2,041,113 / olanzapine / ZYPREXA
In this s 8 NOC case, Teva is seeking damages from Lilly as compensation for having been prevented from coming to market with a generic version of olanzapine.* O’Reilly J’s decision did not arrive at a final quantum, but simply made the factual findings necessary for those calculations [6]. Most of the issues—when would Teva’s product have been listed, what would its market share have been, how much trade-spend—turned on the particular facts. The issue of most interest and general importance was an evidentiary question as to the admissibility of opinion evidence proffered by a fact witness. O’Reilly J also clarified a point regarding pipefill.
Opinion evidence proffered by fact witness
In order to assess damages, it is necessary to determine what would have happened in the “but for” world. That is necessarily a hypothetical matter. Teva wanted its fact witness to testify as to what they would have done or what would have happened in the but-for world [14], for example whether Teva would have launched with material produced by Process 1 or Process 2 [15]. The idea was evidently that the Teva executives who were actually responsible for making those types of decisions, and who would have made the decision in question had the statutory stay not been triggered, were best placed to address that aspect of what would have happened in the but for world. Lilly objected on the basis that the opinions of fact witnesses are not admissible, and O’Reilly J agreed [13].
O’Reilly J did not cite any authority for this proposition. While I’m not an expert on evidence law, I’m not sure that there is a rule prohibiting fact witnesses from giving opinion evidence. The issue is discussed at length in Graat v. The Queen, [1982] 2 SCR 819, in which Dickson J, for the Court, concluded (836):
Except for the sake of convenience there is little, if any, virtue, in any distinction resting
on the tenuous, and frequently false, antithesis between fact and opinion. The line
between “fact” and “opinion” is not clear.
He then says that the question at issue should be resolved on the basis of general principles:
Admissibility is determined, first, by asking whether the evidence sought to be admitted
is relevant. This is a matter of applying logic and experience to the circumstances of the
particular case. The question which must then be asked is whether, though probative, the
evidence must be excluded by a clear ground of policy or of law.
Ultimately, the SCC held that the witnesses in question “had an opportunity for personal observation. They were in a position to give the Court real help” (836). Consequently the evidence was admissible. Without more details than are evident from the decision, I don't know how those principles would have applied to the evidence in question in this case, but it seems to me at least arguable that it would have been admitted.
O’Reilly J noted that there was a way around the problem:
[13] During the trial, I suggested to counsel that the best way to provide the relevant
evidence to the Court would be to explore with fact witnesses what they did in the real
world. The witnesses could then be asked whether they knew of any reason why they
would have acted differently in the but-for world. This would confine fact witnesses to
their own knowledge and experience, as opposed to asking them, in an open-ended
fashion, what they would have done or what they thought would have happened in the
but-for world.
While this would be a getting a way around the putative rule against allowing fact witnesses to give opinion evidence, the point of Graat, as I read it, is that these kind of indirect methods are not necessary.
The specific issue in Graat, and many of the cases discussed therein, was whether lay witnesses, such as police officers, could testify as to whether the accused’s ability to drive was impaired by alcohol. As many of the decisions emphasized, this is a situation where an ordinary person who has actually observed the accused has sufficient experience to form a helpful opinion. In a passage adopted by Dickson J at 839, Lord MacDermott in Sherrard v Jacob [1965] NILR 151, 162, stated:
The driving of motor vehicles is now so much a matter of everyday experience for
ordinary people that I find it difficult to see how inferential or opinion evidence as to
being (a) under the influence of drink and (b) thereby unfit to drive a car can be placed in
different categories for the purpose of determining admissibility. The one as much as the
other seems to be within the capacity of the non-expert to form a reasonable conclusion
While drunken driving might seem far removed from pharmaceutical production processes, the parallel seems to me to be close nonetheless. Whether a pharmaceutical company might have used one process or another is not a matter of everyday experience for ordinary people, but, as I understand the facts, it was a matter of everyday experience for the particular fact witnesses in this case. The point from Graat is that whether or not he had been qualified as an expert, the witnesses in question had sufficient relevant knowledge and experience to provide helpful evidence on the issue at hand.
A broad reading of Graat is that opinion evidence is admissible if it would be helpful and there is no clear ground of policy or of law for excluding it (835-36). A narrower reading is that fact witnesses may give opinion evidence when that is a method of making a compendious statement of facts (840). Even on the narrow reading, it seems to me that there is a good argument that the evidence at issue in this case would be admissible (again with the caveat that it is not possible to take a firm view with the limited details in the opinion). In some decisions reviewed by Dickson J, the court had taken a position very similar to that implicit in O’Reilly J’s suggestion, to the effect that the fact witness could state all the factual circumstances which would lead her to form the opinion that the accused was intoxicated, but the witness could not state the opinion itself (828). This position was clearly rejected by the SCC in Graat. As I understand, the point of allowing the opinion evidence is largely that such stratagems are unnecessary.
I don’t want to say that the evidence at issue in this case should have been admitted, as the nature of the evidence was described only in general terms. And, again, I am not an expect in evidence law, so there may well be a rule or development that I have missed. But, at least on the authority of Graat, it seems to me that there is no strict rule prohibiting fact witnesses from giving opinion evidence.
Pipefill
Teva claimed that its losses should include an amount for pipefill— “that is, the quantity of sales Teva would have made to distributors in the but-for world, an amount that would not be captured by retail sales figures” [90]. The idea is that the manufacturer ships its product from the factory, it sits a while with the wholesaler until ordered by the retailer, and sits a while with the pharmacy before being dispensed to an individual [93]. Teva wanted its lost profits to include losses on product that had left the factory, but had not yet been dispensed. O’Reilly J held that Teva was not entitled to lost profits on pipefill [103]. The basic rule for s 8 damages is that “but for” causation, in a world in which the patentee had not applied for an order of prohibition, except that losses made after the compensable period are not compensable, even if they were caused by the statutory stay: 2009 FCA 187, [92]-[102]; 2011 FCA 149. This is a statutory exception to the general principle that losses caused by the wrong are recoverable. O’Reilly J observed that pipefill product is actually sold, but it is sold outside of the compensable period [92]. Consequently, it is not a recoverable loss. This holding is significant because there are several other cases, reviewed in detail by O’Reilly J [96]-[101], which arguably did allow pipefill. He held that these cases were not determinative. In some the holding was ambiguous, and “In none of them was the issue seriously contested or a quantum specifically calculated” [101]. To the extent they differed, he therefore declined to follow them [103]. Given that O’Reilly J gave full consideration to the point, his holding is likely to be influential.
*The procedural history is long. Hughes J ruled against Lilly in 2007 FC 596, the NOC proceeding that ultimately gave rise to this s 8 action [4]. After Novopharm (now Teva) launched, O’Reilly J held the patent invalid Olanzapine (No 1) 2009 FC 1018 which was reversed and remanded by 2010 FCA 197. On remand, in was Olanzapine (No 2) 2011 FC 1288, O’Reilly J again concluded the patent was invalid and this was affirmed 2012 FCA 232 [2] (blogged here).
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