BAYER INC. v. BAYER INTELLECTUAL PROPERTY GMBH, 2020 FC 866

Date: 20200828 Docket: T-2093-18 Citation: 2020 FC 866 Ottawa, Ontario, August 28, 2020 PRESENT: Mr. Justice Pentney BETWEEN: BAYER INC. and BAYER INTELLECTUAL PROPERTY GMBH Plaintiffs and APOTEX INC. Defendant ORDER AND REASONS [ 1 ] The Plaintiffs (collectively Bayer) have brought a motion seeking to validate service of unredacted expert reports on the Defendant, Apotex, which occurred on August 10, 2020. In the alternative, Bayer seeks leave to file these reports on Apotex after the expiry of the time for doing so, set out in the Scheduling Order of May 22, 2020.

Apotex vehemently objects, claiming that it will suffer significant prejudice by this last-minute change, and that Bayer is conducting trial by ambush. [ 2 ] For the following reasons, I am granting Bayer’s motion for an extension of time to file the unredacted expert reports and the accompanying documents. I. Background [ 3 ] The context for this motion is the imminent trial of common issues involving Bayer’s actions against Apotex and Teva, relating to Bayer’s patents for certain formulations of the drug rivaroxaban, marketed under the brand XARELTO ® .

The trial of common issues is set to commence on September 1, 2020. Under the Scheduling Order set by the Case Management Judge on May 22, 2020, the Defendants’ expert reports were due on May 22, 2020, and Bayer’s expert reports were due on August 5, 2020. [ 4 ] Bayer served complete, unredacted expert reports on Teva on time, but it was unable to do the same for Apotex, because two of Bayer’s expert reports contain references to documents that Bayer obtained from Teva subject to a protective agreement.

Bayer served redacted reports on Apotex on August 5, 2020, in accordance with the Scheduling Order and indicated that it was taking steps to obtain consent from Teva to be able to provide the complete unredacted expert reports and the Teva documents they reference to Apotex. [ 5 ] Apotex objected, taking the position that the August 5, 2020 expert reports filed by Bayer were " “fixed” " and that it was too late to amend them. The matter was discussed during a Trial Management Conference on August 13, 2020, and Bayer was directed to bring a formal motion.

The parties filed their materials on this motion, and the matter was heard on August 26, 2020. Teva was not a party to the hearing. [ 6 ] Before analyzing the legal arguments, it is necessary to trace the history of the dispute over the documents. As noted earlier, Bayer is seeking to defend its patents regarding rivaroxaban, including Canadian Patent No. 2,547,113 (the 113 Patent). It has launched actions against a number of companies that seek to market generic versions of this drug, the first of which were against Teva and Apotex.

At the request of Teva and Apotex, and over the objections of Bayer, a trial of common issues was ordered because the two claims were launched very close in time and involved quite similar claims and defences ( Bayer Inc v Apotex Inc , 2019 FC 191 ).

In granting the request, Prothonotary Tabib specified at paragraph 14 that: Under a common hearing of the invalidity issues, there will remain two separate actions; discoveries may be coordinated if parties so consent, but need not be; the trials of both actions would proceed together, but only in respect of common issues, namely, claim construction and invalidity, for which the evidence would be adduced only once for the purposes of both; with respect to all other issues, including any issue of infringement, the trials would continue separately; finally, and just as importantly, two separate judgements would necessarily issue, each having binding effect only on the parties to which it relates, and each of which could even issue at different times. [ 7 ] Trial preparations have proceeded under this premise.

Teva and Apotex cooperated by aligning their pleadings, including filing Fresh as Amended Statements of Defence, which contain a lengthy " “Statement of Common Invalidity Allegations” " .

They also decided to share the workload of conducting Examinations for Discovery of Bayer witnesses: Apotex agreed to rely on the examination of certain witnesses by Teva counsel, and Teva did the same in regard to the examination of other witnesses by Apotex. [ 8 ] However, during the course of trial preparations an issue arose between Bayer and Teva in respect of experiments carried out by Teva many years ago. [ 9 ] Bayer says that European Patent No. 1,689,370 (EP370) is the counterpart to the 113 Patent in Canada.

EP370 was the subject of opposition proceedings commenced by Teva’s predecessor, Ratiopharm, which ended in 2016. As part of an appeal following those proceedings, Ratiopharm filed an experimental report by Yael Cohen of the " “R&D Department of Teva Pharmaceuticals” " (Cohen Report). The Cohen Report is publicly available on the register of the European Patent Office.

[10] Without entering into the details, it is sufficient to note that the Cohen Report discusses the results of experiments carried out atTeva that investigated the "“in-vitro and in-vivo data of rivaroxaban tablets”" prepared by mixer wet granulation, fluidized bedgranulation, and direct compression. [11] Bayer wanted further information from Teva about the Cohen Report. Accordingly, on March 22, 2019, it requested production ofdocuments associated with the Cohen Report. This request was refused.

Bayer repeated this request in September 2019, duringExaminations for Discovery of Teva, but again, production was refused. Next, Bayer brought a motion to compel, which was granted bythe Case Management Judge on February 13, 2020. Bayer received the requested documents from Teva in February and March 2020 (theTeva documents). [12] In the meantime, prior to receiving the requested documentation from Teva, Bayer produced the Cohen Report to Teva and Apotexin June 2019, in advance of their oral discovery of Bayer.

Neither Teva nor Apotex questioned Bayer witnesses about the Cohen Report. [13] The next important steps in this narrative involve the filing of expert reports. Consistent with the request of Teva and Apotex for atrial of common issues and with the overall direction of the trial preparations in this matter, Teva and Apotex jointly retained two experts,Drs. Benet and Betensky. Teva and Apotex retained other experts separately. Three of the experts, Drs.

Benet, Betensky, and Taft(retained by Apotex), commented on the bioavailability difference between hydropholized and non-hydropholized rivaroxaban. [14] Two of Bayer’s experts, Drs. Eldon and Thisted, provided opinions on the Teva studies referenced in the Cohen Report and theTeva documents that were produced in February and March 2020. [15] On July 24, 2020, Bayer notified Teva’s counsel that it intended to refer to the Teva documents in its expert reports to be served onApotex. Bayer indicated its view that the Teva documents were not confidential in light of the public Cohen Report.

However, Bayernonetheless requested a limited release of confidentiality from Teva (presumably in recognition that the documents were subject to theProtective Agreement between Bayer and Teva) so that it could provide these documents to Apotex. Teva sought instructions, and thenrequested that Bayer provide further details regarding its request, including an explanation of the basis for Bayer’s assertion that theTeva documents lacked confidentiality. Following further exchanges, a motion was set down for hearing, and a

schedule was set forBayer and Teva to file their motion records. The matter was eventually resolved, and Teva granted its consent to the limited disclosure ofthe Teva documents, though it continued to dispute the relevance and probative value of these documents. [16] As a result of this sequence of events, Bayer was in a position to provide its complete, unredacted expert reports and the Tevadocuments that they referenced to Apotex on August 10, 2020. However, by that time the deadline for filing and serving its expertreports had already expired, and Apotex objected. [17] One final point should be noted.

In parallel to all of this, Teva has separately retained Dr. Benet to provide an expert reply report,which comments on the views expressed by Bayer’s experts about the Cohen Report and the Teva documents. Pursuant to theScheduling Order, parties require leave of the Court to file expert reply reports, and they have come to an agreement about the filing ofother reports. However, Bayer opposes Teva’s motion to file Dr. Benet’s expert reply report. [18] During the course of written and oral submissions on this motion, counsel for Bayer indicated that Bayer was prepared to consent tothe filing of Dr.

Benet’s reply expert report by Apotex and also by Teva, if this motion was resolved in its favour. Otherwise, Bayerwould maintain its objection to Teva’s request for leave to file this report. [19] This brings the narrative to a close, and I now turn to an analysis of the merits of the motion. II. Issues [20] The parties made wide-ranging submissions on this motion. Bayer claimed that it had acted reasonably throughout, and argued thatTeva was responsible for a key part of the delay because it took too long to respond to Bayer’s request to lift the confidentiality claimedover these documents.

Bayer also argued that Apotex should not complain about late production of documents, since Apotex itself hadprovided very late production of a number of documents with its expert reply reports. Apotex, on the other hand, argued that "“[i]nreality, Bayer is seeking to transform the contours of the case”" and was conducting trial by ambush. Apotex submitted it would suffersignificant prejudice if this last-minute request was approved. [21] I disagree with Bayer that Teva has any responsibility for the delay, and I disagree with Apotex that Bayer is attempting totransform the case.

This motion can be dealt with on narrower grounds. Although the complete unredacted expert reports were onlyserved on Apotex on August 10, 2020, it had already received the other portions of the expert report on August 5, 2020, and took noissue with those. Therefore, in essence, the issue is whether to grant leave to Bayer to file the complete reports after the deadline fordoing so has passed. III. Analysis [22] The parties agree that the test for an extension of time involves consideration of the four factors set out in Canada (AttorneyGeneral) v Hennelly, (FCA), 244 NR 399, [1999] FCJ No 846 (QL) (FCA).

This test asks whether the applicant hasdemonstrated: (

a) a continuing intention to pursue the matter; (

b) that there is some merit to the matter in question; (

c) that no prejudiceto the respondent arises because of the delay; and (

d) that there is a reasonable explanation for the delay. The overarching considerationis whether the interests of justice favour granting the request. In light of this, the matter is to be viewed as a whole such that weakness onone factor is not fatal to the request (Canada (Attorney General) v Larkman, 2012 FCA 204 at para 62). [23] Stepping back and looking at the matter as a whole, I find that it is in the interests of justice for Bayer to file and serve theunredacted expert reports on Apotex.

[ 24 ] The subject matter of the Cohen Report and the Teva documents relates to the bioavailability of rivaroxaban in hydropholized and non-hydropholized forms. On the face of the pleadings, and given the procedural history of this case to date, this is an important issue for the parties. It is cited in the original Statement of Defence filed by Apotex on December 11, 2018, and in particular in the discussion of the Benke Declaration at paragraphs 203 and following.

Further, it formed the backdrop to the motion that was argued regarding the reliance by Bayer on studies that it conducted prior to the launch of any litigation in Canada on its patents ( Apotex Inc v Bayer Inc , 2020 FCA 71 affirming 2019 FC 1370 ).

It also continues to be a prominent feature of the joint defence filed by Teva and Apotex. [ 25 ] I therefore reject Apotex’s claim that Bayer is seeking to transform the contours of the case given that the subject matter at the heart of the Cohen Report and Teva documents has been a central contour of this litigation, including from Apotex’s perspective, from the outset.

There is therefore some merit to Bayer’s request. [ 26 ] On the questions of continuing intention and a reasonable explanation for the delay, I agree with Apotex that it is unfortunate that Bayer did not seek relief from the Protective Agreement earlier, since it has been in possession of the Teva documents since February 2020. Although it may not have known whether it was going to rely on these documents as evidence at trial, they clearly fell within its scope of production once Bayer obtained them from Teva. Indeed, Bayer argued its motion to compel production from Teva on that basis.

However, for whatever reason, Bayer did not take steps at that time to obtain Teva’s consent or to seek an order from the Court that would have permitted it to produce these documents to Apotex in a timely fashion. [ 27 ] However, once Bayer realized its experts were relying on the confidential documents, it has taken steps to seek relief from Teva and it informed Apotex of the issue.

This could have been done sooner, but I am not persuaded that Bayer has acted strategically or has sat on its rights. [ 28 ] Notwithstanding this, I am not persuaded that Bayer’s missteps create a prejudice to Apotex that would warrant the refusal of this motion. Apotex claimed that it might have approached its case differently had it known of the existence of these studies and submits that it is now being ambushed and prejudiced by late production. In doing so, Apotex focuses on itself as a singular party.

While Apotex is a separate party from Teva, and their two trials are proceeding in parallel, the evidence at issue is to be introduced in the common portion of the trial, recalling that the trial of common issues was requested by Teva and Apotex, and has proceeded based on an understanding that all of the evidence presented by them would be used in the trial of common issues. At the argument on this motion, counsel for Apotex confirmed that this was the agreement between Teva and Apotex in regard to the common portion of their trials.

Although Apotex and Teva have jointly retained some experts, and have separately retained others, all of the evidence will be used in the common trial of both matters. [ 29 ] Apotex argued that Bayer’s motion should be dismissed and that, in regard to this aspect of the evidence, I should deal with the cases on a different evidentiary basis. In other words, Apotex argued that I could consider the full record and complete expert reports vis- à-vis Teva, but only the redacted expert reports minus the Teva documents vis-à-vis Apotex.

It submitted that otherwise, Apotex would suffer a prejudice that cannot be compensated for in costs, or otherwise diminished by delaying the trial to give it time to consider whether to call further expert evidence. [ 30 ] I am not persuaded. Unlike other cases where the trial involved only two parties, this situation must be assessed in the context of the preparations for a trial of common issues during which Teva and Apotex have decided to share the burden of trial preparations, including in regard to expert evidence and in sharing the Examination for Discovery of Bayer witnesses.

Additionally, there is no suggestion by Apotex that its interests diverge from Teva’s in relation to the invalidity aspect of the trial, or in regard to this particular evidence. [ 31 ] Because this is a trial of common issues, it is relevant that Bayer has served the complete reports on Teva, and that Teva has been aware of the Cohen Report and has had the documents throughout the period. Apotex received notice from Bayer of the Cohen Report when it received production of Bayer’s documents in June 2019, and so it is not taken completely by surprise that Bayer seeks to rely on that study.

Neither Teva nor Apotex pursued any line of questioning during discovery relating to the Cohen Report or any background documents relating to it. Bayer did not obtain the actual documents from Teva until February 2020, and its experts commented on this material during the course of preparing their reports. Teva, in turn, has retained Dr.

Benet to comment on this evidence, and it has been fully aware of the context for the Cohen Report, the background documents relating to it, and therefore it has had ample time to prepare for this eventuality. [ 32 ] In sum, Teva and Apotex requested and obtained an order for a trial of common issues, and they have cooperated and, to some degree, relied upon each other during the course of trial preparation, including by not duplicating Examinations for Discovery and by retaining some joint experts. Teva and Apotex share an interest in having the 113 Patent declared invalid.

Teva produced documents that Bayer now seeks to rely upon to meet the joint defence put forward by the Defendants. Teva is fully aware of the context for and contents of the Cohen Report and the Teva documents. It was well-positioned to decide how it wanted to deal with the opinions about the Cohen Report and documents put forward by Bayer’s experts. Through no fault of its own, Apotex did not have an opportunity for input into this strategy.

That is the only prejudice it can claim. [ 33 ] I find that it is in the interests of justice for the Court to have available to it the Cohen Report, the Teva documents, as well as the reply expert report of Dr. Benet. As noted previously, there was no question that the Court will have the Cohen Report, the Teva documents, and the Bayer expert reports in relation to the trial vis-à-vis Teva.

The question is whether it should also have this material in the trial vis-à-vis Apotex and I find that it should. [ 34 ] In the context of the trial of common issues, and in light of the common defence advanced by Teva and Apotex in regard to the 113 Patent, the importance the parties have attached to the question of bioavailability of hydropholized and non-hydropholized rivaroxaban in the context of the trial of common issues, and the fact that Apotex has had the redacted expert reports since August 5, 2020, and received the complete reports and Teva documents on August 10, 2020, it is in the interests of justice for the motion to be granted. [ 35 ] The Court will benefit from having the full record in regard to both Defendants at the trial of common issues.

As it has done during the preparation of the Fresh as Amended Statement of Defence, and Examinations for Discovery, Apotex will benefit from the work of

Teva, including the preparation of Dr. Benet’s reply expert report. This sort of collaboration in presenting evidence is a natural outcome of the request by Teva and Apotex for a trial of common issues, and it reflects the degree to which both Defendants share an interest in invalidating the 113 Patent. [ 36 ] The real harm, if any, to Apotex is that it did not have an opportunity to discuss with Teva the strategy for responding to the Bayer experts’ views on the Teva documents, or in preparing instructions for Dr. Benet.

At this stage, it is neither feasible nor necessary to adjourn the trial to address this potential prejudice. Another means of minimizing any possible prejudice to Apotex is available. If Apotex wishes to ask any questions of Dr. Benet about his reply expert report, it must advise the Court no later than 48 hours prior to his testimony, and provide a clear explanation of why further questioning is necessary. If leave is granted, Apotex can provide written questions to Dr. Benet in advance of his testimony, and will be granted a short time to conduct direct examination on these questions at the trial.

Any such request will need to be justified by Apotex. [ 37 ] In closing, I must add that it is a matter of considerable regret and frustration that the Court has been put in the position of dealing with a last-minute request of this nature, literally on the eve of the trial.

Although I am not persuaded that Apotex will suffer any meaningful prejudice as a result of these events, it remains a fact that time that should otherwise have been spent on final preparations for trial has, instead, been taken up addressing a last-minute motion that Bayer could easily have avoided by acting as soon as it obtained the documents from Teva. [ 38 ] In exercise of my discretion under Rule 400, and considering all of the circumstances discussed above, I order Bayer to pay costs to Apotex in the all-inclusive amount of $2,000. ORDER in T-2093-18 THIS COURT ORDERS that : 1 .

The Plaintiffs are granted an extension of time to file and serve unredacted expert reports of Dr. Eldon and Dr. Thisted, as well as the Teva documents, on Apotex. The extension of time is granted nunc pro tunc , effective August 20, 2020. 2 . The Plaintiffs’ consent to Teva filing the reply expert report of Dr. Benet is acknowledged, and its objection to Teva’s motion for leave to file said report is therefore rendered moot. 3 . Apotex may seek to conduct direct examination of Dr. Benet in regard to his reply expert report at the trial.

If Apotex wishes to do so, it must advise the Court at least 48 hours prior to Dr. Benet’s testimony and justify its request. If leave is granted, Apotex will be permitted to provide written questions to Dr. Benet in advance of his testimony, and to conduct brief direct examination on these questions. 4 . Bayer shall pay to Apotex costs, in the all-inclusive amount of $2,000. 5 . A copy of this Order and Reasons shall be placed on Court File No. T-1960-18. “William F. Pentney” Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-2093-18 STYLE OF CAUSE: BAYER INC. AND BAYER INTELLECTUAL PROPERTY GMBH v APOTEX INC.

PLACE OF HEARING: Ottawa, ontario DATE OF HEARING: august 26, 2020 JUDGMENT AND REASONS: PENTNEY J. DATED: august 28, 2020 APPEARANCES :

Christopher Van Barr Alex Gloor Will Boyer Rebecca Stiles For The plaintiffs Harry Radomski Sandon Shogilev Daniel Cappe For The Defendant SOLICITORS OF RECORD : Gowling WLG Barristers and Solicitors Ottawa, Ontario For The plaintiffs Goodmans LLP Barristers and Solicitors Toronto, Ontario For The Defendant