Irreparable Harm Test No Different for Copyright, Trade-marks or Passing Off
Eli Lilly Canada Ltd. v. Apotex Inc. 2009 FC 1053 (Martineau, J.)

October 19, 2009

Anthony Creber and Scott Robertson for Eli Lilly Canada Ltd. (Eli Lilly)
Andrew Brodkin and Sandon Shogalev for Apotex Inc. (Apotex)

The issue in this case was whether Apotex was precluded by issue estoppel from pursuing their current Notice of Allegation and whether it was null, void and of no effect. The drug at issue in the proceeding was an orally disintegrating olanzapine tablet and whether a notice of compliance could issue to Apotex in light of Eli Lilly’s Canadian Patent No. 2,041,113 (the ‘113 Patent).

In a prior PM(NOC) proceeding between Apotex and Eli Lilly relating to a conventional olanzapine tablet by Apotex, Apotex had served Eli Lilly with an Notice of Application (NOA) claiming that all claims of the ‘113 Patent were void and of no effect on several grounds of invalidity. The grounds alleged did not include invalidity for lack of sufficiency. Eli Lilly prevailed in that proceeding and obtained an order prohibiting the Minister from issuing a Notice of Compliance until after the expiration of the ‘113 Patent. The Court found Apotex had failed to substantiate their allegations. The Court refused to allow Apotex at the hearing to rely upon an argument based on sufficiency since it had not been pleaded in the NOA. On appeal, the Court of Appeal held “the applications judge correctly held that the sufficiency of the disclosure is a stand alone ground which ought to have been raised in the NOA”.
Apotex subsequently commenced impeachment proceedings which at the time of this proceeding had not proceeded beyond the pleadings stage.

After Eli Lilly had successfully obtained a prohibition order against Apotex, Novopharm’s PM(NOC) proceeding against Eli Lilly relating to the ‘113 Patent was heard. Novopharm alleged the ‘113 Patent was invalid on several bases including sufficiency. In that case the Court found Eli Lilly had not demonstrated that Novopharm’s allegations as to sufficiency are not justified. On that basis Eli Lilly’s application for a prohibition order against Novopharm was dismissed. Novopharm was issued a Notice of Compliance and Eli Lily’s appeal was then dismissed on the grounds of mootness.

Apotex subsequently became embroiled in another PM(NOC) proceeding for the orally disintegrating olanzapine tablet relating to the ‘113 Patent. Apotex alleged all the claims in the ‘113 Patent were invalid for insufficiency. Apotex relied exclusively on the Novopharm decision (above) and the dismissal of Eli Lilly’s appeal from that decision. Eli Lilly filed an application for a declaration that Apotex’s notice of allegation was an abuse of process and for an order prohibiting the Minister from issuing a notice of compliance for this drug to Apotex. Apotex filed a motion dismissing Eli Lilly’s application on the basis that it was redundant, frivolous and otherwise an abuse of process in light of the decision in the Novopharm proceeding. The case management Prothonotary ordered a bifurcation of the issues for determination of: (1) whether Apotex’s current NOA is an abuse of process and not a proper NOA; and (2) whether Eli Lilly’s current application is an abuse of process. The Court elected to deal with issue (1) first since would be determinative of all proceedings and because Eli Lilly’s application was triggered by Apotex’s current NOA.

At the hearing Apotex raised an initial objection against Eli Lilly reliance on issue estoppel as there had been no explicit reference in its NOA. The Court noted that the factual basis for issue estoppel and abuse of process, which had been mentioned in the NOA, was the same. Further, the Court had discretion to allow Eli Lilly to amend a document. Both Eli Lilly and Apotex had fully addressed the doctrine of issue estoppel in their memoranda of fact and law, and Apotex had no sought an adjournment to deal with the isuue estoppel argument. The Court found that to deny Eli Lilly the opportunity to invoke the doctrine of issue estoppel was to prefer form over substance. The Court dismissed Apotex’s preliminary objection.

The Court noted that the policy underlying the doctrines of abuse of process and issue estoppel is very similar, and that the doctrine of issue estoppel may be even more restrictive than abuse of process. The doctrine of abuse of process operates “where allowing the litigation to proceed would nonetheless violate such principles of judicial economy, consistency, finality and the integrity of the administration of justice” but the criteria for issue estoppel may not have been met. The requirements for issue estoppel are: (1) the same question has been decided; (2) the decision which is said to create the estoppel was final; and (3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies. If these conditions are met the Court still has the discretion whether the doctrine ought to be applied.

The Court of Appeal had previously held that in PM(NOC) proceedings “generics should in most circumstances be precluded by the doctrine of issue estoppel from alleging for a second time that a patent is invalid, unless the basis relied upon for the subsequent allegation could not be determined with reasonable diligence at first instance.” Apotex argued here that the same question is not at issue since this proceeding related to the orally disintegrating tablet whereas its earlier NOA related to the conventional tablet. The Court did not find this convincing and noted that in both the issue was the invalidity of the ‘113 Patent. The fact that each NOA raised different grounds for invalidity did not detract from the point that the issue in both was invalidity, i.e. the same issue.

Apotex argued that whether or not the criteria of issue estoppel have been met the Court should exercise its discretion not to apply it since no court has ever specifically considered whether Apotex should receive market approval for the orally disintegrating olanzapine tablets. The Court declined to exercise its discretion noting it was incumbent on Apotex to put its best foot forward on invalidity the first time, that there was no evidence to suggest Apotex could not have raised the issue of sufficiency the first time and that Apotex was not without remedy since it could always begin an impeachment action.

In the result the Court concluded Apotex was precluded from proceeding with their current NOA, that no new prohibition order was necessary since the prohibition order from the earlier proceeding was still in effect, and Apotex’s current NOA is null, void and of no effect. Costs were awarded in favour of Eli Lilly.

By: Michael Crinson, Dimock Stratton LLP