"APOTEX" Dr.B.S.SHERMAN BSc(Eng. U.Tor) PhD (MIT) loses case

From McCARTHY TETRAULT LLP

Published by the IP Litigation Group 2013 January 22

Ontario Court Grants Summary Judgment Dismissing Apotex’s Claim for Unjust Enrichment by: Fiona Legere, Steven Mason and Brooke MacKenzie On January 15, 2013, the Honourable Justice Quigley of the Ontario Superior Court granted summary judgment to Abbott and Takeda, denying Apotex’s claim for disgorgement of profits on the basis of unjust enrichment. The case involved a claim for damages arising from Abbott’s invocation of the Patented Medicines (Notice of Compliance) Regulations. The PM (NOC) proceedings were ultimately discontinued by Abbott and Apotex thereafter brought an action, in the Ontario Court, for (a) damages under section 8 of the PM (NOC) Regulations; and (b) disgorgement of Abbott’s profits on the basis of unjust enrichment. In the Federal Court, generic drug manufacturers have been limited to their own lost profits as a remedy for any alleged delay arising from the invocation of the PM (NOC) Regulations.  Most recently, the Federal Court of Appeal in Apotex Inc. v. Eli Lilly Canada Inc., 2011 FCA 358, struck out a claim by Apotex for a disgorgement remedy. The Ontario Court initially took a more circumscribed view and refused to strike out claims brought by generic’s for disgorgement. In lengthy reasons for decision, Justice Quigley granted Abbott’s motion for summary judgment, providing three independent bases to support his decision: Apotex could not rely on equitable rights for additional remedies not provided for in the PM (NOC) Regulations. The PM (NOC) Regulations provide a "complete code" for compensation, which ousts common law rights that might have operated but for the statutory scheme. Parliament expressed its intention to eliminate any claim to unjust enrichment with "irresistible clearness". Apotex could not meet the tripartite test for unjust enrichment because the operation of the PM (NOC) Regulations constitutes a juristic reason for any alleged enrichment. Apotex could not meet the tripartite test for unjust enrichment because the September 2008 settlement agreement between the parties constitutes a juristic reason for any alleged enrichment. The Court held that the key issue in dispute was a question of law, and a comprehensive documentary record permitted the Court to make any necessary findings. The Court agreed with Abbott that this was precisely the kind of case that can and ought to be resolved by summary judgment, on the basis of the "full appreciation test" articulated in the Ontario Court of Appeal’s decision in Combined Air Mechanical Services Inc. v. Flesch. The decision is an important win for innovator pharmaceutical companies in Canada because it forecloses claims for disgorgement of an innovator’s profits merely because an innovator unsuccessfully invoked the PM (NOC) Regulations. Justice Quigley’s reasons make clear that no such claim lies in unjust enrichment where innovators avail themselves of the procedures provided for under the PM (NOC) Regulations.  Importantly, the law in Ontario is also now consistent with Federal Court jurisprudence.  Although Apotex argued that the Ontario Court was not bound by and should not follow the Federal Court jurisprudence, the Court held that there were strong reasons to do so. Indeed, the Court admonished Apotex for "seek[ing] to circumvent determinations that have already been made by the Federal Court" which could "leave itself open to an allegation that it is engaging in forum shopping". A copy of the decision can be viewed here.