Eli Lilly Canada Inc. v. Apotex Inc. (2010 FCA 240) A-451-09 Appeal and cross appeal dismissed, cefaclor, September 22, 20102010

This was an appeal of the decision of Madame Justice Gauthier (in the Federal Court) who had found that although Lilly met its burden to prove that Apotex infringed eight Lilly process patents related to the manufacture of the antibiotic cefaclor for material imported before June 3, 1998, Lilly failed to do so for the cefaclor imported into Canada after June 3, 1998. Apotex cross-appealed on the Judge’s application of the “Saccharin Doctrine”.

The Federal Court of Appeal (the “FCA”) dismissed the appeal as it decided that the issue on appeal was essentially factual: whether Apotex’ manufacturer had changed from using a patented to a non-patented process when it made the intermediate compound needed to supply Apotex with the bulk cefaclor imported after June 3, 1998. The FCA decided that the Judge had sufficient basis for her conclusions and that no palpable and overriding error was apparent from the Judge’s findings as to fact. The FCA found that the Judge was not wrong in law in not excluding the testimony of a witness from Apotex’ manufacturer (Lupin) which Lilly objected to under rule 248 of the Federal Rules because on discovery, an officer of Apotex had stated that he had no knowledge of the process actually used by Lupin, when in fact, unknown to Lilly, Lupin had written a letter in 2000 to Mr. Ivor Hughes as Apotex’ lawyer advising him that it was willing to cooperate in the litigation

The FCA noted that although the Judge exercised her discretion when she accepted late tendered evidence of Apotex, the FCA should not be taken to condone Apotex’ unexplained failure to provide timely responses to questions, to correct erroneous responses, and to produce documents in a timely fashion and that it should never be considered good practice for a party to fail to comply with the rules of discovery.

The FCA also dismissed the cross-appeal and confirmed that the “Saccharin doctrine” – i.e., the doctrine whereby the importation of a product made abroad via an patented process constitutes “use” and therefore infringement of the Canadian process patent- which has been settled law in Canada for over a hundred years and was endorsed by the Supreme Court in Monsanto v. Schmeiser (2004), is still good law. The FCA also rejected Apotex’ alternative argument that the Saccharin doctrine should not apply where the patented process was for an “intermediate” product (as was the case for the patents in suit) if a “material change” is made to the product of the process prior to importation and instead referred to the present law applied by the Trial Judge which requires only that the patented process play an “important part” in the manufacture of the imported product.