When a generic drug claims damages against a brand name drug,
what limits should be put on calculating compensation? Section 8 of
the Patented Medicines (Notice of Compliance) Regulations was
designed to answer just that question, but it left some questions
unanswered. A pair of twin judgments by Justice Snider, Teva Canada Ltd. v. Sanofi-Aventis Canada
Inc., and Apotex Inc. v. Sanofi-Aventis Canada Inc.
released at the end of May 2012, provided insight into some of the
Damages under Section 8
Under section 8 of the Regulations, if a brand name's patent
claim falls through, the brand name owes damages to the generic
company for money lost during what is called the "Relevant
Period." This is the period that the generic company would
have had the right to sell the product if the Regulations
– in place to protect the rights of the original brand
name patent owner – did not exist. The period ends on the
date that the patent ownership claim is dismissed.
Sanofi held rights to seven Canadian patents for rampiril (a
drug used to treat high blood pressure and congestive heart
failure), marketing it as ALTACE. Two generic brand companies, Teva
and Apotex, wanted to sell the drug, but Sanofi exercised its
rights under the Regulations, and the generics had to wait several
years until they were allowed to commence sales.
The companies then claimed that Sanofi was liable for the losses
they suffered when they were unable to sell their products. Sanofi
acknowledged in both cases that it owed damages, but pointed out
that the Relevant Period was being overestimated by the generics,
and took issue with some of the assumptions that went into the
generics' assessments of damages.
Limits on Calculating Compensation
Justice Snider set out to determine "What would have
happened if Sanofi had not brought an application for
prohibition?" In answering this question, she determined that
courts should consider the possibility of multiple market entrants,
but only within a reasonable and fact-contextual limit.
Justice Snider also clarified that the Relevant Period cannot
begin earlier than the day on which the generic brand's
prohibition triggers the statutory stay. 'Ramp-up' periods
(between product development and maximum selling capacity) should
be deducted in the assessment, and future lost profit calculations
constitute an attempt to claim damages outside the Relevant Period,
and should be excluded.
Though the law of section 8 claims is still developing, these
two cases are helpful in clarifying the factors that will be
considered when evaluating generic companies' section 8 damages
claims, including the commencement date of the "Relevant
Period" and damage deductions for "Ramp-up."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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