On September 12, 2013, the Ontario Court of Appeal upheld the
Superior Court's dismissal of Apotex's claim for
disgorgement of Takeda's and Abbott's profits in the
context of the Patented Medicines (Notice of Compliance)
Regulations (the "NOC Regulations").
The Ontario Court had previously dismissed motions to strike such
claims on the basis that it was not "plain and obvious"
that they could not succeed. In contrast, by upholding the
underlying summary judgement, the Ontario Court of Appeal has
confirmed and clarified the law.
The Divisional Court has been swift to apply the Court of
Appeal's decision. In a case decided on September 19,
2013 involving another Apotex claim for disgorgement ("Eli
Lilly") the Divisional Court followed Takeda &
Abbott and, in a decision delivered from the bench, reversed
the Court belowand struck Apotex's claim for disgorgement of
profits against Eli Lilly.
As a result of these decisions, Ontario's jurisprudence now
closely tracks that of the Federal Court of Appeal
1 ("Eli Lilly FCA Decision"), which
bars claims for unjust enrichment arising out of the operation of
the NOC Regulations. In so doing, the Ontario courts
have resolved the uncertainty surrounding the availability of this
remedy in Ontario, lessening their appeal to generic drug
Apotex v. Takeda and Abbott
In the underlying summary judgment motion (the "Quigley
Decision"), Justice Quigley dismissed Apotex's
allegation 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 noted the
delicate balance struck by Parliament in crafting Canada's laws
concerning pharmaceutical inventions. He was persuaded by the
Federal Court of Appeal's finding in the Eli Lilly FCA
Decision that its jurisdiction to grant equitable relief could
not be used to grant a remedy that the NOC Regulations
were intended to exclude. Justice Quigley also found that
there were two juristic reasons for the alleged unjust enrichment:
the NOC Regulations and an existing settlement agreement
between the parties.
The Court of Appeal unanimously affirmed the Quigley
Decision, rejecting all arguments raised by Apotex on
appeal. The Court of Appeal held that, regardless of the
enforceability of a settlement agreement between the parties to the
proceeding, "the deprivation that the appellant suffered could
be no more than their damages for that period calculated according
to s. 8 of the Patent Regulations." The Court
of Appeal found that such deprivation could not extend to the
The Court of Appeal also rejected Apotex's argument that it
should be entitled to pursue an unjust enrichment claim, separate
from the NOC Regulations:
In our view, the simple answer to that argument is that the
profits or revenues earned by the respondents for which the
appellant claims disgorgement are due to the operation of the
regulatory scheme of the Patent Regulations. 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. (para.
Apotex v. Eli Lilly
In the lower Court, the Motions Judge declined to strike
Apotex's claim for disgorgement of Eli Lilly's
profits. On appeal, the Divisional Court noted at the outset
that the Motions Judge "did not have the benefit of the
thorough reasons [...] in [the Quigley Decision] which was
recently affirmed by the Court of Appeal."
The Court recognized that the Quigley Decision was
decided in the context of a motion for summary judgment rather than
a motion to strike. However, the Court rejected Apotex's
attempts to distinguish the Quigley Decision on grounds
which it held "arise from the [PMNOC] Regulations
which are a part of a complete statutory code governing patent
The Court held that it was plain and obvious that Apotex's
Statement of Claim disclosed no claim totally independent from the
Gowlings appeared as counsel in each of the cases referred to
above. Gowlings lawyer Christopher Van Barr appeared for
Takeda in both the Apotex Appeal and the Quigley
Decision. Gowlings lawyers Patrick Smith and Todd Burk
appeared for Eli Lilly in the Eli Lilly Decision.
Patrick Smith also appeared for Eli Lilly in the earlier Federal
Court of Appeal decision referred to in each of the Ontario
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