Federal Court Enforces Settlement Agreement Against Apotex Regarding Gatifloxacin

On March 24 2015, Hughes J of the Federal Court of Canada granted Allergan’s motion for an Order enforcing the terms of settlement offered by Apotex in a patent infringement action regarding gatifloxacin (Allergan, Inc v Apotex Inc, 2015 FC 367).

Allergan commenced the infringement action against Apotex in August 2010. In April 2012, Apotex’s counsel presented an Offer to Settle, which was subsequently clarified (Settlement Agreement). Allergan’s counsel responded in June 2012 with draft Minutes of Settlement that incorporated the Settlement Agreement. The parties made further exchanges regarding the draft Minutes but the essential terms remained unchanged. Allergan eventually accepted the terms in February 2014, but in March 2014, Apotex advised Allergan that it had withdrawn its offer to settle. Allergan brought a motion seeking enforcement of the Settlement Agreement.

Justice Hughes drew the following principles from his review of the jurisprudence on whether a contract has been entered into:

• for there to be a binding contract, there must be an offer and acceptance wherein the terms of the offer are matched by the terms of the acceptance;
• the acceptance must be unequivocal;
• there can be an offer and acceptance so as to create a binding contract even where the parties contemplate the execution of a more formal document; and
• negotiations as to the more formal document do not necessarily mean that an offer or acceptance has been repudiated.

Hughes J noted that the Court must apply a subjective standard to determine whether there has been a binding contract on a case-by-case basis.

In the present case, Hughes J found that the Settlement Agreement was clear and unequivocal and was accepted by Allergan in February 2014. He therefore held that Allergan was entitled to enforce the Settlement Agreement.