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Akebia’s “Zombie Motion” is Put to Rest

In FibroGen, Inc. v. Akebia Therapeutics, Inc., Justice Rennie allowed FibroGen’s appeal from an order requiring that FibroGen file certain fact witness statements from a discontinued action despite their designation as confidential or highly confidential information.

In the underlying action, Akebia sought to impeach three Canadian patents owned by FibroGen. In anticipation of trial, FibroGen served fact witness statements and accompanying documents, designating the materials as confidential or highly confidential information under the confidentiality agreement between the parties. The action was later discontinued. Two months after the discontinuance, Akebia brought a motion challenging FibroGen’s confidentiality designations. Akebia filed the fact witness statements under seal as part of its motion record.

The Federal Court ordered that the materials would remain under seal pending the filing of redacted or public versions. However, if none were filed within 30 days, the entire motion record would be made public. FibroGen appealed, arguing that the Federal Court erred by (1) not dismissing Akebia’s motion for mootness, and (2) not finding that Akebia was bound by the implied undertaking rule.

Akebia’s motion was moot

Justice Rennie held that the Federal Court erred by relying on Akebia’s potential use of the fact witness statements in cross-examination in the parallel US litigation for impeachment purposes. The Federal Court’s rationale was speculative, lacking the “immediacy, certainty, and precision” necessary to overcome the general rule that moot issues should not be heard.

Since the parallel US litigation had been discontinued after the Federal Court issued its order, the Court’s primary rationale for finding that the motion was not moot had evaporated. Likewise, Akebia failed to preserve any right to contest FibroGen’s confidentiality designations when it agreed to discontinue the action. To characterize Akebia’s motion as a live controversy would “undermine the confidence and certainty that reasonable parties and their counsel place in notices of discontinuance.”

Akebia was bound by the implied undertaking rule

Parties receiving information produced under compulsion in a proceeding are subject to an implied undertaking not to use the information for any purpose other than that proceeding. The implied undertaking continues until varied by court order.

The Federal Court held that FibroGen’s objection based on the implied undertaking rule was premature because the rule’s application depended on when and how Akebia sought to use the documents. However, Justice Rennie held that the Federal Court’s approach to the implied undertaking rule was flawed. The implied undertaking applied to FibroGen’s witness statements because FibroGen was compelled to produce them by a Prothonotary’s Direction. Rather than attempting to circumvent the implied undertaking rule by bringing a motion challenging FibroGen’s confidentiality designations, Akebia should have first brought a motion to be relieved from the implied undertaking.

Justice Rennie allowed FibroGen’s appeal, set aside the Federal Court’s order, and dismissed Akebia’s motion. A copy of the decision can be found here.