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Apotex barred from raising validity issues during assessment of damages

On September 16, 2014 Prothonotary Lafrenière dismissed Apotex’s motion for leave to file an amended Responding Statement of Issues. Apotex sought to argue, among other things, that the Plaintiffs are not entitled to any damages for patent infringement because following the finding of validity and infringement the Supreme Court of Canada rendered a decision in another proceeding rejecting one of the principles upon which the infringed patent had been found valid.

This motion arose in the context of a patent infringement action regarding Canadian Patent No. 1,275,350 which issued from an application divided out of application number 341,340. The 340 Application claimed a class of compounds and the 350 Patent claimed a smaller subset of compounds from this class, including lisinopril, which is marketed under the trade names PRINIVIL  and ZESTRIL by Merck and AstraZeneca, respectively.

During the liability phase, Justice Hughes considered whether Merck had obtained multiple patents, including the 350 Patent, in exchange for disclosure of a single invention in the 340 Application. While Justice Hughes concluded that each claim in the 340 Application disclosed a separate invention he made it clear that this conclusion was based on jurisprudential constraints and he would have otherwise found that the 340 Application is directed to but one invention. The 350 Patent was declared valid and infringed by Apotex. The Federal Court of Appeal upheld Justice Hughes decision that each claim of the 340 Application disclosed more than one invention and leave to appeal to the Supreme Court of Canada was dismissed.

Following the liability phase, but prior to commencement of the damages phase, the Supreme Court of Canada issued its decision in Teva sildenafil  where the court specifically referenced Justice Hughes’ decision and held that the general proposition that separate claims disclose separate inventions is based on a misinterpretation of the case law and must be rejected.

Apotex sought to rely on the decision of the United Kingdom Supreme Court in Virgin Atlantic v Zodiac Seats  to argue that the Plaintiffs were not entitled to damages because the Supreme Court of Canada subsequently rejected the principle on which the infringed patent was held valid. In Virgin Atlantic, Zodiac was found to have infringed the patent at issue, however, prior to an assessment of damages the patent was found to be invalid and was subsequently amended to avoid invalidity. Zodiac did not infringe the amended patent and the court held that Zodiac was entitled to contend that there had been no damages due to infringement because the amended patent was not infringed.

Prothonotary Lafrenière stated that a change in the law is not a sufficient basis to re-open previously decided cases and held that both res judicata and issue estoppel prevent Apotex from re-opening the question of the validity of the 350 Patent. Prothonotary Lafrenière stated that while special circumstances may operate to restrict the application of issue estoppel, Apotex had not pleaded any special circumstances.

Prothonotary Lafrenière also noted Apotex’s great reliance on the Virgin Atlantic decision but found the case was not applicable because it was based on a peculiar aspect of European patent law that has no parallel in Canada. Finally, Prothonotary Lafrenière stated that even if it were open to Apotex to now seek a declaration regarding the validity of the 350 Patent, a damages reference is not the appropriate forum to do so.

A copy of Prothonotary Lafrenière’s Reasons for Order and Order can be found here.