Nature of case: PM(NOC) Regulations - Section 8
Date of decision: May 23, 2012
On May 23, 2012, the Federal Court held that Merck Frosst Canada
Ltd. ("Merck") is liable to Apotex Inc.
("Apotex") for damages under section 8 of the
Patented Medicines (Notice of Compliance) Regulations (the
"Regulations"), but exercised its discretion to
reduce the amount of compensation payable based on a defence of
ex turpi causa.
On March 26, 1997, the Federal Court made an order dismissing
Merck's application for a prohibition order under section 6 of
the Regulations in respect of the drug MEVACOR
(lovastatin), without addressing the substantive issue of whether
Apotex's product would infringe. Apotex subsequently sued Merck
for damages under section 8 of the Regulations. At trial,
the Federal Court (per Snider J.) held that Apotex was not entitled
to make a claim for section 8 damages under the 1993 version of the
Regulations. The Federal Court of Appeal set aside that
decision on the basis that the 1998 version of the
Regulations applied, and remitted the matter to the
Federal Court to determine: i) the period for which Merck is liable
to Apotex for damages under section 8; and ii) whether the defence
of ex turpi causa is applicable to reduce the compensation
otherwise payable under section 8.
On remand, the Federal Court (per Snider J.) held that Merck is
liable to Apotex for damages under section 8 of the
Regulations beginning on the date that Apotex's drug
submission was placed on "patent hold" (May 25, 1996),
and ending on the date that the Court dismissed the application for
a prohibition order (March 26, 1997). The Court then considered
whether to exercise its discretion under section 8(5) to reduce the
compensation owing to Apotex during the relevant period. Merck
argued that Apotex's damages should be reduced or eliminated,
as some of the product that Apotex would have sold during the
period of liability would have infringed a valid Merck patent. In
support of its argument, Merck referred to a previous decision from
a patent infringement action involving lovastatin in which the
Court held that some of Apotex's sales infringed Merck's
patent (2010 FC 1265, affirmed 2011 FCA 363). Justice Snider held
that Apotex would have used an infringing process to produce
lovastatin until February 26, 1997 and should not be entitled to
damages for those sales. However, Apotex was entitled to
compensation for the period beginning on February 27, 1997 and
ending on March 26, 1997, as there was no evidence that Apotex
would have infringed Merck's patent during that period.
The amount of compensation owing to Apotex during the period
from February 27, 2007 to March 26, 2007 will be determined in a
subsequent phase of the trial.
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