Abuse of Process: The Door Opens

Apotex Inc. v. Pfizer Ireland Pharmaceuticals / sildenafil 2011 FCA 77 Sexton JA: Layden-Stevenson, Stratas JJA var’g 2010 FC 968, Hughes J

Pfizer Ireland / sildenafil 2011 FCA 77 is an important decision on abuse of process and other pleadings related to the fact that PM(NOC) proceedings and an infringement action are entirely distinct proceedings that nonetheless often raise the same issues between the same parties. The prior FCA case law had undoubtedly “taken a dim view of attempts to prevent relitigation of issues decided in NOC proceedings in subsequent actions” [12]. In Pfizer Ireland / sildenafil 2011 FCA 77 the FCA affirmed that a defendant is in no way estopped from relitigating any cause of action, whether by way of res judicata, issue estoppel, abuse of process or any other doctrine [19]. Indeed, on the pleadings in issue the FCA varied the decision of Hughes J only by striking some paragraphs that he had allowed to stand. This is not surprising.

What is striking and significant is that the FCA went to considerable lengths to hold, after an extensive review of the case-law, that issue estoppel and / or abuse of process may bar relitigation of subsidiary factual and legal issues [24]. The Court specified that this may be particularly “where the evidentiary record at trial was identical to that of the NOC proceeding,” [23] but the Court did not set out any strict rules in this regard, and it noted that more broadly “issue estoppel generally precludes parties from raising arguments or issues that could have been raised at the original hearing,” [25, emphasis added]. The FCA left to the trial judge the question of whether a discretionary bar should apply in respect of a particular issue or factual determination [29], cautioning one the one hand that “courts should be cognisant of the summary nature of NOC proceedings and the fact that no discoveries or live evidence are permissible,” [25], but also that “issue estoppel and abuse of process exist primarily as pragmatic rules intended to promote judicial economy and efficiency. Those who act in a way such that pragmatism, judicial economy and efficiency are adversely affected, may find that the judge exercises his or her discretion in order to prevent such conduct” [27].

The Court’s reasoning is persuasive on its face, both in the distinction between cause of action estoppel and issue estoppel, and in the policy point regarding judicial economy. Nonetheless, there are clearly problems with this approach. The Court “acknowledge[d] a risk that parties may be tempted to make submissions concerning issue estoppel and abuse of process witness by witness, document by document, thereby prolonging proceedings,” but felt that this risk could be controlled by the discretion of the trial judge [27]. Moreover, even if it true that the trial judge can deal more or less adequately with these concerns, it strikes me that this is a second-best approach as compared with a system in which the NOC proceeding, or its equivalent – namely an interlocutory injunction – was actually part of the same proceeding as the infringement action. The problem of duplicative proceedings is just one of the problems that stems, fundamentally, from the distinct nature of NOC proceedings. Of course, that is a problem which cannot be addressed by the FCA.

Another interesting point is that there may be a split in the FCA on this issue, or at least a shift in views, between Pfizer Ireland / sildenafil and Janssen-Ortho v Apotex / levofloxacin (NOC) 2009 FCA 212. In litigation between Janssen-Ortho and Novopharm, Hughes J had found the levoflaxin patent to be valid and infringed, and this was affirmed by the FCA: 2006 FC 1234 affm’d 2007 FCA 217. In subsequent NOC proceedings between Janssen-Ortho and Apotex, Shore J referred repeatedly to the decision of Hughes J in the Novopharm litigation, and, while he did (in my view) carry out an independent review of the evidence, he relied on abuse principles to say "[t]his Court . . . would require better evidence and more appropriate legal argument . . . to come to a different result” 2008 FC 744 [214]. The majority of the FCA in Janssen-Ortho v Apotex / levofloxacin (NOC) remitted the matter back to Shore J to assess the evidence before him “independently of any findings made by Hughes J. in the Novopharm trial.” [80] (See here regarding the eventual fallout.) In contrast, the Pfizer Ireland / sildenafil decision expressly allows the trial judge to consider whether the evidence in the subsequent proceeding is different from that in the prior action. It is perfectly clear that the principles elaborated on in the Pfizer Ireland / sildenafil decision apply equally whether it involves a prior NOC and a subsequent infringement action, as in Pfizer Ireland / sildenafil, or a prior infringement action and a subsequent NOC, as in Janssen-Ortho / levofloxacin (NOC). The decisions cannot be reconciled on this basis. Indeed, generally the weight given to a prior infringement action should be greater, as the proceedings are full rather than summary.

A more plausible distinction is that the levoflaxin litigation involved different parties – Novopharm in the infringement action and Apotex in the NOC proceeding – while the parties to the sildenafil litigation were the same. However, in Pfizer Ireland / sildenafil the FCA noted that one of the rationales for abuse of process is to “promote the integrity of the justice system [and] prevent inconsistent findings” [24]. Surely the system is embarrassed by inconsistent findings based on the same evidence and arguments, whether the parties are the same or not. Similarly, at some point judicial resources are wasted in repeatedly litigating the validity of the same patent, whether or not the parties are the same. If these really are the justifications for the abuse doctrine, Shore J’s requirement that the new parties raise different arguments or different evidence is not so unreasonable.

Layden-Stevenson JA was the only judge in common between the two panels, and she dissented in the levoflaxin decision. However, she concurred on the abuse of process point [81], and dissented only because she felt that this error did not taint his own assessment of the issues. Thus, this is not a case where we can say that there is an obvious split in the Court in the sense that Layden-Stevenson J was in dissent on a point of principle in levoflaxin. Nonetheless, the principled distinction between the cases is not obvious to me. I would be interested to hear how Layden-Stevenson J would reconcile these cases.