Formal Confidentiality Order Not Always Required

MediaTube Corp. v. Bell Canada 2018 FC 355 Locke J
            2,339,447 / Internet Protocol Televsion / Fibe TV, FibreOp

This decision raises a couple of interesting points regarding procedure and substantive law of confidentiality orders. As discussed here, MediaTube's infringement action against Bell fell apart during discovery, and Locke J’s decision on the meritslargely addressed costs: 2017 FC 6. (And see 2017 FC 495 discussed here further clarifying the costs order.)

During the trial, in an exchange with the Court, Bell identified certain exhibits and transcripts that it felt should be treated as confidential. MediaTube did not object at that time, but it did object after retaining new counsel, and just after the trial decision was issued, MediaTube filed a motion seeking a declaration that these exhibits and transcripts are part of the public domain, and that they be made available to the public [4]-[6]. (The Court of Appeal has indicated that the hearing of the appeal would not be scheduled until after a decision on this motion [7].)

No formal evidence was submitted on the issue of confidentiality and no formal Confidentiality Order had ever been granted, but Bell had raised the issue of confidentiality several times during the trial, asking that certain material be treated as confidential, and Locke J had agreed [15], [16], [18]. Thus the issue of confidentiality had been duly raised, considered and decided at trial [20], and Locke J held that the matter was therefore res judicata notwithstanding the absence of a formal order (citations omitted):

[20] The fact that no formal Confidentiality Order was issued does not render null my rulings on confidentiality, and does not impede the application of the principle of res judicata. In addition, I am concerned about potential negative effects on the efficient conduct of trials in the future if I were to give weight now to Bell’s failure to make a formal motion, supported by formal evidence, for a formal Confidentiality Order. . . . The issuance of the order sought by MediaTube, and the consequent loss of confidentiality of Bell’s information, would likely prompt future litigants with information that all parties agree is confidential to devote unnecessary resources to obtain formal Confidentiality Orders.

This is not to say that a formal order is never advisable, but only that the need for a formal order at trial should be left to the trial judge [20].

MediaTube also relied on the fact that the court had not been formally closed when the confidential testimony was heard. After noting that it was unlikely that any member of the public had actually had access to the confidential evidence [23], Locke J rejected this argument as well, for similar reasons of judicial economy:

[24] As with the issue of Bell’s failure to request a formal Confidentiality Order, I am concerned about potential negative effects on the efficient conduct of trials in the future if I were to give weight now to Bell’s failure to request that the courtroom be formally closed during discussion of confidential information during trial. Requiring a party to take this step when it has no practical effect would impede the efficient conduct of trial.

The decision also raised a significant point on the substantive law related to confidentiality. In Sierra Club of Canada 2002 SCC 41, the SCC held that a confidentiality order should only be granted when it is necessary “to prevent a serious risk to an important interest, including a commercial interest.” The SCC elaborated by saying “In order to qualify as an ‘important commercial interest’, the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of a public interest in confidentiality” [53], [55]. While the primary basis for his decision is that the matter was res judicata, Locke J also remarked that

[22] . . . I am satisfied that, where a party that finds itself involved in litigation (especially as a defendant in an action that is without merit) and is compelled by the rules of discovery to divulge sensitive and confidential information, there is a strong public interest in that party being able to maintain the confidentiality of that information. Otherwise, no confidential information is safe. I am satisfied that the salutary effects of maintaining the confidentiality of the information in question in the present motion, outweigh its deleterious effects on the right to free expression, including the public interest in open and accessible court proceedings.

This strikes me as a sensible interpretation of the SCC’s remarks.

No new cases

No new substantive patent cases were released last week.

Note that I generally only blog on substantive patent / pharma cases. If you want to keep abreast of all new Canadian decisions, including procedural decisions and copyright and trade-mark cases, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.

Late Request to Amend Priority Date

Bayer Cropscience LP v. Canada (Attorney General) 2018 FCA 77 Nadon JA: Webb, Gleason JJA aff’g 2017 FC 178 O'Reilly J
            2,907,271

In this decision the FCA has affirmed O'Reilly J’s decision affirming the Commissioner’s decision to refuse Bayer’s request to amend the priority date, essentially for the same reasons given by O’Reilly J, namely that the request was outside the sixteen month window set in by Rule 88(1)(b).

As discussed here, this case turned on a narrow point of law in the context of unusual facts. Bayer filed a US patent application on 3 April 2012. The USPTO refused to assign a filing date for it on the basis that Bayer had failed to file accompanying drawings. Bayer filed the drawings on 19 April 2012, and the USPTO assigned that as the filing date. The following year, on 15 March 2013, Bayer filed a PCT application claiming priority from the US application. Bayer asked for a filing date of 3 April 2012, but WIPO pointed out that the US application had a filing date of 19 April. Therefore Bayer requested, and was given, a filing date of 19 April 2012. Two years after that, Bayer persuaded the USPTO that the drawings were not required after all, and on 14 April 2015, the USPTO amended the filing date for the US application to 3 April 2012. However, the USPTO, which acted as the international receiving office for the PCT application, refused to amend the PCT filing date. On 7 August 2015, the PCT application entered the national phase in Canada as Canadian Patent Application No 2,907,271. Bayer requested that the ‘271 application be given a filing date of 3 April 2012 on the basis that it was claiming priority from the ‘691 US Priority Application, which had an amended filing date of 3 April 2012.

Bayer’s argument was essentially that it had physically filed the complete and proper US application on 3 April 2012, and it should therefore be entitled to claim priority based on that date [47], [76]. The problem is that Rule 88(1)(b) provides that the request for priority must be made “before the expiry of the sixteen-month period after the date of filing of [the US application].” Bayer’s request was simply out of time. It was in effect asking for a waiver of the sixteen month period set out in the Rules, and there is no basis for such a waiver [77].

Non-infringing Alternative and Non-economic Factors

ADIR v Apotex Inc 2018 FC 346 Gagné J
            1,341,196 / perindopril / COVERSYL

This decision concerns the accounting of profits portion of a bifurcated trial. In the liability decision, Apotex had been held liable for infringement and Servier elected an accounting: 2008 FC 825 aff’d 2009 FCA 222. A substantial amount of the infringing material manufactured by Apotex in Canada was destined for export to markets such as the UK and Australia. In the accounting portion of the trial, Apotex argued that it had a non-infringing alternative (NIA) which would have allowed it to compete in those markets, namely by sourcing perindopril from third party manufacturers based outside Canada. Apotex argued that the profits it would have made by manufacturing abroad should be deducted from the profits actually made by the infringing manufacture in Canada, to arrive at the differential profit to be disgorged. As discussed here, Gagné J rejected consideration of the NIA as a matter of law: 2015 FC 721. Her decision was delivered prior to the FCA decisions in Lovastatin Damages 2015 FCA 171 and Venlafaxine s8 2016 FCA 161, in which the FCA affirmed the need to consider any non-infringing alternative in the causation analysis (as discussed here, here and here). It was therefore unsurprising that the FCA allowed Apotex’s appeal in part, remanding on the NIA issue: 2017 FCA 23 Perindopril Accounting FCA rev’g in part and remanding 2015 FC 721 (here). 

The sole question in this decision on remand was “whether any of Apotex’s profits from export sales of perindopril could have and would have been realized through use of a non-infringing alternative [NIA],” with a consequent reduction in the amount to be disgorged [2]. In a striking application of the “would” branch of the test, Gagné J held that even though Apotex could have sourced non-infringing perindopril from a third party, albeit with a delay of one year, it would not have done so. Consequently, no reduction was ordered in the award of $56,000,000 plus interest.

NEXIUM Saga Is Not Over Yet

AstraZeneca Aktiebolag v Apotex Inc 2018 FC 185 Locke J
            2,139,653 / esomeprazole / NEXIUM

While the SCC abolished the promise doctrine in AstraZeneca v Apotex 2017 SCC 36 rev’g 2015 FCA 158 rev’g 2014 FC 638, the associated litigation is not over yet. To recap, Apotex had prevailed in NOC proceedings (2010 FC 714). The subsequent infringement action was bifurcated to carve out any experimental and regulatory use exemption, as well as the quantum of any damages or profits [5]. In the first part of the bifurcated action, AstraZeneca initially lost, on the basis that the 653 patent was invalid for lack of utility, but then ultimately won when the SCC in AstraZeneca abolished the promise doctrine. At first instance, Rennie J had held that the 653 patent was invalid for failure to meet the promised utility, but had rejected all other validity attacks. The FCA had upheld the decision on the basis of lack of promised utility, but did not address Apotex’s appeal of the other validity attacks. In the meantime, Apotex brought a s 8 action consequent on its victory in the NOC proceeding. This went to trial before Locke J, after the SCC hearing but before its decision [9]. The parties agreed that Locke J should not issue his decision until after the SCC had issued its decision [10]. When the SCC decision issued, and after hearing supplemental submissions, Locke J dismissed Apotex’s s 8 NOC claim: 2018 FC 181. The second part of the birfurcated infringement action is ongoing, and this decision concerned motions as to how to proceed in light of the SCC AstraZeneca decision. The difficulty is that SCC had concluded its decision by holding that “The `653 patent is not invalid for want of utility” [64]. Apotex argued that this was not the same as a holding that the patent was valid, and the trial should be re-opened to allow the parties an opportunity to address the validity issues, in particular those which had not been addressed by the FCA, with additional evidence [27]. AstraZeneca, on the other hand, argued that the SCC decision had finally determined the validity of the 653 patent, and consequently the second part of the bifurcated trial, should proceed. Locke J ruled in favour of AstraZeneca, on the basis that he had decided in dismissing Apotex’s s 8 claim, in 2018 FC 181, [30]-[36] that “the validity of the 653 Patent was finally decided by the SCC, and that there remains no other validity issue to debate” [29].

Remedies and Extraterritoriality

In a recent post I pointed out that Canadian and US law have different approaches to the problem which arises when domestic acts of infringement cause losses in a foreign country (see also here). In Canada, it appears that all losses which are proximately caused by the domestic infringement are recoverable, regardless of where the loss itself occurs, though the courts will offset foreign awards in assessing damages. In contrast, several US Federal Circuit cases have held that recovery may be barred if the loss itself occurred abroad, even if the loss was caused by domestic infringement The US Supreme Court will address this issue in WesternGeco LLC v. ION Geophysical Corp., No 16-1011. Many of the briefs, including that of the US Solicitor General, are urging that the position of the US Federal Circuit is wrong (see here), and yesterday Professor Tom Cotter had a post on his Comparative Patent Remedies blog, also arguing, in effect, that the Canadian position is correct.