COMPETITION |
Eli Lilly and Co. v. Apotex Inc.
A-486-03
2004 FCA 232, Rothstein J.A.
14/6/04
10 pp.
Appeal from Motions Judge's decision ((2003), 28 C.P.R. (4th) 37) granting motions for summary judgment--As defence to patent infringement action, Apotex alleged violation of Competition Act, s. 45, added Shionogi & Co. Ltd. (Shionogi) as defendant-by-counterclaim--Of eight patents Eli Lilly and Company and Eli Lilly Canada Inc. (Lilly) claimed infringed by Apotex, four assigned to Lilly by Shionogi in 1995--Apotex submitting assignments constituted agreement resulting in undue lessening of competition contrary to Competition Act (Act), s. 45--Before Motions Judge Lilly sought summary judgment dismissing paragraphs of statement of defence and counterclaim based on anti-competitive agreement; Shionogi sought summary judgment dismissing counterclaim against it, and appealed order of Prothonotary refusing to strike Apotex's counterclaim against it--Motions Judge finding allegations respecting conduct contrary to Act, s. 45 not disclosing cause of action--Holding Molnlycke AB v. Kimberly-Clark of Canada Ltd (1991), 36 C.P.R. (3d) 493 (F.C.A.) constituted binding precedent and dispositive of matter--Interpreting Molnlycke as holding impairment of competition inherent in exercise of rights specifically provided by Patent Act can never be undue--Finding could be no cause of action under Act by reason of simple assignment of patent rights--Whether interpretation of scope of holding in Molnlyckecorrect-- Molnlycke held, in order to provide scope for statutory monopolies granted by Patent Act to operate, Parliament must have intended "undue impairment of competition cannot be inferred from evidence of exercise of [patent] rights alone" [emphasis added].--Where, however, evidence of something more than mere exercise of patent rights that may affect competition in relevant market, Molnlycke not purporting to completely preclude application of Act--Act, s. 32 expressly addressing cases in which patent used so as to lessen competition unduly--Apotex not relying on s. 32 because not provision of Part VI of Act and therefore cannot give rise to claim for damages under s. 36--However, express statement in s. 32 that use of patent rights could lessen competition unduly giving rise to remedy under s. 32 indicating Molnlycke cannot reasonably be interpreted as completely precluding application of Act whenever patent rights involved--Apotex says assignment resulted in one company, Lilly, acquiring patent rights allowing it to control all of commercially viable processes for making cefaclor where, before agreement, those processes controlled by two companies--Motions Judge foreclosing consideration of this argument because of view Molnlycke precluded cause of action under Act in respect of simple assignment of patent rights-- However, Molnlycke not precluding Motions Judge from considering whether evidence of other facts, circumstances beyond simple assignment from Shionogi to Lilly resulted in undue lessening of competition which could engage s. 45(1)--Whether s. 45(1) can ever apply to agreement involving exercise of patent rights when evidence of something more than assignment itself, never decided--Motions Judge obliged to carry out own analysis of whether s. 45(1) could apply and, if so, whether sufficient evidence proving Lilly and/or Shionogi engaged in conduct contrary to s. 45--Motion Judge's interpretation of Molnlycke not correct and erred by not carrying out own analysis-- Appeals allowed--Competition Act, R.S.C., 1985, c. C-34, ss. 1 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 19), 32 (as am. by S.C. 1990, c. 37, s. 29), 36 (as am. by R.S.C., 1985 (4th Supp.), c. 1, s. 11), 45 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 30; S.C. 1991, c. 47, s. 714)--Patent Act, R.S.C., 1985, c. P-4.