T-1458-90
The Wellcome Foundation Limited and Burroughs
Wellcome Inc. (Plaintiffs)
v.
Apotex Inc., Novopharm Ltd., PDI-Pharma Dis
tribution Inc., Rene Hunderup and Fisker Cargo
Inc. (Defendants)
INDEXED AS: WELLCOME FOUNDATION LTD. V. APOTEX INC.
(T.D.)
Trial Division, Muldoon J.—Ottawa, June 7 and
8, 1990.
Patents — Infringement — Defendants, Apotex and Novop-
harm, importing drug formulated by process subject to
Canadian patent prior to obtaining compulsory licences
Importation to test safety and stability of tablet form to
prepare submissions for compulsory licence — No right to
import unless patentee, compulsory licensee (Patent Act, s.
39(4)), or interim compulsory licensee (s. 39(7)).
Patents — Practice — Anton Piller order granted based on
defective evidence — Plaintiffs' affidavits implying quantities
of illegally imported drug greater than in fact — Defendants
infringing patent — As fault on both sides, and competing
motions, necessary to balance issues and give relief Court
considering just — Continued detention of seized materials
ordered until testing determining whether drug that patented,
in which case to be detained until defendants obtaining com
pulsory licences or until final judgment — If not drug patent
ed, to be returned to owners — Defendants enjoined from
importing, using or selling patented drug until final judgment
or until compulsory licences issued.
This was an application for the detention of materials—
alleged to be the drug acyclovir—seized from the defendants
until final judgment; for an order permitting the plaintiffs to
take samples in order to determine whether the material be
acyclovir; and for an order restraining the defendants from
importing acyclovir until final judgment. The plaintiffs own the
Canadian process patent for the drug acyclovir. The defend
ants, Apotex and Novopharm, prior to obtaining compulsory
licences, imported acyclovir so that they could press it into
tablets in order to determine stability and safety, which was
necessary to prepare the submission for a notice of compliance
and drug identification number. The issue was whether such
importation was legal.
Held, the application should be allowed.
According to Patent Act, section 42 a patentee has the
exclusive right to make, construct and use the invention and to
sell it to others. By judicial interpretation in the Rhone-
Poulenc case, those rights have been extended to include
importing. Since that judgment was rendered, Parliament has
specifically provided that an interim compulsory or compulsory
licence is required to import patented medicines. The Supreme
Court of Canada's decision in Micro-Chemicals Limited v.
Smith Kline & French Inter-American Corporation, [1972]
S.C.R. 506, that experimental use of a patented process is not
infringement where the purpose is to improve the invention or
to prove that the product could be manufactured on a commer
cial basis, and not with the intention of making and selling the
thing for profit, was to be distinguished. Neither Apotex nor
Novopharm were producing acyclovir, but were importing it.
The plaintiffs had raised a good prima facie case of a serious
issue to be tried, but could not show irreparable harm as their
action could come to trial before the defendants obtain compul
sory licences and notices of compliance.
The affidavits upon which Denault J. had been induced to
grant an Anton Piller order were misleading as they overstated
the number of shipments, leading to an inference that the
quantity of illegally imported drug was greater than it in fact
was. As there was fault on both sides (the plaintiffs obtained an
intrusive Anton Piller order based on defective evidence, and,
the defendants have been illegally importing acyclovir), the
Court had to balance the issues and give such relief as to it
seemed just. Accordingly, the seized goods were to be tested
and, if they proved to be acyclovir, detained until the defend
ants had obtained compulsory licences or until final judgment.
Otherwise they were to be returned to their owners. Apotex and
Novopharm were enjoined from importing, selling or promoting
acyclovir until they obtained compulsory licences.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Patent Act, R.S.C., 1985, c. P-4, s. 39(4),(7), 39.11 (as
enacted by R.S.C., 1985 (3rd Supp.), c. 33, s. 15).
CASES JUDICIALLY CONSIDERED
APPLIED:
Societe des Usines Chimiques Rhone-Poulenc et al. v.
Jules R. Gilbert Ltd. et al. (1967), 35 Fox Pat. C. 174
(Ex. Ct.).
DISTINGUISHED:
Micro Chemicals Limited v. Smith Kline & French
Inter-American Corporation, [1972] S.C.R. 506;
(1971), 25 D.L.R. (3d) 79; 2 C.P.R. (2d) 193.
CONSIDERED:
Astra Pharmaceuticals Canada Ltd. et al. v. Apotex Inc.
(1984), 1 C.P.R. (3d) 513 (F.C.T.D.); Takeda Chemical
Industries Ltd. et al. v. Novopharm Ltd. (1985), 7 C.P.R.
(3d) 426 (F.C.T.D.); Cimaroli v. Pugliese (1987), 25
C.P.C. (2d) 10 (Ont. S.C.); Midway Mfg. Co. v. Bern-
stein, [1983] 1 F.C. 510; (1982), 67 C.P.R. (2d) 112
(T.D.).
COUNSEL:
Patrick E. Kierans and C. Ross Carson for
plaintiffs.
Harry B. Radomski and Tim Gilbert for
defendant Apotex Inc.
Malcolm S. Johnston, Q.C. for defendant
Novopharm Ltd.
Joseph I. Etigson for defendants PDI-Pharma
Distribution Inc., Rene Hunderup and Fisker
Cargo Inc.
SOLICITORS:
Ogilvy, Renault, Montreal, for plaintiffs.
Goodman & Goodman, Toronto, for defend
ant Apotex Inc.
Malcolm S. Johnston, Q.C., Toronto for
defendant Novopharm Ltd.
Hughes, Etigson, Concord, Ontario for
defendants PDI-Pharma Distribution Inc.,
Rene Hunderup and Fisker Cargo Inc.
The following are the reasons for judgment
delivered orally in English by
MULDOON J.: The parties are litigating over the
defendant's importation of the drug acyclovir, for
mulated by process described in the overseas plain
tiff's patents.
Among the general provisions of the Patent Act,
R.S.C., 1985, c. P-4, which I shall call the Act, is
section 42 [as am. by R.S.C., 1985 (3rd Supp.), c.
33, s. 16] which provides that a patent confers on
the patentee:
the exclusive right, privilege and liberty of making, construct
ing and using the invention and selling it to others to be used
• • •
To that litany of exclusive rights there must be
added, by judicial interpretation, that of import
ing. In March 1967, Mr. Justice Thurlow, then of
the Exchequer Court of Canada, rendered his
judgment in the case of Societe des Usines Chi-
miques Rhone-Poulenc et al. v. Jules R. Gilbert
Ltd. et al. (1967), 35 Fox Pat. C. 174. The head-
note at page 176 accurately reports that Thurlow
J., inter alia, held:
16. That the principle that the importation into Canada of
substances produced abroad according to a Canadian process
patent constituted infringement of that patent must be
regarded as a settled point in the Exchequer Court in the
absence of any expression of opinion by the Supreme Court.
Of the two patents in suit, 1,062,257 and
1,096,863, the latter is a Canadian process patent.
Counsel have been unable to discover or report any
contrary expression of opinion by the Supreme
Court of Canada. There is no doubt that the
substance acyclovir found in the possession of the
defendants, all except Fisker Cargo Inc., was
imported, being a substance produced abroad. But
counsel for the defendants PDI, Hunderup and
Fisker Cargo Inc. points out that in 1969 the Act
was amended, as he put it, to permit importation.
No doubt, in relation to chemical products and
substances, subsection 39(4) surely countenances,
in paragraph 39(4)(a), the importation of any
medicine for the purposes of a compulsory licence,
thus:
39. ...
(4) Where, in the case of any patent for an invention
intended or capable of being used for medicine or for the
preparation or production of medicine, an application is made
by any person for a licence to do one or more of the following
things as specified in the application, namely,
(a) where the invention is a process, to use the invention for
the preparation or production of medicine, import any medi
cine in the preparation or production of which the invention
has been used or sell any medicine in the preparation or
production of which the invention has been used, or,
And then paragraph (b) relates to an invention
other than a process:
39. (4) ...
the Commissioner shall grant to the applicant a licence to do
the things specified in the application except such, if any, of
those things in respect of which he sees good reason not to
grant a licence.
Subsection 39(7) is much in the same terms and
it reads as follows:
39. ...
(7) On the expiration of the period specified by the Commis
sioner in the notice to the patentee referred to in subsection (6),
the Commissioner shall, if he has not finally disposed of the
application, grant an interim licence to the applicant to do the
things specified in the request except such, if any, of those
things in respect of which he sees good reason not to grant such
an interim licence.
It is apparent that the Commissioner could see
good reason, for example, not to permit importa
tion or any of the other things specified in the
request or in the licence.
The Patent Act, which disposes of the subject in
regard at least to procedure, therefore requires a
compulsory licence or an interim licence for the
importation, inter alia, of patented medicines,
unless the Commissioner has good reason, even
then, not to permit importation.
The two concerns, Taro and Genpharm, already
have compulsory licences, awaiting only the expi
ration of the time prescribed in subsections
39.11(1) [as enacted by R.S.C., 1985 (3rd Supp.),
c. 33, s. 15) and (2). These provisions draw further
restrictions upon the importation of, for example,
the acyclovir which is the subject of this action. It
is worth reciting, first, paragraphs 39.11(1)(a) and
(b):
39.11 (1) . . .
(a) where the invention is a process, to import the medicine
in the preparation or production of which the invention has
been used, if the medicine is for sale for consumption in
Canada; or
(b) where the invention is other than a process, to import the
invention for medicine or for the preparation or production of
medicine, if the medicine is for sale for consumption in
Canada.
Subsection 39.11(2) [as enacted idem] spells out
the duration of the above prohibitions on importa
tion of medicines:
39.11 ...
(2) the prohibition under subsection (1) expires in respect of
a medicine
(a) seven years after the date of the notice of compliance
that is first issued ....
And it goes down to paragraph (b), which I think
is the appropriate one here:
39.11 (2) .
(b) eight years after the date of the notice of compliance
that is first issued in respect of the medicine, where, on June
27, 1986, the notice of compliance has been so issued and
neither a licence under section 39 has been granted in respect
of the medicine nor a notice of compliance has been issued in
respect of the medicine to a person other than the patentee;
and
And the definition of "patentee" could lead, and
does indeed lead, to the conclusion that the plain
tiff, Burroughs Wellcome, stands as patentee
under this definition in this part of the Patent Act.
Does the law countenance the importation of
patented medicines, prior to the issuance of a
compulsory licence, in order that the person, firm
or corporation who or which has applied for a
compulsory licence, or intends to apply for a com
pulsory licence, may work up the submission
nowadays required by the Health Protection
Branch in order to receive a Notice of Compliance
and a Drug Identification Number? Counsel could
point to no statutory authority other than the cited
provisions of section 39. Section 39, as noted,
countenances importation on or after issuance of a
compulsory licence or an interim compulsory
licence.
Counsel for the defendants rely on the decision
of the Supreme Court of Canada cited as Micro
Chemicals Limited v. Smith Kline & French
Inter-American Corporation, [1972] S.C.R. 506.
The Court's unanimous decision was delivered by
Mr. Justice Hall, on October 5, 1971. The alleged
infringement in question was said to have occurred
from and after January 10, 1961, and consisted in
the defendant's experimental use of a patented
process prior to the defendant having applied for a
compulsory licence. It was acknowledged that the
defendant's experiments were for the purpose of
making trifluoperazine by the patented process,
not to improve the invention, but for proving that
the defendant could produce the product on a
commercial basis. The small amount of trifluoper-
azine produced was (prior to January 22, 1966)
put into bottles and kept for the defendant Micro
Chemicals and never entered into commerce and
no damage was suffered by the plaintiff and no
profits made by Micro.
Hall J. said this, beginning at pages 519-520 of
the Supreme Court Reports:
In my view he [the trial judge] was in error in holding as he did
that an experimental user without a licence in the course of
bona fide experiments with a patented article is in law and [sic]
infringer. The reasoning of Jessel M.R., in Frearson v. Loe
((1878), 9 Ch. D. 48), and approved by Vice-Chancellor Bris-
towe in Proctor v. Bayley & Son ((1889), 6 R.P.C. 106 at
p. 109), is applicable. Jessel M.R., said at pp. 66-67:
The other point raised was a curious one, and by no means
free from difficulty, and what occurred with regard to that
was this, that the Defendant at various times made screw
blanks, as he said, not in all more than 2 lbs., by various
contrivances by which no doubt crew [sic] blanks were made
according to the Plaintiff's patent of 1870, as well as that of
1875; they seem to have been an infringement of both. He
said he did this merely by way of experiment, and no doubt if
a man makes things merely by way of bona fide experiment,
and not with the intention of selling and making use of the
thing so made for the purpose of which a patent has been
granted, but with the view of improving upon the invention
the subject of the patent, or with the view of seeing whether
an improvement can be made or not, that is not an invasion
of the exclusive rights granted by the patent. Patent rights
were never granted to prevent persons of ingenuity exercising
their talents in a fair way. But if there be neither using nor
vending of the invention for profit, the mere making for the
purpose of experiment, and not for a fraudulent purpose,
ought not to be considered within the meaning of the prohibi
tion, and if it were, it is certainly not the subject for an
injunction.
There next follows a passage quoted by counsel
on all sides in the present case, a passage by Mr.
Justice Hall, who continues [at page 520]:
The use Micro was making of the patented substance here
was not for profit but to establish the fact that it could
manufacture a quality product in accordance with the specifi
cations disclosed in respondent's application for Patent 612204.
Walsh J., found that Micro's experiments prior to January 22,
1966, constituted a technical infringement as they were not
carried out for the purpose of improving the process but to
enable Micro to produce it commercially as soon as the licence
it had applied for could be obtained. I cannot see that this sort
of experimentation and preparation is an infringement. It
appears to me to be the logical result of the right to apply for a
compulsory licence.
And then Mr. Radomski cited the following
passage from Mr. Justice Hall's decision, which is
on the same page:
However, the fact that an applicant puts himself in a position to
show that he is possessed of the equipment, skill and know-how
by experimentation does not, in my opinion, make him an
infringer.
Mr. Kierans cited the following passage [at page
5211:
The finding of Walsh J. that there was an infringement in
the period between January 25, 1966, and June 21, 1966,
consisting of the transfers of the material from Micro to
Gryphon and the manufacture of tablets by Gryphon and the
activity of Maney in soliciting potential customers is amply
supported by the evidence. The respondent is accordingly en
titled to damages for infringement in this period.
Now, I ask: Is that high authority sufficient
authority to hold that the defendants are entitled
to import acyclovir—the patented substance—so
that Apotex and Novopharm may press it into
tablets in order to determine stability and safety?
Neither has a compulsory licence and Apotex has
not yet even applied for a licence.
Counsel for the plaintiff says that these defend
ant generic drug manufacturers are in the analo
gous position to that of Gryphon in the Micro
Chemicals case, but in truth there is no evidence
that they have advertised any of their tablets made
with acyclovir for sale.
Is the Micro Chemicals case on all fours with
the present case? It is distinguishable. Neither
Apotex nor Novopharm is attempting to produce
acyclovir in its own laboratory where it could
control and would want to limit its findings to and
for itself. No. Both are importing already pro
pounded acyclovir. One must remember what
Thurlow J. held about importation in his judgment
in the RhOne-Poulenc case. That stands, except
that Parliament has now made specific provision
for importation upon issuance of a compulsory
licence if the Commissioner finds no reason to
prohibit importation. There is no other statutory
authority cited here which operates in derogation
of a patent.
Have times otherwise changed since the alleged
infringement considered in the Micro Chemicals
case? Yes. Now, before exploiting a compulsory
licence, the licensee must also obtain a notice of
compliance and a drug identification number from
the Health Protection Branch of the Department
of National Health and Welfare. The sequence
envisaged in the statutory scheme is that, first, one
obtains the compulsory licence; then one may
import for experimentation in order to make
appropriate submissions to the Health Protection
Branch for a notice of compliance.
The conclusion is that the plaintiffs raised a
good "prima facie" case of a serious issue to be
tried, but given the time it will take to acquire a
compulsory licence and a notice of compliance by
the defendants Apotex and Novopharm, by which
time the plaintiffs' action could come to trial, they
could not show irreparable harm.
It appears to the Court that the plaintiffs'
affidavits upon which they induced Mr. Justice
Denault to grant an Anton Piller order were so
defective as to have misled the Court. Messrs.
Rowan and Desmarais overstated the number of
shipments and, by implication, the volume of acy-
clovir which was imported. Mr. Rowan did not
deal fairly and openly in his affidavit with the
prospect of testing on the part of the defendants
Apotex and Novopharm. Other instances were
demonstrated by the defendants' counsel. Of note
in this regard is the case of Cimaroli v. Pugliese
(1987), 25 C.P.C. (2d) 10, a decision of Master
Sandler of the Supreme Court of Ontario, subse
quently upheld by Mr. Justice O'Driscoll [(1988),
25 C.P.C. (2d) 10], from whose decision leave to
appeal further was refused. There the contentious
documentary text was actually before the judge of
first instance but it consisted of the proverbial
"fine print" and was not brought specially to the
judge's attention. That was perhaps a smaller fault
than those exhibited in the plaintiffs' material
before Denault J.
Among the volume of jurisprudence placed
before the Court by the parties, mention should be
made of Astra Pharmaceuticals Canada Ltd. et al.
v. Apotex Inc. (1984), 1 C.P.R. (3d) 513
(F.C.T.D.), a decision of Mr. Justice Joyal, and
Takeda Chemical Industries Ltd. et al. v. Novo-
pharm Ltd. (1985), 7 C.P.R. (3d) 426 (F.C.T.D.),
a decision of the Associate Chief Justice of this
Court. They have not been overlooked.
The case here is said to be one of "first impres
sion" and is not easy to conclude because it
appears that there is fault on both sides in the
sense that the plaintiffs obtained a very intrusive
Anton Piller order on what may be said to be less
than good evidence. On the other hand, the
defendants have been importing that for which
they have no licence to import.
Since both motions asked for further and other
relief as to the Court may seem just, it may
require some creative measures in disposing of this
matter, where two competing motions are made.
In the case of Midway Mfg. Co. v. Bernstein,
[1983], 1 F.C. 510; (1982), 67 C.P.R. (2d) 112
(T.D.), Mr. Justice Collier, according to the
[C.P.R.] headnote:
Held, the interlocutory injunction part of the order is set
aside. The balance of the Anton Piller order is not set aside.
That is creative, in my opinion; and while I may
not follow the exact same disposition as Mr. Jus
tice Collier, I think that the Court should give
such relief as to the Court may seem just.
It was mentioned during the course of the hear
ing that had the defendants gone to the plaintiffs
and requested permission to import some acyclovir
so that they could perform experimentations, we
might not have had to have such an investigation
and such intrusive measures.
The plaintiff says that the defendants thereby
were gaining time which they were not entitled to,
when it comes to producing and selling under a
compulsory licence.
It was also suggested that the plaintiffs, instead
of taking the draconian measures they took, or
induced Mr. Justice Denault to permit them to
take, ought to have gone to the defendants and
said: "Look here, we understand that you are
importing acyclovir and that is contrary to the
patent."
Of course, the defendants urged that if they are
not entitled to import it now, that gives the plain
tiffs an extention of its patents, in derogation of
compulsory licencing.
These are not easy issues to balance, I may say.
One could philosophize for a week or a month. But
we have no time to do that.
The disposition is as follows:
1. Subject to what follows the seized materials
alleged to be acyclovir shall remain in custody and
the plaintiff as soon as possible may, without
mixing the various contents, take a small random
sample, sufficient for analysis, in order to deter
mine whether that seized material be truly of the
same chemical composition and constitution as
acyclovir, pursuant to subsection 39(2) of the
Patent Act; and
a) if it be the same then all quantities of that
seized material shall be held in continued deten
tion and custody for preservation, and may be
photographed and delivered to a person agreed
upon by the parties for preservation until
(i) the defendant Apotex obtain a compulsory
licence under said Act, whereupon its ma
terial and that destined for it may and shall
be returned to the owner or respective owners;
and until
(ii) the defendant Novopharm obtain such a
compulsory licence, whereupon its material
and that destined for it may and shall be
returned to the owner or respective owners;
b) if the seized material be not the same as the
patented material acyclovir pursuant to subsec
tion 39(2) of the Act or deemed thereby to be
the same upon test, it shall be returned forth
with, upon the test results being obtained direct
ly from the analyst or tester, to its respective
owners among the defendants; and the parties
shall in this regard be at liberty to apply to the
Court for orders to release the test results within
a reasonable time, to release the seized material
and for a further order as to costs;
c) in regard to the seized material respectively
of Apotex and of Novopharm, it shall remain in
safe custody and preservation so long as its said
respective owners do not obtain a compulsory
licence pursuant to said Act, where it shall
remain at the ultimate expense of those parties
ordered to pay costs upon the determination and
final judgment in this action, or until further
order of the Court;
d) the plaintiffs shall have their taxed party-
and-party costs, awarded this 8th day of June,
1990, for proceedings upon their motion heard
this day and yesterday and hereby awarded, and
the same shall be paid equally by Apotex and
Novopharm and if paid in full by the one
defendant it shall have judgment for one-half
against the other defendant as between Apotex
and Novopharm.
2. Until final judgment in this action, or until
Apotex and Novopharm respectively obtain a com
pulsory licence in regard to acyclovir pursuant to
the provisions of the Patent Act, or until further
order of this Court, whichever may be the first to
occur, Apotex and Novopharm respectively to
gether with their officers, directors, agents, ser
vants and employees, and those of the other
defendants, and the other defendants themselves,
are hereby restrained from importing, using, offer
ing for sale, selling, promoting or inducing, caus
ing or procuring others to import, use, offer for
sale, sell and promote the medicine acyclovir as
prepared by the processes disclosed and claimed in
Canadian Patents Nos. 1,062,257 and 1,096,863.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.