2,365,281 / anti-IL-12 antibodies / STELARA
This decision raises basic issues regarding the proper approach to a stay of the remedies phrase of a bifurcated trial pending appeal of the liability decision. AbbVie sued Janssen for patent infringement. On Janssen’s motion, the trial was bifurcated into liability and remedy phases. AbbVie was successful at the liability stage, and that decision is under appeal to the FCA. On a subsequent motion a Prothonotary further ordered the remedial phase bifucated into a phase on injunctive relief, and a phase on damages. Janssen has appealed this second bifurcation . Janssen is therefore now facing two appeals, and if either is successful, the trial on injunctive relief should not go ahead, or should not go ahead separately from the damages phase . Janssen sought a stay of the remedies phase.
The parties agreed that the test for whether a stay should be granted is the three-part test from RJR-MacDonald  1 SCR 311 that also governs an interlocutory injunction: a serious issue to be tried, irreparable harm, and the balance of convenience. The FCA held that each of these tests is a separate threshold, so that each must be answered in the affirmative in order for a stay to be granted . Stratas JA pointed out that “[e]ach branch of the test adds something important” . While that is true, it does not follow that each must be satisfied individually. The alternative is that all are balanced together. That balancing approach has been endorsed by Sharpe on Injunctions and Specific Performance, ¶2.90-2.100, and by Sask CA in Mosaic v PCS 2011 SKCA 120  (blogged), and by Hoffmann J in Films Rover International Ltd v. Cannon Film Sales Ltd.  3 All ER 772 at 780 (Ch), who explained:
The principal dilemma about the grant of interlocutory injunctions. . . is that there is by definition a risk that the court may make the ‘wrong’ decision. . . . A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been ‘wrong.’
Stratas JA pointed out that it would be strange if a stay could be granted “in the face of a laughably weak or hopeless case,” , or on the basis of “vague assumptions and bald assertions” . That is true, but that does not justify a threshold approach; a laughably weak case, and vague assumptions, would not support a stay under a balancing approach either, as they would be given very little weight. Stratas JA reviewed a number of FCA cases which use the irreparable harm requirement as a threshold test . While I have not reviewed these cases in detail, that is certainly consistent with the approach taken to interlocutory injunctions in the patent context: see my article Interlocutory Injunctions and Irreparable Harm in the Federal Courts, (2010) 88 Can Bar Rev 517. While the FCA has been internally consistent in this respect, it should be recognized that it is increasingly out of step with other courts in Canada and elsewhere.
Having decided that each step is separate, the FCA refused the stay based solely on the irreparable harm branch, saying that
Janssen brought the motion to bifurcate the liability and remedies issues. It got the order it sought. . . . In short, Janssen got what it wanted and what it could reasonably expect - the prompt beginning of a remedial phase that would cause it to incur management time and legal and other costs. To the extent that this is harm, it is harm it brought upon itself by asking for bifurcation in these circumstances. It is avoidable harm -.
This does not strike me as persuasive. As I understand it, an order for bifurcation isn’t a favour granted to one party, but an assessment by the court that the interests of the efficient administration of justice are best served by bifurcation. There is at least an argument to be made that the efficient administration of justice would also be served by a stay; Stratas JA never addressed this point because he never reached the balance of convenience. It is not clear to me why a concern for the efficient administration of justice should be disregarded, merely because the party raising the issue had previously raised another issue regarding the efficient administration of justice. In the bigger picture, the money that the parties spend in wasted legal fees are not just a cost to the parties; they are a cost to society as a whole. The money has to come from somewhere, whether it is reduced research expenditure, or higher consumer prices.
All this is not to say that I disagree with the result. Notwithstanding that the SCC in RJR-MacDonald did equate the test for a stay and an interlocutory injunction, the two situations are quite different. In an application for an interlocutory injunction, the court has only summary information on which to base any assessment of the merits. That is what led the House of Lords in Cyanamid  UKHL 1 to downplay the importance of the merits in an interlocutory injunction application. (There is a strong argument to be made that in an appropriate case the merits deserve more weight than Cyanamid would give them, but that is a different issue.) In contrast, on an application for a stay, the court has a fully reasoned decision of a trial judge on a full evidentiary record. For that reason (as Professor Vaver pointed out to me), the UK courts do not treat a stay and an interlocutory injunction equivalently. In Virgin Atlantic  EWCA Civ 1513  Jacob LJ noted that
It should be noted the question [of a stay of an injunction pending appeal] is not the same when one is considering what to do on an application for an interim injunction pending trial. In that case the patentee has yet to establish his right, whereas after successful trial he has prima facie done just that. So in general, when an appeal is pending, the patentee will get his injunction provided he gives a cross-undertaking in damages against the possibility that the defendant's appeal would be successful. The question, however, remains one of a balance of convenience.
Stratas JA gave great weight to the importance of “The binding, mandatory nature of law – which I shall call ‘legality’ Indeed, it is an aspect of the rule of law, a constitutional principle.” , and he referred to the granting of a stay as a “temporary suspension of legality. ” . I am not comfortable with that characterization. If in the end, if an appeal court holds that the trial judge was wrong on a matter of law, then it seems to me that legality would be temporarily suspended by refusing a stay, rather than by granting it. But without raising it to the level of a constitutional principle, the underlying notion that the fully reasoned decision of the trial judge is entitled to considerable deference is surely correct.
Even this does not mean that some kind of threshold test should be adopted. Jacob LJ was of the view that the question “remains one of a balance of convenience,” though the trial judge’s decision on the merits is given great weight.
I note also that a key aspect of the UK approach is that while the remedial phase will normally not be stayed pending appeal, if the appellant is successful, it will be awarded not just its costs on the appeal, but also the costs incurred in the remedial inquiry:
The general rule is that a successful claimant is entitled to pursue an inquiry for damages even if there is a possibility of an appeal. He normally does so at his own risk as to costs if the decision on liability is reversed on appeal” Virgin Atlantic .
While I am not familiar with the Canadian practice on this point, and Stratas JA, made no reference to costs of the remedial inquiry in dismissing the motion for a stay, the UK approach does strike me as a sensible one.