Eli Lilly Canada Inc. v. Novopharm Limited – 2013 FC 677

Per Prothonotary Tabib:

In this motion Teva sought to amend its Statement of Defence and Counterclaim after the first phase of a bifurcated patent infringement/impeachment action was heard and determined in its favour, but before the start of discoveries on the second phase of the litigation.

Although the bifurcation order issued in this matter contemplated that all issues of liability would be heard and determined at a first trial, with only quantification issues remaining to be determined in a second trial or reference, the Trial Judge elected to defer the determination of some liability issues to the second trial. Thus, the question arises as to whether any amendments proposed by Teva that can be said to go to liability issues rather than to quantification issues should be viewed as amendments made after trial but before judgment, rather than amendments made before trial, and to what extent such a distinction should affect the Court’s determination on this motion. [4]

The Court held that all amendments going to liability issues should be considered as amendments made after trial and should, in the circumstances of this case, be refused.

Effect of Bifurcation and the First Trial

Teva argued that its amendments should not face the same heightened level of scrutiny as amendments proposed at or after trial, as the net effect of the Trial Judgment is to defer, regardless of the bifurcation order, the entirety of its section 8 (PM(NOC)) claim to the second phase of this proceeding, which has barely yet begun. [33]

However, the Court held that “Teva’s position incorrectly assimilates the Trial Judge’s decision to defer the determination of specific issues of liability to the second phase of the trial to a decision to vary the bifurcation order and to defer the trial of these liability issues to the second phase.” [34]

“By necessary implication, while the Trial Judge was not required by the bifurcation order to decide all liability issues at the first trial, the parties were nevertheless required to present all their evidence going to these issues at the first trial, so as to enable the Judge, if he so chose, to determine the issues. At no time before, during or after the first trial did the parties request, or the Judge suggest, that the bifurcation order should be amended or varied to dispense the parties from putting their case on the section 8 liability issues at the first trial. It is one thing for the Trial Judge to exercise the latitude given to him by a bifurcation order to defer his determination of certain issues to a later date; it is quite another to interpret this exercise of discretion as an order varying the terms of a previously made order when that variance has not been requested by the parties, when the parties were not provided with an opportunity to be heard and when no justification for the variance is given.” [37]

The Court noted that the circumstances of the case led to the conclusion that the trial on all liability issues is concluded, and that only the determination of the Trial Judge on the evidence presented to him at the first phase of the trial was deferred to the second phase of the trial. The Court held that Teva’s proposed amendments going to liability issues must therefore be considered as amendments proposed after a hearing but before a judgment is rendered. [43]

Amendments Going to Liability Issues

The Court held that the amendments proposed by Teva that go to liability issues are to be treated as amendments proposed after a hearing [44], and should not be permitted as they are not in the interest of justice and as Teva has not established that they would not cause prejudice to Lilly that cannot be compensated in costs. [52]

Amendments Going to Quantum

The Court noted that the proposed amended pleadings significantly expand the allegations relating to the damages suffered by Teva. However, because discoveries had not yet commenced on the quantification issues, there was no prejudice to Lilly if substantial amendments were made to the heads of damages claimed. The Court held that amendments going to quantum should therefore be permitted, so long as they are reasonably arguable and are not otherwise defective. [54]