Monday, April 18, 2016

Exception to Implied Undertaking Rule

Gilead Sciences, Inc v Teva Canada Ltd 2016 FC 31 Tabib J aff’d 2016 FC 336 Barnes J
     2,261,619 / 2,298,059 / tenofovir disoproxil / TRUVADA ATRIPLA VIREAD

My post on Barnes J’s decision affirming Tabib J’s refusal to strike Gilead’s quia timet action focused on what is meant by “imminent” activity, but Tabib J’s decision is also interesting because she relieved Gilead of the implied undertaking rule, pursuant to which a party is prevented from using information obtained on discovery for any other litigation or purpose [1].

In 2011 and 2012 NOC proceedings commenced between Gilead and Teva in respect of products covered by the 059 and 619 patents [5]. In August 2012, while those proceedings were pending, Teva brought an action seeking a declaration that the 619 and 059 patents were invalid [6]. In December of 2013 the FC granted an order prohibiting Teva from launching prior to expiry of the 619 patent, but dismissing the application in respect of the 059 patent. Teva initially continued to prosecute its impeachment action in respect of both patents, but a year later, in December of 2014, it discontinued the action in relation to the 059 patent, though without amending the pleadings [8]. Gilead then instituted the present quia timet action, seeking a declaration that Teva had in the past and will in the future infringe the 059 Patent [10].

The 059 and 619 patents related to the fumarate salt of tenofovir disoproxil (TDF). In its impeachment action Teva alleged that it wishes to import, make, use and sell in Canada TDF or products containing TDF [13]. In bringing its quia timet action, Gilead sought to rely on this statement as a material fact supporting its allegation to the effect that Teva intends to and will import, make, use and sell in Canada products containing TDF prior to the expiry of the 059 patent [12]. In order to this, Gilead sought to be relieved of the implied undertaking rule [1].

Tabib J noted that, inter alia, “the rule encourages parties to provide a more complete and candid discovery, again, furthering the interest of justice by giving them some assurance that the documents and answers will not be used for a purpose collateral or ulterior to the proceedings,” but the rule “is not however absolute and the Court retains the power to relieve persons of the obligation where it is in the interest of justice to do so” [14]. Tabib J noted that there is a recognized exception when “the deponent has given contradictory testimony about the same matters in successive or different proceedings,” and essentially the same consideration was at interest in this case [16]:

[17] Where it suited its purpose, as plaintiff in the . . impeachment action, Teva publicly described itself as an interested party on the basis of express allegations of an intent to come to market with products containing TDF prior to the expiry of the subject patents. It is fair to say that any facts that may have been disclosed on discovery by Teva to flesh out or support these allegations were proffered to advance Teva’s own interests in that litigation. . . . In the circumstances, the implied undertaking would permit Teva to play games with the administration of justice and to tailor its litigation position to suit its needs in each particular proceeding.

Tabib J also noted that “the narrow issue of whether Teva intends to and will come to market prior to the expiration of the 619 and/or 059 Patents is not just similar, it is the same. Teva cannot claim that they are distinct merely because the current action concerns only the 059 Patent while the [impeachment] action no longer concern that Patent: At the time discovery was given, the 059 Patent was directly at issue” [20]. Consequently, she held that Gilead is relieved of the implied undertaking rule in respect of the excerpts of discovery transcripts identified in its motion record.

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