Eye defer to you: FCA affirms refusal of interlocutory injunction in patent suit involving ophthalmic medical devices

The Federal Court of Appeal upheld the Federal Court’s denial of the moving party’s interlocutory injunction motion, deferring to the Federal Court for issues of mixed fact and law where a motions judge did not commit a palpable and overriding error.

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In TearLab Corporation v I-MED Pharma Inc and The Regents of the University of California¹, the Federal Court of Appeal (FCA) dismissed an appeal against a Federal Court order that dismissed the moving party’s interlocutory injunction motion. In dismissing the appeal, the FCA applied a standard of deference, noting it could not interfere with a Federal Court order relating to an issue of mixed fact and law unless the motions judge had committed a palpable and overriding error.

Litigation history

The plaintiff and moving party, TearLab Corporation, is an exclusive licensee of Canadian Patent No. 2,494,540 (the ‘540 Patent), which is owned by the Regents of the University of California. The ‘540 Patent generally relates to diagnostic devices, systems, and methods for measuring the osmolarity of tears, said to be useful for diagnosing and treating dry eye disease.

The Federal Court dismissed both an interim injunction motion²and an interlocutory injunction motion³ filed by TearLab to prevent the defendant I-MED Pharma Inc. from selling its device pending determination at trial of patent infringement and validity. (See our IP Monitor regarding the judgment refusing the interlocutory injunction.) Further, the court awarded approximately $140,000 in costs to I-MED. (See our IP Monitor regarding the costs judgment.)

TearLab appealed the Federal Court’s decision to dismiss the interlocutory injunction.

Issue raised in appeal

The Court of Appeal based its decision on one issue: whether Justice Manson erred applying legal principles and assessing the evidence when he denied TearLab’s interlocutory injunction. He ruled TearLab had failed to meet the second and third parts of the three-part test for an interlocutory injunction as outlined by the Supreme Court of Canada⁴ . Namely, TearLab failed to establish it would suffer irreparable harm if the injunction were not granted, and further failed to establish that the balance of convenience favoured granting the injunction to TearLab.

Deferential standard of review

The FCA noted that when reviewing the lawfulness of a discretionary decision on a motion for an injunction, it cannot interfere with a Federal Court order relating to an issue of mixed fact and law, unless the motions judge has committed a palpable and overriding error. The FCA further noted that Justice Manson’s determinations were owed deference in the absence of a fundamental error in his appreciation of the evidence.

TearLab’s arguments

TearLab made three arguments:

• Justice Manson applied an unattainable evidentiary threshold designed for injunctions in pharmaceutical patent cases without any regard for the nature of the ‘540 Patent, and should have applied a test favoured under English case law;
• Its witnesses provided evidence that demonstrated the potential for irreparable harm;
• Justice Manson erred in relying solely on the status quo in his assessment of the balance of convenience.

FCA deferred to Justice Manson and the Federal Court

The FCA held that Justice Manson did not err in his application of the second part of three-part test for an interlocutory injunction. It was not a palpable and overriding error for Justice Manson to reach his conclusion that damages were quantifiable and reparable based on evidence submitted by I-MED’s witnesses. English cases and outdated Federal Court cases relied upon by TearLab could not displace seminal Supreme Court of Canada decisions relating to interlocutory injunctions and the FCA’s own subsequent decisions.

With respect to the third part of the three-part test for an interlocutory injunction, the FCA held that Justice Manson properly weighed the evidence before him and took the full context into consideration when concluding that the balance of convenience favoured I-MED. The FCA was not convinced the Federal Court judge committed a reviewable error of law, a misapprehension of the facts, or an inappropriate weighing of the evidence warranting appellate intervention. Justice Manson reached a conclusion available to him based on the evidence before him.

Links to decisions:

Appeal judgment: 2017 FCA 8

Interim motion judgment: 2016 FC 350

Interlocutory motion judgment: 2016 FC 606

Judgment regarding costs: http://www.nortonrosefulbright.com/files/ca-cost-order-federal-court-pdf-141188.PDF

Footnotes

[1]       2017 FCA 8.
[2]       2016 FC 350.
[3]       2016 FC 606. [4]       RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311 at 347-349.  The three-part test for an interlocutory injunction is outlined in our IP Monitor regarding the Federal Court’s judgment refusing the interlocutory injunction found here.