Transcript The Conduct of an Action

The Conduct of an Action
U of T Patent and Trade Secret Course
Allyson Whyte Nowak
March 1, 2011
Outline of Today’s Presentation
 Jurisdiction in IP matters
 Overview of a Patent action
 Specific trial-related issues
2
Jurisdiction: Federal Courts Act
3
Federal Courts Act
4
Section 20 of the Federal Courts Act confers
Exclusive jurisdiction to the Federal
Court re:
• statutory registration
• grant of intellectual property rights
Concurrent jurisdiction with the
Provincial Superior Court re:
• claims for infringement
5
Jurisdiction
The Federal Court is the court of choice for patent infringement
actions in view of:
1. nature and pan-Canadian scope of remedy
2. scope of judgment
3. expertise
6
The Business of the Federal Court: 2010
9,337 proceedings disposed of
 7,471 immigration proceedings
 185 admiralty cases
 52 Aboriginal law actions
 1 income tax
 564 judicial review applications
 48 Access to Information/Privacy
 59 applications under the PM(NOC) Regulations
 97 copyright actions
 105 patent actions
 216 trade-mark actions
 5 industrial design
Total IP: 423
7
Jurisdiction (cont’d)
The downside is that, as a statutory court, the Federal
Court lacks jurisdiction to deal with some IP-related
causes of action: breach of confidential information;
breach of contract; and general tort claims.
8
Netbored Inc. v. Avery Holdings et al.
(2005) FC 1405, Hughes J. held:
“The Anton Piller Order is also directed to “Plaintiff’s confidential
information”...
…the Federal Court does not have jurisdiction to hear and
determine issues as to “confidential information” without the
existence of valid and subsisting federal law upon which to
anchor that jurisdiction (McNamara Construction (Western) Ltd. V.
Regina, [1977] 2 S.C.R. 654). None is pleaded, the Plaintiffs have
not argued that there is any such law and this Court is unaware of
any such law.
The Federal Court does not have jurisdiction to hear and grant
relief in respect of claims as to “confidential information”. The
portions of the Statement of Claim claiming such relief are struck
out. The Anton Piller Order to the extent that it purports to direct
itself to confidential information, is a nullity.”
9
Judges and Prothonotaries
• On July 2, 2003, the two divisions of the Federal
Court became separate courts
 Federal Court
 Federal Court of Appeal
• 31 judges of the Federal Court
• 6 Prothonotaries
• 11 judges of the Federal Court of Appeal
10
Prothonotaries
• Appointed under s. 12 of the Federal Courts Act
• Authority includes:
 mediation
 case management
 practice motions (including those which may result in a
final disposition of the case regardless of the amount in
issue)
 trials of actions in which up to $50,000 is claimed
(see: Rules 50, 382, 383 to 387 of the Federal Courts Rules)
11
Appeals in the Federal Court
An appeal of a Prothonotary’s decision
•
as of right
An appeal of a judge of the Federal Court’s decision
•
12
as of right
Appeal of a Prothonotary’s Decision
The standard of review
1.
Questions are vital to the final issues of a case; or
2.
The Order is “clearly wrong”, i.e.
a. misapprehension of the facts; or
b. applied a wrong principle of law.
Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 463 (F.C.A.)
Merck & Co. Inc. v. Apotex Inc. 2003 FCA 488 at para. 19
13
Appeal to the FCA
The standard of review
1. The judge had no grounds to interfere; or
2. If such grounds exist, the judge’s decision was arrived at:
(a) on a wrong basis; or
(b) was “plainly wrong”.
Merck & Co. Inc. v. Apotex Inc. 2003 FCA 488 at para. 20.
Z.I. Pompey Industrie v. ECU-Line N.V. (2003), 224 D.L.R. (4th)
577 at 586 (S.C.C.).
14
Timeline of a Patent Case
Stage 1: The Pleadings
• Statement of Claim issued and served
• Statement of Defence to be served within 30 days
• Notice of Status Review issued if pleadings have
not closed within 180 days
 Onus is on the Plaintiff to explain the delay
 Will usually lead to case management
15
Case Management in the Federal Court
 No criteria are prescribed in the Federal Courts Rules
as to when an order for case management will be
made
 Most patent infringement actions are considered
complex enough to warrant case management
 Case becomes managed by a Prothonotary of the
Federal Court who manages the conduct of the action,
including the setting of timelines outside those
provided by the Rules
16
Pleading/Proving an Infringement Case
Must plead/prove facts to show:
(i)
ownership of the patent
(ii) a license
(iii) facts establishing infringement
17
The Anatomy of a Statement of Claim
1. Style of Cause
2. Identify the parties to the action
3. Identify the rights of the plaintiffs
4. Identify the acts of the Defendants which
constitute an encroachment of those rights
5. State the relief being sought
18
The Anatomy of a Defence
1. Style of Cause
2. Respond to Plaintiffs’ allegations
(a) admit
(b) deny
(c) have no knowledge of
3. Deny acts constitute infringement
4. Rely on exceptions to infringement (ss. 55.2
and 56 of the Patent Act)
5. Deny entitlement to relief sought
19
The Anatomy of a Defence (cont’d)
6. Bring a Counterclaim seeking to impeach the patent,
including any of the validity “defences”, including:
i.
ii.
Anticipation
Obviousness
iii. Lack of utility
iv. Ambiguity
v. Claims broader than invention disclosed
vi. Method of medical practice
vii. Not patentable subject matter
7. Counterclaims most typically seek to impeach the patent
by asserting one or more of the validity “defences”
8. State relief being sought by way of Counterclaim
20
The Gillette Defence
The Defendant can argue:
(i)
broad interpretation – claims include prior art
(ii) narrow interpretation – patent is not infringed
See: Sanofi-Synthelabo Canada Inc. v. Apotex
Inc. (2005), 39 C.P.R. 4th) 202 (F.C.)
21
Interlocutory Motions
There are various interlocutory motions which can be brought at the
pleadings stage of an action:
•
•
•
•
•
Motion to strike the Statement of Claim
Motion to strike the Statement of Defence and Counterclaim
Motion for Particulars
Motion for Security for Costs
Motion for Bifurcation
In a case managed proceeding, these motions are being resolved more
and more on an informal basis by the Case Management Prothonotary
22
Pleadings Motions: Motion to Strike
The Rule: 221
221. (1) On motion, the Court may, at any time, order that a
pleading, or anything contained therein, be struck out, with
or without leave to amend, on the ground that it
(a) discloses no reasonable cause of action or defence,
as the case may be,
(b) is immaterial or redundant,
(c) is scandalous, frivolous or vexatious,
(d) may prejudice or delay the fair trial of the action,
(e) constitutes a departure from a previous pleading, or
(f) is otherwise an abuse of the process of the Court,
and may order the action be dismissed
or judgment entered accordingly.
23
Pleadings Motions: Motion to Strike
The key cases
Hunt v. Carey Can. Inc., [1990] 2 S.C.R. 959
The test
Even considering the facts as pleaded to be true, is it plain and
obvious that the claim discloses no reasonable cause of action?
The trends
Courts will not strike pleadings which raise contentious legal
issues or questions of statutory interpretation (Apotex Inc. v.
Eli Lilly and Co. 2004 F.C.A. 358 and Apotex Inc. v.
Merck & Co. 2004 F.C. 1452)
24
Pleadings Motions: Motion for Particulars
The Rules: 174 and 181
174. Every pleading shall contain a concise statement of the
material facts on which the party relies, but shall not
include evidence by which those facts are to be proved.
181. (1) A pleading shall contain particulars of every allegation
contained therein, including
(a) particulars of any alleged misrepresentation, fraud,
breach of trust, wilful default or undue influence; and
(b) particulars of any alleged state of mind of a person,
including any alleged mental disorder or disability,
malice or fraudulent intention.
25
Pleadings Motions: Motion for Particulars
The Trends
26
1)
Prior art references must include pinpoint citations
Denharco Inc. v. Forespro Inc., [1999] 3 F.C. (T.D.)
2)
It is unclear when affidavit evidence supporting the need
for particulars, will be required (see: IPL Inc. v. Hofmann
Plastics Canada Inc., [2005] F.C. 1743; Gillette Co. v.
Dynamic Toy Importers Ltd., [2003] F.C. 956 at 287)
Pleadings Motions: Motion for Particulars
The key cases
Gulf Can. Ltd. v. “Mary Mackin” (The), [1984] 1 F.C. 884 (F.C.A.)
The test
“At that early stage, a defendant is entitled to be furnished all
particulars which will enable him to better understand the position
of the plaintiff, see the case made against him and appreciate the
facts on which it is founded so that he may reply intelligently to the
Statement of Claim and state properly the grounds of defence on
which he himself relies, but is not entitled to go any further and
require more than that.”
Embee Electronic Agencies Ltd. v. Agence Sherwood Agencies
Inc. et al. (1979) 43 C.P.R. (2d) 285 (F.C.T.D.)
27
Pleadings Motions: Amending Pleadings
The Rule: Rule 75
75. (1) Subject to subsection (2) and rule 76, the Court may, on
motion, at any time, allow a party to amend a document, on
such terms as will protect the rights of all parties.
Limitation
(2) No amendment shall be allowed under subsection (1) during
or after a hearing unless
(a) the purpose is to make the document accord with
the issues at the hearing;
(b) a new hearing is ordered; or
(c) the other parties are given an opportunity for any
preparation necessary to meet any new or
amended allegations.
28
Pleadings Motions: Amending Pleadings
The Test
An amendment to a pleading may be allowed at any stage of an action
for determining the real questions in controversy between the parties.
On a motion for leave to amend pleadings, the Court must assume the
facts pleaded in the proposed amendments are true. The Court should
then determine if the amendments would be capable of being struck
under Rule 221. If the proposed amendments would not be struck, the
amendments should be allowed (Nidek, supra at 24) in the absence of
prejudice to an opposing party. (Scottish & York Insurance Co. v.
Canada, [1999] F.C.J. No. 277 (F.C.A.)
The Trends
Amendments that advance additional causes of action or
defence are likely to be vital entitling review de novo
(BMS v. Apotex 2008 F.C. 1196)
29
Protective Orders
The Rules: Rules 4 and 151
Matters not provided for
4.
On motion, the Court may provide for any procedural matter not
provided for in these Rules or in an Act of Parliament by analogy to
these Rules or by reference to the practice of the superior court of
the province to which the subject-matter of the proceeding most
closely relates.
Motion for order of confidentiality
151. (1) On motion, the Court may order that material to be filed shall be
treated as confidential.
Demonstrated need for confidentiality
(2) Before making an order under subsection (1), the Court must be
satisfied that the material should be treated as confidential,
notwithstanding the public interest in open and accessible court
proceedings.
30
Protective Orders
The test
Rule 4 Order: It is a sufficient demonstration of the need for a
Confidentiality Order if the moving party believes that its
proprietary, commercial and scientific interests would be seriously
harmed (Apotex v. Wellcome, supra at 311)
Rule 151 Order: There must be a “serious risk to an important
interest” that reasonable alternatives could not prevent and the
benefit of granting the confidentiality order must outweigh the
injurious effect of the public interest in open and accessible
court proceedings (Sierra Club, supra)
31
Protective Orders
The test (continued)
CEO: Only in “unusual circumstances”, considerations for
which include:
1) the existence of a similar order granted upon
consent in foreign parallel litigation;
2) the ability of a party to object to a designation of
confidentiality and the Courts’ ability to control
the “declassification” process; and
3) a party’s belief that its commercial business or
scientific interest associated with trade secrets
might be seriously harmed by disclosure (Apotex
v. Wellcome, supra at 311).
32
Protective Orders
The Trends
1) Protective orders covering trade secrets and drug
formulations (Eli Lilly and Company v. Apotex, 2008 F.C. 892)
(Lundbeck Canada v. The Minister, 2007 F.C. 412) are easier
to obtain than:
• litigants’ names, patent number in suit, name of the drug
contained in the patent in suit, i.e., marketing/business
strategy (Novopharm Limited v. “Company X” 2008 F.C.
840)
• financial information
• complied confidential information (Teva Neuroscience,
2008 F.C. 1091)
33
Protective Orders
The Trends (continued)
2) CEO orders are extremely difficult to obtain unless on
consent but see: Lundbeck (2007), 58 C.P.R. (4th) 139
(F.C.), Rivard Instruments (2006), 54 C.P.R. (4th) 420
(F.C.) and Foster-Miller, Inc. v. Babcock (2002) 18 C.P.R.
(4th) 334.
3) Courts focus on the evidence and will reject blanket
assertions of confidentiality (Abbott Laboratories Ltd. v.
Canada (Minister of Health) (2005), 41 C.P.R. (4th); Teva
Neuroscience, supra; Eli Lilly, supra).
4) The attempt to prevent documents produced in Canadian
litigation from leaving Canada by way of a “Canada Only
Clause” was rejected DataTreasury Corp. v. Royal Bank of
Canada et al. 2008 F.C. 955.
34
Bifurcation Orders
The Rules: Rules 3 and 107
3.
These Rules shall be interpreted and applied so as to
secure the just, most expeditious and least expensive
determination of every proceeding on its merits.
107. (1) The Court may, at any time, order the trial of an issue or
that issues in a proceeding be determined separately.
Court may stipulate procedure
(2) In an order under subsection (1), the Court may give
directions regarding the procedures to be followed, including
those applicable to examinations for discovery and the
discovery of documents.
35
Bifurcation Orders
The key case
Illva Saronno S.p.A. v. Privilegiata Fabbrica Maraschino
“Excelsior” (1998), 84 C.P.R. (3d), (F.C.T.D.)
The test
The Court must be satisfied on a balance of probabilities that in
light of the evidence and all the circumstances of the case
(including the nature of the claim, the conduct of the litigation,
the issues and the remedies sought, severance is more likely
than not to result in a just, expeditious and least expensive
determination of the proceedings on the merits. (Illva Saronno,
supra)
36
Bifurcation Orders
In IP cases, the issues of liability and quantum of damages
has traditionally been sought on the basis of the authority of
Markesteyn v. Canada, [2001] F.C.J. No. 1149 (F.C.T.D.) and
a consideration of the following factors:
i.
ii.
The complexity of the issues;
Whether the issues of liability are clearly distinct from issues of remedy and
damages;
iii. Whether the issues of liability and damages are so interwoven that no time will
be saved;
iv. Whether a decision relating to liability will likely put an end to the action
altogether;
v. Whether the parties have already devoted resources to all of the issues;
vi. Whether the splitting of the action will save time or lead to unnecessary delay;
vii. Whether the parties will suffer any advantage or prejudice; and
viii. Whether bifurcation will result in the most just expeditious and least
expensive disposition of the proceeding.
37
Bifurcation Orders
The Trends
1) Attempts to use Rule 107 to bifurcate “non-traditional”
issues, Realsearch Inc. v. Valorie Kone Brunette Ltd., [2004]
F.C.J. No. 23 (F.C.A.)
2) Increasingly more difficult to obtain unless on consent (even
then, the Court will not “rubber stamp” a parties’ joint
request: H-D Michigan v. Berrada, 2007 F.C. 995)
38
Timeline of a Patent Case
Stage 2: The Discovery Phase
Documentary discovery
Under the Rules, within 30 days after the close of
pleadings each party must serve a list (called an
affidavit of documents) of the documents in their
power, possession or control which are relevant to
the issues raised in the action
39
Stage 2: The Discovery Phase
Oral discovery
• Rule 236 provides that “[e]xcept with leave of the Court, a
party may examine for discovery any adverse party only
once.”
• A corporate party is entitled to select the representative to be
examined on its behalf
• The Defendant is entitled to examine the inventor of a patent,
however, the inventor’s evidence is not binding on the Plaintiff
40
Stage 2: The Discovery Phase
•
Where a witness is unable to answer a question posed on
discovery, an undertaking may be given to make inquiries of others
and to provide the answer in writing
•
There may be questions that are refused, on the basis, for
example, that they are not relevant. In these instances, no answer
is provided by the witness and the questions are followed up by
counsel on a motion seeking to compel answers to the questions
refused
•
Once answers to undertakings are provided, and the propriety of
refusals determined, a second round of discovery is generally
conducted to ask follow-up questions
41
Stage 3: The PreTrial Stage
• Any party may requisition a pretrial conference at
the point at which they seek no further discovery
• A pretrial is conducted by a Judge who will not be
the Trial Judge
• Expert reports must be served with pretrial
conference memoranda within 30 days after
service of the requisition
42
Stage 4: Trial
• Parties may choose the location of the Trial
• Trials tend to be longer than in the United States and
Europe, lasting on average, between 2-6 weeks
• Parties will not know who the trial judge is until the day
of trial, unless the action is complex enough to warrant
Trial Management Conferences in advance of trial
• There is an informal group of judges with IP expertise
who tend to preside over
patent actions
43
The Flow of a Patent Trial
• Opening by the Plaintiff
• Defendant can choose to make an opening after the
Plaintiff or choose to wait until the close of the
Plaintiff’s case on infringement
• Plaintiff leads evidence establishing
 Ownership of the patent
 Status of the licensee as a “person claiming under the
patent”
 Facts establishing infringement (can be by way of
admissions, witnesses, discovery read-ins)
 Opinion evidence on the construction of the patent and
infringement
44
A Patent Trial (cont’d)
• The Defendant responds to the evidence on infringement
(cross-examination of the Plaintiff’s witnesses and calling
of its own expert and/or fact witnesses)
• The Defendant leads evidence on the issues of invalidity
(expert and/or fact witnesses and possibly by way of
admissions and discovery read-ins)
• The Plaintiff responds to the evidence on invalidity (crossexamination of the Defendant’s witnesses and calling of
its own expert and/or fact witnesses)
• Reply evidence by the Plaintiff
• Closing arguments by Plaintiff and Defendant
with right of reply
45
Foreign Decisions
Persuasive value but not binding on a Canadian court
Madam Justice Reed in Kirin-Amgen Inc. v. Hoffman-La
Roche Ltd. (1999), 87 C.P.R. (3d) 1 at 21-22 (F.C.T.D):
“Counsel placed decisions in two other
proceedings before me. One of the Federal
Court of Australia…the other by the technical
Board of Appeal of the European Patent
Office…it is trite law that neither has any
binding or precedential value in this Court”.
46
Differences in the Canadian and US
patent laws tend to further diminish
the value of a U.S. decision
47
United States
Canada
Jury trials
No Jury trials
Patent construction takes place
in a Markman hearing in
advance of the trial
No Markman
hearings
File wrapper is given significant
emphasis
No file wrapper
estoppel
Issue Estoppel
The question whether a party can be estopped
from making allegations in Canada by virtue of:
• admissions made by the parties or their privies
and/or
• findings of fact in foreign litigation
while available in principle in Canada, has yet to
be applied.
48
Issue Estoppel
In Johnson & Johnson Inc. v. Boston Scientific Ltd. 2008 FC 552,
Madam Justice Layden Stevenson J. (as she then was) exercised
her discretion not to apply the doctrine saying,
“In the end, whether to apply issue estoppel, even in
circumstances where all the conditions are met, is a
matter of discretion…
The trial of this matter spanned six weeks. Many
witnesses testified, most of them experts. Given the
duration of the trial, the length of time that it has been
pending, the preparation entailed, and the fact that it
was a battle ‘hard fought’, it seems appropriate, to me,
that my determinations be made on the merits.”
49
Expert Reports in the ONSCJ
Rule 53.03(1) and (2)
 Expert reports are due:


Not less than 90 days before the pre-trial conference
Responding reports due 60 days before the pre-trial
conference
 Standardized content (Rule 53.01(2.1))




Instructions provided
Opinion on each issue
Description of research conducted
List all documents relied on
 Expert must sign acknowledgment
of duties (Form 53)
50
Reform in the Federal Court
New Rules in effect as of August 2010:
• standardize the content of an expert statement or
affidavit (to be accompanied by a signed Code of
Conduct) Rule 52.2(1)
• provide for the ability for parties to jointly name an
expert Rule 52.1(2) or submit a joint statement Rule
52.6 (4)
• allow for expert conferences in advance of trial
Rule 52.6(1)
• permit concurrent examination of experts (“hot tubbing”)
Rule 282.1
• require leave to call more than 5 experts Rule 52.4(1)
51
The Effect of Reform
What is the Practical Effect of this?


52
Increased scrutiny of experts
i.
their expertise
ii.
what they can opine on
iii.
the manner in which they prepare their
report
iv.
the manner in which they give their
evidence
Increased scrutiny of a lawyer’s role in
developing expert evidence
Effect of Reform (continued)
Your focus at each step of the trial process
should be on the same principles that have
been the focus of reform:
• Reliability
• Independence
• Impartiality
53
Selection of an expert witness
 Expertise - “special knowledge”

verify qualifications

ensure their acceptance in the appropriate
scientific or professional community
 Ability to support his or her opinion
54

objective support (previous academic
publications)

ability to defend position (without advocacy)
Admissibility of Expert Evidence
Mohan remains the test
55
1)
Relevance
2)
Necessity
3)
No exclusionary rule
4)
Properly qualified witness
R. v. Abbey 2009
Mohan is to be applied in 2 steps:
Stage 1:
Analysis of the Mohan requirements
•
Relevance is logical relevance
•
“yes” or “no” analysis
Exercise of the Court’s “Gate-keeper” function
Stage 2:
•
56
Weighing of the benefits and costs
associated with the admission of
the evidence
The Court’s “Gate Keeper” Function
BENEFITS
COSTS
Legal relevance
Time
Reliability
Prejudice
Confusion
57
Preparation of Expert Evidence
 Expert Reports

Focus on independence and reliability

Beware of difference between courts in
the accepted role of lawyers in the
process of preparing reports
 Expert Testimony

58
Focus on impartiality
I say “tomatoe”…
“While I do not question Mr. Combs' veracity as a witness, I do question
the weight to be attached to his evidence. He was called as an expert
to give his opinion to assist me in determining the value to the owner of
this property. It would appear that he has had a long and close
association with Loblaws both in a business sense and as an adviser.
Mr. Combs gave expert testimony on behalf of this claimant in a
previous hearing to determine compensation (Re Loblaw Groceterias
Co. Ltd. and Minister of Highways for Ontario, [1964] 1 O.R. 271.) One
looks for independence in a witness called to give expert testimony. I do
not feel that there was that degree independence in Mr. Combs that his
evidence could be accepted without the closest scrutiny and a
consideration of his evidence and any other evidence that might run
contrary to it.”
Toronto (Metropolitan) v. Loblaws
Groceterias Co. [1972] S.C.R. 600
59
You say…
“The criticism of Dr. McClelland is particularly noteworthy. It was
centred on the fact that he has been called by Apotex more than 20
times in a career spanning over 30 years. The implication is that if he is
not a man for all seasons, he is certainly a man for all patents.
However, I was not aware that there was a limit to a number of times a
witness could appear. It may well be that Apotex has come to rely upon
his opinion. It may well be that there have been times when NOAs were
not issued because his advice was that the patent was valid, or that
Apotex's method would infringe, based on his understanding of the
common general knowledge and prior art. A reading of his crossexamination in its entirety, not just in bits and pieces, shows his
objectivity in this case. No adverse inference should be drawn from the
fact that I have come to prefer the evidence of Professor Davies.”
Lundbeck Canada Inc. v. Canada (Minister of Health) (2009),
73 C.P.R. (4th) at para. 74 (F.C.)
60
Impartiality is the key
“Dr. Haselbeck’s characterization of the relevant literature
repeatedly shows that his enthusiasm to support his
employer’s position leads him to overstate or misstate the
conclusions found therein”.
Kirin-Amgen Inc. v. Hoffman-La Roche Ltd. (1999), 87
C.P.R. (3d) 1 at 19 (F.C.T.C.)
61
And … Don’t Overreach
Heed the warning of the Ontario Court of
Appeal in R. v. Abbey:
“ The case law demonstrates that
overreaching by expert witnesses is
probably the most common fault
leading to reversals on appeal…”
62
Admissibility vs Matter of Weight
Courts have not dealt with a lack of independence
or impartiality relating to expert evidence
consistently:
 Pre 2002 it tended to be a matter of admissibility
 Post 2002 it tended to be a matter of weight
 In 2009 there was some indication that we might
be returning to a focus on admissibility: Alfano
(Trustee of) v. Piersanti
63
Admissibility vs Weight (continued)
However, note the comment of the Court in
Tavernese v. Economical Mutual Insurance, [2009]
O.J. No. 2329:
“ [i]t would take a palpably partisan
approach on the part of a purported
expert witness to result in outright
disqualification.”
64