Her Majesty in Right of Alberta v. Altria Group Inc. et al.

The government of Alberta is taking Big Tobacco to court, suing for $10 billion in health care costs and damages related to smoking since the 1950s. The province is suing some of the tobacco industry’s biggest players, including the Canadian units of Philip Morris International Inc., British American Tobacco PLC, and Japan Tobacco Inc.

The Alberta suit is similar to actions launched by several other Canadian provinces following a Supreme Court of Canada ruling last year that the Canadian government does not share legal liability for health care claims against tobacco companies. The Alberta suit is in its early stages; a case management judge was appointed by the Alberta Court of Queens Bench in late August.

“This lawsuit, to be clear, is not about banning cigarettes or punishing smokers,” Alberta Premier Alison Redford said when the suit was launched. “It is about recovering health care costs as a result of the misconduct of the tobacco industry.”

Since the Supreme Court of Canada’s decision, legal action by provinces to recover costs from tobacco companies has accelerated. All 10 provinces and two of Canada’s three northern territories have created legislation to enable them to sue the tobacco industry for smoking-related medicare costs. Alberta’s Right of Recovery Act, which allows for recovery of health care costs, was passed in 2009.

A ruling in May by Ontario’s highest court in a separate case defeated a bid for dismissal by the international parent companies of Canadian tobacco firms. The ruling is seen as important to suits such as Alberta’s because the international parent firms have a larger capacity to pay significant damages.

For plaintiff Her Majesty the Queen in Right of Alberta

May Jensen Shawa Solomon Duguid Hawkes: The firm did not identify the lawyers working on the suit by press time.

For defendant British American Tobacco

Stikeman Elliott: Litigation: David Byers, Michael Mestinsek, and associate Lesley Mercer. (Byers and Mestinsek are in Calgary; Mercer is in Toronto.)

For defendants British American Tobacco (Investments) Limited and B.A.T Industries PLC

Dentons: The firm did not identify the lawyers working on the suit by press time.

For defendant Imperial Tobacco Company Limited

Osler, Hoskin & Harcourt: Litigation: Deborah Glendinning, Tristram Mallett, and associates Sandeep Joshi, Tara Kyluik, and Kelly Osaka. (All are in Calgary except Glendinning, who is in Toronto.)

For defendants Philip Morris International Inc., Philip Morris USA Inc., and Rothmans Benson & Hedges Inc.

McCarthy Tétrault: Michael Feder, Simon Potter, Kara Smyth, and Sean Smyth. (All are in Calgary, expect for Potter, who is in Montreal.)

Heenan Blaikie: Litigation: Robb Beeman and Caireen Hanert. (They are in Calgary.)

Gowling Lafleur Henderson:

Litigation: Laurie Livingstone, Steven Sofer, and Kenneth Warren Q.C. (Sofer is in Toronto; the others are in Calgary.)

For defendants R.J. Reynolds Tobacco Company and R.J. Reynolds Tobacco International Inc.

Borden Ladner Gervais: The firm did not identify the lawyers working on the suit by press time.

—Laura King

Eli Lilly v. Novopharm Limited

The Supreme Court of Canada decision not to hear pharmaceutical giant Eli Lilly’s appeal of a lower court ruling invalidating its patent on the drug olanzapine, sold under the name Zyprexa, has expanded a round of legal actions against the Canadian government under international trade agreements.

The May 16 ruling effectively upheld several lower-court rulings, beginning in 2004, on the invalidity of the so-called 113 patent. Those rulings arose from long-running challenges to Eli Lilly patents by Novopharm Limited, now known as Teva Canada Ltd.

Novopharm had previously successfully challenged the patent on olanzapine, a schizophrenia drug that is among the 10 highest-selling drugs in Canada and worldwide, and the Federal Court agreed on the grounds that claims made at the time the patent was granted—asserting that it would be far better than any existing medication—had not held up.

Eli Lilly had already filed a notice of intent to claim damages against the Canadian government because of the earlier invalidation of another patent, for the drug Strattera, a medication for attention-deficit hyperactivity disorder.

Using section 11 of the North American Free Trade Agreement (NAFTA) and claiming that the invalidation of the patent is inconsistent with Canada’s commitments under NAFTA, Eli Lilly claimed damages of $100 million against the Canadian government.

After the May 16 ruling invalidating its patent on olanzapine, Eli Lilly amended that notice of claim to $500 million, alleging that the Canadian courts improperly invalidated two of its patents.

The case has several noteworthy details, including the fact that similar challenges to the olanzapine patent were launched by various generic manufacturers in 17 countries; in addition, only the Canadian courts invalidated the Eli Lilly patent. Of interest to both lawyers and academics is the implication of decisions of nonaccountable and independent courts triggering legal actions under international trade agreements and potentionally subjecting governments to hundreds of millions of dollars in liabilities.

For appellant Eli Lilly

Gowling Lafleur Henderson:

Patent litigation: Anthony Creber, Cristin Wagner, and associate Livia Aumand. (They are in Ottawa.)

For respondent Novopharm Limited (now Teva Canada)

Heenan Blaikie: Neil Fineberg, Trent Morris, Andy Radhakant, Andrew Skodyn, and Jonathan Stainsby. (They are in Toronto.)


Commissioner of Competition v. CCS Corporation et al.

A case about ownership of a landfill site is causing a big stink—and could significantly clarify the power of Canada’s antitrust watchdog to undo mergers. On July 13 the Supreme Court of Canada granted Tervita Corp. (formerly CCS Corp.) leave to appeal a Federal Court ruling upholding an order by the federal commissioner of competition ordering Tervita to divest a British Columbia landfill site it acquired in its purchase of Complete Environmental Inc.

The antitrust watchdog—the Competition Tribunal—said that allowing Tervita to keep the site would significantly reduce competition in the region for the disposal of hazardous waste, a decision upheld by the Federal Court of Appeal.

Because of the relatively low value of the deal (it was valued at $6 million, and the assets and revenues involved were well below thresholds requiring notification of the competition tribunal), the deal was not automatically reviewed.

But the commission can review mergers of any size within one year of closing, and the tribunal took it up. The case has competition lawyers on edge as it shows that the tribunal is willing to challenge mergers of any size.

The decision may have important implications for sellers in any deal that raises competition risk. One of the options for relief requested by the commissioner was a dissolution of the merger with the target assets to go back to the vendors. But in May 2012 the tribunal ordered divestiture of the site rather than dissolution of the merger.

For appellant Tervita

Torys: Litigation: Dany Assaf, John Laskin, Linda Plumpton, Crawford Smith, and associate Justin Necpal. (All are in Toronto.)

For respondent Commissioner of Competition

In-House: Jonathan Hood. (He is in Ottawa.)

WeirFoulds: Nikiforos Iatrou. (He is in Toronto.)