On September 12, 2013, a panel of three judges of the Court of
Appeal for Ontario (ONCA) unanimously upheld the decision of the Ontario
Superior Court of Justice (ONSC) earlier this year to grant partial
summary judgment to Abbott and Takeda, denying Apotex's claim
for disgorgement of profits on the basis of unjust enrichment.
The case involved a claim for damages arising from Abbott's
invocation of the Patented Medicines (Notice of Compliance)
Regulations (PM(NOC) Regulations) relating to its drug
Prevacid®. The PM(NOC) proceedings were ultimately discontinued
by Abbott following a settlement agreement between the parties, and
Apotex thereafter brought an action in the ONSC for (a) damages
under section 8 of the PM(NOC) Regulations and (b) disgorgement of
Abbott's profits on the basis of unjust enrichment. On January
15, 2013, Justice Michael Quigley granted Abbott's motion for summary
judgment to deny Apotex's claim for disgorgement.
In dismissing Apotex's appeal, the ONCA observed that Apotex
had now conceded that its damages for any delay in obtaining access
to the generic market is limited to its own lost profits. Moreover,
the ONCA held that, even if the settlement agreement is
unenforceable (which Apotex argued was a possible outcome of the
trial), the remedy to Apotex could still not exceed its lost
In holding that Apotex's damages are limited to its own lost
profits, the ONCA put an end to any remaining debate over whether a
generic can claim disgorgement merely because the innovator
lawfully exercised its rights to invoke the PM(NOC) Regulations.
Indeed, the ONCA confirmed that the operation of the PM(NOC)
Regulations specifically authorizes an innovator to do so and, as a
result, a claim for unjust enrichment is not available:
The respondents' right to be in the market to the exclusion
of the appellant and therefore to earn its profits or revenues is
that provided for by the Patent Regulations. Those Regulations
constitute a valid juristic reason for the respondents' profits
and revenues for the period in question. This precludes the
appellant's claim for disgorgement.
As a result, the law in the Federal Court and in Ontario is now
clear. A generic cannot claim disgorgement of the innovator's
profits for delayed market entry caused by invoking the PM(NOC)
McCarthy Tétrault was counsel of record for the
respondent Abbott Laboratories Limited.
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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