Judgments

Decision Information

Decision Content

T-1513-88
Imperial Chemical Industries PLC and I.C.I. Pharma, Division Atkemix Inc. (Plaintiffs)
v.
Apotex Inc. (Defendant)
INDEXED AS: IMPERIAL CHEMICAL INDUSTRIES PLC V. APOTEX INC.
Trial Division, Rouleau J.—Ottawa, December 14, 1988; January 12, 1989.
Patents — Infringement — Pharmaceutical products — Compulsory licenses — Recent amendments to Act extending monopoly of patentee in respect of importation of drugs and sale of imported drugs and restricting rights of compulsory licence holders — Federal Court having jurisdiction as issue not matter of property and civil rights but of patent infringe ment — Amendments not abrogating vested rights as compul sory licence not conferring property rights — Amendments apply to restrict sale of drugs already imported — Plaintiffs meeting tests for obtaining interlocutory injunction.
Injunctions — Interlocutory injunction for infringement of pharmaceutical product patent — Prima facie case test favoured over serious issue to be tried test — Injunction to issue, plaintiffs having shown irreparable harm in loss of market position, balance of convenience in their favour.
Constitutional law — Charter of Rights — Interlocutory injunction to restrain infringement of pharmaceutical product patent — Charter s. 7 applicable to neither corporations nor purely economic interests — Charter s. 15 inapplicable to corporations.
Constitutional law — Distribution of powers — Patent Act s. 41 not ultra vires Parliament as only incidentally dealing with property and civil rights — Matter falling under Consti tution s. 91(22).
The defendant had obtained a compulsory licence to import, prepare, use and sell the heart medicine, Atenolol, under the plaintiffs' patent. It had commenced selling the medication in August 1988. In December 1987, the Patent Act was amended so as to provide a patentee with an extended monopoly in respect of the importation for sale for consumption in Canada of the patented medicine. This meant that a compulsory licence no longer permitted, for a certain period, the sale for consump tion in Canada of medicine made from imported drugs. In August 1988, the plaintiffs commenced an action against the defendant for patent infringement, and in September 1988, originated this application for an interlocutory injunction to
restrain the defendant from further infringing their patent by importing and selling Atenolol in Canada.
The defendant argues that the Court lacks jurisdiction to hear the case because the matter is one of contractual obliga tion between the parties and that the amendments to the Patent Act are ultra vires, dealing with property and civil rights. The defendant further submits that the amendments are contrary to sections 7 and 15 of the Charter and paragraph 1(a) of the Bill of Rights. In the alternative, it argues that the amendments should not retrospectively abrogate vested rights nor apply to products that had already been imported when the amendments came into effect. The defendant finally submits that the plain tiffs have not met the required onus to be granted an injunction.
Held, the application should be allowed.
This case has nothing to do with a contract between the parties. Any breach of section 41.11 of the Act, which is what is at issue herein, would be tantamount to patent infringement, not to breach of contract. Furthermore, Parliament has juris diction over patents pursuant to subsection 91(22) of the Constitution Act, 1867. And even though property and civil rights fall under provincial jurisdiction, Parliament is entitled to create or regulate property in the course of exercising its enumerated powers.
Corporations may not rely upon the equality provisions of section 15 of the Charter and paragraph 1(a) of the Bill of Rights and section 7 of the Charter has no application to purely economic interests.
A compulsory licence does not confer a property right; it merely gives the licensee permission to carry on an activity which would otherwise be unlawful. The defendant, therefore, has no vested rights which could have been abrogated by the amendments. The amendments clearly restrict the importation of Atenolol for sale for consumption in Canada regardless of when the medicine was imported.
The weight of judicial authority in Canada in patent matters leans toward use of the "prima facie case" test, rather than the "serious issue to be tried" test, and to relaxing that standard only where there exists strong evidence of irreparable harm and balance of convenience. The plaintiffs have demonstrated a strong prima facie case, that they might well suffer irreparable harm by losing their market position and that the balance of convenience lies in their favour.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
An Act to amend the Patent Act and to provide for certain matters in relation thereto, S.C. 1987, c. 41, ss. 28, 33.
Canada Elections Act, R.S.C. 1970 (1st Supp.), c. 14, s.
67.
Canadian Bill of Rights, R.S.C. 1970, Appendix III, ss. 1(a), 2(c).
Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.), ss. 7, 15.
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am. by Canada Act, 1982, 1982, c. 11 (U.K.), Schedule to the Consti tution Act, 1982, Item 1), ss. 91(22), 92(13).
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 20. Federal Court Rules, C.R.C., c. 663, R. 469.
Patent Act, R.S.C. 1970, c. P-4, ss. 41 (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 64; 1987, c. 41, s. 14), 41.11 (as en. idem, s. 15), 41.12 (as en. idem), 72.
CASES JUDICIALLY CONSIDERED
APPLIED:
Smith, Kline & French Laboratories Limited v. Attorney General of Canada, [1986] I F.C. 274; (1985), 24 D.L.R. (4th) 321 (T.D.), coed [1987] 2 F.C. 359; (1986), 34 D.L.R. (4th) 584 (C.A.); Parkdale Hotel Ltd. v. Canada (Attorney General), [1986] 2 F.C. 514; 27 D.L.R. (4th) 19 (T.D.); Re Aluminum Co. of Canada, Ltd. and The Queen in right of Ontario; Dofasco Inc., Intervenor (1986), 29 D.L.R. (4th) 583 (Ont. Div. Ct.); Institute of Edible Oil Foods v. Ontario (1987), 63 O.R. (2d) 436 (H.C.); Cutter Ltd. v. Baxter Travenol Laboratories of Canada, Ltd. et al. (1980), 47 C.P.R. (2d) 53 (F.C.A.); Samsonite Corp. v. Holiday Luggage Inc. (1988), 20 C.P.R. (3d) 291 (F.C.T.D.); American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.); Syntex Inc. v. Apotex Inc., [1984] 2 F.C. 1012; 1 C.P.R. (3d) 145 (C.A.); Turbo Resources Ltd. v. Petro Canada Inc., [1988] 3 F.C. 235; (1988), 17 F.T.R. 28 (T.D.); Turf Care Products Ltd. v. Crawford's Mowers & Marine Ltd. et al. (1978), 95 D.L.R. (3d) 378 (Ont. H.C.).
DISTINGUISHED:
McCraken et al. v. Watson, [1932] Ex. C.R. 83; Aktiebolaget Hassle v. Apotex Inc. (1987), 17 C.P.R. (3d) 349 (F.C.T.D.); Meyer v. State of Nebraska, 262 U.S. 390 (1923); Re Mia and Medical Services Commis sion of British Columbia (1985), 17 D.L.R. (4th) 385 (B.C.S.C.); Wilson v. British Columbia Medical Services Commission, B.C.S.C. No. 1566, 1988, not yet reported.
COUNSEL:
James D. Kokonis, Q.C. and G. Gaikis for plaintiffs.
Malcolm S. Johnston, Q.C., Patricia A. Rae, Harry B. Radomski for defendant.
SOLICITORS:
Smart & Biggar, Ottawa, for plaintiffs.
Malcolm Johnston & Associates, Toronto, for defendant.
The following are the reasons for order ren dered in English by
ROULEAU J.: This action by the plaintiffs, brought pursuant to Rule 469 of the Federal Court Rules [C.R.C., c. 663], is for an interlocuto ry injunction restraining the defendant from infringing certain of the claims of the plaintiffs' Canadian patent.
The main issue arises out of recent amendments [S.C. 1987, c. 41] to the Patent Act [R.S.C. 1970, c. P-4] which have the effect of extending the monopoly for pharmaceutical products and pur portedly restricts the rights of producers who have obtained compulsory licences.
The plaintiff Imperial Chemical Industries (ICI) is a British pharmaceutical manufacturer and retailer with its head office located in London, England. The plaintiff ICI Pharma is a Canadian subsidiary wholly owned by ICI. ICI Pharma's principal office is located in Mississauga, Ontario. The defendant is a Canadian corporation involved in the manufacture and retail of pharmaceuticals and carries on business in Weston, Ontario.
The plaintiff ICI is the owner of Canadian patent 945,172 granted in 1974 in respect of the invention for the process of manufacturing alkanolamine derivatives. The letters patent con tain some thirty-six claims in relation to this inven tion and includes the process for the manufacture of a medicine known by the generic name Ateno- lol, a leading heart medicine. The patent is due to expire in 1991.
In 1975, the year following the grant of the Canadian patent, the plaintiff ICI performed extensive research and testing of Atenolol and eventually brought the drug into the British market in 1976. ICI Pharma received a Notice of Compliance from Health and Welfare Canada on
March 10, 1983 and has been marketing the drug in this country under the trade name Tenormin. In order to encourage sales, ICI Pharma undertook a promotional and educational program which has had the effect of increasing sales of the drug from $4 million in 1984 to a projected $33 million in 1988. The drug is currently one of the most popu lar heart drugs in Canada. At present, sales of Atenolol/Tenormin account for approximately 75% of the revenue generated by the plaintiff ICI Pharma. It is expected that when the patent expires in 1991, approximately one-half of these sales will be lost to competitors.
On March 3, 1986, the defendant applied for a compulsory licence under section 41 of the Patent Act (R.S.C. 1970, c. P-4, as am. [by R.S.C. 1970 (2nd Supp.), c. 10, s. 64]) to import, prepare, use and sell Atenolol under the plaintiffs' patent. On July 15, 1987 the Commissioner of Patents grant ed to the defendant an interim licence pursuant to subsections 41(5) through 41(9) of the Act and on February 15, 1988 that interim licence was replaced by a regular licence under subsection 41(4) of the Act. Pursuant to this licence, the defendant imported Atenolol into Canada and commenced selling it in limited quantities on the Canadian market in August 1988.
Effective December 7, 1987, section 41 of the Patent Act was amended [by S.C. 1987, c. 41, s. 4] so as to provide a patentee with an extended monopoly in respect of the importation for sale for consumption in Canada of the patented medicine. The effect of the new legislation is that a licence granted under section 41 of the Act no longer permits, for a period of time, the sale for consump tion in Canada of medicine made from imported drugs [my emphasis].
In light of these legislative amendments, when the plaintiffs learned on August 2, 1988 that the defendant proposed to market Atenolol in Canada, they sent a cease and desist letter to the defendant. No reply was received and the plaintiffs became aware that the defendant was receiving orders for Atenolol. Consequently, on August 5, 1988 the plaintiffs commenced an action against the defend-
ant for patent infringement and on September 27. 1988 originated this application for an interlocuto ry injunction restraining the respondent from fur ther infringing their patent by importing and sell ing Atenolol in Canada.
The relevant amendments to the Patent Act are sections 41.11 and 41.12 which provide as follows:
41.11 (1) Subject to this section but notwithstanding any thing in section 41 or in any licence granted under that section, no person shall under a licence granted under that section in respect of a patent for an invention pertaining to a medicine, regardless of when the licence was granted, have or exercise any right,
(a) where the invention is a process, to import the medicine in the preparation or production of which the invention has been used, if the medicine is for sale for consumption in Canada; or
(b) where the invention is other than a process, to import the invention for medicine or for the preparation of production of medicine, if the medicine is for sale for consumption in Canada.
(2) The prohibition under subsection (1) expires in respect of a medicine.
(a) seven years after the date of the notice of compliance that is first issued in respect to the medicine, where, on June 27, 1986, the notice of compliance has been so issued; and
(i) a licence has been granted under section 41 in respect of the medicine but no notice of compliance has been issued to the licensee in respect of the medicine; or
(ii) a notice of compliance in respect of the medicine has been issued to a person other than the patentee but no licence under section 41 in respect of the medicine has been granted to the person;
(b) eight years after the date of the notice of compliance that is first issued in respect of the medicine, where, on June 27, 1986, the notice of compliance has been so issued and neither a licence under section 41 has been granted in respect of the medicine nor a notice of compliance has been issued in respect of the medicine to a person other than the patentee; and
(e) ten years after the date of the notice of compliance that is first issued in respect of the medicine where that notice of compliance is issued after June 27, 1986.
(3) Subsection (1) does not apply in respect of a licence pertaining to a medicine after the date of expiration of the first patent granted in Canada in respect of that medicine.
(4) Subsection (I) does not apply in respect of any licence pertaining to a medicine where on June 27, 1986, a licence has been granted in respect of the medicine and a notice of compliance in respect of the medicine has been issued to the licensee.
41.12 Notwithstanding anything in section 41 or in any application for a licence made or licence issued under that section prior to the coming into force of this section, every licence so applied for or granted in respect of a patent for an invention pertaining to a medicine shall be deemed, for the purposes of this Act, to have been applied for or granted to authorize, in addition to any other matters applied for or authorized thereby,
(a) where the invention is a process, the use of the invention for the preparation or production of medicine; or
(b) where the invention is other than a process, the making or use of the invention for medicine or for the preparation of production of medicine.
The plaintiffs submit that section 41.11 of the Patent Act affects the situation where previously a licence may have been granted to import and sell medicine in Canada. Under the present legislation, the plaintiffs argue, the section, in effect, creates a licence with restrictions. Where the importation is for sale for consumption in Canada, the section renders the importation unlawful. In other words, the section removes the licence as a defence to an assertion of patent infringement. The licence being removed as a defence means that any act which is reserved for the exclusive use of the patentee is an infringement. Therefore, the plaintiffs maintains, the sale of unlawfully imported medicine is an infringement of the patent and future importation for sale for consumption in Canada is prohibited. Since the first Notice of Compliance issued to the plaintiffs on March 10, 1983 and no other person had received a Notice of Compliance or a compul sory licence by June 27, 1986, then according to the new legislation, the prohibition contained within subsection 41.11(1) extends for a period of eight years, expiring March 10, 1991.
The plaintiffs maintain that by importing and selling Atenolol in Canada, the defendant is infringing the plaintiffs' patent. Furthermore, the plaintiffs argue that this Court ought to issue an interlocutory injunction in their favour because on the facts, they are able to meet the tripartite test
established by the jurisprudence which would jus tify the grant of this extraordinary and discretion ary remedy. That is, the plaintiffs are able to establish, first, not simply an arguable case, but a strong prima facie case which in all likelihood would lead a trial judge to conclude, based on the facts, that there is infringement; second, that there exists the danger of irreparable harm to the plain tiffs; and third, that the balance of convenience is clearly in favour of the plaintiffs.
The defendant submits four main heads of argument:
I Lack of jurisdiction in this Court because
there exists a contractual obligation between the parties and is therefore in the realm of property and civil rights.
Il Amendments to the Patent Act are contrary to the Canadian Charter of Rights and Free doms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.)].
III The amendments to the Patent Act should be interpreted in such a manner as to allow for the distribution of imported products which were landed in Canada before the amend ments; the statutes should not be interpreted retrospectively.
IV The plaintiffs have not met the required onus to be granted an injunction.
I
The defendant challenges both the jurisdiction of this Court to deal with the issues raised by this case and the constitutional validity of the amend ments to section 41 of the Patent Act.
With regards to the Court's jurisdiction, the defendant maintains that pursuant to section 72 of the Patent Act, a compulsory licence granted under the Act operates as if embodied in a deed between licensor and licensee. Therefore, the defendant argues, the lis between the plaintiffs and defendant is an alleged breach of contract, and
such an action is not within the jurisdiction of this Court.
As to the constitutional validity of the new legislation, the defendant's arguments are numer ous. First, the defendant maintains that since the relationship between the parties (i.e. a patentee and a licensor) are in contract, the amendments to section 41 are ultra vires the Parliament of Canada in that it is legislation in relation to property and civil rights, matters which fall within provincial jurisdiction.
II
The defendant submits that the amendments are contrary to paragraphs 1(a) and 2(c) of the Canadian Bill of Rights, R.S.C. 1970, Appendix III, in that section 41.11 of the Patent Act pur ports to revoke or suspend the defendant's contrac tual right to use the plaintiff's property right and the defendant has been deprived of its right with out due process of law.
Further, the defendant maintains that the amendments to the Patent Act are of no force and effect in that they contravene sections 7 and 15 of the Canadian Charter of Rights and Freedoms. Sectionl5 guarantees the right of every individual to the equal protection and benefit of the law without discrimination. The underlying principle of this section, according to the defendant, is that persons who are similarly situated must be similar ly treated and that any distinction will violate this principle of equality if it has no rational and reasonable justification. It is submitted that sec tion 41.11 of the Patent Act discriminates between two group of persons; those who, as of June 27, 1986 hold a licence under section 41 together with a Notice of Compliance and those who, as of the same date hold only a licence. The latter are prohibited from importing medicine for sale or consumption in Canada while the former are not. The section further discriminates between a paten- tee who holds a Notice of Compliance obtained after June 27, 1986 and a licensee of that patentee who obtains a Notice of Compliance after that date. Upon the coming into force of section 41.11
the latter was no longer permitted to import the medicine for sale for consumption in Canada.
Section 7 of the Charter guarantees everyone "the right to life, liberty and security of the per son" as well as the right not to be so deprived "except in accordance with the principles of funda mental justice". It is the defendant's contention that this section applies to the issuance of business licences necessary to carry on business lawfully and that the refusal to issue a licence cannot be upheld unless it is in accordance with the princi ples of fundamental justice. Because section 41.11 interferes with the defendant's licence to carry on business, it therefore constitutes an impairment of the defendant's right to "life, liberty and security of the person" and this impairment has not been in accordance with the principles of fundamental jus tice which means not only a right to a fair hearing, but also includes elements of substantive fairness.
III
Aside from its arguments concerning the consti tutional validity of section 41.11 of the Patent Act the defendant makes certain submissions concern ing the proper interpretation to be afforded to the legislation should this Court find the legislation to be valid.
First, the defendant argues that legislation is not to be interpreted as retrospectively abrogating vested rights and that there exists a presumption within the rules of statutory interpretation that proprietary rights are not to be taken away with out provision being made for compensation. It is a recognized rule, according to the defendant that legislation should be interpreted, if possible, so as to respect any vested rights. If there is any ambiguity in the construction of a statutory enact ment, the interpretation which is in favour of the subject should be adopted.
Second, the defendant maintains that the proper interpretation of section 41.11 prohibits the impor tation of medicine into Canada for the purpose of sale for consumption as of the date the legislation was proclaimed into force and effect, that is, December 7, 1987 and therefore, the defendant argues the section does not apply to medicine
imported into the country prior to that date. Because the defendant's inventory of over one thousand kilograms of Atenolol was imported into Canada between July 15, 1987 and November 19, 1987, prior to section 41.11 coming into effect, it should not apply to the Atenolol which the defend ant is now offering for sale.
IV
The defendant on the other hand, argues that an interlocutory injunction should not issue because the plaintiffs are unable to meet the onus thrust upon them. They have failed. Further, the defend ant submits that the plaintiffs have failed to prove irreparable harm since any damages they may suffer are readily quantifiable. To the contrary, it is of the opinion that if an interlocutory injunction were granted the defendant would face the threat of irreparable harm in that it would suffer loss of goodwill and commercial reputation which cannot be measured in damages. Finally, it is the defend ant's contention that the plaintiffs have failed to prove that the balance of convenience lies in their favour.
I intend to dispense with the jurisdictional issue raised by the defendant. Section 72 of the Patent Act does not, in my opinion, apply to this action, which is solely one of patent infringement. The cases relied upon by the defendant namely, McCracken et al. v. Watson, [1932] Ex. C.R. 83 and Aktiebolaget Hassle v. Apotex Inc. (1987), 17 C.P.R. (3d) 349 (F.C.T.D.) simply do not have application to the facts now before the Court. In the McCracken case, the contract in question dealt only incidentally with the patent licence, and hence adjudication of the contract was outside the jurisdiction of the Exchequer Court. In the Aktiebolaget case, Dubé J., found that the state ment of claim defined a cause of action under a contract regarding the payment of royalties under a compulsory licence granted pursuant to subsec tion 41(4) of the Patent Act. As in McCracken, the contract dealt only incidentally with a matter over which the Court had jurisdiction and that was not sufficient to clothe the Court with jurisdiction to preside over the collection of unpaid royalties which was first and foremost a matter arising under contract.
The facts before this Court have nothing to dc with a contract between the parties. Section 41.11 of the Patent Act provides to the plaintiffs a limited monopoly to import Atenolol for sale for consumption in Canada. Any breach of that sec tion by a holder of a compulsory licence, such as the defendant, would be tantamount to patent infringement and not to a breach of any contract which may exist between the parties pursuant to section 72 of the Act. The plaintiffs are not suing on the licence or for any breach of the licence.
Furthermore, subsection 91(22) of the Consti tution Act, 1867 [30 & 31 Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 1)] specifically confers on Parliament jurisdiction over patents of invention. Section 20 of the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10] confers on this Court jurisdiction in "all ... cases in which a remedy is sought under the authority of any Act of ... Parliament ... or at law or in equity, respecting any patent of invention". In Smith, Kline & French Laboratories Limited v. Attorney General of Canada, [1986] 1 F.C. 274; (1985), 24 D.L.R. (4th) 321 (T.D.), confirmed by the Court of Appeal [1987] 2 F.C. 359; (1986), 34 D.L.R. (4th) 584, the plaintiffs contended that subsection 41(4) of the Patent Act was legislation in relation to property and civil rights in the province and hence ultra vires the power of the Parliament of Canada, being a matter assigned to the provinces under subsection 92(13) of the Constitution Act, 1867. It was indeed a similar argument to the one being advanced here by the defendant. Strayer J., finding the section of the Patent Act to be within Parliament's jurisdiction made the following com ments at pages 294 F.C.; 349 D.L.R., equally applicable, I might add, to the facts of this case:
It appears to me that under its authority with respect to patents of invention and discovery, Parliament is entitled to regulate patents in a variety of ways. Essentially, this power enables it to create a monopoly for one party and to exclude other parties from the use, manufacture, sale, or importation of products which are the subject of a patent. The granting of such a patent, according to the jurisprudence, confers an intangible property right on the patentee. It is probably true that in the absence of this specific assignment of authority to Parliament with respect to "patents" they would have fallen
under provincial jurisdiction with respect to property and civil rights. But Parliament is not precluded from creating or regu lating property in the course of exercising its enumerated powers.
Clearly, this Court has jurisdiction to deal with the proceedings now before it.
II
The next issue concerns the constitutional validi ty of the amendments to section 41 of the Patent Act. Section 15 of the Canadian Charter of Rights and Freedoms and paragraph 1(a) of the Canadi- an Bill of Rights provide as follows:
15. (1) Every individual is equal before and under the law and has the right to equal protection and equal benefit of the law without discrimination and, in particular, without discrimi nation based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
1....
(a) the right ... to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;
This Court has had the opportunity on previous occasions of examining the question of whether the equality provisions contained within section 15 of the Charter and paragraph 1(a) of the Bill of Rights apply to corporate entities. It has consist ently been held that a corporation is not entitled to rely on these provisions.
In Smith, Kline & French Laboratories Limited v. Attorney General of Canada, the plaintiff sought, inter alia, a declaration that subsection 41(4) of the Patent Act, R.S.C. 1970, c. P-4, was null and void as being contrary to section 15 of the Charter and paragraph 1(a) of the Bill of Rights. Strayer J. held that the corporate plaintiffs did not fall within the ambit of protection afforded by these equality provisions because they applied only to "every individual", a term which did not include corporate entities. His Lordship stated at pages 298-299 F.C.; 352 D.L.R.:
The plaintiffs contend that subsection 41 (4) of the Patent Act is inconsistent with paragraph [1 ](a) [of the Bill of Rights] in that it has the effect of denying individuals the enjoyment of property without due process of law.
It is clear that the term "individual" does not include bodies corporate. Therefore the corporate plaintiffs have no claim under paragraph 1(a) of the Canadian Bill of Rights.
And later at pages 315-316 F.C.; 365-366 D.L.R.:
For the same reasons as noted above in connection with paragraph I(a) of the Canadian Bill of Rights, the corporate plaintiffs are not potentially within the protection of section 15 because it applies only to "every individual".
In Parkdale Hotel Ltd. v. Canada (Attorney General), [ 1986] 2 F.C. 514; 27 D.L.R. (4th) 19 (T.D.), the plaintiff brought an action for a decla ration that section 67 of the Canada Elections Act, R.S.C. 1970 (1st Supp.), c. 14, was of no force and effect. Discussing the meaning of the work "individual" in section 15 of the Charter, Mr. Justice Joyal stated at pages 538-539 F.C.; 36-37 D.L.R.:
It appears clear from the wording of section 15 that its protective umbrella only extends to physical persons and that a corporation or other "personne morale" is left out in the rain as it were. The term "individual" as it appears in section I of the Canadian Bill of Rights has been the subject of judicial determination in the R. v. Colgate Palmolive case which I have previously cited and Doyle J. in that case ruled that the term did not include a corporation. In a more recent case, the term "individual" as found in section 15 of the Charter was the subject of inquiry. In Smith, Kline & French Laboratories Limited v. Attorney General of Canada, [ 1986] 1 F.C. 274; (1985) [24 D.L.R. (4th) 321], 7 C.P.R. (3d) 145 (T.D.), Strayer J. in his meticulous reasons for judgment does not seem to have had to spend much soul-searching in reaching the conclusion that a corporation could not seek the protection of section 15 of the Charter.
Other courts, having had the opportunity to decide the correct interpretation and ambit of applicability of section 15, have come to a similar conclusion. Perhaps the most succinct statement is made in Re Aluminum Co. of Canada, Ltd. and The Queen in right of Ontario; Dofasco Inc., Intervenor (1986), 29 D.L.R. (4th) 583 (Ont. Div. Ct.), wherein Mr. Justice Montgomery stated at page 593:
In my view, s. 15 is restricted to the protection of individuals and does not apply to corporate entities. It is a part of the Charter that protects the dignity and worth of human beings against governmental instrusion that would make distinction between individuals based upon human attributes or character istics.
I am of the opinion that the language used in section 15 is unequivocal. The equality guaranteed
and the discriminatory protection it affords are directed at natural persons and not at corpora tions.
I turn now to the question of whether the amendments to section 44 of the Patent Act are of no force and effect because they are contrary to section 7 of the Charter which provides as follows:
7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
The defendant corporation is included within the protection of the above section as the term "everyone" includes a corporation. However, the rights in issue must involve the concepts of "liber- ty" or "security" of the person. In Smith, Kline & French Laboratories Limited v. Attorney General of Canada, both the Federal Court Trial Division and the Federal Court of Appeal held that section 7 had no application to "purely economic inter ests" of even a natural person.
The defendant relies on the decision of the Supreme Court of the State of Nebraska in Meyer v. State of Nebraska, 262 U.S. 390 (1923), where in the concept of "liberty" was given a liberal and extended meaning. The Court held that the term denoted not simply freedom from bodily restraint but also "the right of the individual to contract [and] to engage in any of the common occupations of life" (at page 399).
However, the Meyer case was decided on the basis of the United States Constitution which pro hibits against the deprivation of "life, liberty or property". The term "property" has been excluded in the protection provided by section 7 of the Charter.
The other cases relied upon by the defendant are two decisions of the British Columbia Supreme Court, Re Mia and Medical Services Commission of British Columbia (1985), 17 D.L.R. (4th) 385 and Wilson v. British Columbia Medical Services Commission, [1988] (unreported), B.C.S.C. No. 1566. The Mia case relied on the above-noted Meyer decision and in turn the Wilson decision relied on Mia. In Wilson, the finding of the Court was that section 7 of the Charter embraced individual freedom of movement including the
right to choose one's occupation and where to pursue it, subject to the right of the State to impose, in accordance with the principles of funda mental justice, legitimate and reasonable restric tions on the activities of individuals. However, my reading of these cases does not confirm the defen dant's contention that the Court concluded that the protection of section 7 extends to property or pure economic rights.
In a recent Ontario decision Institute of Edible Oil Foods v. Ontario (1987), 63 O.R. (2d) 436 (H.C.), the Court determined that section 7 of the Charter did not contemplate the protection of pure economic interests, and found it difficult to accept that such a proposition would be seriously advanced.
In any event, the applicability of section 7 to pure economic interests has been fully considered by this Court in Smith, Kline & French Laborato ries Limited, supra, wherein Strayer J. stated as follows [at pages 313 F.C.; 363 D.L.R.]:
In my view the concepts of "life, liberty and security of the person" take on a colouration by association with each other and have to do with the bodily well-being of a natural person. As such they are not apt to describe any rights of a corporation nor are they apt to describe purely economic interests of a natural person.
Counsel for the defendant has not referred me to any authority which, in my opinion, would justify a departure from this interpretation. I am, therefore, not persuaded that the amendments to section 44 of the Patent Act are invalid as being contrary to the rights and freedoms guaranteed by section 7 of the Charter.
III
1 move now to the question of the proper inter pretation to be accorded to section 44.11 of the Patent Act. Counsel for the defendant has put forth two arguments in this respect; first, that the legislation should not be interpreted as retrospec tively abrogating vested rights and second, that the section applies only to Atenolol imported into Canada after December 7, 1987, the effective date of the legislation, but not to medicine imported into the country prior to that date.
With regards to the retrospectivity argument, I am in complete agreement that it is a well recog nized cannon of statutory interpretation that legis lative enactments should be interpreted so as to respect vested rights where possible. If there exists any ambiguity in the construction of a statute it should be interpreted so as to respect those rights. Generally, a presumption exists that a statute is not to be presumed to retrospectively abrogate
vested rights.
This argument does not, in my view, assist the defendant in this case however. To begin with the defendant has no "vested rights" in relation to the patent, since the patentee itself has no such vested rights. In Smith, Kline & French Laboratories Limited et al., Strayer J. discussed the effect of section 41 of the Patent Act in the following way at pages 295 F.C.; 349-350 D.L.R.:
There is no common law right to a patent: Commissioner of Patents v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning [(1963), 41 C.P.R. 9 at p. 17] [1964] S.C.R. 49; (1963), 25 Fox Pat. C. 99, at page 57 S.C.R.; 107 Fox Pat. C. The right is created by Act of Parliament. What Parliament has done in this case is to restrict the extent of the monopoly granted to patentees of medicines. It was so explained by Thurlow J. in Hoffman-La Roche Ltd. v. Frank W. Horner Ltd., Attorney-General of Canada, Interve- nant (1970), 64 C.P.R. 93 (Ex.CT.) at page 107.
What a patentee has, therefore, from the time of issue of his patent is not an unassailable, complete monopoly right. His patent does indeed purport to give a monopoly of his invention but it is a monopoly which, because of s. 41, is subject to the right of anyone who can comply with the section to obtain the right to use the invention notwithstand ing the patent. Such a monopoly is therefore not capable of affording a foundation upon which a massive commercial enterprise, not by itself capable of being monopolized, may be built and afforded monopoly protection.
A compulsory licensee does not, as is contended by the defendant, have a right in the nature of a property right vis-à-vis the patentee. Rather, the existence of the licence merely gives the licensee permission to carry on an activity which is other wise unlawful. In Smith, Kline & French Laboratories Limited, a licensee's right was described in the following terms at pages 300 F.C.; 353-354 D.L.R.:
When a compulsory license is issued, it does not amount to a taking away of a monopoly as the monopoly created by the patent was always a limited one subject to such decisions taken by the applicants and the commissioner with respect to the obtaining and granting of a compulsory licence. In this respect the property rights granted by a patent in respect to medicines
are rather like a title to land in fee simple which is subject to the right-of-way of a neighbour passing over that land. If the neighbour does not use the right-of-way for 5 years and then starts to use it, his use does not amount to a taking of the property of the owner in fee simple: the owner's right was always subject to the possible inconvenience of use of the right-of-way arising out of a unilateral decision taken by the neighbour.
Accordingly, I reject the defendant's argument that section 41.11 abrogates any vested right of the defendant. The legislation is clearly intended to alter the scheme of the Patent Act so as to provide patentees with a limited monopoly in respect of the importation of medicines for sale for consumption in Canada. The language of the amendment is, in my view, unambiguous and supports no other intention.
The second argument put forward by the defendant, that the legislative amendments apply only to Atenolol imported into the country after December 7, 1987 is indeed a novel one, but cannot in my opinion, succeed. The defendant maintains that it is entitled to sell in Canada the Atenolol which it acquired prior to the effective date of the legislation. Paragraphs 44.11(1)(a) and (b) clearly restrict the importation of Atenolol for sale for consumption in Canada regardless of when the medicine was imported into the country. It is impossible, having regard to the clear language and intent of the legislation to read the words "import" and "sale" disconjunctively as suggested by the defendant. My reading of the legislation leads me to suspect that the defendant may contin ue to import Atenolol and to enlarge its inventory of the medicine if it so desires. But it may not, until 1991, offer the medicine for sale for con sumption in Canada because of the limited monopoly the plaintiffs enjoy as a result of the amendments to section 41.11 of the Patent Act.
IV
Having found that this Court has jurisdiction in this proceeding and that the amendments to sec tion 41 of the Act are constitutionally valid, I turn now to the all important question of whether an interlocutory injunction should issue in the plain tiffs' favour.
An interlocutory injunction is an extraordinary remedy lying within the equitable jurisdiction of
this Court. It is an extraordinary and discretionary remedy and one which will not be granted unless the Court is satisfied that it is a proper case in which to exercise its discretion. A tripartite test has evolved through the jurisprudence to assist the Court in making a decision: (1) has the applicant shown a prima facie/serious issue to be tried; (2) is there a danger of irreparable harm to the appli cant, and; (3) does the balance of convenience lie with the applicant.
Notwithstanding the general rules relating to the granting of interlocutory injunctions, the Fed eral Court of Appeal has declared something of an exception to those rules in patent matters. In a unanimous judgment in Cutter Ltd. v. Baxter Travenol Laboratories of Canada, Ltd. et al. (1980), 47 C.P.R. (2d) 53 (F.C.A.), then Chief Justice Thurlow expressed the exception in the following terms, at pages 55-56:
In this Court, the grant of an interlocutory injunction in a patent infringement action is not a common occurrence in most instances, the result of an application for an interlocutory injunction, where infringement and validity are in issue, is that the defendant gives a satisfactory undertaking to keep an account and upon that being done the application is dismissed with costs in the cause.... The principal reason for this practice is, in my opinion, the fact that in most instances the nature of the patent rights involved is such that damages (provided there is some reasonably accurate way of measuring them) will be an adequate remedy for such infringement of the rights as may occur pending the trial and because when the matter turns on the balance of convenience if the defendant undertakes to keep an account and there is no reason to believe that he will be unable to pay such damages as may be awarded, the balance will generally be in favour of refusing the injunc tion. It is always necessary to bear in mind that the damages that can be caused to a defendant in being restrained, for a period that may run into several years, from doing what, if he succeeds, he was, but for the injunction, entitled to do in the meantime, may have consequences that are as serious for him as any that his infringement, if he does not succeed, may have for the patentee.
It is easy to see that this so-called exception does not have the character of a completely different rule. Rather, it acknowledges that the adequacy of damages is less in doubt in patent cases than in other matters. This line of reasoning was again picked up by Madam Justice Reed in Samsonite Corp. v. Holiday Luggage Inc. (1988), 20 C.P.R. (3d) 291 (F.C.T.D.) although she indicated less of a willingness to treat patent matters differently than any other case. She stated at pages 309-310:
I simply do not accept that there is a presumption that interlocutory injunctions should not be granted in patent cases ... I think that reluctance arises from a hesitation about determining rights (even for a temporary period of time) on less than full evidence. In addition, the balance of convenience may often tip in favour of the defendant because it may be compara tively easier to calculate the damages which a plaintiff will suffer as a result of not granting the injunction than it is to calculate the damages a defendant would suffer should the interlocutory injunction have been wrongly given.
What these statements from both levels of the Federal Court appear to impart is not so much that patent matters ought to be dealt with in any radically different fashion but that the weight given to different elements of the test may shift where patents are the subject matter of the dis pute. A court, considering the granting of an inter locutory injunction for alleged patent infringe ment, will examine closely the questions of damages and balance of convenience, notwith standing the fact that a prima facie case may exist in favour of the plaintiff.
The leading case on the applicable standards to be used in deciding whether or not to issue an interlocutory injunction is that of American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.). It was here that the House of Lords set the standard to be satisfied by the applicant before an interlocutory injunction would issue. At page 407, Lord Diplock made the following statement:
The use of such expressions as "a probability," "a prima facie case," or "a strong prima facie case" in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the object sought to be achieved by this form of temporary relief. The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.
Despite this relatively clear statement there still exists some confusion as to whether an applicant for an interim injunction is required to make out a prima facie case or a serious question. In Syntex Inc. v. Apotex Inc., [1984] 2 F.C. 1012; 1 C.P.R. (3d) 145 (C.A.), Mr. Justice Stone, in the majori ty opinion, discussed this issue. He noted that Canadian jurisprudence has favoured both formu lations of the test at one time or another and that it has not been authoritatively decided in Canada
as to which of the two tests is to be applied. His Lordship stated at pages 1022-1023 F.C.; 152-153 C.P.R.:
I turn next to consider the appropriate treshold test to be applied in a case of this kind before an interim injunction will issue. The learned motions judge thought that the existence of a "serious issue" to be tried was sufficient. That test was devel oped in England and has been applied by courts in this country. (See, e.g. Yule Inc. v. Atlantic Pizza Delight Franchise (1968) Ltd. et al (1977), [35 C.P.R. (2d) 273; 80 D.L.R. (3d) 725] 17 O.R. (2d) 505 (H.C.); General Mills Canada Ltd. v. Maple Leaf Mills Ltd. (1980), 52 C.P.R. (2d) 218 (Ont. H.C.); Source Perrier (Société Anonyme) v. Canada Dry Ltd. (1982), 64 C.P.R. (2d) 116 [36 O.R. (2d) 695] (H.C.). The appellant contends that it is not the proper test and that the proper one is the "prima facie" case test. (See, e.g., Tarra Communications Ltd. et al. v. Communicomp Date Ltd. et al. (1973), 1 O.R. (2d) 682 [41 D.L.R. (3d) 350] (H.C.); Fellows & Son v. Fisher, [1976] 1 Q.B. 122 (C.A.); N.W.L. Ltd. v. Woods, [1979] 1 W.L.R. 1294 (H.L_); Fruit of the Loom, Inc. v. Chateau Lingerie Mfg. Co. Ltd. (1982), 63 C.P.R. (2d) 51 (F.C.T.D.)). That test, of course, is a higher one than the "serious issue" test. No case has been brought to our attention in which it has been authoritatively decided in Canada as to which of these two tests is to be applied in a case of this kind. Nevertheless, my review of these cases leads me to accept as appropriate the following view of the law expressed by Mac- Kinnon A.C.J.O. in Chitel et al. v. Rothbart et al. ((1982), [69 C.P.R. (2d) at p. 72, 141 D.L.R. (3d) 268] 39 O.R. (2d) 513, (C.A.)) at page 522):
Although the American Cyanamid case has been followed in this province, it has been properly emphasized by Cory J., speaking for the Divisional Court in Yule Inc. v. Atlantic Pizza Delight Franchise (1968) Ltd. et al. (1977), 17 O.R. (2d) 505, 80 D.L.R. (3d) 725, 35 C.P.R. (2d) 273, that the remedy must remain flexible and that the American Cyana- mid test may not be a suitable test in all situations. That there are exceptions to or qualifications of the test is noted by Lord Diplock himself in N.W.L. Ltd. v. Woods, [1979] 3 All E.R. 614 at 625:
My Lords, when properly understood, there is in my view nothing in the decision of this House in American Cyanamid Co. v. Ethicon Ltd. to suggest that in considering whether or not to grant an interlocutory injunction the judge ought not to give full weight to all the practical realities of the situation to which the injunction will apply. American Cyanamid Co. v. Ethicon Ltd. which enjoins the judge on an application for an interlocutory injunction to direct his attention to the balance of convenience as soon as he has satisfied himself that there is a serious question to be tried, was not dealing with a case in which the grant or refusal of an injunction at that stage would, in effect, dispose of the action finally in favour of whichever party was successful in the application, because there would be nothing left on which it was in the unsuccessful party's interest to proceed to trial.
Mr. Justice Addy recently delivered a well-rea soned decision on why higher standard of prima facie case was to be favoured. In Turbo Resources Ltd. v. Petro Canada Inc., [ 1988] 3 F.C. 235; (1988), 17 F.T.R. 28 (T.D.) he too noted the confusion in case law on which formulation of the test was proper. However, while he acknowledged that there might be very limited situations wherein something less than a prima facie case might serve as the basis for an injunction, he stated at pages 242 F.C.; 32 F.T.R.:
... it is difficult for me to conceive why, generally speaking, either at law or in accordance with equitable principles which govern injunctive proceedings, a plaintiff should be granted interlocutory injunctive relief unless a strong prima facie case at the very least a prima facie case has first been established. Put in another way, where the defendant would be suffering actual damage pending trial, then unless the person relying on the monopoly is able to satisfy the judge at the hearing that there is a probability of eventual success, the application should fail.
There is little doubt indeed, following the deci sion of Madam Justice Reed in Samsonite Corp. v. Holiday Luggage Inc. (1988), 20 C.P.R. (3d) 291 (F.C.T.D.), as to the test which should be applied in an injunction application concerning patent infringement. She acknowledged the confusion concerning the two tests and stated at page 294:
Despite this uncertainty, both counsel agree, I think, that regardless of the verbal formulation in which the test is framed (prima facie case or serious question to be tried) what the courts in fact do, when faced with an application for an interlocutory injunction, is to adjust the demands for a strong case by reference to the irreparable harm (or balance of convenience) which will result from the giving or withholding of an injunction. Thus, if the plaintiff appears to have a strong case, he will be required to prove less by way of "irreparable harm", (or balance of convenience). If the plaintiffs' case is less strong, however, he will be required to prove more by way of "irreparable harm" (or balance of convenience). I agree with this analysis.
It appears, therefore, that the weight of judicial authority in Canada leans toward the use of the "prima facie case" test and to relax that standard only where there exists strong evidence of irrepa rable harm and balance of convenience.
There can of course be no prima facie case of patent infringement unless there is a valid patent, section 47 of the Patent Act provides as follows:
47. Every patent granted under this Act shall be issued under the signature of the Commissioner and the seal of the Patent Office; the patent shall bear on its face the date on which it was granted and issued and it shall thereafter be prima facie valid and avail the grantee and his legal representatives for the term mentioned therein, which term shall be as provided in and by sections 48 and 49.
The plaintiff Imperial Chemical Industries (ICI) is the registered owner of such a patent in relation to the processes for the manufacture of pharmaceutical products known as "alkanolamine derivatives". According to the affidavit evidence filed by the plaintiff, Atenolol is covered by this patent. The plaintiff therefore, is the owner of a patent for the drug Atenolol.
On the question of whether or not the respond ents are infringing that patent, the evidence filed at this motion reveals a copy of the application by the defendant for a licence, pursuant to subsection 41(4) of the Patent Act, to import and market the drug Atenolol. That licence was issued on Febru- ary 15, 1988. The defendant would have the right to import and sell Atenolol if it were not for the recent coming into force of section 41.11 of the Act regarding restrictions on certain licences.
This amendment was one of several enacted by An Act to Amend the Patent Act and to provide for certain matters in relation thereto, S.C. 1987, c. 41. Pursuant to section 33 of that Act, section 41.11 was to come into force on a date to be set by proclamation. By SI/88-1, 122 Canada Gazette II 335, 6 January 1988, the amendment was in force as of December 7, 1987. It should also be noted that section 28 of the 1987 amending Act provides as follows:
28. Any matter arising after the coming into force of the provisions of the Act referred to in subsection 33(1) in respect of any patent issued before the coming into force of those provisions, except any matter arising under any of sections 41.1 to 41.25 of the Patent Act, as enacted by section 15 of this Act, shall be dealt with and disposed of in accordance with the Patent Act as it read immediately before the coming into force of those provisions.
This section appears to be aimed at ensuring that sections 41.1 through 41.25 will have the retroactive effect they are intended to have. The effect of these legislative amendments appears to be that certain of the rights and privileges, namely
importation of Atenolol for sale for consumption in Canada, granted by the licence and issued to the defendant on February 15, 1988 have been sus pended until the expiration of eight years after the date of issuance of the notice of compliance, or in this case until March 10, 1991.
The function of this Court is to examine these facts and make a determination as to the relative strength of the plaintiff's case. In other words, if this Court had to finally decide the matter on the merits, on the basis of the material before it, would the plaintiffs succeed? In my view they would; the plaintiffs have demonstrated a strong prima facie case.
The second essential factor in determining the appropriateness of an interlocutory injunction is irreparable harm. In the context of preliminary injunctive relief, the phrase is given a specific meaning, namely that the plaintiff, before the trial, must face the risk of some injury which cannot be compensated or remedied other than through the granting of an interlocutory injunc tion. If damages will provide adequate compensa tion, and the defendant is in a position to pay them, then ordinarily there will be no justification in running the risk of an injunction pending the trial.
It is exceptionally difficult to define irreparable harm precisely. Courts regularly and routinely assess monetary awards for non-pecuniary injuries where this is necessary. On the other hand, courts have sometimes been prepared to view what other wise seems readily calculable losses as "irrepa- rable" for the purposes of interlocutory relief. In this regard, see Turf Care Products Ltd. v. Craw- ford's Mowers & Marine Ltd. et al. (1978), 95 D.L.R. (3d) 378 (Ont. H.C.) wherein Lerner J. granted the plaintiff an interlocutory injunction, refusing to force it to seek and prove its damages.
In the case at bar, the sales of Atenolol repre sent the plaintiff ICI Pharma's source of income. Allowing the defendant to exercise its right under the compulsory licence will diminish these sales by as much as fifty percent. Although those lost sales may be quantifiable and compensable in damages, what cannot be compensated is the plaintiff's loss of market position which will allow it to establish
its reputation and goodwill in the market place. It is my view that the plaintiffs might well suffer irreparable harm if the defendant is permitted to commence selling Atenolol in the Canadian market.
The third test, the balance of convenience, involves an assessment of the facts as they relate to the potential harm to each party depending on the issuance or refusal of the requested injunction. The purpose of an interlocutory injunction is to pre serve the status quo until the time of trial. In this context, the status quo relates to the situation before the defendant commenced his course of conduct.
For the same reasons that I found the plaintiffs to be threatened by irreparable harm, I am per suaded that the balance of convenience lies in their favour. In order for the plaintiff ICI Pharma to accrue sufficient profits to allow it to research and develop new products and retain its market posi tion and viability it is essential for its limited monopoly to sell Atenolol to continue unimpeded. Furthermore, the defendant has failed to provide any evidence that it is unable to continue to ware house its inventory of Atenolol and sell it for consumption in Canada after the plaintiff's patent expires in 1991; there exists the further fact that the defendant's sales as of the date of this applica tion are diminuous having not yet achieved regis tration in the major markets of Canada.
In conclusion, I am satisfied that the plaintiffs have succeeded in establishing a strong prima facie case, that they face the threat of irreparable harm should the interlocutory injunction not issue and that the balance of convenience lies in their favour. For these reasons, I am granting the plain tiffs the interlocutory injunction requested in their application, restraining the defendant from further sale of the drug Atenolol in Canada.
The injunction shall issue; the plaintiffs shall provide the usual undertaking; costs to the applicants.
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