Federal Court of Appeal Strikes Claim for ''permanent loss of market share'' in a Section 8 Damages Action [ALTACE® (ramipril)]

Summary:

On May 2, 2011, a majority of the Federal Court of Appeal (Dawson JA; Noël JA concurring) relied on the prior decision in Fosamax^® (argued by Ogilvy Renault) and struck a claim for "permanent loss of market share" under section 8 of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"). Justice Sharlow dissented and held that this type of claim is arguably within the scope of section 8, is consistent with the object and purpose of the Regulations, and should not be struck from the pleadings.

On June 22, 2007, sanofi-aventis and sanofi-aventis Deutschland et al. (collectively "sanofi") commenced an action against Teva Canada Limited ("Teva") for infringing the Canadian patent for ramipril. On September 17, 2007, Teva defended the infringement action and counterclaimed against sanofi under s. 8 for damages allegedly caused by reason of a prior application under s. 6 of the Regulations. Teva's counterclaim was stayed pending a trial of the infringement action. On June 29, 2009, the Federal Court dismissed sanofi's infringement action and vacated the stay of the counterclaim.

In its Counterclaim, Teva sought damages pursuant to s. 8 of the Regulations. This section states that if a "first person" applies for a prohibition order and the application is withdrawn, discontinued or dismissed, the "first person" is liable to the "second person" for "any loss suffered" during a prescribed period. The period of liability under the Regulations begins on the date when the "second person" would have received a notice of compliance "but for" the prohibition application, and ends on the date when the application is terminated.

Sanofi-aventis brought a motion to strike Teva's claim for "permanent loss of market share" on the basis that this remedy is not within the scope of section 8. Sanofi-aventis' motion was granted by the Prothonotary and affirmed by the Federal Court judge (2010 FC 1210). Both Courts held that a "first person" is only liable for damages "suffered" during the period defined in the Regulations and not for losses "suffered" after that date.

Teva appealed to the Federal Court of Appeal. A majority of the Court affirmed the Federal Court decisions on the basis that "section 8 does not provide any entitlement to damages in respect of losses incurred outside the period." Hence, there was no reason to depart from the decision in Fosamax, as the present pleading was indistinguishable and there was no evidence that its prior decision was manifestly wrong. In a strongly-worded dissent, Sharlow JA held that "Teva's allegations are based on an interpretation of section 8 that its words can reasonably bear, and that is consistent with the purpose" of the Regulations. Justice Sharlow wrote that the "Regulations establish a legal procedure that amounts to a mandatory injunction"; section 8 is a "counter balance to the power of an innovator drug company to cause this mandatory injunction." Sharlow JA wrote that the damages contemplated by section 8 are "intended to be analogous to the undertaking a party is normally required to offer when seeking an injunction in ordinary commercial litigation" and should be interpreted broadly. Sharlow JA was "not persuaded that the narrow interpretation of section 8 adopted in [Fosamax], which turns on a narrow interpretation of the word "suffered", is correct." Sharlow JA expressed no view on whether the facts of the present case are distinguishable from those in Fosamax, but opined that the Court should not be precluded from reconsidering its prior decision in the context of Teva's claim.

Link to decision:
Teva Canada Limited v. sanofi-aventis Canada Inc. et al., 2011 FCA 149.

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