Merck & Co. Inc. v. Apotex Inc.
Action for infringement of exclusive rights under patent for enalapril maleate used in treatment of hypertension and congestive heart failure and marketed under trade name Vasotec -- Plaintiffs holder and exclusive licensee of patent in Canada -- Defendant, manufacturer and distributor of generic pharmaceutical products, acquiring enalapril maleate in bulk form (bulk product) prior to issuance of plaintiff's patent, making like tablets, and marketing tablets under trade name Apo-Enalapril -- Defendant stock-piling bulk product acquired: (1) from compulsory licensee (Delmar) and allocated to defendant's purchase before grant of patent (acquired lots); (2) from Delmar but having to be repurified by Delmar to meet defendant's specification after grant of patent (reprocessed lots) -- Defendant contending Act, s. 56 allowing use and sale of Apo-Enalapril on basis defendant simply using and selling bulk product made in Canada and acquired prior to issuance of patent -- Issue whether s. 56 immunity extending to defendant where, after grant of patent, defendant manufacturing or altering form of bulk product, earlier acquired, by a manufacturing process, and producing tablets for sale -- Purpose of s. 56 to protect common law right to use and sell any article, machine, manufacture, or composition of matter not subject to exclusive patent rights when acquired -- Extension of immunity to permit defendant to use bulk product to produce second product in another form, containing patented composition for matter, and to sell to others second product for a use claimed within plaintiffs' patent going beyond intended purpose of s. 56 -- Use by defendant to produce pharmaceutical tablets for use claimed by plaintiff's patent, and sale by defendant of Apo-Enalapril in tablet form, produced after grant of patent from bulk product acquired prior to issue of patent not protected under s. 56 from plaintiffs' claims of infringement -- Bulk product in reprocessed lots not in existence for purposes of statutory immunity, as herein, until meeting quality required by defendant -- S. 56 immunity not extending to use or sale of enalapril maleate in reprocessed lots, whether in bulk or tablet form if such use or sale ultimately for use claimed within plaintiffs' patent (Lido Industrial Products Ltd. v. Teledyne Industries Inc. et al. (1981), 57 C.P.R. (2d) 29 (F.C.A.)); use or sale for another ultimate purpose or mere acquisition and holding in inventory of bulk product not constituting infringement -- Plaintiffs contending defendant precluded from benefit of s. 56 as acquisition of bulk product prior to issuance of patent made in bad faith -- Equitable principles may only preclude reliance on s. 56 where clear evidence conduct smacking of fraud in ongoing relationship between parties -- Plaintiffs not having in Canada any recognized property in invention of enalapril maleate until issuance of patent; defendant's conduct not barring its reliance upon s. 56 defence -- Plaintiff submitting defendant infringing its exclusive patent interests by producing tablets for Delmar -- In addition to permitting Delmar to make, use or sell invention for medicine, licence implicitly allowing Delmar to contract for production of final dosage form -- Defendant, acting under contract for Delmar and not on its own account, not infringing plaintiffs' patent claims by producing final dosage form from bulk product held only on consignment (defendant's production right) so long as Delmar's licence in effect -- End of defendant's production right by termination of Delmar's licence by statutory amendment not based on extinguishment of Delmar's rights under licence but rather based on lack of any right in defendant to use invention after grant of patent -- Thus defendant having no immunity from infringement suit pursuant to production of tablets from bulk product acquired after termination of Delmar's licence even though bulk product produced by Delmar while it held compulsory licence -- Defendant also contending plaintiffs' patent claims invalid -- Claims for compounds and claims for compositions to those compounds in or with a carrier may co-exist as valid claims within same patent unless: (1) composition claims not including inventive step aside from that included in compound already claimed; and, composition claims not necessary to embody invention claimed in a use in a practical form; or (2) composition claims failing to meet statutory requirements for specification under Act, s. 34 -- Shell Oil Co. v. Commissioner of Patents,  2 S.C.R. 536 qualification applicable: composition claims at issue although not inventive in themselves, necessary to embody claim for use of compound in a practical form -- Claims at issue not invalid on Tennessee Eastman Co. v. Commissioner of Patents,  S.C.R. 111 principle: patent claims concerning medical treatment not within s. 2 "invention" definition -- Claims in issue meeting s. 34 specification requirement at time patent issued -- Act not requiring each patent claim to be inventive in manner independent from all others: claims at issue not invalid for redundancy -- Defendant's counterclaim attacking validity of plaintiffs' patent dismissed -- Action for infringement of plaintiffs' patent allowed -- Patent Act, R.S.C., 1985, c. P-4, ss. 2, 34, 56.