Law Times

Law Times • February 8/15, 2010 CaseLawLaw SUPREME COURT OF CANADA Insurance ACCIDENT INSURANCE Insured did not suffer "accident" within meaning of policy Insured had unprotected sex with three women. He acquired genital herpes and suff ered rare but known complication which resulted in paralysis from mid- abdomen down (transverse my- elitis). He was aware of sexually transmitted diseases but did not know women he slept with had herpes. Insured's group insur- ance policy provided coverage for losses sustained "as a direct result of a Critical Disease or resulting directly and indepen- dently of all other causes from bodily Injuries occasioned solely through external, violent and accidental means, with- out negligence" on insured's part. Defi nition of critical dis- eases in policy did not include transverse myelitis. Insured commenced action and par- ties applied for determination of whether paraplegia qualifi ed as bodily injury "occasioned solely through external, violent and accidental means". Trial judge held that insured did not expect to become paraplegic and fact that sexual conduct foolish and risky did not pre- clude consequences from being considered accidental within meaning of policy. Court of Appeal upheld trial judge's conclusion that policy provid- ed coverage. Insurer's appeal allowed. Word "accident" is ordinary word that should be given ordinary meaning. Not every unexpected mishap is ac- cident. Someone who picks up disease in ordinary course of events would not ordinarily be described as having been in "an accident". Although generous meaning should be given to word "accident" in absence of limiting language in policy, care should be taken not to convert accident policy into general health, disability, or life insur- ance policy. Insured suff ered disease transmitted in ordinary course of having sex. Genital herpes is sexually transmitted virus that spreads by sexual in- tercourse. Transverse myelitis was unexpected consequence of disease but occurs as normal incident or consequence of that disease. Transmission followed normal method by which sexu- ally transmitted diseases rep- licate and thus bodily injury proceeded from natural causes. No accident within meaning of policy. Gibbens v. Co-Operators Life Insurance Co. (Dec. 18, 2009, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Roth- stein and Cromwell JJ., File No. 32677) Decision at 292 D.L.R. (4th) 492, 165 A.C.W.S. (3d) 733 was reversed. Order No. 009/355/052 (39 pp.). Intellectual Property FEDERAL COURT Industrial And PATENTS Pharmaceutical companies failed to establish that allegations of invalidity of both patents and non-infringement of one patent were not justified Application by pharmaceutical companies for order prohibit- ing Minister of Health from issuing notice of compliance to competitor until expiration of related patents. Pharmaceutical companies obtained two pat- ents covering drug called me- mantine. Memantine acted by blocking certain neurotrans- mitter receptors on certain brain cells. Memantine had been used as far back as 1960's based on belief that it had dif- PAGE 13 Follow on www.twitter.com/lawtimes COURT DECISIONS CaseLaw is a weekly summary of notable unreported civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. CaseLaw is a weekly summary of notable unreported civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. Single or multiple copies of the full text of any case digested in this issue can be obtained by: Single or multiple copies of the full text of any case digested in this issue can be obtained by calling CaseLaw's photocopy department at (905) 726-5419, or 1(800) 565-6967. i) completing and mailing in the order form in this issue; or ii) calling CaseLaw's photocopy department at (905) 841-6472 in Toronto, (800) 263-3269 in Ontario and Quebec, or (800) 263-2037 in other provinces; or iii) faxing a copy of the completed order form to (905) 841-5085. ferent eff ects than ones that were subsequently discovered. First patent related to meman- tine's ability to reduce brain cell degeneration. Second patent related to use of memantine in combination with another medication to treat Alzheimer's disease and similar conditions. Pharmaceutical companies ob- tained notice of compliance for use of memantine in treatment of Alzheimer's disease. Pharma- ceutical companies listed pat- ents in relation to memantine. Competitor applied for notice of compliance for generic ver- sion of memantine. Competi- tor served notice of allegation alleging patents were invalid and would not be infringed. Application dismissed. Phar- maceutical companies failed to establish that competitor's al- legations of invalidity of both patents and non-infringement of one patent were not justi- fi ed. Term "cerebral ischemia" in fi rst patent was construed using defi nition specifi ed in patent rather than ordinary meaning of that term. As re- sult, generic version of me- mantine would have infringed fi rst patent but for fi nding of invalidity. Competitor was not permitted to use one article of prior art for issue of anticipa- tion when this article had only been listed in notice of allega- tion in connection with issue of obvious. Nonetheless, other articles were suffi cient to es- tablish anticipation of claims in fi rst patent. Claims in fi rst patent were also obvious in light of prior art. Allegations of invalidity of second patent on bases of anticipation and obvi- ousness were not justifi ed. Sec- ond patent was not anticipated by prior art since prior art did not address synergistic eff ect from use of both memantine and other medication. Second patent was not obvious since prior art did not predict syner- gistic eff ect. Second patent was, however, invalid due to lack of demonstrated utility or sound prediction. Synergistic eff ect had not been demonstrated when patent was obtained and no basis was provided for pre- dicting synergistic eff ect. Apart from fi nding of invalidity, sec- ond patent was also deemed to have been abandoned pursu- ant to s. 73(1)(a) of Patent Act (Can.). Pharmaceutical com- panies had not replied in good faith to requisition of examiner. In event that second patent was valid, competitor would not have infringed or been likely to induce infringement. Fact that competitor's generic version of memantine would likely be used in combination with oth- er medication in violation of second patent did not in itself provide basis for fi nding com- petitor would induce others to infringe second patent. Lundbeck Canada Inc. v. Ratiop- harm Inc. (Nov. 23, 2009, F.C., Mactavish J., File No. T-414- 08) Order No. 009/335/069 (121 pp.). TAX COURT OF CANADA Taxation INCOME TAX Directors established due diligence Appellants were directors of company. Amounts and li- ability of company were not disputed. Minister made as- sessment pursuant to director's liability provisions of s. 227.1 of Income Tax Act (Can.), and s. 323 of Excise Tax Act (Can.). Appellants argued defence of due diligence. Appeals were allowed. First appellant with limited abilities and business knowledge was reasonable to rely on son to apprise fi rst ap- pellant of fi rst appellant's du- ties and obligations as director. Second appellant had nothing to do with company other than being director on paper. Sec- ond appellant was reasonable and prudent in relying on un- dertaking given by brother that if corporations were activated, second appellant would get out as director. Pascoal v. Canada (Dec. 2, 2009, T.C.C., McArthur J., File No. 2006-3622(IT)G; 2006-3621(GST)G; 2006- 3638(IT)G; 2006-3620(IT)G) Order No. 009/348/036 (13 pp.). ONTARIO CIVIL CASES Bankruptcy And Insolvency ARRANGEMENTS Section 36 of Companies' Creditors Arrangement Act (Can.) inapplicable to transfer of assets of business Motion by C., which included number of entities includ- ing C.W., C.M., C.P. and N., for order approving transition and reorganization agreement, including transition agree- ment for N.. Moving party C. had been granted Companies' Creditors Arrangement Act (Can.), protection in 2009. N., which carried on business publishing national newspaper, was general partnership with units held by C.M. and N. Holdings, which was wholly owned subsidiary of C.M.. In 2005 limited partnership ("L.") was formed to acquire newspa- per C.W.'s publishing entities as well as shared services op- erations. N. was excluded from this acquisition however opera- tions that were provided by L. for benefi t of N. rendered it de- pendent on shared services ar- rangements. L. had not sought protection under CCRA. N. had not generated profi t since 1998 and continued to suff er operating losses. Absent fund- ing N. would shut down and employment would be lost for several hundred employees. Under N. transition agreement assets and business of N. would be transferred as going concern StewartMcK_LT_Feb8_10.indd 1 www.lawtimesnews.com 2/3/10 3:44:25 PM

• Cover
• LSUC Relaxes Rules
• McLachlins Decade
• Focus On Intellectual Property/Trademark Law