Blog

Court Refuses to Bifurcate Section 8 Counterclaim from Olopatadine Infringement Action

 

In Alcon Canada Inc. v. Apotex Inc., 2016 FC 898, Prothonotary Tabib dismissed Alcon’s motion to bifurcate its infringement action from Apotex’ counterclaim for damages under section 8 of the PMNOC Regulations.

Apotex served Notices of Allegations on Alcon in relation to a formulation of olopatadine 0.2% solution used to treat allergic eye diseases. Alcon’s applications for prohibition were dismissed and discontinued, giving rise to Apotex’s right to section 8 damages. After Apotex received its Notice of Compliance, Alcon commenced an action for patent infringement. Apotex counterclaimed for section 8 damages. Alcon moved for bifurcation to have liability for infringement tried before quantification of damages and before Apotex Inc.’s section 8 counterclaim.

The parties agreed on the test for bifurcation: it was Alcon’s burden to demonstrate that bifurcation would more likely than not result in the just, most expeditious and least expensive determination of the litigation. It is well-established that bifurcation is particularly beneficial in patent infringement cases, where one has the right to opt between damages and an accounting of profits, since the quantification phase might be avoided entirely. However, this analysis “changes dramatically” where a section 8 claim is asserted as a counterclaim since there is no longer a possibility that a judgment on liability will eliminate the need for a second phase of trial altogether.

Alcon argued that its main defence to the section 8 claim was infringement and that, if Apotex is found to infringe, there is a high likelihood of settling the section 8 claim. The Court found there was “no evidence at all” on the motion from which it could conclude settlement would be likely. The Court thus proceeded on the assumption that a second phase of the trial will most likely be necessary.

The Court held that it must consider whether bifurcation will likely result in sufficiently important savings of costs or resources to offset the inherent inefficiencies of a bifurcated trial. Should the Court find non-infringement, there would be significant costs savings by not needing to litigate Alcon’s damages as well as some of Apotex’ defences to the damages claim. However, should the Court  find infringement, savings would not be “significant enough to outweigh the inherent wastefulness of the bifurcation.” The section 8 damages are based on Apotex’s profits, which would still need to be explored due to Alcon’s entitlement to opt for an accounting of profits. Moreover, the savings “might not even be realized at all since at law, a defence of infringement has not been held to constitute a complete bar to a section 8 claim and Apotex could still chose to pursue the quantification of its section 8 claim.”

Thus, bifurcation was only likely to lead to appreciable savings of costs or time should Alcon lose in the liability phase. In other words, Alcon’s motion required the Court to conclude that it is more likely than not that Alcon’s action would fail. Motions for bifurcation should not turn on an assessment of the relative merits of the parties’ case or an evaluation of which party is most likely to prevail. The Court held it was “not a compelling or attractive argument” that Alcon should be allowed to take a chance on a weak case without having to incur the full costs of meeting Apotex’s defences.

The Court accordingly dismissed Alcon’s motion for bifurcation.

A copy of the judgment can be found here.