Case: Apotex Inc. v. Eli Lilly Canada Inc.,
et al. (SCC file no. 35714)
Drug: olanzapine (ZYPREXA®)
Nature of case: Apotex SCC leave to appeal application on Rule 399 motion dismissal
Date of decision: April 24, 2014
On April 24, 2014 the Supreme Court of Canada ("SCC") dismissed Apotex Inc.'s ("Apotex") leave application on a Rule 399 motion to set aside a prohibition order, and dismiss the underlying application, in respect of Canadian Patent No. 2,041,113 ("the '113 Patent") and the drug ZYPREXA® (olanzapine). This decision confirms that a generic manufacturer cannot retroactively set aside and dismiss an earlier prohibition order against it based on a subsequent finding of patent invalidity in order to access section 8 damages.
In 2007, a prohibition order was issued against Apotex when it lost an application under the Patented Medicines (Notice of Compliance) Regulations relating to olanzapine and the '113 Patent. Apotex's allegations of invalidity were "not justified".
Subsequently, an impeachment action by another party was successful on the same patent. On appeal by Eli Lilly, the Court of Appeal remitted the issue of invalidity back to the trial judge for redetermination of the utility and sufficiency of disclosure grounds of alleged invalidity. The trial judge found that the promised utility was not soundly predicted and that the '113 patent was therefore invalid in rem. That decision was upheld on appeal and leave to appeal to the SCC on the finding of invalidity was refused.
Apotex then received a notice of compliance ("NOC") to market its version of the olanzapine product in 2009. Apotex proceeded to file a Rule 399 motion in the Federal Court to set aside the prohibition order and dismiss the underlying application in order to access section 8 damages. The Federal Court and the Federal Court of Appeal ("FCA") refused to grant this relief. In the FCA decision Justice Evans held that no reviewable error of law had been committed, and that a "finding that a patent is invalid does not enable the Court to reach back and retroactively dismiss an application for an order of prohibition granted earlier on the ground that an allegation of non-infringement or invalidity in a Notice of Allegation was not justified". The FCA went on to state: "[t]he practical significance of this issue is that a generic pharmaceutical manufacturer may claim damages under section 8 of the Regulations if an application for an order of prohibition under subsection 6(1) is withdrawn or discontinued, dismissed, or reversed on appeal. Since a subsequent declaration that a patent listed on the register is invalid is none of these, it does not give rise to a claim by the generic manufacturer for damages for loss of profits sustained during the time that the prohibition order kept its product off the market".
Justice Evans found that the FCA was bound by its earlier decisions on this issue1, and noted that Apotex's arguments that these cases are "bad law", "are more appropriately addressed in an application for leave to appeal to the Supreme Court of Canada".
The Supreme Court denied Apotex's leave application with costs. As is typical in leave decisions, reasons were not provided. In the result, the prohibition order stands even though Apotex was in fact able to obtain its NOC in view of the finding of invalidity in the impeachment action. Access to section 8 damages, therefore, is not available to Apotex in these circumstances.
Link to decisions:
1. Apotex Inc. v. Syntex Pharmaceuticals International Inc., 2010 FCA 155 and Pfizer Canada Inc. v. Ratiopharm, 2011 FCA 215.
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