Date: 20000121
Docket: T-753-99
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.,
Plaintiffs,
- and -
NU-PHARM INC.,
BERNARD SHERMAN,
RICHARD BENYAK,
Defendants.
REASONS FOR ORDER
MULDOON, J.
[1] This is a motion by the plaintiffs in Merck & Co. Inc. and Others v. Nu-Pharm Inc. and Others seeking an order, pursuant to Rules 373 and 374 of the Federal Court Rules, 1998, SOR/98-106, for an interlocutory injunction restraining the defendant Nu-Pharm Inc. from infringing Canadian Letters Patent 1,275,349. The moving parties, which include Merck Frosst Canada & Co., ask that the injunction endure until the final disposition of the claim. The moving parties also seek to restrain Nu-Pharm Inc. from: manufacturing, arranging for the manufacture, acquiring, importing, exporting, distributing, selling, offering for sale, taking orders for, advertising and marketing enalapril maleate in bulk or tablet form. The plaintiffs here are the moving parties, or applicants, and the defendants are the respondents herein.
[2] In the alternative, the moving parties seek an order requiring that the respondent first, keep an account of all enalapril in Nu-Pharm's, its officers' or its subsidiaries' possession, custody or control. Second, they seek an order requiring that the respondent furnish monthly statements to the moving parties of its earnings from enalapril and enalapril maleate. Third, they seek an order requiring that the respondent deposit an initial security bond with the Court in the amount of $51 million or, in the alternative, 10% of their sales of Nu-Enalapril on a monthly basis until final disposition of the claim.
[3] The moving parties also seek an order first, designating the action a specially managed proceeding; second, appointing a case management judge; third, scheduling pre-trial proceedings; fourth, fixing trial hearing dates; and fifth, an order as to costs.
Facts
[4] One of the moving parties, Merck & Co., Inc., owns patent no. 1,275,349 ('349 patent). The evidence suggests that they have sales revenue of US$26.9 billion and cash equivalents of US$2.6 billion. The other moving party, Merck Frosst Canada & Co. (hereinafter Merck Frosst), is the only licensee of the '349 patent. Both parties have struggled long and hard to protect the patent from those whom they consider to be infringing it.
[5] The respondent is a wholesaler and distributor of generic drugs. It does not appear to have many assets, having recently sold its drug manufacturing and processing facilities located at 380 Elgin Mills Rd E. in Richmond Hill to a subsidiary of Apotex Inc., Novex Pharma. It currently rents space in a nearby industrial park located at 50 Mural Street in Richmond Hill and has contracted out to another corporation the manufacturing and packaging of its drugs, such as Nu-Enalapril.
[6] In 1991, the moving parties initiated an action against Apotex for infringement of the '349 patent in respect of Apotex's acquisition of bulk enalapril maleate and its manufacture, use and sale of Apo-Enalapril tablets. Justice Mackay of this Court, in file no. T-2408-91, found in favour of the moving parties, determining that claims 1 to 5 and 8 to 15 of the '349 patent had been infringed. He imposed a permanent injunction on Apotex, its officers, directors, servants, agents, employees and others in respect of any further infringement of the '349 patent. The Court of Appeal upheld this decision on April 9, 1995 in file no. A-742-94.
[7] For the purposes of this motion, the moving parties allege that all claims of the patent are valid. The respondent offers the opinions of six experts in a variety of pertinent fields as evidence that claim 1 is not valid. The moving parties submit that the claims cover enalapril, enalapril maleate, enalapril sodium and disodium maleate. The respondent denies this, offering for evidence the expert opinions of Mr. McClelland, Mr. Olah and Mr. Csizmadia. The respondent also denies that the drug manufactured by the moving parties and respondent under the trademarks of Vasotec and Nu-Enalapril respectively, contain enalapril maleate.
[8] Vasotec and Nu-Enalapril are both angiotensin-converting enzyme inhibitors and are used in the treatment of hypertension and heart failure. As of the mid-1990s, four angiotensin II receptor antagonists / AT1 receptor blockers have appeared on the market, though, despite this competition, Mr. Hébert, Vice President of Marketing at Merck Frosst, asserts that Vasotec accounts for $180 million annually in gross sales for Merck Frosst. An IMS report, tendered in response to an undertaking by counsel for the moving parties, shows figures purporting to represent the monthly sales of Vasotec and other like drugs since the beginning of the 1990s.
[9] Nu-Enalapril has been on the market since Health Canada issued the respondent a Notice of Compliance (hereinafter NOC) on February 25, 1999. In the NOC, Nu-Enalapril was identified as identical to Apo-Enalapril. It is now listed for sale on every provincial formulary except those in Ontario and Nova Scotia.
[10] The moving parties offer evidence from Mr. Hébert suggesting that Nu-Enalapril sales can be estimated at $39 million annually. Mr. Hébert bases this opinion on sales data that Merck Frosst supposedly kept from 1993 until 1997, when Apo-Enalapril was on the market. Mr. Hébert asserts that the sales of Nu-Enalapril represent $51 million in lost sales revenue for the moving parties. The respondents invoke the opinion of Mr. Rudson, an industry expert, to estimate their sales of Nu-Enalapril at $16.23 million annually. Mr. Rudson estimates that these sales represent either $1.24 or $3,2 million in lost profits to the moving parties, depending on which party's sales estimates are used. He bases this opinion on an average 6.29% profit margin found to exist in the pharmaceutical industry from 1968 to 1982 by the 1985 Eastman Commission of Inquiry. He estimates that, if a 10% profit margin were used, lost sales would equal either $1.98 or $5.1 million, again depending on which party's sales estimates were used.
Legal Issues
Interim Injunction
[11] The moving parties submit that section 57 of the Patent Act, R.S.C. 1985, Chap. P-4 and rules 373 and 374 of the Court's Rules, allow the Court to grant them an interlocutory injunction. The respondent does not dispute this. The Court, therefore, acknowledges that both section 57 of the Patent Act and rule 373 of the Rules give it jurisdiction to hear the request for interlocutory relief.
[12] The parties do not dispute that the test for determining whether an interlocutory injunction should be granted is the three-part test found in R.J.R. - MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 312. Pursuant to this test, the Court must determine whether first, there be a serious issue to be tried, second, whether a moving party would suffer irreparable harm if the motion were refused and third, whether a moving party would suffer greater harm if the motion were not granted than the respondent would suffer if it were granted.
[13] The moving parties submit that each part of this three part test is related to, and effects the other parts. The respondent did not address the submission. Nevertheless, this Court accepts that the submission is well founded, based as it is on a passage written by Professor Sharpe, as he then was, and adopted by Mr. Justice Stone in Turbo Resources Ltd. v. Petro Canada Inc., [1989] 2 F.C. 451 (F.C.A.). The Court, therefore, acknowledges that, where the moving parties satisfy one part of the test with ease, the Court must consider this fact if the moving parties meet with some difficulty in satisfying another part of the test.
Serious Issue To Be Tried
[14] The first step for the Court in determining whether to grant an interlocutory injunction is to ascertain whether the main action contains a serious issue to be tried. The moving parties submit that there are two serious issues to be found in their statement of claim. The first issue, found in subparagraphs 1(a) and (b) of the claim, is centred around the allegation that the respondent Nu-Pharm and the defendants Mr. Sherman and Mr. Benyak have infringed claims 1 to 5 and 8 to 15 of the '349 patent through the acquisition and sale of dosage from enalapril maleate tablets.
[15] The second issue, also found in subparagraph 1(b), is based on the allegation that the respondent Nu-Pharm and the defendants Mr. Sherman and Mr. Benyak have infringed the '349 patent contrary to the permanent injunction granted by this Court and the Court of Appeal in proceedings numbered T-2408-91 and A-724-94. The recent order of Prothonotary Roza Aronovitch, dated November 16, 1999, however, struck out this last issue from the statement of claim. As counsel for the respondent rightly points out, the issue, therefore, cannot be properly pleaded before this Court because it is not part of the amended statement of claim. This Court will not examine the issue, therefore, despite both counsels' lengthy submissions in relation to it.
[16] In addressing the issue of infringement the respondent disputes the validity of claim 1 of the '349 patent. The respondent also disputes that its Nu-Enalapril tablets infringe claims 2 to 7 of the patent. It alleges that the Nu-Enalapril tablets contain the compounds enalapril sodium and disodium maleate as medicinal ingredients, compounds which it argues are distinct from enalapril and enalapril maleate and which are not caught by claims 2 to 7.
[17] Both parties agree that the test for a serious issue is based on the guidelines developed in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 and adopted in Turbo, supra. The principal guideline found in American Cyanamid is that a court must not undertake a prolonged examination of the merits but must simply make a preliminary assessment of them. This assessment required that the pleadings in the main action be examined in light of the evidence presented to support them. Based on this examination, the Court must find that the motion is neither vexatious nor frivolous.
[18] The threshold of the serious issue test is a low one. Nevertheless, the respondent submits that satisfying the threshold is not merely an exercise in establishing a cause of action. It also submits that there must be cogent evidence to support a finding that the issues are not frivolous or vexatious. These arguments, however, have little merit. Having to do more than establish a cause of action, the respondent is arguing against the modes threshold established in R.J.R. - MacDonald, at p. 338:
| Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. |
As for describing the requisite evidence as cogent, such an exercise adds nothing to the content of the guidelines set out in American Cyanamid, and would, therefore, be a needless addition to them. None of the jurisprudence relied on by the respondent can serve to change these findings.
[19] The evidence adduced by the respondent in respect of whether claim 1 of the '349 patent is valid includes the opinions of six independent experts and suggests that the claims of the '349 patent are invalid. The moving parties allege problems with some of the expert opinions, for instance, that tests completed by Mr. Danilov either do not support the respondent's allegations that claim 1 of the patent is too broad, or are not reliable. They also point to the judgments of Mr. Justice Mackay, dated December 22, 1994 (file no. T-2408-91), and of the Court of Appeal, dated March 6, 1996 (file no. A-724-94), which found claims 1 to 5 and 8 to 15 of the '349 patent to have been infringed by Apotex's Apo-Enalapril. Counsel also argued that one cannot infringe an invalid patent. Though no authority was cited in support of this last proposition, this Court notes that subsection 43(2) of the Patent Act provides:
| 43.(2) After the patent is issued, it shall, in the absence of any evidence to the contrary, be valid and avail the patentee and the legal representatives of the patentee for the term mentioned in section 44 or 45, whichever is applicable. |
| 43.(2) Une fois délivré, le brevet est, sauf preuve contraire, valide et acquis au breveté ou à ses représentants légaux pour la période mentionnée aux articles 44 ou 45. |
[20] As for the evidence by the respondent in respect of whether Nu-Enalapril infringes the '349 patent, it is crowned by the expert opinion of Mr. McClelland. He opines that Nu-Enalapril does not contain enalapril maleate as an active ingredient but, rather, contains enalapril sodium and disodium maleate and, as such, does not come within claims 2 to 7 of the '349 patent. There is, however, a plethora of evidence suggesting that Nu-Enalapril does, indeed, contain enalapril maleate. The moving parties adduced pictures of bottles of Nu-Enalapril tablets whose labels indicate that they contain enalapril maleate. They also entered into evidence the product monographs of Nu-Enalapril and Apo-Enalapril and an NOC dated February 25, 1999, all stating that the Nu-Enalapril tablets contain enalapril maleate.
[21] It will require a lengthy examination and a consideration of the finer details of the evidence before the issues of validity and infringement can be resolved for the moving party properly points out, however, that this is no time to engage in a full blown trial to determine the validity of the various claims of the '349 patent. As for whether Nu-Enalapril infringes these claims, the evidence strongly implies that this is the case. Lord Diplock, in American Cyanamid, however, wrote:
| It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. |
[22] The Court of Appeal in Turbo, cited this passage with approval and this Court, therefore, considers it inappropriate to begin resolving the multitude of conflicts appearing in the evidence. It also declines to resolve intricate legal questions surrounding the validity and infringement of the various claims in the '349 patent. A preliminary assessment makes clear, however, that the claims in question stand a chance of being both valid and infringed. As such, the claim of infringement made against the respondent is not frivolous. It is a serious issue to be tried.
Irreparable Harm
[23] The moving parties submit that, if the interlocutory injunction is not granted, they will suffer irreparable harm in a number of ways. The Supreme Court commented briefly on the issue of irreparable harm in R.J.R. - MacDonald, supra, at 341:
| "Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary items [...]. Examples of the former include instances where one party will be put out of business by the court's decision (R.L. Crain Inc. v. Hendry (1988), 48 D.L.R. (4th) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985] 3 W.W.R. 577 (B.C.C.A.)). |
Decisions of this Court have also recognized other grounds on which irreparable harm may be found but these will be addressed only as they become relevant.
[24] The first of the moving parties' submissions in regard of irreparable harm is based on the allegation that the respondent will breach a permanent injunction entered against Apotex through the manufacturing and selling of its Nu-Enalapril. In Lubrizol Corp. v. Imperial Oil Ltd., [1996] 3 F.C. 40 (F.C.A.), the Court of Appeal asserted that a breach of an injunction is not a cause of action. The moving parties presumably rely on this case to suggest that, as a breach cannot, therefore, lead to damages, it is necessarily not quantifiable in monetary terms. This Court notes, however, that such a breach is quantifiable as exemplary damages when argued together with some other activity giving rise to a cause of action. It cannot, therefore, be said to be prima facie irreparable harm.
[25] The moving parties also submit that they may not be able to collect any damages awarded as Nu-Pharm is a mere wholesaler and distributor with seventeen employees, has only $16 million in annual sales and, having recently sold its land and manufacturing plant, has too few assets to help pay any award of damages or profits ordered against it. As such, they submit that any award of damages will never be paid and constitutes, therefore, irreparable harm. They also offered evidence that, by the end of December of 1999, $39 million of Nu-Enalapril will have been sold and assessed that this would represent $51 million in lost sales revenue for which the respondent may be liable. At the hearing, counsel for the moving parties, however, claimed only $1 million a month in lost profits in view of the numbers contained in an IMS report.
[26] The respondent submit that the moving parties will lose a maximum of $16.23 million in net sales up to the end of 1999 but asserts that this represents a maximum of only $1.98 million in profits lost by the moving parties. It submits evidence that it is able to satisfy an award of this size.
[27] The ability of a party to collect on an award, if granted one, is relevant to whether it will suffer irreparable harm. In addressing the issue of irreparable harm, the Supreme Court wrote in R.J.R. - MacDonald, supra, at 341:
| It is harm which [...] cannot be cured, usually because one party cannot collect damages from the other [...] The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)). |
[28] The moving parties submit that it is up to the respondent to satisfy that it can afford an award should one be made against it. With respect to the three decisions of this Court relied on be the moving parties, however, the Supreme Court in R.J.R. - MacDonald, supra clearly lays the burden of proof on the shoulders of the party seeking an injunction. At 348, it provides:
| At the second stage the applicant must convince the court that it will suffer irreparable harm if the relief is not granted. |
[29] The moving parties originally claimed $51 million in damages but wisely abandoned this speculative figure in preference for $1 million in damages for each month Nu-Enalapril is sold. It is clear, however, that one may not extrapolate with confidence from the IMS report the figure of $1 million. It also, therefore, must rate as little more than speculation. The respondent's submission that it will earn $16.23 million in net sales is also suspect, based as it may be on sales it has earned from only a few provincial formularies during the early months. The profit calculation of $1.98 million is also unreliable, because it is based on rather old data from the 1985 Eastman Commission of Inquiry. These weaknesses are, however, not critical. There is evidence that the respondent has the means to pay some damages and no clear evidence that any award eventually made against it will rise above this amount.
[30] The moving parties submit that the sale of Nu-Enalapril will have a devastating effect on their sales of Vasotec and will result in a loss of the rights conferred on them under the '349 patent. As for the second part of this submission, the moving parties rely on the reasons of Mr. Justice Strayer in Corning Glass Works v. Canada Wire & Cable Ltd. (T-1944-81, July 20, 1984) (F.C.T.D.). The decision of Mr. Justice Strayer, however, is based on a prior finding that there had been a patent infringement. In the present case, however, there has been no finding that the respondent has infringed the '349 patent. In addition, this Court is bound by the comment of Mr. Justice Marceau in Apotex Inc. et al. v. Wellcome Foundation Ltd. et al. (A-294-98, A-295-98, A-310-98, July 24, 1998) (F.C.A.):
| The evidence does not support the contention that any other significant damage than loss of sales to the appellants would be suffered by the respondents, and such a damage could be totally compensated by a payment equivalent to the sales revenue that they would have earned in the absence of a stay. I fail to see how the monopoly right attached to the holding of a patent can be seen as having a value independent of the profits that may be derived from marketing the patented invention. |
The submission, therefore, must fail.
[31] As for the alleged devastating effect on sales of Vasotec, this would normally be quantifiable and, therefore, would not constitute irreparable harm. The moving parties submit, however, that the market for enalapril is currently in a state of flux and that, as a result, damages arising from the sale of Nu-Enalapril are not quantifiable in a reasonably precise manner. This state of flux, as described by Mr. Hébert, Vice President of Marketing at Merck Frosst, however, compares poorly to that found to exist in the market for motor oil additives by Madam Justice Reed in Lubrizol Corp. v. Imperial Oil Ltd. (T-577-87, January 12, 1989) (F.C.T.D.) In general, the evidence shows that the enalapril maleate market is relatively static, despite the presence of nine other angiotensin-converting enzyme inhibitors and the entry of four angiotensin II receptor antagonists / AT1 receptor blockers in the last half of the decade.
[32] The case of Lubrizol Corp. is also distinguishable on the basis that Madam Justice Reed found irreparable harm due to a difficulty in quantifying damages. In the years since her judgment was published, however, it has become clear that a mere difficulty in assessing the quantum of damages is insufficient. Mr. Justice Mackay, in Merck & Co., supra, wrote:
| I am not persuaded that, in the circumstances of this case the plaintiffs will suffer irreparable harm between now and trial of the action, harm that will not be adequately compensated in damages. While assessing compensation may not be easy in all respects, mere difficulty in precisely calculating damages does not constitute harm that is not adequately compensable in damages, and it is sufficient that there be some reasonably accurate way of measuring them. |
[33] This is an example of the principle repeatedly set down by the Court of Appeal to the effect that clear evidence of the irreparable nature of the harm in question must be adduced; mere speculation is insufficient; Imperial Chemicals Industries PLC v. Apotex Inc., [1990] 1 F.C. 221 (F.C.A.). Likewise, the submission that sales of Nu-Enalapril will diminish profits earned by Merck Frosst from its Vasotec drug to a degree difficult to predict must fail for similar reasons.
[34] The moving parties submit that irreparable harm will result from damage to their reputation if sales of Nu-Enalapril are allowed to continue in violation of the '349 patent. As evidence of the damage which will result, the moving parties rely on a statement of Mr. Hébert to the effect that other drug companies will take advantage of any drop in Vasotec sales to promote sales of their own brands. Mr. Hébert also states that sales of Nu-Enalapril will harm the goodwill that the moving parties enjoy with the various provincial listing authorities. In support of this, he cites the negative impact on the reputation of the moving parties which resulted from fighting to remove Apo-Enalapril from provincial formularies earlier in the 1990s.
[35] This Court accepts that there are certain occasions when damage to one's goodwill can ground a finding of irreparable harm; Centre Ice Ltd. v. National Hockey League (A-696-93, January 24, 1994) (F.C.A.) and Allergan Pharmaceuticals Inc. et al. v. Bausch & Lomb Inc. et al. (T-1626-85, November 8, 1985) (F.C.T.D.). There is, once again, however, a dearth of evidence pointing to a potential for loss of governmental goodwill in the present case. As Heald J.A., in Centre Ice Ltd., supra, wrote:
| The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be established by "clear evidence". On this record, there is a notable absence of such evidence. |
Mr. Hébert makes serious and surprising allegations; one would expect them to be substantiated.
[36] As for the potential loss of goodwill in the face of increased promotional efforts by other drug companies, this would be, to a large measure, the result of a conscious decision by Merck Frosst to decrease its promotional backing of the drug, in essence, allowing its Vasotec sales to wither. This despite the fact that the moving parties have at least $2.6 billion in cash and cash equivalents. In light of this, any loss could not be considered a result of the respondent's activities.
[37] The moving parties submit that monetary damages are inadequate to remedy the substantial $51 million loss of market share which will result from sales of Nu-Enalapril. Aside from denying the accuracy of the $51 million figure, the respondent asserts that any market share loss is not attributable to its actions. In the alternative, it submits that any market share loss is readily quantifiable whatever its size and, therefore, cannot ground a finding of irreparable harm.
[38] There is no question that only a permanent market loss was acknowledged in R.J.R. - MacDonald, supra as equating to irreparable harm. Though Madam Justice Reed, in Lubrizol Corp., did find irreparable harm based on the loss of a substantial market share, this finding was made in the context of a market in great flux. As this Court has noted, however, no such flux exists in today's market for enalapril maleate. Conclusions reached in this latter case, therefore, cannot help to ground a claim for irreparable harm in the present case. As no claim of a permanent market share loss was made, the submission must fail.
[39] In addition, the figure of $51 million has already been noted as unreliable, based as it is on unknown sales figures of Apo-Enalapril from the mid-1990s. As counsel for the respondent stated: saying that $51 million in sales will be lost does not make it so. Neither does the IMS data serve to clarify any matters. The respondent, on the other hand, leads evidence from two sources who are to all appearances independent and, more importantly, enter into much greater detail on the question of potential market share loss. Their opinions highlight the speculative nature of the moving parties' evidence.
[40] The moving parties submit that the lack of honesty, co-operation, candour and reliability on the part of the respondent, in getting its Nu-Enalapril to market, is sufficient to base a finding of irreparable harm. They assert that allegations abound regarding the respondent falsifying records and destroying documents and submit that it has engaged in all manner of deceptive and dishonest activities. This submission does not, however, move the Court.
[41] The moving parties hope to condemn the respondent on the basis of what amounts to unsubstantiated allegations. It is disappointing, to say the least, that counsel for the moving parties thought this Court susceptible to pursuing such a course. The decision of Mr. Justice Noël in Technologie Micro-Contrôle v. Technologie Labtronix Inc. et al. (T-1805-96, September 5, 1996) (F.C.T.D.) is no defence for counsel's submissions since there is no evidence that the respondent in this case is connected to organized crime. Neither are any of the moving parties' other allegations, save one, corroborated by an independent and reliable source, or indicative of mala fides. In light of these findings, and despite the moderate strength of their claim for infringement, this Court likewise dismisses the argument that the conduct of the respondent, in the circumstances, is an open invitation to others to encroach upon the moving parties' territory.
[42] This Court is satisfied that no irreparable harm will come to the moving parties. This conclusion is reached despite the moving parties' making out a strong case for the patent infringement issue. This Court must also, however, acknowledge some doubt concerning whether the respondent can afford whatever relief may eventually issue against it. As such this Court must consider where the balance of convenience lies before coming to a conclusion; Turbo, supra, applies.
Balance of Convenience
[43] The moving parties submit the fact that they have a disproportionately stronger case than that of the respondent is enough to tip the balance of convenience in their favour. Other factors they consider relevant to the balance of convenience include first, the disproportionate amount of time and money they have spent to develop enalapril maleate as a drug, second, the fact that the respondent knew that marketing Nu-Enalapril might well infringe the '349 patent, third, that not granting an injunction would be akin to granting a compulsory license to the respondent and fourth, the alleged public interest in not letting drug companies either flout the Patented Medicine (Notice of Compliance) Regulations SOR/93-133 or breach an injunction. The only submission by the respondent which this Court needs to note is that the amount of loss and disruption suffered by it from an injunction will far exceed any that may be suffered by the moving parties if the injunction were not granted.
[44] Neither party disputes that the general principles for determining the balance of convenience can be found in Manitoba (Attorney General) v. Metropolitan Stores (MTD) Ltd., supra and in the factors enumerated by Stone J.A. in Turbo, supra at 473-74. They do not need to be repeated here.
[45] The moving parties' case for infringement, although strong, is not so strong as either to tip the balance of convenience in their favour or demonstrate that not granting an injunction will, in effect, result in the respondent having received a compulsory license to produce enalapril maleate. As for the public interest, the evidence adduced does not show that the respondent has flouted the law or acted in an egregious manner. Finally, the respondent has spent an appreciable amount on getting Nu-Enalapril to market and it cannot be said that it will suffer less inconvenience simply because these amounts have been much smaller than those expended by the moving parties in getting Vasotec to market.
[46] The disruption from which the respondent will suffer if it is forced to stop the manufacture and sale of its Nu-Enalapril tablets far outweighs the inconvenience that the moving parties will experience if the impugned drug is allowed to stay on the market until final disposition of the main action. The evidence shows that Nu-Enalapril will be delisted from provincial formularies and that, if it wins in the main action, the drug will be restored to those lists only with considerable delay and effort. Both parties also acknowledge the large share of the respondent's profits which sales of Nu-Enalapril represent, and which will be lost if an injunction be granted. The moving parties failed to lead clear evidence of irreparable harm. They also failed to show this Court that the balance of convenience favours the granting of an interlocutory injunction. This Court is satisfied, therefore, that no injunction should be forthcoming despite the moving parties' adduced evidence of not only a serious issue but of a strong case for infringement.
Alternative Remedies
[47] The moving parties made brief written and oral representations in support of their submission for an accounting of the respondent's enalapril supplies. They also sought an order requiring the respondent to report to them all profits made from enalapril and enalapril maleate. They also made brief submissions in regard to the respondent depositing with the Court first, an initial $51 million security bond and further monthly deposits or second, monthly payments of 10% of the respondent's sales of Nu-Enalapril. The respondent made no submissions in this regard.
[48] As noted above, it is unclear whether the respondent will be able to satisfy an order worth more than $1.98 million. As neither party was willing to lead solid evidence in respect of what may be expected if damages are awarded, requiring the respondent to submit to the Court 10% of its sales on a monthly basis is the best way to secure justice. It is impossible to know, at this time, whether this figure will cover all eventual damages. Nevertheless, it represents a just amount. Both parties ought to make haste to bring on the trial of this action.
[49] The moving parties made submissions with regard to designating the main action as specially managed proceeding pursuant to rule 384 and with regard to fixing trial dates. The first relief is granted and the second has been referred to the Associate Chief Justice for his consideration.
Conclusion
[50] There being no clear evidence of either irreparable harm or that the balance of conveniences favours the imposition of an interlocutory injunction, none will be ordered. This part of the motion, therefore, must be dismissed. The parties may make submissions to the Court in respect of the exact nature of the monthly deposits and the accounting that will be required.
[51] Costs of these proceedings shall be in the cause. The (defendants') respondents' counsel are directed to prepare for the (plaintiffs') applicants' counsel's approval, a form of order in reification of the terms of these reasons. If such submission for approval be not fully prepared after 3 weeks from the filing of these reasons, the respondents must pay $1,500 costs to the applicants, whose counsel must then undertake the task of submission of a form of order to be accomplished within 3 weeks, failing which, costs paid (if any) are to be refunded, and the parties must jointly move for an order, without costs.
Judge
Ottawa, Ontario
January 21, 2000