Canada: Ontario Court Denies Generic Claims For Innovator Profits: "Apotex v. Takeda And Abbott", 2013 ONSC 356

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.” (para. 172)

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 Regulations.

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 balance.

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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