On January 15, 2013, a provincial Court held, for the first
time, that generic drug companies are prohibited from claims of
disgorgement of an innovator drug company’s profits in the
context of claims made under the Patented Medicines (Notice of
Compliance) Regulations (the NOC Regulations). The
decision, Apotex v. Takeda and Abbott (Apotex),
comes in the wake of the Ontario Court’s dismissal of several
motions to strike such claims. In those cases, the Court held that
it was not “plain and obvious” that the claims advanced
by the generics could not succeed based on principles of unjust
enrichment. Apotex now clarifies the law.
Justice Quigley’s decision in Apotex, arising
from Takeda’s and Abbott’s motion for partial summary
judgment, brings the Ontario Superior Court of Justice in line with
jurisprudence from the Federal Court of Appeal. In particular,
Apotex alleged in its statement of claim that Takeda and Abbott
wrongfully invoked the NOC Regulations and that such
wrongful invocation entitled Apotex to disgorgement of
Takeda’s and Abbott’s profits on the basis of unjust
enrichment. Justice Quigley disagreed and found that:
The NOC Regulations are a
delicate and complicated balance of competing interests.
Recognition of Apotex’s claim to unjust enrichment would
frustrate Parliament’s policy decision to preclude the
disgorgement of the innovator’s profits from a claim for s. 8
damages. Section 8 is part of a “complete and comprehensive
scheme that both supplies the duty and provides the necessary
adjudicative machinery such that resort to the common law is
duplicative in any situation where the common law applies.”
The framework for, and the balance struck by, Canada’s
laws addressing pharmaceutical inventions figured prominently in
the Court’s decision in Apotex. The Court also
addressed the following issues:
Equitable Jurisdiction of the Ontario Court and
Appropriateness for Summary Judgment
Apotex had argued that the broader equitable jurisdiction of the
Ontario Superior Court permitted it to pursue the same disgorgement
remedy that has been previously denied by the Federal Court.
However, Justice Quigley concluded that this equitable jurisdiction
is no wider than that of the Federal Court when dealing with
subject matter within that Court’s concurrent jurisdiction.
Justice Quigley also concluded that summary judgment was an
appropriate mechanism to address Apotex’s claim for
disgorgement. The Court found that it was possible to have a
“full appreciation” of the evidence and the issues
necessary to permit a dispositive finding in this case.
The Federal Court of Appeal
The Federal Court of Appeal recently granted a motion by Eli
Lilly to strike Apotex’s claim against it for unjust
enrichment, finding that the Federal Court’s jurisdiction to
grant equitable relief could not be used to grant a remedy that
Section 8 of the NOC Regulations was intended to exclude
(Apotex. v. Eli Lilly Canada Inc., 2011 FCA 358). Justice
Quigley held that he was not bound by stare decisis to the
Federal Court of Appeal decision. However, he found that the
doctrine of judicial comity supports adherence to it. He also noted
that leave to appeal the Federal Court of Appeal’s decision
was denied by the Supreme Court of Canada. While not tantamount to
an adoption of the decision by the Supreme Court, Justice Quigley
viewed this circumstance as adding some weight to the correctness
of the decision.
Justice Quigley independently found that the NOC
Regulations constitute a comprehensive scheme and complete
code and, as such, a remedy for unjust enrichment does not exist in
the context of remedies provided in the NOC
Juristic Reasons for any Unjust Enrichment
Justice Quigley went on to address whether, in any event, Apotex
had established the third element of the tripartite test for unjust
enrichment, namely, whether there is an absence of a juristic
reason for any enrichment. Justice Quigley found that Apotex did
not satisfy the test as two juristic reasons were present for any
alleged enrichment, the NOC Regulations themselves and a
settlement agreement entered into by the parties.
With respect to the NOC Regulations, he found that
there was no requirement that the invocation of the legislation be
“required by law.” Rather, the juristic reason was
satisfied by the operation of law that produces the result. That is
to say, the “juristic reason” leg of the test does not
require that the law compel an innovator to commence an
NOC application; it is sufficient if the operation of the NOC
Regulations permit such an application to be commenced.
Justice Quigley also noted that the NOC Regulations strike
a balance with the “early working” and
“stock piling” provisions of the Patent
Act, which permit accelerated market entry of generic products
in Canada. He found that permitting Apotex to claim disgorgement of
the innovator’s revenues or profits would disrupt this
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