Digests

Merck & Co. Inc. v. Apotex Inc.

T-2408-91

MacKay J.

7/3/00

30 pp.

Evidence establishing except for brief time on afternoon of December 15, 1994 and early following day, after December 14 until late in day on December 16 Apotex continuing to sell Apo-Enalapril, product Court found infringed plaintiffs' patent interests, as reasons for judgment filed December 14, 1994 clearly stated--Sales of Apo-Enalapril exceeding $9 million on December 15, and more than $360,000 on December 16--Between December 16 and December 23, no purchase orders for Apo-Enalapril but Apotex continuing to deliver Apo-Enalapril to customers whose purchases made before sales stopped on December 16--From December 23 until January 9, 1995 Apotex' sales not enjoined while interim stay in place--Apotex not selling product to customers after stay withdrawn on January 9--Following filing of reasons for judgment, Dr. Sherman (President of Apotex), Executive Vice-President Jack Kay, counsel for Apotex reading reasons--Dr. Sherman concluding reasons indicating injunction would issue when formal judgment filed, and in interim Apotex free to carry on business as usual--Apotex not offering incentives for sales, but none required as product only generic brand of largest selling prescription drug in Canadian market, had ready sales with preference under provincial drug plans listing it as accepted for medical prescription public funding in all but one province--Federal Court Rules, R. 355 providing two kinds of conduct constituting contempt: (1) disobeying any process, order of Court; (2) acting in such way as to interfere with orderly administration of justice, or to impair authority, dignity of Court--First paragraph of preamble to show cause order describing alleged contempt as breach of permanent injunction pronounced on December 14 in reasons for judgment--As no injunction until December 22, no breach of injunction or of order for delivery up of infringing product until formal order filed--Second paragraph of preamble alleging conduct interfering with orderly administration of justice, or impairing authority, dignity of Court--In Baxter Travenol Laboratories of Canada Ltd. et al. v. Cutter (Canada), Ltd., [1983] 2 S.C.R. 388, Dickson J. holding may be contempt in respect of that sort of conduct by action taken between release of reasons, filing of formal judgment, if with knowledge of reasons, one acts in manner clearly prohibited in reasons--Must show beyond reasonable doubt Dr. Sherman, Apotex between December 14 and 22, with knowledge of reasons acted contrary to conclusions, directions set out in Court's reasons of December 14, and that by actions after January 9, 1995 when interim stay of injunction withdrawn and permanent injunction set down, terms those of order for delivery up, rendered nugatory by aid proferred to third parties to trade among themselves infringing product--Reference in reasons to counsel's request for opportunity to consult about terms of formal judgment not indicating intention to await final order to determine effective date for conclusions, findings set out by reasons--Consultation could not do more than implement by formal judgment findings, conclusions already made, effective, without any prospect of significant change, when reasons dated, filed--Reasons clearly specified Merck, plaintiffs entitled, at date of reasons, to declaration certain claims of patent infringed by defendant Apotex, and to permanent injunction restraining defendant from infringing valid claims of patent and to order in appropriate terms for delivery up, or destruction under oath or under supervision of Court of all Apo-Enalapril products not including bulk enalapril maleate held in inventory--Specified Merck entitled to permanent injunction prohibiting infringement of valid patent claims--That infringement found to be in manufacture, sale of Apo-Enalapril tablets infringing on Merck's patent--Clear on December 14 formal judgment would include permanent injunction--Contempt if offence consisting of intentional doing of act in fact prohibited by order--Absence of contumacious intent mitigating factor, but not exculpatory circumstance--Once reasons for decision released, any action which would defeat purpose of anticipated injunction undermining that which has already been given judicial approval--Any such action subverting processes of Court and may amount to contempt--Reasons clearly described permanent injunction to be issued--Beyond reasonable doubt both Apotex by officers and Dr. Sherman in personal capacity committed contempt by selling, authorizing selling, of Apo-Enalapril after Dr.Sherman read reasons for judgment dated December 14, 1994 indicating as of that day Merck entitled to permanent injunction prohibiting Apotex from infringing upon valid claims of Merck's patent--As "directing mind" of Apotex, Dr. Sherman's decision about effect of reasons, leading to sales of Apo-Enalapril on following two days, thereby committing contempt--Second allegation of contempt relating to actions between January 9, when interim stay of injunction withdrawn, and April 27, 1995 when show cause order issued--Dr. Sherman directing Mr. Kay that after January 9, Apotex not accepting returns of Apo-Enalapril from customers--Departure from normal policy to accept returns because once goods returned could not be resold--Dr. Sherman gave no instruction about implementing policy of "no returns"--Apotex, by actions of Vice-President Sales, Mr. Barbeau, and direction of staff, played active role in promoting sales, purchases by third parties of infringing product until April 20, 1995 when Court upholding Apotex' claim product produced from bulk enalapril maleate acquired prior to grant of Merck's patent protected from claim of infringement by Patent Act, s. 56--Apotex' activities between January 9 and date of show cause order facilitating sales of product among third parties not merely by exchange of information, but by its financial involvement in providing distribution allowances, prompt payment allowances, treating some transactions as if sales made directly by Apotex to third party purchasers, interference with orderly administration of justice, impairing authority, dignity of Court--Apotex' action in relation to these transactions, involvement in financial arrangements facilitating transactions subverting Court's process constituted contempt of Court in period after January 9--Dr. Sherman not guilty of contempt by directing "no returns" policy--Federal Court Rules, C.R.C., c. 663, R. 355--Patent Act, R.S.C., 1985, c. P-4, s. 56 (as am. by S.C. 1993, c. 44, s. 199).