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Ongoing Infringement Must be Parsed to Determine Relevant Limitation Periods

January 24, 2017

By Andrew McIntosh 

In the recent decision of Apotex Inc v AstraZeneca Canada Inc 2017 FCA 9 relating to the drug omeprazole, the Federal Court of Appeal held that in the case of an ongoing, continual tort, each infringing act must be examined separately to determine the relevant limitation period.  In particular, where section 39 of the Federal Courts Act (the “Act”) is applicable, each infringing act must be examined to determine whether it falls within the scope of: (a) section 39(1) which provides that where a cause of action arises in a province, the applicable provincial limitation period applies, or (b) section 39(2) which provides that a six year limitation period applies for causes of action arising “otherwise than in a province”.

In 2004, after receiving a Notice of Compliance, Apotex started marketing and selling its Apo-Omeprazole product.  Apotex manufactured the product in Ontario, and sold it both in Ontario, and elsewhere inside and outside of Canada.  AstraZeneca commenced an action in 2004 and another in 2011, claiming that Apotex’s product infringed Canadian Patent No. 1,292,693 (the ‘693 Patent).  It also claimed that Apotex was inducing infringement by others, including infringement of its customers, and the ultimate end-users of the product.

In addition to the usual defences of non-infringement and invalidity, Apotex raised a limitation period defence with respect to the action commenced in 2011.  It asserted that section 39(1) of the Act applied to those sales which took place in Ontario, and thus Ontario’s two-year limitation period foreclosed AstraZeneca from recovering for any of these sales that occurred more than two years before the action was commenced.  In response, AstraZeneca argued that section 39(2) of the Act applied to all sales, whether in Ontario or elsewhere, on the basis that Apotex’s commercial activity was national and international in scope, and should not be parsed into pieces.  Thus, according to AstraZeneca, a six-year limitation period applied.  The trial judge agreed with AstraZeneca, holding that one of the purposes of section 39 of the Act is to facilitate a judicial forum providing for one-time resolution of disputes that concern activity crossing provincial boundaries and international borders.  Otherwise the burden of segregation and characterization of evidence could be enormous.  Accordingly, he held that a six-year limitation period applied to all of Apotex’s infringing activity, including that which took place solely in Ontario.

While it was not clear to the Federal Court of Appeal that the trial judge made his decision on the basis of this legal interpretation, it disagreed with the interpretation itself.  It held that it was unreasonable having regard to the language of the section, provincial jurisdiction over property and civil rights, and the fact that each act of infringement constitutes a distinct cause of action.  The statute requires an inquiry into the place where each cause of action arose.  For the purposes of section 39, a cause of action arises in a province if all of the elements of the cause of action occur in that province.  Accordingly, a provincial limitation period applies if acts of infringement are limited to a single province.

As noted by the Federal Court of Appeal, for some causes of action this is relatively straightforward analysis.  For example, if the manufacture and sale of an infringing product takes place in a province then that province’s limitation period will apply.  But in other instances, the analysis is more complex.  For example, in the case of inducing infringement, the cause of action arises “in a province” only if both the inducement and the direct infringement take place in the same province.  Otherwise the six year limitation period in s 39(2) of the Act applies. The Court observed that the analysis may be a very fact intensive and onerous inquiry, and that it was not in a position to even decide if there was a sufficient record in the case to make such a determination. In the circumstances, it was best to determine the issue during the subsequent damages reference.

It is worthwhile to observe that this issue is not likely to be a common one in patent infringement actions in the future.  Section 55.01 of the Patent Act, which came into force in 1996, provides that no remedy may be awarded for an act of infringement committed more than six years before the action for infringement is commenced.  This overrides section 39 of the Federal Courts Act. The reason the issue arose in this case is because the application for the ‘693 Patent was filed before October 1, 1989, meaning it was subject to the Patent Act as it read on that date.  That version of the Patent Act did not have a section dealing with applicable limitations periods.  With the passage of time, there are fewer remaining patents that are based on applications filed before October 1, 1989, where section 39 governs the limitation period.

Similarly, the Copyright Act prescribes a limitation period of three years for infringement actions, so section 39 of the Federal Courts Act is unlikely to arise in that context.  However, the Trade-marks Act is silent with respect to limitations periods for actions for infringement, depreciation of goodwill, passing off and making false or misleading statements.  Accordingly, the Court’s analysis in this case will likely have important applicability at least in the context of actions under the Trade-marks Act going forward.

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Andrew McIntosh Andrew McIntosh
B.Sc. (Chem.), J.D., LL.B.
416.957.1677  email Andrew McIntosh