Source: http://canadacopyrightlaw.com/doc/Ciba-Geigy_Canada_Ltd_v_Apotex_Inc_and_Ciba-Geigy_Canada_Ltd_v_Novopharm_Limited-SCC1992
Timestamp: 2019-04-24 02:28:26+00:00

Document:
La Forest, L'Heureux-Dube, Gonthier, Stevenson*, and Iacobucci JJ.
Torts – Passing-off – Prescription drug – Customers of pharmaceutical laboratories – Products having similar appearance – Whether patients included in pharmaceutical laboratories' clientele for purposes of a passing-off action concerning the get-up of a prescription drug.
The appellant is a pharmaceutical laboratory which since 1977 has manufactured and sold metoprolol tablets in Canada under the trade name "Lopresor". The respondents some years later also obtained licences to manufacture and sell metoprolol in Canada, and since 1986 the tablets sold by the respondents have had the same get-up as those sold by the appellant. Metoprolol is a prescription drug prescribed by doctors for hypertension. Since the products sold by the parties have been designated interchangeable pharmaceutical products by Ontario law, a pharmacist may give a patient the products of either of the respondents in place of Lopresor when the prescription does not bear the notation "no substitution".
The appellant brought passing-off actions against the respondents, alleging that its metoprolol tablets have a unique get-up by reason of their size, shape and colour and that this get-up has become associated with its product. The respondents' response was to file motions for summary judgment dismissing the actions or, in the alternative, for a ruling on a point of law. The court denied the motions for summary judgment but granted the alternative application. Relying on Ayerst, McKenna & Harrison, Inc. v. Apotex Inc. (1983), 41 O.R. (2d) 366 (C.A.), the court held that in an action for the alleged passing-off of a prescription drug, a plaintiff must establish that the conduct complained of is likely to result in the confusion of physicians or pharmacists in choosing whether to prescribe or dispense either the plaintiff's or the defendant's product. The Court of Appeal affirmed this order. These appeals are to determine whether, in a passing-off action dealing with the get-up of a prescription drug, the public affected by the risk of confusion includes not only health care professionals but also the patients who consume the drugs.
Held: The appeals should be allowed.
A manufacturer that wishes to succeed in a passing-off action must show that its product has acquired a secondary meaning with its customers and that the competing product is likely to create a risk of confusion in the public mind. The approach is the same when the producer or manufacturer is a pharmaceutical laboratory. For the purposes of a passing-off action the customers of pharmaceutical laboratories do not consist exclusively of physicians, dentists and pharmacists. The patient who uses the product is also included. There is no reason in law to depart from the well-established rule that the final consumer of a product must be taken into account in determining whether the tort of passing-off has been committed. The prescription pharmaceutical products field is not so fundamentally different from other areas of commercial activity that special rules should apply to it and that pharmaceutical laboratories should be deprived of means of proof available to other industries. Proof of secondary meaning and of misrepresentation is thus not limited merely to direct customers of the pharmaceutical laboratory.
Ayerst, McKenna & Harrison should not be followed. Following the reasoning applied in that case would lead to treating the patient as a special kind of consumer: yet the patient needs information and protection just as other consumers do. Not including him in the clientele covered by the passing-off action would divest him of part of his rights as an individual by depriving him of the means of protecting himself. Moreover, that decision was rendered three years before the Ontario Prescription Drug Cost Regulation Act, 1986 came into effect, giving the patient increased control over the brand of drug he wishes to obtain where the product is interchangeable.
Not followed: Ayerst, McKenna & Harrison, Inc. v. Apotex Inc. (1983), 41 O.R. (2d) 366; Smith, Kline & French Canada Ltd. v. Novopharm Ltd. (1983), 72 C.P.R. (2d) 197; Syntex Inc. v. Novopharm Ltd. (1983), 74 C.P.R. (2d) 110; Hoffmann-La Roche Ltd. v. Apotex Inc. (1982), 72 C.P.R. (2d) 183; Smith, Kline & French Canada Ltd. v. Apotex Inc. (1985), 12 C.P.R. (3d) 479; Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129; referred to: Parke, Davis & Co. v. Empire Laboratories Ltd.,  S.C.R. 351; Hoffmann-La Roche & Co. v. D.D.S.A. Pharmaceuticals Ltd.,  R.P.C. 1; Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., 224 USPQ 349 (1984); Par Pharmaceutical, Inc. v. Searle Pharmaceuticals, Inc., 227 USPQ 1024 (1985); Merck & Co. v. Par Pharmaceutical, Inc., 227 USPQ 489 (1985); Oxford Pendaflex Canada Ltd. v. Korr Marketing Ltd.,  1 S.C.R. 494; Roche Products Ltd. v. Berk Pharmaceuticals Ltd.,  R.P.C. 473; Perry v. Truefitt (1842), 6 Beav. 66, 49 E.R. 749; Singer Manufacturing Co. v. Loog (1880), 18 Ch. D. 395 (C.A.), aff'd (1882), 8 App. Cas. 15 (H.L.); Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd.,  R.P.C. 31; Reckitt & Colman Products Ltd. v. Borden Inc.,  1 All E.R. 873; Consumers Distributing Co. v. Seiko Time Canada Ltd.,  1 S.C.R. 583; Pinard v. Coderre,  Que. Q.B. 99; General Baking Co. v. Gorman, 3 F.2d 891 (1925); Scandinavia Belting Co. v. Asbestos & Rubber Works of America, Inc., 257 F. 937 (1919); Henry Thorne & Co. v. Sandow (1912), 29 R.P.C. 440; Saville Perfumery Ld. v. June Perfect Ld. (1941), 58 R.P.C. 147; République française v. S. Hyman Ltd. (1920), 31 Que. K.B. 22.
Food and Drugs Act, R.S.C., 1985, c. F-27 [formerly R.S.C. 1970, c. F-27], s. 9.
Food and Drug Regulations, C.R.C. 1978, c. 870.
Ontario Drug Benefit Act, 1986, S.O. 1986, c. 27.
Patent Act, R.S.C., 1985, c. P-4 [formerly R.S.C. 1970, c. P-4].
Prescription Drug Cost Regulation Act, 1986, S.O. 1986, c. 28, ss. 1 "interchangeable product", 4(1), (2), (3), (6).
Chenevard, Charles. Traité de la concurrence déloyale en matière industrielle et commerciale, t. 1. Paris: L.G.D.J., 1914.
Drysdale, John, and Michael Silverleaf. Passing Off: Law and Practice. London: Butterworths, 1986.
Fleming, John G. The Law of Torts, 7th ed. Sydney: Law Book, 1987.
Lilkoff, Lubin. "Rapport sur la protection du consommateur en droit pénal canadien". Dans Travaux de l’association Henri Capitant des amis de la culture juridique française, t. 24, La protection des consommateurs. Paris: Dalloz, 1975, 331.
Mermillod, Louis. Essai sur la notion de concurrence déloyale en France et aux États-Unis. Paris: Pichon & Durand-Auzias, 1954.
Nadeau, André, et Richard Nadeau. Traité pratique de la responsabilité civile délictuelle. Montréal: Wilson & Lafleur, 1971.
Salmond on the Law of Torts, 17th ed. By R. F. V. Heuston. London: Sweet & Maxwell, 1977.
Wadlow, Christopher. The Law of Passing-off. London: Sweet & Maxwell, 1990.
APPEALS from a judgment of the Ontario Court of Appeal (1990), 75 O.R. (2d) 589, 45 O.A.C. 356, 32 C.P.R. (3d) 555, affirming an order of Fitzpatrick J. determining a point of law in a passing-off action. Appeals allowed.
James D. Kokonis, Q.C., and John R. Morrissey, for the appellant.
H. B. Radomski, for the respondent Apotex Inc.
Malcolm Johnston, Q.C., for the respondent Novopharm Ltd.
This case involves determining, in the context of a passing-off action, who are the customers of pharmaceutical laboratories manufacturing prescription drugs. Do those customers consist only of physicians, dentists and pharmacists or are the patients to whom the drugs are dispensed also included?
The plaintiff Ciba-Geigy Canada Ltd. ("Ciba-Geigy") is a pharmaceutical laboratory which since 1977 has manufactured and sold metoprolol tartrate ("metoprolol") in Canada under a licence from AB Hässle of Sweden. Metoprolol is included in the list contained in Schedule F of the Food and Drug Regulations of drugs which can only be sold on prescription. Since 1977 this beta-blocker product, the trade name of which is “Lopresor”, has been prescribed by doctors in Ontario and Canada for low or moderate hypertension; since 1981 it has been prescribed in Ontario for patients suffering from angina. Hypertension is one of the diseases and disorders listed in Schedule A of the Food and Drugs Act, R.S.C., 1985, c. F-27 (formerly R.S.C. 1970, c. F-27), for which the advertising and sale of therapeutic products are prohibited. The drug is given in two doses, each of which has a specific get-up. Fifty mg Lopresor is an oblong pink tablet and 100 mg Lopresor is a tablet of the same shape, only blue.
The respondents, Apotex Inc. (“Apotex”) and Novopharm Limited (“Novopharm”), obtained licences under the Patent Act, R.S.C., 1985, c. P-4 (formerly R.S.C. 1970, c. P-4), to manufacture and sell metoprolol in Canada.
From July 1984 to June 1986, the product sold by Apotex, the trade name of which is “Apo-metoprolol”, took the form of white circular, biconvex 50 mg and 100 mg tablets. Since June 1986 the tablets sold by Apotex have had the same get-up – shape, size and colour – as those of the plaintiff.
The drug manufactured and sold by Novopharm since 1986, “Novo-metoprolol”, available in two doses – 50 mg and 100 mg – also has the same get-up as that of the plaintiff.
The parties’ metoprolol tartrate tablets have been designated interchangeable pharmaceutical products pursuant to the Prescription Drug Cost Regulation Act, 1986, S.O. 1986, c. 28. Accordingly, a pharmacist may give a patient the products of either of the respondents in place of Lopresor when the prescription does not bear the notation “no substitution”.
In June 1986 the plaintiff brought two passing-off actions, one against Apotex and the other against Novopharm, alleging that its metoprolol tartrate tablets have a unique get-up by reason of their size, shape and colour and that this get-up has become associated with its product.
As often happens in such a case, the plaintiff sought an interlocutory injunction to prevent Novopharm from manufacturing and marketing blue capsule-shaped and pink capsule-shaped metoprolol tablets. The injunction was denied by J. Holland J. of the Supreme Court of Ontario on September 8, 1986 as Ciba-Geigy had not shown there was any “serious issue to be tried”: (1986), 12 C.P.R. (3d) 76. Leave to appeal to the Ontario Divisional Court was refused by Osler J. on November 21, 1986.
The respondents filed motions for summary judgment in the Supreme Court of Ontario in response to the plaintiff’s actions. They submitted that there was no genuine issue for trial as Ciba-Geigy was unable to establish that physicians and pharmacists prescribe or dispense metoprolol tartrate on the basis of its appearance or that physicians and pharmacists were confused in choosing the brand of metoprolol to give patients because of the similar appearance of the parties’ tablets.
…with respect to the marketing of prescription drugs, a plaintiff in an action for the alleged passing-off of a prescription drug must establish that the conduct complained of is likely to result in the confusion of physicians and pharmacists in choosing whether to prescribe or dispense either the plaintiff’s or the defendant’s product.
In February 1989 Fitzpatrick J. denied the motions but answered the question of law in the affirmative. Ciba-Geigy appealed to the Ontario Court of Appeal as, it argued, the trial judge had erred in excluding patients, who are consumers of the drugs, from those affected by the confusion. The Ontario Court of Appeal dismissed the appeal: (1990), 75 O.R. (2d) 589, 45 O.A.C. 356, 32 C.P.R. (3d) 555.
On May 16, 1991, leave to appeal to this Court was granted,  1 S.C.R. vii.
Holland J. refused to issue an interlocutory injunction because the appellant had not shown there was a “serious issue” to be tried. Reviewing the case law on passing-off in the pharmaceutical field, Holland J. considered that the plaintiff had to show that its product’s get-up had acquired a secondary meaning for its customers, consisting exclusively of physicians, dentists and pharmacists. Even assuming that Ciba-Geigy had shown this, it was not able to prove that those customers were likely to be misled by the similarity of the products.
Novopharm and Apotex argued in their motions for a summary judgment that only confusion in the minds of physicians, dentists or pharmacists was relevant to a passing-off action and that the plaintiffhad not established such confusion.
With respect to the marketing of prescription drugs, a plaintiff in an action for the alleged passing-off of a prescription drug must establish that the conduct complained of is likely to result in the confusion of physicians and pharmacists in choosing whether to prescribe or dispense either the plaintiff’s or the defendant’s product.
Fitzpatrick J. refused to rule on the evidence of confusion in the minds of physicians and pharmacists, however, and he accordingly dismissed the motions for summary judgment.
The appellant argued that the Supreme Court of Ontario had erred in considering that the ultimate consumer of the prescribed drug should be excluded from the customers affected by the passing-off. It submitted that Fitzpatrick J. should not have relied on the remarks of Cory J.A. in Ayerst, McKenna & Harrison because they were merely obiter dicta, or alternatively, because they were wrong.
As far as the appeal itself is concerned, we do not think that the statements of Mr. Justice Cory can be considered to be obiter dicta in the sense that they do not carry binding force. In our view, they were carefully considered statements which were intended by the court to declare the law applicable to that case and to govern the trial judge conducting the new trial. See R. v. Govedarov (1974), 3 O.R. (2d) 23 (C.A.), at p. 36.
The court in that case did refer …to the judgment of the Supreme Court of Canada in Parke, Davis & Co. v. Empire Laboratories Ltd.,  S.C.R. 351, …on which the appellant relies and which at p. 358 approved a statement in the judgment there under appeal which made reference to “the public who consumes its goods”. Accordingly, it cannot be said that the court in Ayerst was ignorant of this decision, nor can it be said that the judgment involved a manifest slip or error. Having regard to the governing legal framework, the court specifically considered who the “customers of the plaintiff” (p. 376 O.R.) were and defined the relevant market accordingly. In so doing we do not think it erred in not regarding Parke Davis as dispositive of the decision on the point. That case was concerned with other matters, primarily the lack of distinctiveness of the plaintiff’s capsules, related to the acquisition of a secondary meaning.
This Court must determine whether, in a passing-off action dealing with prescription drugs, a plaintiff may argue that the public affected by the risk of confusion includes, in addition to physicians, dentists and pharmacists, the patients who consume the drugs, or is instead limited exclusively to the health care professionals in question.
The appellant Ciba-Geigy puts forward four arguments. First, it considers that, contrary to what was held by the lower courts, the tort of passing-off always concerns the ultimate consumer of goods or services.
Second, the appellant submits that, in relation to a passing-off action in the specific field of pharmaceutical products, the Supreme Court admitted in Parke, Davis & Co. that the testimony of those who consume the prescribed drugs is relevant. Ciba-Geigy adds that in Oxford Pendaflex Canada Ltd. v. Korr Marketing Ltd.,  1 S.C.R. 494, at p. 502, the Supreme Court cited with approval the decision of the English Court of Appeal in Roche Products Ltd. v. Berk Pharmaceuticals Ltd.,  R.P.C. 473, which recognized that in the case of pharmaceutical products passing-off can be established by proving reputation and confusion among the public or consumers.
Thirdly, the appellant argues that Morden A.C.J.O. of the Ontario Court of Appeal erred when he considered that Cory J.A.’s judgment in Ayerst, McKenna & Harrison laid down a rule of law, since in its submission the passage quoted is only obiter dictum.
Finally, the appellant submits that if Cory J.A. laid down a rule of law in Ayerst, McKenna & Harrison, he erred because: (1) the rule contradicts this Court’s opinion in Parke, Davis & Co. which recognizes that patient evidence is relevant; (2) the rule is based on misapprehension of the relevant legislation: although advertising of prescription drugs is restricted, the legislation does not go so far as to totally prohibit advertising aimed at the general public of products such as metoprolol; in any event, in the appellant’s submission, the question of advertising is not significant or determinative of the outcome of the present case; (3) there is nothing in the relevant legislation that sanctions passing-off at the consumer or patient level; (4) the rule disregards the fact that under the Prescription Drug Cost Regulation Act, 1986, patients have a choice among interchangeable drugs; and (5) the rule disregards the fact that passing-off may actually have occurred.
One of the respondents, Apotex, argues that the reference clientele for passing-off in the particular field of this case includes only physicians or pharmacists, as was stated in Ayerst, McKenna & Harrison. Prescription drugs are not sold to the public as other consumer products are and the customer cannot simply obtain them from the pharmacy shelf, by comparing similar products and finally selecting one of them. The choice of brand is determined pursuant to legislated interchangeability rules. According to Apotex, given this regulatory framework Ontario courts and the Federal Court have properly recognized that in a passing-off action based on the appearance of products the customers of prescription drugs were the health care professionals who prescribe it and dispense those drugs to patients. The customers are thus the persons who buy the products from the manufacturers.
Apotex further submits that Cory J.A.’s comments in Ayerst, McKenna & Harrison are not obiter dicta.
Finally, Apotex argues that in Ayerst, McKenna & Harrison the Ontario Court of Appeal did not distinguish Parke, Davis & Co. and did not have to do so.
The other respondent, Novopharm, states that the pharmaceutical products market differs considerably from that of other consumer goods and that, as noted in Ayerst, McKenna & Harrison, the “market” is made up of pharmacists, physicians and dentists. In the submission of Novopharm, neither Cory J.A. in Ayerst, McKenna & Harrison nor Morden A.C.J.O. in the present case erred in their conclusions and Cory J.A.’s opinion does not conflict with this Court’s decision in Parke, Davis & Co.
Novopharm considers that given the present legislation, if there is no misrepresentation, if the patient has no possibility of choice and there is no damage to the plaintiff, there is no passing-off. It argues that pharmacists buy and sell its products because of their interchangeability and cost, not because of their appearance. The Prescription Drug Cost Regulation Act, 1986, which came into force three years after Ayerst, McKenna & Harrison, gives patients outside hospitals the right to request an interchangeable product. The fact that the patient has a choice, however, does not mean he is part of the clientele: he remains subject to the physician’s prescription and the pharmacist purchases and dispenses the drug because of the price and interchangeability.
…no man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such purchaser to tell a lie or to make a false representation to somebody else who is the ultimate customer…. [H]e must not, as I said, make directly, or through the medium of another person, a false representation that his goods are the goods of another person.
The House of Lords has set out the requirements for a passing-off action on many occasions. In Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd.,  R.P.C. 31, Lord Diplock identified five conditions, at p. 93: there must be (1) misrepresentation (2) by a trader in the course of trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader, and (5) which causes actual damage to the business or goodwill of the trader bringing the action.
The three necessary components of a passing-off action are thus: the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff.
In Canada the Supreme Court has also had occasion to rule on a passing-off action, in particular in Oxford Pendaflex Canada Ltd. v. Korr Marketing Ltd., supra, in which the issue turned primarily on the similar get-up of the parties’ products. In that case this Court stated that in any passing-off action the plaintiff, in order to succeed, must establish that its product has acquired a secondary meaning.
…attention should be drawn to the fact that the passing off rule is founded upon the tort of deceit, and while the original requirement of an intent to deceive died out in the mid-1800's, there remains the requirement, at the very least, that confusion in the minds of the public be a likely consequence by reason of the sale, or proffering for sale, by the defendant of a product not that of the plaintiff’s making, under the guise or implication that it was the plaintiff’s product or the equivalent.
A manufacturer must therefore avoid creating confusion in the public mind, whether deliberately or not, by a get-up identical to that of a product which has acquired a secondary meaning by reason of its get-up.
[TRANSLATION] Unlawful or unfair competition causing an unjust injury to another person falls within civil liability under art. 1053 C.C. Actions for damages for unfair competition are heard under not only the federal legislation but also the general principles of delictual civil liability.
In considering those upstream and downstream of the product, two separate aspects must be distinguished. I refer in this regard to the persons who manufacture or market the products, on the one hand (“the manufacturers”), and on the other to those for whom the products are intended, the persons who buy, use or consume them (“the customers”).
It is clear that however one looks at the passing-off action, its purpose is to protect all persons affected by the product.
This corresponds to the third point mentioned by Lord Oliver. The right to be protected against the “pirating” of a brand, trade name or the appearance of a product is linked to a kind of “ownership” which the manufacturer has acquired in that name, brand and appearance by using them.
Accordingly, to begin with, from what might be called the individual or manufacturer’s standpoint, the passing-off action is intended to protect a form of ownership.
The courts have wavered between two conceptions of a passing-off action – as a remedy for the invasion of a quasi-proprietary right in a trade name or trade mark, and as a remedy, analogous to the action on the case for deceit, for invasion of the personal right not to be injured by fraudulent competition. The true basis of the action is that the passing off injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business.
In countries with a free market system the proper functioning of the economy depends upon competition between rival trading enterprises. It is the mechanism of competition which controls the price, quality and availability of goods and services to the public.
[TRANSLATION] Just as an effort made to dislodge an opponent from the position he occupies, to attract sales to oneself by offering better goods on better terms, is legitimate when only fair methods are used, so such conduct is objectionable when it infringes the rules of honesty and good faith that underlie commercial transactions.
[TRANSLATION] Seeing the success of his competitor’s product, he had the idea of profiting from it: since this article, this shape, this packaging had met with public favour, why not copy it? – since this trade name had made its way in the world, why not adopt a similar one?
The purpose of the passing-off action is thus also to prevent unfair competition. One does not have to be a fanatical moralist to understand how appropriating another person's work, as that is certainly what is involved, is a breach of good faith.
Finally, another more apparent, more palpable aspect, a consequence of the preceding one, must also be mentioned. The "pirated" manufacturer is very likely to experience a reduction in sales volume and therefore in his turnover because of the breaking up of his market. When such a situation occurs in the ordinary course of business between rival manufacturers that is what one might call one of the rules of the game, but when the rivalry involves the use of dishonest practices, the law must intervene.
In the Anglo-Saxon legal systems, [TRANSLATION] "the person chiefly concerned is the competitor affected by the unfair act" (Mermillod, Essai sur la notion de concurrence déloyale en France et aux États-Unis (1954), at p. 176). He is frequently in fact the first party affected by the practice or aware of it.
However, "[i]t should never be overlooked that …unfair competition cases are affected with a public interest. A dealer's good will is protected, not merely for his profit, but in order that the purchasing public may not be enticed into buying A's product when it wants B's product" (General Baking Co. v. Gorman, 3 F.2d 891 (1st Cir. 1925), at p. 893). Accordingly, "the power of the court in such cases is exercised, not only to do individual justice, but to safeguard the interests of the public" (Scandinavia Belting Co. v. Asbestos & Rubber Works of America, Inc., 257 F. 937 (2d Cir. 1919), at p. 941). The ordinary customer, the consumer, is at the heart of the matter here. According to the civilian lawyer Chenevard, supra, at p. 20, in a case of unfair competition it is [TRANSLATION] "the buyer who is the first to be injured".
The customer expects to receive a given product when he asks for it and should not be deceived. It often happens that products are interchangeable and that a substitution will have little effect. However, the customer may count on having a specific product. There are many reasons for such a choice: habit, satisfaction, another person's recommendation, the desire for change, and so on. I have no hesitation in using the classic saying, taken from popular imagery: "the customer is always right". Merchants must respect his wishes, choices and preferences as far as possible. Where this is simply not possible, no substitution must be made without his knowledge. That is the minimum degree of respect which manufacturers and merchants, who we should remember depend on their customers, should show.
…you must deal with the ordinary man and woman who would take ordinary care in purchasing what goods they require, and, if desiring a particular brand, would take ordinary precautions to see that they get it.
The term "get-up" is normally used in passing-off to mean the whole visible external appearance of goods in the form in which they are likely to be seen by the public before purchase. If the goods are sold in packages, then their get-up means the appearance of the pack taken as a whole. If they are sold or displayed unpackaged, then the get-up relied on can only be that inherent in the goods themselves.
The look, the appearance, the get-up of a product play a crucial role in the purchase process since they are the chief means at the manufacturer's disposal to attract customers. The importance of visual impact is well known: what appeals to the eye is crucial.
The product's appearance or its packaging – shape, size or colour – may be characteristic of a particular manufacturer and have the effect of marking out the product or making it recognizable as his own. In the mind of the customer appearance is not always linked to a trade mark, that is, the consumer may rely on the appearance rather than the trade mark to indicate the use of the product. For example, when he needs removable self-stick notes, he will look for small blocks of yellow paper. He may not know the name of the product or manufacturer, but he does not need to in order to recognize what he wants to buy. What he has noticed and what he has retained is the specific colour of the merchandise; or he will know that a particular product contained in a tin with an exotic bird on the lid is polish, without necessarily having to know the trade name or brand, and when he wishes to purchase that polish it is the image of the bird on the packaging that will assist him in recognizing the product. With a few exceptions, the external features of a product are not sought for themselves, but because they are the means of recognizing the satisfactory product, for example. They are a source of information associated with reputation for a consumer or a group of customers. Appearance is thus useful not only in product recognition but also to distinguish one product from another with the same uses.
Of course, it may be that appearance is associated with a specific brand in the consumer's mind. When he wishes to have a product of that brand he will look for that get-up.
The question now is as to who lies beyond the product, that is who must be protected, who must not be confused by manufacturers, for example, by a similar appearance. As business is organized at present, it is very seldom that an individual deals directly with the manufacturer or producer: he is not generally the immediate customer. The route taken by a product between the time of its manufacture, to use a broad term, and the time it reaches the consumer can be compared to a chain made up of several links which must all be there and be in a particular order. Manufacturer, wholesaler, retailer and consumer are all links in this chain.
The first person who buys the product is not generally the one for whom it is ultimately intended. Assuming that there are three links in the chain, with the producer and the consumer at the two ends, the "retailer" (grocer, bookseller, garage owner and so on) is an intermediary between the producer and the consumer. I would without hesitation describe him as a "trade customer", that is a person who obtains a product not for his own use but with a view to passing it on to a third person in the course of his business. There is little need to dwell at length on the case of such merchant intermediaries, who are in fact part of the manufacturer's or producer's clientele. There may at times be some question whether the passing-off action really affects them as customers. The closer they are, that is the more direct contact they have with the manufacturer or producer, the less likely they are to be misled. This is indeed what Viscount Maugham found in Saville Perfumery Ld. v. June Perfect Ld. (1941), 58 R.P.C. 147 (H.L.), at pp. 175-76: "It is, for example, quite a common occurrence …to find that retail traders are not misled while ordinary customers are".
Outside the field of pharmaceutical products, the courts and authors have unquestionably recognized that the consumer, or the person who might be called the ordinary customer – the last link in the chain – is also part of the "clientele" in whose minds any confusion must be avoided.
Further, when Lord Diplock in Erven Warnink B.V. v. J. Townend & Sons (Hull) Ltd., supra, set out the conditions for the passing-off action at p. 93, he used the very words "ultimate consumers".
There is no question that confusion, which is the essence of the tort of passing-off, must be avoided in the minds of all customers, whether direct – here one thinks of the retailers – or indirect – in that case the consumers. Proof of reputation or secondary meaning and of misrepresentation has never been limited by the courts to direct customers of the person claiming a right.
Moreover, we must not lose sight of the fact that the ordinary clientele includes "consumers". I use this word in its juridico-sociological meaning, which to Western minds in the late 20th century inevitably implies the need for protection. The passing-off action is entirely consistent with the plethora of present-day protectionist provisions, even though it existed long before they did!
There is no need to dwell at length on the purposes of the passing-off action in this field as they are essentially the same as those I have just considered. Adapting the principles set out to cases such as that now before this Court leads to the conclusion that competing laboratories must avoid manufacturing and marketing drugs with such a similar get-up that it sows confusion in the customer's mind.
First, I should make a few observations on the get-up of the products at issue here. As Wadlow points out (supra, at p. 379), pharmaceutical companies are limited in the choice of ways to distinguish the get-up of their products. As pharmacists buy such products in bulk and dispense them to the public in standard containers which are transparent and anonymous, the only way of drawing the attention of patients to the origin of the product is the capsule or tablet itself. There are not many possibilities: what is written on tablets is often too small to be legible, at least not readily so, and that leaves only the shape, size and colour of the products as a means of distinguishing them. Here again pharmaceutical laboratories have little room for manoeuvre. The size and shape of drugs cannot depend solely on imagination, since they must meet certain functional requirements resulting from physiological necessities such as ingestion and digestion. As to colour, owing partly to the small size of the products, combinations which might be original or characteristic are also relatively limited.
Further, the same is true for the composition of drugs as for that of any other product. What I would call the basic components of two competing products are quite often identical while it is the incidental ingredients that are specific to each, and it is often the quantity and quality of such ingredients which make the difference in taste, consistency, texture and so on. In the pharmaceutical field, drugs consist of an active ingredient, the basic medicinal substance, and an excipient which plays a role inter alia in get-up, ingestion and digestion. Understandably, two remedies which must achieve the same therapeutic result will contain the same active ingredients. In the case at bar, the parties' products all contain a beta-blocker, metoprolol tartrate. At the same time, the incidental substances in which the active ingredients are embodied may well be different.
Of course, the passing-off action is meant to protect manufacturers. In the case at bar, these are the pharmaceutical laboratories which manufacture and market the drugs. There is no need to consider this point further, as it presents no problem here. One must instead look at the other links in the chain, those who "buy" or "consume" the products, in order to determine who are the customers to be protected by the passing-off action. There are those who argue that only physicians, dentists and pharmacists are included. I will begin by reviewing the cases which have given a limited definition of the clientele and then consider several aspects of the question, an analysis of which will inevitably lead in my opinion to a preference for a broad clientele. Finally, I will cite decisions of the courts and authors who consider that the patient is included in the clientele of pharmaceutical laboratories for the purposes of a passing-off action.
The courts below, and the parties in their factums submitted to this Court, referred frequently to Ayerst, McKenna & Harrison, Inc. v. Apotex Inc., supra, and to the decisions of the Ontario High Court of Justice which have followed it. In Ayerst, McKenna & Harrison, Ayerst had since 1968 manufactured and sold a drug containing propranolol to control certain cardiovascular problems. Beginning in 1980, Apotex also manufactured and sold a drug with a propranolol base. The products of the two pharmaceutical laboratories were prescription drugs declared to be "interchangeable" by the Ontario and Quebec ministries of Health. The tablets had the same get-up: colour, size and shape. Ayerst lost a part of the market and brought a passing-off action against Apotex. The only issue in the Court of Appeal was whether a new trial should be directed on account of the antipathy to the plaintiff shown by the trial judge and the latter's refusal to allow certain important rebuttal evidence.
The problems faced by Ayerst are increased by the federal and provincial statutes and regulations which must be complied with by manufacturers of prescription drugs. A manufacturer cannot advertise his product to the general public. Only physicians and dentists can prescribe and only physicians, dentists, and pharmacists can dispense prescription drugs. The plaintiff must then establish that its product has, by its shape, size, and colour, acquired a secondary meaning among physicians, dentists, and pharmacists.
These comments make it clear that for the purposes of a passing-off action the customers of pharmaceutical laboratories consist exclusively of health care professionals. The patient who uses the product is not included.
McRae J. admitted, however, that patients taking cimetidine are consumers of it, but according to the language used, there appear to be "consumers" and "true consumers". Only the latter, physicians and pharmacists, count in a passing-off action.
As previously indicated, both White J. in Hoffmann-La Roche and the Court of Appeal in Ayerst, McKenna & Harrison, Inc. make it clear that passing-off must take place at the level of physicians, dentists and pharmacists.
One of the Court of Appeal's arguments in Ayerst, McKenna & Harrison was that there was no direct connection between the consumer and the product. The medicinal substances in question can only be dispensed by a pharmacist, and only on a doctor's prescription. The patient does not take the drug from a store shelf but is required to go through several intermediaries in order to obtain it, in this case a doctor and then a pharmacist. Consequently, there are those who are of the view that the patient does not risk being deceived in the same way as when he has free access to several competing products placed at his disposal side by side.
For consumer products in general, present-day commercial organization is such that the consumer rarely obtains products or goods directly from the manufacturer or producer. Strictly speaking, whatever the sphere of commercial activity, the customers of producers or manufacturers are the retailers through whom the producers or manufacturers seek to supply as many goods as possible with the greatest possible profit. In my opinion, pharmacists occupy the same place in this organizational chain, correspond to the same link, as other merchants. Apart from the prescription drugs field, there is no doubt that the customers concerned in a passing-off action include both retailers and consumers. If one reasons by analogy, patients should be included among the customers, as well as health care professionals of course.
As the patient has no direct access to the product, it is all the more necessary for him to be able to exercise some kind of control over what he is being given. In the field of prescription drugs the first information the patient receives when the product is given to him comes from its appearance. If he is familiar with Lopresor, for example, and the pharmacist hands him a bottle filled with white tablets, he will know at once that this is not Lopresor and that the prescription has not been followed.
Moreover, the fact that drugs like those with a metoprolol base are not sold without a prescription does not fundamentally alter the reasoning. These are not the only products the sale of which is controlled by legislation or regulation. Firearms are another example. For obvious reasons of safety, not just anyone can go into a gun shop and freely obtain such an item. He must give the dealer at least a purchase certificate, as the patient must give the pharmacist a prescription. There would seem to be no doubt that the purchasers of firearms would be included among customers in a passing-off action. Here again, the analogy inclines one to include patients among the customers of pharmaceutical laboratories.
Under general law principles, when a pharmacist receives a prescription he must supply what it indicates. The various statutes (Prescription Drug Cost Regulation Act, 1986 and Ontario Drug Benefit Act, 1986, S.O. 1986, c. 27) only set out certain exceptions to these fundamental rules.
Does the fact that a patient has to obtain the product through a physician and pharmacist rule out the possibility of his making a choice?
4.(1) If a prescription directs the dispensing of a specific interchangeable product, the dispenser may dispense in its place another product that is designated as interchangeable with it.
"interchangeable product" means a drug or combination of drugs identified by a specific product name or manufacturer and designated as interchangeable with one or more such products.
Accordingly, if the physician simply puts "Lopresor" on the prescription, the pharmacist may (it is up to him) give out a drug other than Lopresor. He may supply one or other of the respondents' products, Apo-metoprolol or Novo-metoprolol.
The pharmacist's duty to provide this information is fulfilled by the posting of a visible notice to that effect.
The only situation in which the patient – and this is also true of the pharmacist – has no opportunity to select the brand of metoprolol, for example, is when the physician specifies on the prescription that there are to be no substitutions, as provided in s. 4(6) of the Prescription Drug Cost Regulation Act, 1986. The fact that the consumer has no choice as to the product brand does not, however, mean that he cannot refuse to be sold a drug other than the one indicated by the doctor.
The foundations of this right to choose and the reasons for patients' choices do not have to be discussed at length here. Whether the choice is great or small, easily exercised or not, does not change anything in the case at bar. All that is significant, and beyond question, so far as the reasoning is concerned is that the patient has a choice.
In my opinion, therefore, excluding patients from the customers covered by the passing-off action on the pretext that they have no choice as to the product brand is quite wrong. The physician's opinion as to the brand of drug to be taken may of course influence the patient and most prescriptions do in fact specifically indicate the product brand. That information may sometimes come from the patient. It should not be forgotten that in cases like the one before the Court, the medical treatment generally extends over a long period. Hypertension is often treated for several years, if not a lifetime. Patients taking a drug for some time can become accustomed to it and insist on a particular brand. Generally when a person is satisfied with a product, he tends to remain faithful to it. This is especially true in the health field where – understandably – patients are not very willing to experiment and perhaps still less so when they are suffering from conditions such as hypertension. There are thus grounds which I would characterize as psychological for insisting on a particular brand of drug. There are certainly also physiological reasons. It is entirely conceivable that excipients, the non-medicinal part of the drug surrounding the active ingredient, may not have the same characteristics or not produce the same ingestive, digestive and other effects in the case of all manufacturers. The shape of the tablet may also play a part in the patient's preferences: it may be another reason why the patient insists on a particular brand and asks his physician to put it on the prescription.
Moreover, quality control may not be identical from one laboratory to another or the quality itself may not be perceived as such.
Another argument accepted by the Court of Appeal in Ayerst, McKenna & Harrison is that the manufacturer does not have the right to engage in advertising aimed at the general public.
The Food and Drugs Act, R.S.C., 1985, c. F-27, prohibits the sale and advertising of drugs used in treating diseases listed in Schedule A, which includes hypertension. The Food and Drug Regulations contain the regulations governing prescription drugs. Schedule F of the Regulations is an exhaustive list of the drugs – including metoprolol and its salts – which cannot be sold without a prescription and advertising of which is restricted. I use this adjective deliberately because, as a reading of the provision indicates, it is going too far to say that all advertising for the general public is prohibited. It would be more accurate to say that the Regulations restrict the content of the advertising that can be directed at the public. Moreover, there is nothing to prohibit patients having access to pharmaceutical advertising directed at health care professionals when they go to see their physicians, pharmacists or dentists. Frequently, patients can read or at least see pamphlets, magazines and posters and so on.
Such legislation and regulations are understandable. Prescription drugs contain medicinal substances which, while beneficial in small doses, can be harmful or even fatal to health in larger quantities. It is then quite natural for society to limit access to such products as a means of protecting the individual. The advisability of use is determined by a professional, the physician or in some cases the dentist, and distribution is the responsibility of a specialized "merchant", the pharmacist. It is readily understandable that in such a case advertising, at least in its commonly accepted meaning, is not entirely free. Furthermore, it would be completely illogical on the one hand to give the consumer information comparable to that which he can obtain on an ordinary consumer product while at the same time preventing him from freely obtaining that product.
This argument may be summarized as follows: public advertising of the product is prohibited, therefore the patient for whom it is intended has no special knowledge of the product, and therefore he does not risk being affected by any confusion. As I have just explained, such logic is mistaken.
As I mentioned earlier, a manufacturer that wishes to succeed in a passing-off action must usually show that its product has acquired a secondary meaning with its customers, the public, and that the competing product is likely to create a risk of confusion in the public mind. There is no reason for the approach to be any different when the producer or manufacturer is a pharmaceutical laboratory. The prescription pharmaceutical products business is not so fundamentally different from other areas of commercial activity that special rules should apply to it. The courts have no reason in law to deprive pharmaceutical laboratories of means of proof available to other industries.
When the present Act (Food and Drugs Act) states in s. 9(1): "No person shall label, package, treat, process, sell or advertise any drug in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety" (emphasis added), there is no basis for saying that it applies only to health care professionals.
In Hoffmann-La Roche & Co. v. D.D.S.A. Pharmaceuticals Ltd.,  R.P.C. 1, the English Court of Appeal upheld an interlocutory injunction barring the defendant from manufacturing and selling prescription tranquilizers which had the same appearance as those of the plaintiff. According to the court, though there was no confusion – that was proven – in the minds of the laboratories' direct customers, namely pharmacists and physicians, the ultimate customers of the drugs, the patients, were likely to be misled by the misrepresentation.
Now, in this as in all other passing off cases the basic question is whether, directly or indirectly, the manner in which the goods of the defendant are presented to the relevant consumers is such as to convey to the minds of the latter the impression that they are the goods of the plaintiff …What must first be shown is that a substantial body of patients would have come to attribute the plaintiffs' product, by reason of colour, shape, size, number, groove on one side, and some word or the other, to some one trade source or provenance.
In the United States, the courts have in passing-off actions in the field of prescription drugs allowed parties to prove confusion both among professionals and consumer patients. I refer inter alia to Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., 224 USPQ 349 (3d Cir. 1984), Par Pharmaceutical, Inc. v. Searle Pharmaceuticals, Inc., 227 USPQ 1024 (N.D. Ill. 1985), Merck & Co. v. Par Pharmaceutical, Inc., 227 USPQ 489 (3d Cir. 1985).
What is it necessary for a trader who is plaintiff in a passing off action to establish? It seems to me that in the first place, he must, in order to succeed, establish that he has selected a peculiar – a novel – design as a distinguishing feature of his goods and that his goods are known in the market, and have acquired a reputation in the market by reason of that distinguishing feature, and that unless he establishes that, the very foundation of his case fails.
Cases on pharmaceutical get-up are even more numerous in Canada, apparently because of the ready availability of compulsory patent licences for medicines at nominal royalties. The Canadian authorities differ from the English in one important respect which makes the plaintiff's task even harder. In contrast to Roche v. D.D.S.A., the only relevant public for prescription medicines is consistently taken to be doctors and pharmacists, rather than including patients themselves. Unless there is a fundamental difference in how public health is administered, this seems wrong. Patients are the ultimate consumers of medications and have some say in how they are treated. A safer ground for many of the Canadian decisions, especially those where different dosage strengths were distinguished by different colours, is the recurring theme that even patients themselves chiefly associate the colour or shape of the capsule with the therapeutic effect of the medicine rather than its trade source.
Many of the Canadian passing-off cases refer to the trade mark case of Parke Davis & Co. v. Empire Laboratories Ltd. before the Supreme Court of Canada, in which the get-up of the plaintiffs' capsules had failed to acquire secondary meaning. Although the get-up was not distinctive, this case is one of the few which is not inconsistent with treating patients as part of the relevant public.
Whether the get-up of drugs is associated with their effect rather than their commercial origin is a question of fact the consideration of which must be left to the trier of fact, as happens in other commercial fields. That definitely does not mean in law that evidence should be limited to physicians, pharmacists and dentists.
One of the questions discussed in the courts below is the "binding force" of Cory J.A.'s opinion in Ayerst, McKenna & Harrison. In the submission of the appellant, Morden A.C.J.O. erred in concluding that Cory J.A.'s opinion laid down a rule of law when, it argued, his opinion was only obiter dictum. There is no need to deal at length with this question. Even assuming that Cory J.A.'s comments are obiter dicta, they have been adopted, applied and followed on many occasions, thus becoming the ratio decidendi of numerous subsequent decisions.
It should further be noted that the Prescription Drug Cost Regulation Act, 1986 came into effect in December 1986, more than three years after Ayerst, McKenna & Harrison, and was amended in 1989, giving the patient increased control over the brand of drug he wishes to obtain where the product is interchangeable. This is a further reason for not following that decision.
In the case at bar, the real question was not whether Cory J.A.'s comments were obiter dicta, but rather whether that opinion, limiting the customers of pharmaceutical laboratories for the purposes of a passing-off action to health care professionals, is correct in law. For the reasons I have stated, I do not think it is.
There is no reason in law to depart from the well-established rule that the final consumer of a product must be taken into account in determining whether the tort of passing-off has been committed. In the field of prescription drugs, therefore, the customers of pharmaceutical laboratories include physicians, pharmacists, dentists and patients.
2. THIS COURT ORDERS that with respect to the marketing of prescription drugs, a plaintiff in an action for the alleged passing-off of a prescription drug must establish that the conduct complained of is likely to result in the confusion of physicians, pharmacists or patients/customers in choosing whether to prescribe, dispense or request either the plaintiff's or the defendant's product.
Solicitors for the appellant: Smart & Biggar, Toronto.
Solicitors for the respondent Apotex Inc.: Goodman & Goodman, Toronto.
Solicitors for the respondent Novopharm Ltd.: Malcolm Johnston & Associates, Toronto.
This page has been generated using Mincov Legal Markup Language (“MLML”). While every effort has been made to ensure accuracy and currency of this document, Mincov Law Corporation makes no warranty, representation or undertaking, expressed or implied, nor does it assume any liability, direct or indirect, or responsibility for the accuracy, currency, usefulness or continued availability of this document.The official version of this document is located at http://scc.lexum.org/en/1992/1992scr3-120/1992scr3-120.html.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 V. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 art. 1053
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.