Federal Court Grants Order Bifurcating Apotex’ Section 8 Action

In Apotex Inc. v. Alcon Canada Inc., 2016 FC 720, Prothonotary Tabib granted Apotex’ motion for bifurcation of its section 8 action involving its Apo-Travoprost Z topical ophthalmic solution.

There is an ongoing, separate action regarding the infringement and validity of Alcon’s 370 Patent, one of three patents involved in the section 8 action. That proceeding had already been bifurcated between liability and quantification issues. Apotex moved to bifurcate its section 8 action so that Alcon’s defences of hypothetical infringement of two other patents, and the validity of those patents, be tried before quantification.

Alcon feared that Apotex wanted bifurcation in order to move to consolidate the action for hypothetical infringement with Alcon’s action for actual infringement of the 370 Patent, thus delaying the latter. At the hearing, Apotex confirmed that the request for bifurcation was not contingent upon the consolidation of those two proceedings, which seemed to satisfy the Court. Alcon also argued that infringement could not be severed from the determination of the relevant period since Apotex’ pleading did not confirm that its formulation or manufacturing would have varied in the “but for” world. However, Apotex conceded that there would have been no difference.

Prothonotary Tabib considered the factors relevant to bifurcation as set out in paragraph 5 of Merck and Co. v Brantford Chemicals Inc., 2004 FC 1400. Here, the Court found that:

  • the case involved complex issues;
  • the issues to be bifurcated were clearly separate;
  • the factual structure was not extraordinary compared to other section 8 actions;
  • determination of the first phase would neither improve nor hinder the trial judge’s ability to decide the second phase;
  • the issues to be severed were easy to separate and would involve different witnesses;
  • the Court could try the action expeditiously, whether bifurcated or not;
  • there was no clear advantage or disadvantage to deciding infringement first;
  • if both phases proceed, then bifurcation would not result in substantial savings of time or costs; and
  • if the second phase did not proceed, however, then there would be substantial savings of time and costs.

The Court found that the determinative questions were whether, and to what degree, bifurcation might facilitate settlement or put an end to the action. As the law currently stands, infringement in the “but for” world is not a complete defence to a section 8 claim, but is a significant factor to be considered in assessing compensation, and can reduce damages to zero. The Court held that a finding of infringement would likely be dispositive in this case since Apotex conceded that there would be no difference between its formulation and production process in the “but for” and real worlds. Accordingly, bifurcation would likely enable the most important aspects of Alcon’s defences to be determined earlier in a more cost effective manner and the remaining issues would stand a greater chance of being resolved by settlement.

The Court noted that it was influenced by the bifurcation of Alcon’s related infringement action. Alcon’s action was much closer to trial. Without bifurcation, the parties could be required to address similar quantification issues in two trials at different times, thus risking duplication of efforts and contradictory findings. The Court held that bifurcation of the section 8 action obviates this risk, and in the unlikely event that both quantification phases proceed, bifurcation could permit the quantification phases to proceed to discovery and trial concurrently or jointly in both actions.

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