On May 27, 2014, the Federal Court of Appeal upheld the striking
of portions of Teva Canada Limited's Statement of Claim seeking
punitive and exemplary damages in an action for generic damages
under section 8 of the Patented Medicines (Notice of
Compliance) Regulations.1 Teva claimed such
damages against Pfizer Canada Inc. and related companies following
prohibition proceedings involving the drug sildenafil, marketed by
Pfizer as VIAGRA®.
This decision helps to further define the scope of generic
damages claims. For example, prior jurisprudence limited generic
damages claims to their losses suffered during the liability period
defined in the Regulations, and rejected claims for
disgorgement of innovators' profits.
In Viagra, the Court of Appeal referred to
well-established Supreme Court jurisprudence setting the threshold
for the exceptional cases in which punitive damages may be
awarded. The Court acknowledged that punitive damages have
been found to be available in all types of cases, including some
patent infringement cases.
However, the Court held that the Regulations preclude
claims for punitive and exemplary damages because the regulatory
scheme is limited to providing compensatory relief. The Court
emphasized its earlier decisions holding that the wording of
section 8(1) allows compensation for a generic's losses
actually incurred by reason of the operation of the statutory stay,
but not for other types of relief, such as disgorgement of
The Court of Appeal notably adopted the reasons of the motions
judge who found support for the proposition that the
Governor-in-Council intended to exclude punitive damages in the
Regulatory Impact Analysis Statement ("RIAS") discussing
changes made in 2006 to section 8. The RIAS noted that
redundant, scandalous, frivolous or vexatious prohibition
proceedings or applications based on ineligible patents could be
dealt with summarily and with "costs available to the generic
manufacturer on a solicitor-and-client basis in particularly
egregious circumstances". The motions judge held that, while
costs are not a substitute for punitive damages and serve a
different purpose, the RIAS shows that the Governor-in-Council put
its mind to a remedy for innovators' "particularly
egregious conduct" in invoking the Regulations and
chose costs, not punitive damages, as the appropriate remedy.
The Court of Appeal also held that section 8(5), which permits
the Court to "take into account all matters" in assessing
the "amount of compensation", cannot sustain a claim for
punitive damages. The Court reasoned that, by their very
nature, punitive damages are not compensatory. Section 8(5)
merely allows the court to adjust damages taking into account any
conduct of the parties that contributes to the delay of disposition
of the proceeding which is, by its nature, compensatory in
1. Teva Canada Limited v Pfizer Canada Inc et
al, 2014 FCA 138 ("Viagra").
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