Teva Canada Limited v. Janssen Inc.

Teva Canada Limited v. Janssen Inc.
Court (s) Database
Federal Court of Appeal Decisions
Date
2018-05-30
Neutral citation
2018 FCA 33
File numbers
A-244-16, A-274-16
Decision Content
Date: 20180208
Dockets: A-244-16
A-274-16
Citation: 2018 FCA 33
CORAM:
DAWSON J.A.
WEBB J.A.
GLEASON J.A.
Docket: A-244-16
BETWEEN:
TEVA CANADA LIMITED
Appellant
and
JANSSEN INC. and
DAIICHI SANKYO COMPANY, LIMITED
Respondents
Docket: A-274-16
AND BETWEEN:
TEVA CANADA LIMITED
Appellant
and
JANSSEN-ORTHO LLC,
JANSSEN PHARMACEUTICALS, INC.,
OMJ PHARMACEUTICALS, INC. and DAIICHI SANKYO COMPANY, LIMITED
Respondents
Heard at Ottawa, Ontario, on November 28, 2017.
Judgment delivered at Ottawa, Ontario, on January 24, 2018.
REASONS FOR JUDGMENT BY:
DAWSON J.A.
CONCURRED IN BY:
WEBB J.A.
GLEASON J.A.
Date: 20180208
Dockets: A-244-16
A-274-16
Citation: 2018 FCA 33
CORAM:
DAWSON J.A.
WEBB J.A.
GLEASON J.A.
Docket:A-244-16
BETWEEN:
TEVA CANADA LIMITED
Appellant
and
JANSSEN INC. and
DAIICHI SANKYO COMPANY, LIMITED
Respondents
Docket:A-274-16
AND BETWEEN:
TEVA CANADA LIMITED
Appellant
and
JANSSEN-ORTHO LLC, JANSSEN PHARMACEUTICALS, INC., OMJ PHARMACEUTICALS, INC. and DAIICHI SANKYO COMPANY, LIMITED
Respondents
REASONS FOR JUDGMENT
(Confidential Reasons for Judgment Issued January 24, 2018)
DAWSON J.A.
Blank/En blanc
Para.
I. Introduction
1
II. Factual background
8
III. The damages decision of the Federal Court
17
IV. The costs decision of the Federal Court
25
V. The issues
28
VI. The standard of review
29
VII. Consideration of the issues
31
A. Did the Federal Court err in finding that Scenario A best represented what would have happened in the “but for” world?
31
1. The asserted error of principle
32
2. The asserted factual errors
37
(a) Levaquin competed directly against the other two respiratory fluoroquinolones
40
(b) The competitive market was highly promotion sensitive
44
(c) Levaquin and Avelox would have been preferred equally by prescribers during the years 2005 to 2010
48
B. Did the Federal Court err in finding that Janssen had taken appropriate steps to mitigate its loss?
53
1. The concept of mitigation
54
2. The reasons of the Federal Court
59
3. The asserted errors
61
(a) The prices charged to hospitals
63
(b) Teva’s evidence on mitigation
66
(c) The Federal Court’s reference to the date the Supreme Court dismissed the application for leave to appeal from the liability decision
74
C. Did the Federal Court err in its quantification of lost sales to hospitals in the “but for” world?
77
1. The reasons of the Federal Court
77
2. The asserted errors
84
(a) Was there a “precise way” to determine the percentage of sales made indirectly to hospitals?
86
(b) The experts’ assumptions
95
(c) The application of the “broad axe”
104
(d) The date on which damages on lost sales to hospitals ceased
107
D. Did the Federal Court err by finding that Janssen US was a person claiming under the patentee in Canada?
113
1. The asserted errors
114
2. The interpretation of subsection 55(1) of the Patent Act
116
3. Permission from the patentee Daiichi
129
E. Did the Federal Court err in quantifying Janssen US’s damages?
139
1. The asserted errors
139
(a) Lost market share
140
(b) Additional one-month delay
144
(c) Royalty payment
150
F. Did the Federal Court err by awarding an excessive amount for costs?
153
VIII. Conclusion and costs
158
I. Introduction
[1] Levofloxacin is an anti-microbial drug belonging to the class of antibiotics known as respiratory fluoroquinolones. It is marketed in Canada by Janssen Inc. under the brand name “Levaquin”. Levaquin is primarily used to treat serious or complicated respiratory tract infections and some types of urinary tract infections.
[2] Daiichi Sankyo Company, Limited, a Japanese-based pharmaceutical company, owns Canadian Patent No. 1,304,080 (080 Patent) which claims levofloxacin. Janssen Inc. (Janssen Canada) is licensed by Daiichi to sell levofloxacin in Canada.
[3] The Federal Court found that claim 4 of the 080 Patent was valid and was infringed by Teva Canada Limited when Teva offered for sale, and sold, products containing levofloxacin in Canada (2006 FC 1234). The Federal Court restrained Teva from selling and otherwise dealing with products containing levofloxacin in Canada. The judgment of the Federal Court was affirmed on appeal (2007 FCA 217), and leave to appeal the decision of this Court was refused by the Supreme Court of Canada ([2007] S.C.C.A. No. 442).
[4] Thereafter, following a trial lasting ten days the Federal Court determined the quantum of the damages caused by Teva’s infringement. For reasons cited as 2016 FC 593, the Federal Court ordered Teva to pay damages to Janssen Canada in the amount of $5,498,270.00, inclusive of prejudgment interest, and to pay damages to Janssen Pharmaceuticals, Inc. (Janssen US) in the amount of $13,342,949.00, also inclusive of prejudgment interest. As explained in more detail below, Janssen US was part of the supply chain which marketed Levaquin in Canada.
[5] For separate reasons cited as 2016 FC 727, the Federal Court later ordered Teva to pay costs jointly to Janssen Canada and Janssen US. These costs were fixed in the amount of $1,000,000.00, inclusive of all fees, disbursements and taxes, unless within a specified period the Janssen plaintiffs jointly elected to have their costs assessed. The Janssen plaintiffs did not make such an election. In these reasons, Janssen Canada and Janssen US are together referred to as Janssen.
[6] Teva now appeals from the judgment of the Federal Court ordering it to pay damages and from the order of the Federal Court ordering it to pay costs. The appeals were consolidated by order of this Court. In accordance with the consolidation order, a copy of these reasons shall be placed on each Court file.
[7] As will be seen, Teva asserts a number of errors on the part of the Federal Court. In largest part, the asserted errors challenge the Federal Court’s appreciation of the evidence. For the reasons that follow, I have found no error of law or palpable and overriding error of fact or mixed fact and law on the part of the Federal Court. It follows that I would dismiss both appeals with costs.
II. Factual background
[8] The following brief overview is sufficient to situate the issues raised on these consolidated appeals.
[9] At the relevant time there were three respiratory fluoroquinolones available in the Canadian market: Levaquin (levofloxacin), Avelox (moxifloxacin) and Tequin (gatifloxacin).
[10] Sales of levofloxacin and other antibiotics were described at trial to fall into three trade channels. These channels were direct sales to hospitals, direct and indirect sales to drug stores and similar entities, and sales to government and educational entities (reasons, paragraph 85). Of particular relevance to these appeals are sales to hospitals.
[11] Teva launched its generic version of Levaquin on November 29, 2004, under the name Novo-levofloxacin. At approximately the same time concerns began to emerge about the safety of Tequin. Tequin was ultimately withdrawn from the market in June 2006. On October 17, 2006, the Federal Court enjoined the sale of Novo-levofloxacin in Canada. Levofloxacin was the only respiratory fluoroquinolone to be sold in a generic form during the relevant time frame.
[12] At trial, Janssen’s expert Dr. Rosenblatt put forward an economic model (Scenario A) that enabled him to formulate an opinion on what Janssen’s sales of Levaquin 500 mg and 750 mg tablets would have been in the hypothetical “but for” world.
[13] Scenario A was based on a number of assumptions. The first assumption was that Levaquin competed directly against the two other respiratory fluoroquinolones (Avelox and Tequin) and did not compete directly against other antibiotics (such as the macrolides). Another assumption was that once Tequin was withdrawn from the market in June 2006, Levaquin and Avelox would be equally preferred by prescribing physicians. Thus, if Janssen had continued to promote Levaquin during the period of infringement, Levaquin would have maintained its market share against Avelox by gaining a relative share of the lost Tequin sales.
[14] Dr. Rosenblatt put forward an alternative economic model (Scenario B) which was premised on the assumption that sales of Levaquin would have remained flat during the relevant period. Thus, the average level of prescription volumes sold between 2000 and 2004 would have been sold between 2005 and 2010. This was described by Dr. Rosenblatt to be a very conservative scenario. In his view, it was not a likely scenario.
[15] The major assumption common to both scenarios was that the total number of prescriptions “filled” in the period from June 23, 2009 to December 31, 2010 in the hypothetical levofloxacin competitive market did not change from the number of prescriptions that were actually filled in the real world during the damages period. The “levofloxacin competitive market” refers to the sales of all units of the following molecules in Canada: 500 mg and 750 mg levofloxacin (i.e. Levaquin and Novo-levofloxacin), moxifloxacin and gatifloxacin.
[16] Teva’s experts did not construct an economic model to analyze the relevant market. Instead, Teva’s forensic accountant, Mr. Mak, presented a number of damage scenarios, one of which concluded that as a result of Teva’s entry into the market Janssen was “ahead by $4 million” (reasons, paragraph 95). More specifically, in his Scenario 1 Mr. Mak opined that, with prejudgment interest, Janssen would have benefitted from Teva’s entry into the market by between |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| (after the deduction of monies that Teva had already paid to Janssen Canada) (expert report of Mr. Mak, Appeal Book, volume 45, tab 72 at page 017041). The net benefit arose as a result of Mr. Mak’s calculation of expenses not incurred by Janssen in the “but for” world.
III. The damages decision of the Federal Court
[17] After setting out the relevant facts and describing the evidence adduced at trial, the Federal Court considered the issue of whether Janssen US had standing to claim damages as a result of Teva’s infringement of the 080 Patent. This, in turn, required the Court to consider whether Janssen US was a person “claiming under the patentee” within the contemplation of subsection 55(1) of the Patent Act, R.S.C., 1985, c. P-4.
[18] The Federal Court conducted a lengthy review of the relevant jurisprudence (reasons, paragraphs 28 to 43) and then reviewed the relevant evidence (reasons, paragraphs 44 to 58). The Federal Court concluded that Janssen US had standing because “it has the licence or permission, by acquiescence, of Daiichi, to be involved in the chain of the sale of tablets made in Puerto Rico by Janssen Puerto Rico, through Janssen US to Janssen Canada. It is immaterial whether Janssen US had title, even momentarily, to the tablets in Canada.” (reasons, paragraph 61).
[19] The Federal Court then moved to quantify the damages sustained by reason of the infringement. The Court began by reviewing the general legal principles, the parties’ positions and the concessions made by the parties.
[20] The Court then reviewed the marketplace as it existed in fact (reasons, paragraphs 75 to 88), the two scenarios posited by Dr. Rosenblatt and the multiple damages scenarios presented by Teva’s forensic accountant (reasons, paragraphs 89 to 90). After briefly reviewing the parties’ competing views about the “but for” marketplace, the Court set out its findings as to what would likely have occurred in the “but for” world (reasons, paragraphs 104 to 106). The Court’s central finding was that Scenario A “best represents what would have happened in the “but for” world.” However, the Court concluded that some of the assumptions that underlay Scenario A required change. The required changes related to the period in which damages were to be assessed, the percentage of sales of levofloxacin to hospitals and whether sales to educational institutes/governments should be included with hospital sales.
[21] Of relevance to these appeals are the Court’s findings related to the period in which damages were assessed and the percentage of sales to hospitals. With respect to the damage period, the Court found that losses due to prescription (retail) sales would terminate approximately two months after the patent expired (August 31, 2009), and that losses due to sales to hospitals would terminate approximately one year after the patent expired (June 30, 2010) (reasons, paragraph 112). The Court rejected Teva’s assertion that there should be a one month time lag at the beginning of the period in which damages were calculated (reasons, paragraphs 113 to 115).
[22] With respect to hospital sales, the Court allowed Janssen’s claim for damages as a result of having to suppress its selling price to hospitals by |||||||| when Teva entered the marketplace, and found that Janssen could not raise the prices after Teva was later forced to withdraw from the market (reasons, paragraphs 116 to 118). The Court also found that the percentage of indirect sales to hospitals was ||||||||. Janssen’s expert had calculated a figure of ||||||||||||, while Teva’s expert calculated a figure of |||||||||| (reasons, paragraphs 125 to 131).
[23] Finally, after reviewing the relevant legal principles and the evidence as to what Janssen actually did during the relevant period, the Court rejected Teva’s claim that Janssen had failed to mitigate the damages it incurred.
[24] In order to implement into the damages award the changes the Court made to some of the assumptions underlying Scenario A, the Court sent a copy of its draft reasons to counsel for each of the parties and asked that they, working with their experts, prepare an agreed set of figures that resulted from the Court’s changes. Counsel did so and those figures are reflected in the judgment of the Federal Court. Unfortunately, it does not appear that the calculations used to calculate the agreed figures form part of the record. Had this Court found it necessary to intervene in the damage award this absence could have negatively affected this Court’s ability to vary findings that related to counsel’s calculations. We simply do not know how various amounts were calculated.
IV. The costs decision of the Federal Court
[25] In response to the Court’s request that the parties provide submissions on costs, Janssen submitted a draft bill of costs which, including fees, disbursements and taxes, totalled $1,458,751.00. Teva took issue with virtually every item in the draft bill of costs and requested that costs be assessed. Teva also asked that the Court give directions to the assessment officer.
[26] In response, the Federal Court noted that an assessment of costs would be difficult and tedious in view of the many challenges raised by Teva. The Court envisioned that excessive resources of the Court, and the parties, would be spent pursuing the many issues that would have to be considered on an assessment (reasons, paragraph 5).
[27] In the result, the Court ordered that costs fixed as a lump sum be paid to Janssen in the amount of $1,000,000.00. The Court considered this to be “the most reasonable amount in the circumstances.” However, the Court gave Janssen the option, to be exercised within 20 days from the date of the order, to have the costs assessed by an assessment officer having regard to the directions given by the Court (reasons, paragraphs 6 to 7). As explained above, Janssen did not elect to have its costs assessed.
V. The issues
[28] As adverted to above, the appellant raises a number of issues on these appeals, many of which raise a number of sub-issues. I would restate the issues to be decided to be:
Did the Federal Court err in finding that Scenario A best represented what would have happened in the “but for” world?
Did the Federal Court err in finding that Janssen had taken appropriate steps to mitigate its loss?
Did the Federal Court err in its quantification of lost sales to hospitals in the “but for” world?
Did the Federal Court err by finding that Janssen US was a person claiming under the patentee in Canada?
If the Federal Court did not err in finding that Janssen US was a person claiming under the patentee in Canada, did the Federal Court err by:
awarding permanent lost market share damages to Janssen US;
failing to apply a one-month delay or lag to the commencement of Janssen US’s damages; and,
failing to deduct a royalty payment that was contractually required.
Did the Federal Court err by awarding an excessive amount for costs?
VI. The standard of review
[29] The standard of review applicable to the issues raised in this case are as described by the Supreme Court in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. The standard of review to be applied to questions of law is correctness. Findings of fact and inferences of fact are to be reviewed on the basis of palpable and overriding error. Findings of mixed fact and law are to be reviewed on the same deferential standard unless an extricable legal error can be demonstrated, in which event such error is reviewed on the correctness standard.
[30] Where required, the standard of review will be discussed in greater detail in the context of the analysis of each issue asserted by the appellant.
VII. Consideration of the issues
A. Did the Federal Court err in finding that Scenario A best represented what would have happened in the “but for” world?
[31] As I understand Teva’s submission on this issue, it alleges two broad errors on the part of the Federal Court. First, Teva alleges that the Court erred in principle by stating that it was to, in effect, mete out rough justice by application of a “broad axe”. Second, the Federal Court is said to have erred by finding Scenario A to best represent what would have likely happened in the hypothetical “but for” world in circumstances where the factual assumptions that underpinned Scenario A either were not supported by any evidence or were rejected by the Federal Court.
1. The asserted error of principle
[32] I begin my analysis with Teva’s asserted error of principle. Teva’s complaint arises from paragraphs 69 to 71 of the Court’s reasons which discuss the general approach to quantifying damages. There, the Federal Court quotes with approval Lord Shaw’s comment in Watson, Laidlaw & Co. Ltd. v. Pott, Cassels, and Williamson (1914), 31 R.P.C. 104, at pages 117 to 118, to the effect that:
… In the case of damages in general, there is one principle which does underlie the assessment. It is what may be called that of restoration. The idea is to restore the person who has sustained injury and loss to the condition in which he would have been had he not so sustained it. In the cases of financial loss, injury to trade, and the like, caused either by breach of contract or by tort, the loss is capable of correct appreciation in stated figures. In a second class, of cases, restoration being in point of fact difficult, as in the case of loss of reputation, or impossible, as in the case of loss of life, faculty, or limb, the task of restoration under the name of compensation calls into play inference, conjecture, and the like. This is necessarily accompanied by those deficiencies which attach to the conversion into money of certain elements which are very real, which go to make up the happiness and usefulness of life, but which were never so converted or measured. The restoration by way of compensation is therefore accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe. It is in such cases, my Lords, whether the result has been attained by the verdict of a jury or the finding of a single Judge, that the greatest weight attaches to the decision of the Court of first instance.
(underlining added)
[33] The admonition to apply sound imagination and brandish a broad axe is said to be contrary to the decision of this Court in Apotex Inc. v. Merck & Co., Inc., 2015 FCA 171, [2016] 2 F.C.R. 202 (Lovastatin) where, at paragraph 42, the Court noted that because “over-compensation of an inventor chills potential competition” “perfect compensation” is required.
[34] In my view, Teva takes this Court’s comments in Lovastatin out of context. The Court’s comment about “perfect compensation” was made in the context of discussing the purpose of an award of damages for patent infringement — compensation. The Court noted that the concept of compensation rejects both under-compensation and over-compensation. In the circumstances then before the Court, this required consideration of both: (i) what, if any, non-infringing product the defendant or any other competitors could and would have sold “but for” the infringement; and, (ii) the extent lawful competition would have reduced the patentee’s sales.
[35] The Court then went on to note at paragraph 55 the hypothetical and theoretical nature of the exercise of quantifying damages for patent infringement:
… a patentee claiming damages is required to reconstruct the market to project economic results that did not occur. This is a hypothetical enterprise. To “prevent the hypothetical from lapsing into pure speculation” courts require sound economic proof of the nature of the market and the likely outcomes with infringement factored out of the economic picture. Within this framework, patentees are permitted to present market reconstruction theories showing all of the ways in which they would have been better off in the “but for” world. A fair and accurate reconstruction of the “but for” world must also take into account relevant, alternative actions an infringer foreseeably could and would have undertaken had he not infringed.
(underlining added)
[36] The “but for” world is of necessity a hypothetical and theoretical construct. It is not a world where, in the words of Lord Shaw, “the loss is capable of correct appreciation in stated figures.” It follows that the Federal Court did not err in principle by quoting Lord Shaw or by referring in its reasons to a “broad axe”. On a fair reading of its reasons, the Federal Court did not proceed on the basis that what was required was “rough justice”. The Court looked to economic proof of the nature of the levofloxacin market and the likely outcomes in that market when Teva’s infringement was factored out.
2. The asserted factual errors
[37] I now turn to the three factual assumptions that underpinned Scenario A that Teva asserts were unproven or rejected by the Federal Court. They are that:
Levaquin competed directly against the other two respiratory fluoroquinolones, and did not compete directly against other antibiotics.
The competitive market was highly promotion sensitive.
Levofloxacin and moxifloxacin would have been preferred equally by prescribers during the years 2005 to 2010.
[38] It is well-settled law that for any weight to be given to an expert’s opinion, the facts upon which the opinion is based must be proven (see, for example, R. v. J.-L.J., 2000 SCC 51, [2000] 2 S.C.R. 600, at paragraph 59). In the present case, this required Janssen to prove the factual assumptions that underlay Scenario A.
[39] However, for the following reasons I have not been satisfied that the Federal Court erred by relying on unfounded or rejected assumptions as Teva asserts.
(a) Levaquin competed directly against the other two respiratory fluoroquinolones
[40] At paragraph 105 of its reasons the Federal Court found that:
Once Tequin disappeared from the market “most doctors would have switched to levofloxacin or moxifloxacin but some may have switched to other products such as CIPRO or one of the macrolides”.
The relevant comparator market is the respiratory fluoroquinolone class.
[41] Teva asserts that the first finding is incompatible with the second finding because the first finding rejects a major assumption of Scenario A — that the competitive market for levofloxacin was a “closed, zero-sum market involving only levofloxacin, gatifloxacin and moxifloxacin” (paragraph 33, Teva’s memorandum of fact and law).
[42] I begin my analysis by rejecting the premise of Teva’s argument. Scenario A is not based on the assumption that doctors who would have prescribed Tequin would only prescribe Avelox or Levaquin in its stead, and would not prescribe other alternatives such as Cipro or one of the macrolides. The only zero-sum aspect to Scenario A is that any increases in sales Levaquin could obtain in the “but for” world could only come from the share of actual prescriptions issued in respect of the other respiratory fluoroquinolones, Avelox or Tequin.
[43] Scenario A assumes that “but for” Teva’s infringement Levaquin would have maintained its level of prescription volume “and would have also captured a proportion of the growth in AVELOX® prescriptions” after Tequin was removed from the market (expert report of Dr. Rosenblatt, Appeal Book, volume 13, tab 31, at paragraph 49). Whether other drugs would have captured some of Tequin’s market share is irrelevant to this assumption. It follows that the two findings of the Federal Court are not incompatible with one another.
(b) The competitive market was highly promotion sensitive
[44] Dr. Rosenblatt’s opinion was premised on the assumption that because Levaquin was prescribed as an acute, rather than chronic, treatment, every prescription was considered a “new” prescribing decision and these decisions were significantly impacted by the promotional efforts of pharmaceutical sales representatives (expert report of Dr. Rosenblatt, Appeal Book, volume 13, tab 31, at paragraph 42). Teva points to the Federal Court’s findings, at paragraph 105, that:
Visits by sales representatives to physicians promoting a drug have an effect at the initial launch stage of a product, but a lesser effect later.
Doctors’ prescribing practices are significantly affected by “what they are familiar with and seems to work best for their patients.”
Teva argues that in light of these findings Dr. Rosenblatt’s opinion was based upon an unfounded assumption. Put another way, prescribing decisions were not significantly impacted by promotional efforts.
[45] In my view, Teva’s argument parses Dr. Rosenblatt’s opinion and its reliance on the role of the promotional efforts of pharmaceutical sales representatives.
[46] Virtually all promotion of a branded drug stops when a generic version of the branded drug enters the market. This is because pharmacies substitute the generic product for the branded product. Dr. Rosenblatt’s comment about promotional efforts was given in the context of explaining how, notwithstanding declining growth in 2004 in the volume of prescriptions issued for Avelox, Bayer’s continued promotion of its drug Avelox contributed to increase the sales of Avelox at a time when there was no competitive promotion from Levaquin or Tequin.
[47] This does not detract from the assumption in Scenario A that had Janssen continued its pre-infringement promotion efforts it would have, at a minimum, maintained Levaquin’s pre-damages market share of the pre-damages period Avelox and Levaquin market, and would likely have increased its total prescription volume. As Dr. Rosenblatt had previously noted in his opinion at paragraph 37, during the time frame between 2000 and 2004, while Janssen was continuing to promote Levaquin, the number of prescriptions issued for Levaquin was not materially impacted by the entry of Avelox and Tequin into the competitive market.
(c) Levaquin and Avelox would have been preferred equally by prescribers during the years 2005 to 2010
[48] Teva argues that the only evidence to support Dr. Rosenblatt’s assumption that Levaquin and Avelox would have been equally preferred was that of Dr. Chan. Dr. Chan’s evidence is said to be flawed for a number of reasons, including the Federal Court’s comment that it would “treat Dr. Chan’s evidence with caution.” (reasons, paragraph 16). Teva also argues the Court ought to have accepted the evidence of its expert, Dr. Simor, who the Federal Court found gave his evidence “in a straightforward and candid manner.” (reasons, paragraph 20).
[49] I reject these submissions for the following reasons.
[50] First, in cross-examination Dr. Rosenblatt testified that he too had come to the independent opinion that Levaquin’s pre-damages period market share was the appropriate measure to use in calculating loss in the “but for” world. At the time of infringement Levaquin had maintained 51.8% of the combined levofloxacin/Avelox market (expert report of Dr. Rosenblatt, Exhibit 5, Appeal Book, volume 13, tab 31, at paragraph 56). Thus, it is not correct to say that Dr. Rosenblatt’s opinion rests solely on the evidence of Dr. Chan.
[51] Second, it was open to the Federal Court to prefer the evidence of Janssen’s experts over that of Teva’s experts. Teva has not shown the Federal Court to have misapprehended the evidence tendered before it about physician prescribing practices.
[52] Finally, having heard Dr. Chan’s testimony, the Federal Court accepted that he was qualified to opine as “a medical doctor with a specialist certification in respiratory medicine and expertise regarding respiratory tract diseases, antiinfectives, and prescribing practice including expertise on the Canadian antibiotic guidelines.” (reasons, paragraph 16). While Dr. Chan’s lengthy answers and apparent umbrage at having his opinions challenged on cross-examination may have led the Federal Court to view his evidence with caution, this falls far short of a finding that any aspect of his evidence was not credible.
B. Did the Federal Court err in finding that Janssen had taken appropriate steps to mitigate its loss?
[53] I begin by setting out the legal principles that underlie the concept of mitigation and then consider the errors asserted by Teva.
1. The concept of mitigation
[54] The concept of mitigation may be succinctly expressed: a plaintiff is not entitled to recover compensation for loss that could have been avoided by taking reasonable action. Pursuant to this concept, any loss is disallowed when the loss flows from the plaintiff’s inaction, as opposed to the defendant’s wrong.
[55] What constitutes reasonable action is in every case a question of fact, depending on the particular circumstances of the plaintiff and the case. This said, as is the case with the concept of remoteness, a finding that a plaintiff ought to have mitigated its loss is not a simple question of fact because it also involves a legal conclusion.
[56] The burden of establishing the failure to mitigate is on the defendant. The defendant must show both that the plaintiff failed to make reasonable efforts to mitigate and that mitigation was possible (Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at paragraph 24).
[57] In case of doubt, a plaintiff will generally receive the benefit of the doubt on the ground that a defendant should not be overly critical of a plaintiff’s good-faith effort to avoid difficulties caused by the defendant’s wrongful act (S. M. Waddams, The Law of Damages, looseleaf (Toronto: ON: Thomson Reuters Canada, 1991) at paragraph 15.140). In Banco de Portugal v. Waterlow & Sons, Ltd., [1932] A.C. 452 (H.L.), Lord Macmillan expressed this concept as follows (at page 506):
Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.
(underlining added)
[58] This principle applies equally to cases of patent infringement. A plaintiff’s conduct is not to be weighed against a single standard of objective reasonability.
2. The reasons of the Federal Court
[59] After correctly reviewing the applicable legal principles, the Federal Court turned to the evidence of what Janssen actually did to mitigate its loss. The Court then wrote, at paragraph 146, that:
This is what was actually done. There is no evidence from Teva as to what ought to have been done. There are only assertions by Teva’s lawyers in argument as to what ought to have been done and when. The Court has no evidence from any marketing person from Teva or any other evidence to suggest that the steps actually taken by Janssen were too late or inadequate.
[60] At paragraph 147 the Federal Court concluded that it could not find that the steps taken by Janssen were insufficient to mitigate the damages incurred.
(a) The asserted errors
[61] Teva now argues that the Federal Court’s analysis was flawed in that the Federal Court:
Misapprehended the evidence by finding that once Janssen regained market exclusivity for Levaquin it could not raise prices charged to hospitals “as it was bound by an existing contract.” (reasons, paragraph 143).
Erred in law or committed a palpable and overriding error when it concluded at paragraph 146 that there was “no evidence from Teva” on the issue of mitigation.
Erred in law by referring in its mitigation analysis to the date that leave to appeal the liability decision to the Supreme Court of Canada was refused.
[62] In my view, the Federal Court did not err as asserted; in substance Teva impermissibly asks this Court to re-weigh the evidence. I reach this conclusion for the following reasons.
(b) The prices charged to hospitals
[63] Teva argues that Janssen did not prove the existence of any contract that precluded a price hike once Novo-levofloxacin was removed from the market, and that Janssen’s witness Mr. Stewart admitted that Janssen could have raised the prices it charged to hospitals once it regained market exclusivity. Mr. Stewart was a Business Unit Director at Janssen Canada who testified about Janssen’s marketing strategy and business decisions in respect of the sale of Levaquin in Canada.
[64] While the Federal Court’s reference to a contract was unfortunate, this error was not material to the Court’s analysis — the Federal Court understood that as a practical matter Janssen would not raise prices to its customers and that there were business reasons to support this approach. That the Federal Court understood these matters is reflected in paragraph 117 of its reasons where the Federal Court quoted at length the testimony of Mr. Stewart on these points:
Q. Did the presence of Novopharm in the market have an effect on Janssen hospital pricing?
A. Yes, to the extent that, once you have lost all your opportunity to partner with the hospitals and specialists, you don't have anything left except a generic strategy. The only thing you have left to try to leverage to try to hold on to your business is lower your price and compete on price.
In |||||||||| of ||||||||||, we lowered our hospital prices another |||| percent universally across the board so all hospitals had an opportunity to save money because we also had no resources to go out and differentiate between the hospitals on a pricing standpoint. This was a blanket drop in the price as a result.
Q. Before Novo-levofloxacin came to the market, did Janssen intend to lower its hospital prices?
A. There was no plan to implement that |||| percent reduction across the board strategy.
…
Q. In the period after Novopharm left the market, did that have an effect on Janssen’s hospital prices for LEVAQUIN?
A. There was no change to our hospital pricing.
Q. How come?
A. You have established relationships and listings based on the hospital prices that have been offered for the last two years plus. We are not going to rock that boat and change it on these customers. It is not the way we operate.
…
Q. Your [sic] told Mr. Wilcox when he was asking you about the price drops in the hospitals -- pardon me, Mr. Markwell -- that after you had lowered the hospital prices in 2006 when you regained the market, you didn’t want to raise them because you didn’t want to rock the boat, yes?
A. Yes.
Q. By that, you meant you could alienate customers and they would buy the product from someone else?
A. We were coming into the market with other hospital antiinfectives that was the future of our antiinfective franchise at the time. Why would you want to upset the customer by nickel and diming then [sic] on one when you want to come in later then asking them to list enough?
(underlining added)
[65] Teva has not shown any palpable and overriding error on the part of the Federal Court with respect to Janssen’s ability to raise the price charged to hospitals for Levaquin.
(c) Teva’s evidence on mitigation
[66] Teva complains that the Federal Court failed to consider evidence relevant to mitigation and erred by stating that there was “no evidence from Teva”. Teva points to the following evidence on mitigation, which it characterizes to be “ample” to establish that Janssen failed to mitigate its loss (Teva memorandum of fact and law, paragraph 55):
Dr. Chan’s evidence in cross-examination that had Janssen started to market Levaquin again in October 2006, it could have grown its market share (Appeal Book, volume 3, tab 18, page 635, lines 7-14).
Dr. Rosenblatt’s evidence on cross-examination that it would be reasonable for Janssen to promote Levaquin in 2006 when it regained market exclusivity (Appeal Book, volume 1, tab 15, page 381, line 25 to page 382, line 6).
Dr. Grootendorst’s testimony that if the market was as sensitive to promotion as suggested by Drs. Chan and Rosenblatt, Janssen “had every incentive to promote Levaquin upon regaining exclusivity in October 2006” (expert report, Exhibit 52, Appeal Book, volume 47, tab 78 at paragraph 164).
[67] I begin my analysis of Teva’s submission by observing that Teva takes out of context the Federal Court’s statement that there was “no evidence from Teva as to what ought to have been done … only assertions by Teva’s lawyers in argument”. The Federal Court’s comment was a correct observation that Teva had led no fact or expert evidence directed to what would constitute reasonable action on the part of Janssen in the “but for” world. As the presiding Judge observed during oral argument:
Where is your marketing guy, your guy? You are looking at stray stuff in cross-examination from people who are outside the field and you saying ah-ha. Give me something you can sink your teeth into.
(Appeal Book, volume 4, tab 24, page 1525, lines 15-18)
[68] This is, in my view, a fair characterization of Teva’s effort. Given Mr. Stewart’s evidence as to what Janssen did and his explanation for why Janssen acted as it did, the above evidence falls short of demonstrating any reviewable error on the part of the Federal Court. Moreover, the following may be said about the specific evidence Teva relies upon.
[69] First, a global comment: none of Drs. Chan, Rosenblatt or Grootendorst were qualified to opine on the reasonableness of Janssen’s business decisions. This is particularly true of Dr. Chan whose area of expertise was specialist certification in respiratory medicine and expertise regarding respiratory tract disease, antiinfectives and prescribing practice.
[70] Second, Dr. Rosenblatt’s “admission” was significantly qualified. When asked if it “makes sense” for Janssen to promote Levaquin in 2006 he responded:
A. It