2022 FC, 2022 FC 1262

Date: 20220907 Docket: T-997-22 Citation: 2022 FC 1262 Toronto, Ontario, September 7, 2022 PRESENT: Case Management Judge Trent Horne BETWEEN:JANSSEN PHARMACEUTICA N.V.PlaintiffandAPOTEX INC.Defendant ORDER AND REASONS I. Overview [1] This is an action brought pursuant to the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 ("“PM(NOC)Regulations”"). The parties generally agree that a protective order should issue, but disagree on two terms. [2] The parties agree that Confidential Information (a defined term in the draft protective order) may be disclosed to up to three in-houselegal counsel.

Apotex asserts that the parties should also be able to disclose Confidential Information to two employees or corporateofficers of the receiving party. Janssen objects to such disclosure. The parties are agreed that independent consultants or outside expertsmay receive Confidential Information, subject to the terms of the order, but cannot agree on the number of independent consultants oroutside experts. Janssen wants to cap the number at five. Apotex asserts that there should be no limitation. [3] For the reasons that follow, a protective order in the form presented by Apotex will issue.

Even assuming that the informationJanssen will disclose to Apotex during the discovery process has been treated at all relevant times as confidential, and that theinformation is confidential in nature, Janssen has not met its onus to demonstrate that there is a reasonable probability that disclosure ofthe information on the terms proposed by Apotex could cause harm to its proprietary, commercial, and scientific interests. II. The Implied Undertaking Rule and Protective Orders [4] Information and documents that are exchanged during the discovery process are subject to the implied undertaking rule.

This ruleprohibits the use of documents and information produced under the compulsion of the Federal Courts Rules, SOR/98-106 (“Rules”) forany collateral purpose beyond the boundaries of the litigation in which the document or information is produced (R v ICHI Canada Ltd, (FC), [1991] FCJ No 970, 40 CPR (3d) 119 (FCTD); see also Juman v Doucette, 2008 SCC 8 at para 27). [5] The implied undertaking rule has limitations. It is not codified in the Rules, therefore there may be some uncertainty as to its scope. Itis a principle that continues to develop and may differ across jurisdictions.

The application of the implied undertaking to the parties doesnot address all the consequences that may flow from using the information for legitimate purposes. This is particularly important inrespect of third parties (such as witnesses and experts who are not parties) and internally within the opposing organizations.

Further, thematter of enforcement and the Court’s ability to control behaviour is not settled unless the terms are set out in an order (Paid SearchEngine Tools, LLC v Google Canada Corporation, 2019 FC 559 at para 50 ("“Paid Search Engine”"). [6] Given these limitations, litigants, particularly those involved in actions under the PM(NOC) Regulations, routinely agree to a form ofprotective order. [7] For a period of time, the availability of protective orders was in doubt.

In Live Face on Web LLC v Soldan Fence and Metals (2009)Ltd, 2017 FC 858 associate justice Tabib held that, absent special circumstances, it is not necessary for the Court to incorporate in anorder the specific or additional protective measures agreed by parties to a proceeding in order for them to be effective. She concludedthat the Court should no longer routinely issue protective orders on the consent of the parties. [8] Any uncertainty relating to the availability of protective orders has since been put to rest.

The Federal Court of Appeal in CanadianNational Railway Company v BNSF Railway Company, 2020 FCA 45 ("“CNR”") stated that although the Federal Court is in no wayobliged to grant a protective order, there has been no significant and compelling changes to the law that justify the refusal to grant aprotective order on consent (or not) if (

i) the AB Hassle test is met and (ii) the protective order submitted to the Federal Court is inaccordance with the protective order template jointly developed over the years between the intellectual property bar and the FederalCourt (para 31). [9] The fact that the Court has published a model protective order does not create a presumption that such an order is inherently requiredor presumptively available in matters where financial or other commercially sensitive information will be disclosed during discovery. Itis a resource that facilitates the negotiation and issuance of such an order.

The fact that parties agree in principle on a protective orderdoes not mean that one will automatically be granted, or shift the default position from the implied undertaking rule to the terms set outin the Court’s model order.

[10] For example, the Court’s model protective order allows for information to be designated as solicitor’s eyes only. Including this termin the model order does not mean that a solicitor’s eyes only restriction is presumed to be in place in the event the parties broadly agreein principle that a protective order should issue.

By agreeing to some of the terms in the Court’s model order, a party is not deemed tohave agreed to them all. [11] In CNR at para 25, and later in Fibrogen, Inc v Akebia Therapeutics, Inc, 2022 FCA 135 at para 9, the Federal Court of Appealaffirmed that the exchange of documents and information between the parties as part of the discovery process does not engage the opencourt principle. Since protective orders deal with how information will be exchanged, not filed, parties are generally given some latitudeas to the terms and conditions of that exchange.

Put another way, the Court is loath to interfere with an agreement reached by the partiesthat deals only with the private exchange of information. Protective orders that are submitted on consent, and are consistent with theterms of the Court’s model order, are likely to be granted. [12] The vast majority of protective orders are issued on consent. Where parties cannot agree on whether a protective order is necessary,or what certain terms should be, the starting point or default position is that the implied undertaking rule will govern the exchange ofinformation.

The party requesting further restrictions on disclosure bears the onus of demonstrating why additional restrictions arerequired. [13] As I recently stated in Fox Restaurant Concepts LLC v 43 North Restaurant Group Inc, 2022 FC 1149 at para 57, I cannot concludethat the implied undertaking rule is presumptively insufficient or inadequate to protect commercially sensitive information exchangedduring the discovery process.

This equally applies in PM(NOC) proceedings. [14] Returning to the specifics of this motion, absent an order or agreement to the contrary, Apotex employees are entitled to receive andreview the information disclosed by Janssen during the discovery process for the purposes of the litigation. Janssen employees areequally entitled to receive Apotex’s information. Both are constrained by the implied undertaking rule on what they can do with thatinformation.

Neither the implied undertaking rule, the Rules nor the Canada Evidence Act, RSC 1985, c C-5 impose a cap on the numberof independent consultants or experts to whom confidential information of an adverse party may be disclosed. As the party seeking toimpose limitations, Janssen bears the burden to demonstrate that both should be granted. [15] Janssen argues that Apotex has not demonstrated why it needs to disclose information to its employees for the purposes of thislitigation. That is accurate, but the burden is not on Apotex.

It is on Janssen to demonstrate why two Apotex employees who are not in-house counsel should be precluded from having access to this information for the purposes of the litigation, and why there should be acap on the number of consultants or experts who can receive the designated information. [16] As set out in Paid Search Engine at para 43, the test for protective orders can be summarized as follows: • that the information at issue has been treated at the relevant times as confidential; • that the information is confidential in nature; and • that there is a reasonable probability that disclosure of the information could cause harm to proprietary, commercial andscientific interests. [17] This test is essentially the test set out in AB Hassle v Canada (Minister of National Health & Welfare) (1998), (FC), 83 CPR (3d) 428 aff’d (FCA), [2000] 3 FC 360 (CA) ("“AB Hassle”") (Paid Search Engine at para 43). [18] Janssen submits that, since the parties are in agreement that a protective order is necessary in this action, the inquiry is beyond thetest in AB Hassle.

Janssen submits that the AB Hassle test is applicable when the necessity of a protective order is to be determined.Since the parties are in agreement that a protective order should issue, Janssen further submits that the question now is what terms of aprotective order would be tailored to the needs of the parties in this case. [19] I disagree. I find no support in CNR or other jurisprudence for the proposition that the AB Hassle test can be disregarded or modifiedin the event parties generally agree on the need for a protective order, but where certain terms are disputed.

In any event, a determinationof what terms of an order would meet the needs of the parties cannot be untethered from principled guidelines and a proper evidentiaryfoundation. [20] Even if I assume that Janssen has met the first two parts of the test (and I do not concede that it has) there is insufficient evidencethat there is a reasonable probability that disclosure of the information to two Apotex employees and an unrestricted number of expertscould cause harm to its proprietary, commercial, and scientific interests. III.

The Evidence [21] Janssen’s evidence on the motion is an affidavit of a legal assistant employed by its counsel of record. The affidavit attaches certaindocuments and pleadings. [22] The evidence on this motion is quite different than what was before justice Phelan in Paid Search Engine. On that motion, a GroupProduct Manager at Google LLC filed an affidavit that described the potential risk of certain information being shared with the public,including Google’s advertisers and competitors (para 14).

On the evidence before him, justice Phelan concluded that the impliedundertaking rule was inadequate for purposes of that litigation (para 52). I do not read his reasons to extend to a conclusion that theimplied undertaking rule is universally inadequate; each case turns on its own facts and evidence. [23] Apotex makes a compelling argument that many of the documents to be disclosed by Janssen may be 20 years old. The plaintiff’saction alleges infringement of Canadian patent 2,577,288. The PCT filing date for this patent is September 2, 2005.

I do not discount thepossibility that 20 year old documents may still contain confidential information that could prejudice proprietary, commercial, and

scientific interests if they were disclosed to a competitor. But this cannot be assumed; it is for Janssen to establish with evidence. [ 24 ] Janssen argues that once an employee gains access to a competitor’s confidential information, they cannot be expected to erase this information from their mind when making business decisions. Courts have referred to this as the " “empty head” " principle; this principle has been a significant factor in motions to determine whether an employee of an adverse party should be permitted to receive a producing party’s confidential information.

Janssen relies on Rivard Instruments Inc v Ideal Instruments Inc , 2006 FC 1338 ( " “ Rivard ” " ) and Arkipelago Architecture Inc v Enghouse Systems Limited , 2018 FCA 192 ( " “ Arkipelago ” " ). Both of these cases can be distinguished on the nature of the evidence that was filed. [ 25 ] The evidence in Rivard was described by justice Shore as: [28] The evidence before the Prothonotary satisfied the test set out in AB Hassle , above, for the granting of a Protective Order.

The record contained ample evidence to establish the confidential nature of the information, and also to establish Ideal’s subjective belief that its interests would be harmed by the disclosure of that information. The evidence was contained in the Affidavit of Mr. Richard Current, Ideal’s Secretary-Treasurer, and the Affidavit of Mr. Lon Bohannon, one of Ideal’s Directors and the President of Ideal’s parent company. [29] The evidence of Mr. Richard Current and Mr.

Lon Bohannon was very specific as to the confidential nature of the information and the damage to Ideal if the information were disclosed to the public or to Ideal’s competitor, Rivard. In paragraphs 11 through 25 of his Affidavit, Mr. Bohannon described in detail the nature of the confidential information. He also described precisely how and why disclosure to Rivard would be damaging to Ideal. None of this evidence was contradicted by any evidence from Rivard.

It was not “clearly wrong” for the Prothonotary to accept this evidence and to conclude that Ideal had met the test for the granting of a Protective Order. In fact, it was clearly right for her to do so. [ 26 ] In Arkipelago , the motion was first brought before prothonotary Aylen (as she then was). In her order dated October 19, 2017 at paragraph 11, she describes evidence filed by the parties as " “extensive” " .

At paragraph 12, she concludes that the real and substantial risk to subconscious or inadvertent use of the confidential information was " “grounded in the evidence” " . [ 27 ] Janssen’s evidence cannot be described as extensive, ample, significant or specific. To accept Janssen’s position, and preclude two Apotex employees from receiving designated information, would effectively reverse the onus. [ 28 ] Most consent protective orders have a limit on the number of independent consultants or experts who can receive designated information. That does not mean that a limit is presumptively required.

Any disclosure of information to consultants or experts would be under the terms of the implied undertaking rule, and the terms of the protective order. [ 29 ] Again, I am not persuaded that Janssen has met its onus. I cannot conclude that the absence of a limit on the number of consultants or experts leads to a reasonable probability that there would be misuse of designated information, or cause harm to proprietary, commercial, and scientific interests. [ 30 ] The form of protective order requested by Apotex will therefore issue. IV.

Costs [ 31 ] The Court has full discretionary power over the amount and allocation of costs (subrule 400(1)). [ 32 ] At the conclusion of the hearing, the parties agreed that the successful party should be awarded costs in the range of $1,000.00- $2,000.00. I will award costs to Apotex, the successful party, in the amount of $2,000.00, payable in any event of the cause. ORDER in T-997-22 THIS COURT ORDERS that: 1 . A protective order in the form proposed by the defendant will issue. 2 . The plaintiff’s motion is otherwise dismissed. 3 .

Costs of the motion are fixed at $2,000.00, payable to the defendant in any event of the cause. "Trent Horne" Case Management Judge FEDERAL COURT SOLICITORS OF RECORD Docket: T-997-22

STYLE OF CAUSE: JANSSEN PHARMACEUTICA N.V. v APOTEX INC. PLACE OF HEARING: HELD BY VIDEOCONFERENCE DATE OF HEARING: August 26, 2022 ORDER AND REASONS: CASE MANAGEMENT JUDGE TRENT HORNE DATED: SEPTEMBER 7, 2022 APPEARANCES : Dylan Churchill Cole Meagher For The Plaintiff Sandon Shogilev For The Defendant SOLICITORS OF RECORD : BLAKE, CASSELS & GRAYDON LLP Barristers and Solicitors Toronto, Ontario For The Plaintiff GOODMANS LLP Barristers and Solicitors Toronto, Ontario For The Defendant