In response to a motion brought by Teva for summary judgment of the issue of whether Teva can continue a s. 8 claim initially brought by ratiopharm, Justice Hughes found that this case met the criteria for being brought in a summary nature and proceeded to find that in the circumstances Teva could not pursue the s.8 action and dismissed the action.
As a first point, Justice Hughes noted that the summary trial provisions of the Federal Court Rules should be used where possible to secure a just, expeditious and least expensive determination of the issue. The issues in this case met the criteria: the issues were well defined, the facts were set out clearly in the evidence, the evidence was not controversial and there were no issues of credibility and the questions of law, although novel, can be dealt with as easily now as they would have otherwise been after a full trial.
This decision is an interesting contrast to the many early motions for summary judgment under s.8 proceedings, whereby, in virtually every case, the Court tended to defer novel issues to the trial judge.
The principal issue before the Court was whether Teva, which had merged with ratiopharm, could maintain the s.8 damages claim initiated by ratiopharm. After commenting that Teva, in the absence of arguments raised by Wyeth, could carry on the s.8 claim. The main question was whether there was an effect upon the ability to maintain the action due to the presence of a Novopharm license with Wyeth which had been ongoing prior to the merger. The Court found that the dispositive argument in Wyeth’s favour was that respecting the equitable doctrine of election. The doctrine of election holds that a person is precluded from exercising the right that, if inconsistent with another right, if that person has consciously and unequivocally exercised the latter.
To establish an election in equity, it is unnecessary to show that the electing party made a conscious choice between inconsistent rights at the time when the original decision was made. Equitable election is not concerned about whether a choice was made but rather involves accepting the consequences of a decision already made. In this case, by reason of the Novopharm license agreement which included a term that Wyeth would undertake to make commercially reasonable efforts to address infringement, and due to Novopharm’s subsequent actions of taking a deliberate course of action to encourage Wyeth to start proceedings against ratiopharm, Novopharm had benefitted from the licence agreement.
Thus, when the merger occurred, ratiopharm, and thus Teva, were now precluded by virtue of the equitable doctrine of election by virtue of the actions of Teva with respect to the licence. Further, section 186(c) of the Canada Business Corporations Act provides that an amalgamated company is liable for the obligations of the amalgamating corporation (Novopharm’s equitable election). Hence, the Court found not only that the motion could proceed as a summary trial, but that summary judgment would be given. It should be noted that Teva has filed an appeal from this decision.
The full text of this decision can be accessed at:
