Friday, September 18, 2015

Fairness in Abuse of Process: Which Party Will be More Severely Prejudiced

Eli Lilly Canada Inc v Apotex Inc / tadalafil formulation (NOC) 2015 FC 1016 Gleason J
            2,379,948 / tadalafil formulation / CIALIS, ADCIRCA

In Apotex Tadalafil Formulation Gleason J found that Apotex’ product did not infringe the 948 patent [72], which claims a particular formulation of tadalafil, and that the 948 patent was invalid for obviousness as being obvious to try [112], but that it was not invalid for lack of utility [145]. The main points of interest are Gleason J’s discussion of abuse of process, and her discussion of the suggestion in some recent case law that evidence of demonstrated utility must be disclosed in the patent. I will discuss abuse of process in this post, and utility in Monday’s post.

The abuse of process issue arose because de Montigny J ruled against Lilly on the same issues in respect of the same patent in Mylan Tadalafil III question, and in Sanofi Ramipril 2007 FCA 163 the FCA held that when an a patentee has failed in an NOC proceeding against one generic, it is generally an abuse of process within the meaning of paragraph 6(5)(b) of the NOC Regulations to relitigate the same allegation of invalidity when made by second generic. However, as Gleason J noted [11], the FCA did note that the doctrine of abuse of process should be applied on a case by case basis, “to ensure the application of the doctrine of abuse of process does not give rise to unfairness in the circumstances” (Sanofi Ramipril [40]). Gleason J held that “in the rather unique circumstances of this case, this application is not an abuse of process” [10]. The main distinction relied on by Gleason J was the fact that an appeal of de Montigny J's Mylan Tadalafil III decision was still pending, whereas in Sanofi Ramipril [40] appeals of the earlier decision had been exhausted [12], [14].

More important that this specific distinction is the general principle articulated by Gleason J:

[19] I believe the key issue for consideration involves determination of which party will be more severely prejudiced by a negative determination on the dismissal request.

Gleason J then went on to provide a detailed analysis of the consequences to both parties of allowing the prohibition application to proceed on the merits in this particular case. This principle strikes me as valuable in providing structure and meaning to the assessment of fairness in the exercise of the court’s discretion under s 6(5)(b), and indeed when dealing with abuse of process more generally. It is not an exhaustive principle (nor did Gleason J say it was), as it does not address concerns such as economy of judicial resources and the risk of conflicting judgments which go beyond the interests of the parties to the particular litigation, and which were emphasized in Sanofi Ramipril. But it is nonetheless a helpful elaboration on the question of fairness, which was adverted to but not developed in Sanofi Ramipril.

Gleason J’s statement and her subsequent discussion of the facts acknowledges that consideration of fairness requires a comparative balancing analysis, as opposed to focus solely on the plaintiff. A plaintiff may have legitimate reasons for bringing a subsequent action, even if considerations of judicial economy and fairness to the defendant ultimately warrant dismissal of the action for abuse of process. Implicit in Gleason J’s analysis is a risk analysis; there would be prejudice to Lilly from losing its ability to present its case on the merits, and that prejudice would be greatly magnified if it prevailed on the appeal in Mylan Tadalafil III [21]. In that sense, Gleason J’s analysis is broadly analogous to the “lower risk of injustice” principle enunciated by Hoffmann J In the context of interlocutory injunctions in Films Rover [1986] 3 All ER 772, 780. That is, even though one party might suffer a more substantial prejudice on a negative determination on the abuse motion, that prejudice should be discounted if that party would be unlikely to prevail on the merits. That would explain why it is relevant to ask whether the appeals from the prior decision are exhausted, which implies that the merits remain somewhat uncertain.

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