Court File and Parties

COURT FILE NO.: CV-13-10139-CL

MOTION HEARD: 20220127

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Apotex Inc., Plaintiff

AND:

Alcon Canada Inc., Alcon Research, Ltd., Kyowa Hakko Kirin Co., Ltd., Alcon Pharmaceuticals, Ltd. and Alcon Laboratories, Inc., Defendants

BEFORE: Associate Justice B. McAfee

COUNSEL: S. Jackson, Counsel, for the Moving Parties, the Defendants Alcon Canada Inc., Alcon Research, Ltd., Kyowa Hakko Kirin Co., Ltd., Alcon Pharmaceuticals, Ltd., and Alcon Laboratories, Inc. and for the proposed Plaintiffs by Counterclaim, Alcon Canada Inc., Alcon Research, LLC., Kyowa Kirin Co., Ltd., Alcon Pharmaceuticals, Ltd., Alcon Vision, LLC., Alcon Cusi S.A. and Novartis AG

S. Shogilev, Counsel, for the Responding Parties, the Plaintiff Apotex Inc. and for the Proposed Defendants to the Counterclaim, Apotex Inc., ACIC Pharmaceuticals Inc., and Apotex Pharmachem India PVT Ltd

D. Deeth, Counsel, for the Responding Party, the Proposed Defendant to the Counterclaim Crystal Pharma S.A.U.

HEARD: January 27, 2022

REASONS FOR DECISION

[1] The defendants Alcon Canada Inc., Alcon Research, Ltd., Kyowa Hakko Kirin Co., Ltd., Alcon Pharmaceuticals, Ltd. and Alcon Laboratories, Inc. (the defendants) and the proposed plaintiffs by counterclaim Alcon Canada Inc., Alcon Research, LLC., Kyowa Kirin Co., Ltd., Alcon Pharmaceuticals, Ltd., Alcon Vision, LLC., Alcon Cusi S.A. and Novartis AG (the proposed plaintiffs by counterclaim) (collectively the moving parties) move for an order granting leave to amend the statement of defence in the form of the fresh as amended statement of defence and counterclaim attached as exhibit “A” to the affidavit of P. Beard.

[2] The proposed amendments at paragraph 68 (a) and (l) of the defence and the proposed addition of a counterclaim at paragraphs 72 – 106 are opposed. The balance of the proposed amendments at paragraphs 56, 68 (third sentence) and 68 (b)-(k) are not opposed.

[3] In this action the plaintiff Apotex Inc. (Apotex) seeks relief for alleged unlawful acts concerning the marketing of a drug called Patanol. Patanol is used to treat allergic conjunctivitis and comes in the form of eye drops that are administered twice daily. The active ingredient in Patanol is olopatadine at a strength of 0.1%. A related product, called Pataday, contains 0.2% olopatadine and is administered once a day. The allegations involve facts dating back to 1990 and a variety of legal issues ranging from conspiracy to breach of An Act Concerning Monopolies, and Dispensation with Penal Laws, etc. R.S.O. 1897, c. 323 (the Ontario Statute of Monopolies). Apotex alleges that the defendants engaged in a conspiracy and an anti-competitive strategy to create a monopolistic market for olopatadine. Apotex alleges that as part of this conspiracy, the defendants destroyed the market for Patanol and switched the market to Pataday when faced with competition from Apotex’s 0.1% Apo-olopatadine product.

[4] The conspiracy theory involves the defendants using three patents to protect Patanol and Pataday from competition: the 603 Patent, the 094 Patent and the 924 Patent.

[5] The 603 Patent claims, inter alia, olopatadine. The 603 Patent issued in November 1995 and expired on November 21, 2012. The defendant Kyowa Hakko Kirin Co., Ltd. (now named Kyowa Kirin Co., Ltd.) (Kyowa) owns the 603 Patent.

[6] The conspiracy theory also involves the defendants making misrepresentations about the availability of Patanol in order to force the market to use Pataday instead. Apotex alleges that this impacted its ability to sell its 0.1% Apo-olopatadine product.

[7] Apotex seeks damages for conspiracy, unlawful interference with economic relations, treble damages pursuant to the 1897 Ontario Statute of Monopolies, restitution, disgorgement of profits for unjust enrichment, disgorgement for waiver of tort and punitive damages.

[8] This action was commenced on October 15, 2012. Several pleading amendments took place from 2012 to 2017. Apotex provided its affidavit of documents in 2019. Apotex’s representative, Mr. Fahner was examined for discovery on July 29 and 30, 2020.

[9] The defendants and proposed plaintiffs by counterclaim now seek to amend the fresh as amended statement of defence to add grounds of defence and commence a counterclaim. The impugned proposed defences at paragraph 68 (a) and (l) plead that Apotex would not have been able to make any sales prior to the expiry of the 603 Patent because such sales would infringe the 603 Patent and that Apotex is not entitled to profit or equitable relief arising from the alleged infringement of the 603 Patent. The impugned counterclaim seeks relief for the alleged infringement of the 603 Patent. The position of the defendants and proposed plaintiffs by counterclaim is that the proposed amendments are not statute barred and disclose reasonable defences or a cause of action.

[10] Apotex opposes the proposed amendments to the statement of defence at paragraphs 68(a) and (l) on the basis that they are improper and legally untenable. Apotex and the proposed defendants to the counterclaim Apotex, ACIC Pharmaceuticals Inc. (ACIC) and Apotex Pharmachem India PVT Ltd (Pharmachem) oppose the proposed counterclaim on the basis that it is statute barred.

[11] The proposed defendant to the counterclaim Crystal Pharma S.A.U. (now named Curia Spain S.A.U.) (Crystal) opposes the proposed counterclaim on the basis that it is statute barred. Crystal also opposes the proposed counterclaim as against it on the additional ground that no cause of action is pleaded against Crystal.

[12] Rule 26.01 of the Rules of Civil Procedure states:

26.01 On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.

[13] Sections 4 and 5 of the Limitation Act, 2002, S.O. 2002, c. 24, Schedule B are applicable.

[14] The discretion to refuse to grant leave to amend is narrow. Leave shall be granted absent non-compensable prejudice. Leave should only be refused in the clearest of cases. However, proposed amendments that are scandalous, frivolous or vexatious, are an abuse of process or disclose no reasonable cause of action, or defence, may be refused. The proposed amendments must also comply with the rules of pleading (Apotex Inc. v. Schering Corporation, 2018 ONCA 890, at para. 15; Plante v. Industrial Alliance Life Insurance Co., 2003 CanLII 64295 (ON SC), [2003] O.J. No. 3034 (Ont. S.C.J.) at paras. 19-22)

[15] The expiry of a limitation period is one form of non-compensable prejudice (Frohlick v. Pinkerton Canada Ltd., 2008 ONCA 3 at paras. 22 and 24).

[16] The impugned proposed defences at paragraphs 68 (a) and (l) plead that any damages award should factor in Apotex’s alleged infringement of the 603 Patent. If proven, these facts could reduce or negate a damages award. These proposed amendments are not scandalous, frivolous, or vexatious and are not an abuse of process. There is no non-compensable prejudice. Limitation periods do not apply to the proposed defences (Canada Trustco Mortgage Co. v. Pierce, 2005 CanLII 15706 (Ont. C.A.) at paras. 43 and 44; Grand Financial Management Inc. v. Solemio Transportation Inc., 2016 ONCA 175 at para. 94; and Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2019 ONSC 5322 (Ont. S.C.J.) at paras. 354-357).

[17] This is not one of the clearest of cases for which leave with respect to these amendments should be denied. Leave is granted with respect to the proposed amendments at paragraphs 68 (a) and (l).

[18] With respect to the proposed counterclaim, the requirements for pleading a cause of action for patent infringement are:

(1) facts by virtue of which the law recognizes a defined right as belonging to the plaintiff; and

(2) facts that constitute an encroachment by the defendant on that defined right of the plaintiff (Astrazeneca Canada Inc. v. Apotex Inc., 2005 FC 43 at para. 9 citing Dow Chemical Co. v. Kayson Plastics & Chemicals Ltd. (1966), 1966 CanLII 971 (CA EXC), 47 C.P.R. 1 (Ex. Ct.) at 11).

[19] The proposed counterclaim satisfies these requirements, save with respect to Crystal, more of which is said below. A patent provides the patentee and those claiming under the patentee the exclusive right to make, construct, sell and use the invention (Apotex Inc. v. Eli Lilly Canada Inc., 2021 ONSC 1588 (Ont. S.C.J.) at para. 85). The proposed counterclaim pleads material facts establishing that the rights granted by the 603 Patent belong to the proposed plaintiffs by counterclaim at paragraphs 74 and 83-88. The proposed counterclaim also pleads material facts establishing that the rights granted by the 603 Patent were infringed by the acts of the defendants by counterclaim at paragraphs 75-82 and 93-104. The counterclaim is not scandalous, frivolous, or vexatious or an abuse of process.

[20] It is the position of the defendants and proposed plaintiffs by counterclaim that the applicable limitation period for the proposed counterclaim did not begin to run until July 29, 2020, when Mr. Fahner was examined for discovery. It is their position that during the examination for discovery Mr. Fahner disclosed that Apotex purchased the olopatadine that it used at its facility in Ontario to manufacture its 0.1% Apo-olopatadine product. This occurred prior to the expiry of the 603 Patent. Apotex’s olopatadine and its 0.1% Apo-olopatadine product were used for commercial purposes.

[21] The defendants and proposed plaintiffs by counterclaim rely on the affidavit of P. Beard at paragraph 10 wherein she deposes that she is advised by Sean Jackson, defendants’ counsel, and does verily believe that prior to the examination for discovery of Mr. Fahner in July 2020, the matters at issue were not disclosed to the defendants in this proceeding. It is their position that the facts revealed during discovery show that Apotex stockpiled 0.1% Apo-olopatadine product prior to the expiry of the 603 Patent. The relevant excerpts from the transcripts are attached to the affidavit of P. Beard at exhibit “G”.

[22] Apotex and the proposed defendants to the counterclaim argue that the defendants knew or ought to have known of the alleged infringing conduct prior to July 29, 2020. Apotex argues that before and after the commencement of this action, the defendants and Apotex were involved in various proceedings relating to 0.1% olopatadine and 0.2% olopatadine and in the context of those proceedings, Apotex disclosed a variety of information regarding its respective olopatadine products, the processes used to manufacture same and the suppliers of its olopatadine and its utilization of same.

[23] Apotex and the proposed defendants to the counterclaim argue that as of February 1, 2017, when Apotex served an affidavit of documents in the separate proceeding T-574-15, and no later than June 27, 2018, when Apotex’s representative was examined for discovery in that separate proceeding, the defendants were aware that Apotex had been sourcing commercial quantities of olopatadine from third party suppliers from 2005 to 2016, were aware of the quantities of these materials, were aware that Apotex had imported and stored these materials and that they had been used in the manufacture of both 0.1% and 0.2% olopatadine for sale commencing November 22, 2012 (affidavit of N. Roth, paras. 10-13).

[24] Kyowa was not a party to T-574-15.

[25] On the record before me, I am unable to determine when the applicable limitation period began to run. There are factual issues regarding what facts were disclosed, when and to whom. There is an issue of whether the information in the various other proceedings disclosed the use of olopatadine in Canada for commercial purposes, as opposed to regulatory and experimental purposes which would not infringe the 603 Patent. There are also issues regarding how the intersection of the deemed undertaking rule and confidentiality orders in the other proceedings impact the discoverability of a claim.

[26] As stated by Justice Lauwers in Kilitzoglou v. Cure, 2011 ONSC 676 (Ont. S.C.J.) at para. 11:

Rule 26.01 requires the court to grant leave to amend pleadings as a normal practice. Where, as here, a limitations defence is in issue and the discoverability principle is asserted in response, the customary process is to grant leave to amend without prejudice to the defendants to plead and argue the limitations defence. …

[27] Having regard to the evidence before me, including a generous and contextual reading of the affidavit of P. Beard, the applicable low evidentiary threshold to allow these proposed amendments to add the counterclaim has been met, save with respect to Crystal. This is without prejudice to plead a limitation period defence.

[28] I am not satisfied that the proposed counterclaim as against Crystal is legally tenable. I am not satisfied that a cause of action is disclosed as against Crystal.

[29] The allegations made against Crystal in the proposed amended pleading are:

(a) Crystal manufactures and sells olopatadine and has facilities in Spain (para. 90);

(b) Prior to the expiry of the 603 Patent, Crystal manufactured olopatadine outside of Canada that was intended for sale in Canada (para. 98);

(c) ACIC imported that olopatadine into Canada and sold it to Apotex (para. 98).

[30] There is no proposed allegation that Crystal has done anything in Canada that could arguably amount to an infringement of any Canadian patent rights granted under the 603 Patent. There is no proposed allegation that Crystal imported olopatadine into Canada, or used or sold olopatadine in Canada. It is alleged that the olopatadine manufactured by Crystal was imported into Canada by ACIC.

[31] Patents are territorial and Canadian patents cannot be infringed outside of Canada. There must be some activity in Canada by an alleged infringer, such as importing, selling, or using the product in question, to make that infringer liable for infringement of a Canadian patent (Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research, 2020 FCA 30 at para. 36). There are no such allegations against Crystal in the proposed amended pleading.

[32] For these reasons, the motion as it relates to Crystal is dismissed.

[33] With respect to the issue of costs of the motion, as between the moving parties and Apotex, ACIC and Pharmachem, these parties agree that the successful side is entitled to costs in the all-inclusive sum of $5,500.00. As between the moving parties and Crystal, these parties agree that the successful side is entitled to costs in the all-inclusive sum of $2,500.00.

[34] Order to go as follows:

1. On an unopposed basis, leave is granted to amend the statement of defence in the form of the proposed fresh as amended statement of defence and counterclaim attached as exhibit “A” to the affidavit P. Beard, at paragraphs 56, 68 (third sentence) and 68 (b)-(k);

2. Leave is granted to amend the statement of defence in the form of the proposed fresh as amended statement of defence and counterclaim attached as exhibit “A” to the affidavit of P. Beard, at paragraphs 68(a) and (l) and the proposed counterclaim at paragraphs 72-106, as against the proposed defendants to the counterclaim Apotex, ACIC and Pharmachem only, without prejudice to plead a limitation period defence;

3. The motion as it relates to the proposed defendant to the counterclaim Crystal is dismissed.

4. Costs of the motion are fixed in the amount of $5,500.00 payable by Apotex, ACIC and Pharmachem to the moving parties and fixed in the further amount of $2,500.00 payable by the moving parties to the proposed defendant to the counterclaim Crystal, both amounts payable within 30 days.

5. On consent, Apotex’s long motion for answers to undertakings and refusals is adjourned to August 17, 2022.

Associate Justice B. McAfee

Date: May 2, 2022