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The Conduct of an Action

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1 The Conduct of an Action
The Conduct of an Action U of T Patent and Trade Secret Course Allyson Whyte Nowak March 1, 2011

2 Outline of Today’s Presentation
Outline of Today’s Presentation Jurisdiction in IP matters Overview of a Patent action Specific trial-related issues

3 Jurisdiction: Federal Courts Act
Jurisdiction: Federal Courts Act

4 Federal Courts Act

5 Section 20 of the Federal Courts Act confers
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

6 Jurisdiction The Federal Court is the court of choice for patent infringement actions in view of: nature and pan-Canadian scope of remedy scope of judgment expertise

7 The Business of the Federal Court: 2010
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

8 Jurisdiction (cont’d)
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.

9 Netbored Inc. v. Avery Holdings et al. (2005) FC 1405, Hughes J. held:
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.”

10 Judges and Prothonotaries
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

11 Prothonotaries Appointed under s. 12 of the Federal Courts Act
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)

12 Appeals in the Federal Court
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

13 Appeal of a Prothonotary’s Decision
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 FCA 488 at para. 19

14 Merck & Co. Inc. v. Apotex Inc. 2003 FCA 488 at para. 20.
Appeal to the FCA The standard of review 1. The judge had no grounds to interfere; or 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.).

15 Timeline of a Patent Case
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

16 Case Management in the Federal Court
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

17 Pleading/Proving an Infringement Case
Pleading/Proving an Infringement Case Must plead/prove facts to show: ownership of the patent a license facts establishing infringement

18 The Anatomy of a Statement of Claim
The Anatomy of a Statement of Claim Style of Cause Identify the parties to the action Identify the rights of the plaintiffs Identify the acts of the Defendants which constitute an encroachment of those rights State the relief being sought

19 The Anatomy of a Defence
The Anatomy of a Defence Style of Cause Respond to Plaintiffs’ allegations admit deny have no knowledge of Deny acts constitute infringement Rely on exceptions to infringement (ss and 56 of the Patent Act) Deny entitlement to relief sought

20 The Anatomy of a Defence (cont’d)
The Anatomy of a Defence (cont’d) Bring a Counterclaim seeking to impeach the patent, including any of the validity “defences”, including: Anticipation Obviousness Lack of utility Ambiguity Claims broader than invention disclosed Method of medical practice Not patentable subject matter Counterclaims most typically seek to impeach the patent by asserting one or more of the validity “defences” State relief being sought by way of Counterclaim

21 The Gillette Defence The Defendant can argue:
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.)

22 Interlocutory Motions
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

23 Pleadings Motions: Motion to Strike
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.

24 Pleadings Motions: Motion to Strike
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 F.C.A. 358 and Apotex Inc. v. Merck & Co F.C. 1452)

25 Pleadings Motions: Motion for Particulars
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.

26 Pleadings Motions: Motion for Particulars
Pleadings Motions: Motion for Particulars The Trends 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)

27 Pleadings Motions: Motion for Particulars
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.)

28 Pleadings Motions: Amending Pleadings
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.

29 Pleadings Motions: Amending Pleadings
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 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)

30 Protective Orders The Rules: Rules 4 and 151 Matters not provided for
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.

31 Protective Orders The test
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)

32 Protective Orders The test (continued)
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).

33 Protective Orders The Trends
Protective Orders The Trends 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)

34 Protective Orders The Trends (continued)
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 F.C. 955.

35 Bifurcation Orders The Rules: Rules 3 and 107
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. (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.

36 Bifurcation Orders The key case The test
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)

37 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 (F.C.T.D.) and a consideration of the following factors: The complexity of the issues; Whether the issues of liability are clearly distinct from issues of remedy and damages; Whether the issues of liability and damages are so interwoven that no time will be saved; Whether a decision relating to liability will likely put an end to the action altogether; Whether the parties have already devoted resources to all of the issues; Whether the splitting of the action will save time or lead to unnecessary delay; Whether the parties will suffer any advantage or prejudice; and Whether bifurcation will result in the most just expeditious and least expensive disposition of the proceeding.

38 Bifurcation Orders The Trends
Bifurcation Orders The Trends 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.) 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)

39 Timeline of a Patent Case
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

40 Stage 2: The Discovery Phase
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

41 Stage 2: The Discovery Phase
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

42 Stage 3: The PreTrial Stage
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

43 Stage 4: Trial Parties may choose the location of the Trial
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

44 The Flow of a Patent Trial
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

45 A Patent Trial (cont’d)
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 (cross-examination 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

46 Foreign Decisions Persuasive value but not binding on a Canadian court
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 (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”.

47 Differences in the Canadian and US patent laws tend to further diminish the value of a U.S. decision 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

48 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.

49 Issue Estoppel In Johnson & Johnson Inc. v. Boston Scientific Ltd 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.”

50 Expert Reports in the ONSCJ
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)

51 Reform in the Federal Court
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)

52 What is the Practical Effect of this?
The Effect of Reform What is the Practical Effect of this? Increased scrutiny of experts their expertise what they can opine on the manner in which they prepare their report the manner in which they give their evidence Increased scrutiny of a lawyer’s role in developing expert evidence

53 Effect of Reform (continued)
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

54 Selection of an expert witness
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 objective support (previous academic publications) ability to defend position (without advocacy)

55 Admissibility of Expert Evidence
Admissibility of Expert Evidence Mohan remains the test Relevance Necessity No exclusionary rule Properly qualified witness

56 Mohan is to be applied in 2 steps:
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 Stage 2: Exercise of the Court’s “Gate-keeper” function Weighing of the benefits and costs associated with the admission of the evidence

57 BENEFITS COSTS Legal relevance Reliability Time Prejudice Confusion
The Court’s “Gate Keeper” Function BENEFITS COSTS Legal relevance Reliability Time Prejudice Confusion

58 Preparation of Expert Evidence
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 Focus on impartiality

59 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

60 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 cross-examination 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.)

61 Impartiality is the key
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.)

62 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…”

63 Admissibility vs Matter of Weight
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

64 Admissibility vs Weight (continued)
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.”


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