis. The plaintiff in turn has filed a Reply that pleads that the doctrine of special circumstances ought not to apply because the original invalidity decision can be supported on grounds other than the promise doctrine that has been overturned by the Supreme Court of Canada. In other words, the plaintiff pleads that there is no inequity worked by applying the original decision notwithstanding the change in law.

(b) Issues before me

[8] The defendants now wish to strike portion of the Reply on the basis that the plaintiffs ought not to be able to argue that patent is invalid on grounds other than the ones ruled upon in 2009. This case conference was held to seek my leave as case management judge to schedule the intended motions.

(c) Discussion and analysis

[9] The principles that have guided me in case managing this complex case can and should be clearly stated. They are these:

a. It is clear that the central issues raised in this cluster of Monopolies Act cases will not be resolved at trial level – any decision will be taken at least to the Court of Appeal and, subject to leave being granted – to the Supreme Court of Canada;

b. It is clear that the appellate courts will require a fulsome trial record in order to ensure that any decision rendered on these issues is a FINAL decision;

c. By reason of (a) & (b), further attempts to find a “silver bullet” to end this case with a decisive decision on a narrow point of law is not going to be helpful or efficient – this case (and the others like it) needs to get put in front of a trial judge who will be able to put ALL of the issues between the parties together in a comprehensive way;

d. “Rule 21” (or Rule 20) type motions looking to cherry-pick a narrow legal point will not be scheduled any further as they are counter-productive and inefficient – at this stage, the most efficient way to proceed is to PROCEED and allow both sides to fire their best shot at each other and allow the trial judge to sort through the evidence, make the necessary findings of fact and at least the preliminary findings of law pending appellate review;

e. Pleadings motions at this stage in the process ought not be a basis to delay this case any further pending further motions and appeals, etc; and

f. Pleadings motions at this point should be assessed from the perspective of ensuring that both sides know what arguments they will face at trial that both sides have a full opportunity to lead any evidence they need to meet those arguments and that the trial judge has everything needed to fully resolve ALL of the disputes between the parties.

[10] The doctrine of special circumstances is predicated on a change in law that occurred after the otherwise final decision was rendered. It seems to me that an unavoidable consequence of pleading that doctrine is to invite the court to consider whether it is equitable in all of the circumstances now existing to allow the defendants to escape the consequences of a final, in rem decision made against them that invalidated the patent they once exploited. The defendants cannot affirm and disaffirm the same decision in the same breath. The plaintiffs navigated their way through the litigation leading to Snyder J’s decision making tactical choices to investigate issues or pursue arguments based on the law as it then stood. If another road to the same result exists, that circumstance is surely relevant when asking a court of equity to side-step an otherwise final decision.

[11] While “sauce for the goose is sauce for the gander” is not a legal doctrine it does reflect common sense. If equity can be an unruly horse to ride, “Special circumstances” can also be a slippery slope to navigate. Once the finality of an in rem judicial decision is open for examination, that examination cannot be artificially constrained in a way that may simply work a fresh inequity. This is not a simple black and white case where the decisive impact of the change in law is plain and obvious. The case was presented – warts and all – based on the law as it stood in 2009. It would not be equitable to constrain the plaintiffs to the case exactly as presented under the old law without a fair opportunity to revisit tactical decisions that may have opened up other roads to reach the same decision notwithstanding the subsequent change in law. If equity is invited to examine the decision in light of an alleged change in circumstances, it cannot be blindfolded to avoid examining whether the decision can nevertheless be supported.

(d) Disposition

[12] I am not going to accept or reject motions in the abstract. My reasons ought to provide the parties with sufficient guidance as to what is or is not an acceptable motion. I will not schedule a Rule 21 or Rule 20 motion or motions under other rules that are simply dressed in different clothing. If special circumstances are to be pleaded to the trial judge, I am strongly of the view that the trial judge shall be the one to decide what factors he or she is prepared to consider in exercising that equitable discretion. I am not going to close any but the most obvious of doors in advance and no such obvious doors have yet been shown to me.

[13] While I have grave doubts that any pleading motion is necessary at this point, I direct that any such motion that is within a Master’s jurisdiction shall be brought before Master Sugunasiri who will be the designated Master to hear motions arising from this case (within a Master’s jurisdiction). The scheduling of such a motion shall be within her discretion.

S.F. Dunphy J. Date: February 27, 2019