Canada: Ontario Court Of Appeal Conclusively Dismisses Generic's Unjust Enrichment Arguments In Section 8 Case (Intellectual Property Weekly Abstracts Bulletin – Week Of May 18)

Last Updated: May 21 2015
Most Read Contributor in Canada, September 2016

Edited by Chantal Saunders , Beverley Moore and Adrian Howard

Patent  Decisions

Ontario Court of Appeal Conclusively Dismisses Generic's Unjust Enrichment Arguments in Section 8 Case
Apotex Inc. v. Eli Lily and Company, 2015 ONCA 305
Drug:  atomoxetine

Apotex has brought a case against Lilly pursuant to s. 8 of the Patented Medicines (Notice ofCompliance) Regulations (the NOC Regulations). As part of the case, Apotex seeks damages pursuant to s. 8, under the Statute of Monopolies (U.K.), the Ontario Statute of Monopolies, and the Trade-Marks Act, as well as a disgorgement of Lilly's profits due to alleged unjust enrichment. This case considered an appeal of Lilly's motion to dismiss the unjust enrichment claim.

Apotex argued that the unjust enrichment claim was different than that previously considered by the Federal Court of Appeal, as this claim alleged that due to the finding of invalidity with respect to Lilly's patent, and allegations of misrepresentation, the NOC Regulations could not be relied upon as a valid juristic reason for Lilly to be immune from an unjust enrichment claim.

The Ontario Court of Appeal considered the previous jurisprudence relating to the NOC Regulations constituting a complete code, and a juristic reason for precluding an unjust enrichment claim in the context of Apotex' arguments. However, the Court decided the issue based on the lack of "corresponding deprivation" to Apotex. The Court held that Apotex was never deprived of the portion of Lilly's revenues represented by its profits, as Apotex would never have earned those profits. The purpose of the doctrine is to reverse unjust transfers of wealth, which did not occur in this case. Furthermore, the Court held that Apotex had not properly plead the elements required for disgorgement of "profits of wrongdoing", and even if it had, this is not a case where such an extraordinary remedy is available. Apotex was asking the Court to designate it as the de facto beneficiary of Lilly's profits, but it is not the sole party with a legitimate right to deter the underlying wrong.

The Court held that s. 8 of the NOC Regulations can make a generic company whole. Furthermore, a fundamental principle of tort law is that the wronged person is compensated for the full amount of loss, but no more. Thus, Apotex' appeal was dismissed.

Allegations of Obviousness of Three Patents Found Justified
Takeda Canada Inc. v. Canada (Health), 2015 FC 570

In a proceeding pursuant to the Patented Medicines (Notice of Compliance) Regulations, the Court was asked to consider three patents. Apotex alleged the patents were invalid on a number of grounds, including anticipation, obviousness, double-patenting, lack of utility, sufficiency and overbreadth.

The Court noted that Apotex tendered sufficient evidence to put the issues into play and therefore Takeda bears the burden. The Court found that the allegations of obviousness with respect to the three patents were justified, finding that the inventive concept and the relevant art, taken as a whole, were co-extensive. As a result, there was no gap to bridge. The Court then also noted that even if there had been gaps between the prior art and the inventive concepts of each of the three patents, no inventive steps would have been necessary to bridge the gap. Takeda's application was dismissed with costs.

Court of Appeal Raises Issues of construction and medical treatment that should be considered by a Higher Court in Future Cases
Cobalt Pharmaceuticals Company v. Bayer Inc., 2015 FCA 116
Drug: YAZ®

Both Bayer and Cobalt appealed from the Court's judgment. Both appeals were addressed by the Court of Appeal in this decision.

The Court of Appeal began with Cobalt's appeal and noted that the construction of the patent is to be reviewed on the basis of correctness. However, the Court of Appeal offered "certain observations for the Supreme Court of Canada to consider in a future case" relating to the standard. In particular, the Court of Appeal concluded that a correctness review may not be required for consistency and certainty in the interpretation of patents based on the doctrine of comity. The Court of Appeal noted that interpretation of the specification may be done on the basis of palpable and overriding error when done with significant reliance on expert testimony.

The Court of Appeal dismissed Cobalt's appeal relating to construction and non-infringement of one of the patents. The Court of Appeal held that, in terms of obviousness, Cobalt was inviting the Court of Appeal to re-weigh the evidence that was reviewed by the Court, which is not the standard of review. The Court of Appeal refused the appeal relating to lack of sound prediction on the basis that Cobalt changed its submissions from what was set out in the Notice of Allegation. The Court of Appeal was required to consider sufficiency and overbreadth because the Court found it was not necessary to consider these allegations as a result of its construction. Given that the Court of Appeal applied a different construction, these allegations were considered and rejected by the Court of Appeal.

With respect to Bayer's appeal relating to a different patent, the Court of Appeal denied the grounds of appeal relating to construction and found no reviewable error by the Court in finding the allegation of non- infringement was justified. In terms of the method of medical treatment allegations, the Court of Appeal noted that consideration of this allegation was not necessary because of the finding on non-infringement, but wrote that the current law, whereby methods of medical treatment are not patentable, should be fully considered by the Court of Appeal or the Supreme Court of Canada.

Issues of Infringement of Industrial Design and Validity of Patents Remitted to Court
Zero Spill Systems (Int'l) Inc. v. Heide, 2015 FCA 115

This is an appeal from a Judgment of the Court, dismissing the action, finding no infringement, and validity of one of the three patents. The Court of Appeal allowed the appeal, in part, by Zero Spill.

At issue were two industrial designs. Zero Spill is a licensee of one Design, which they alleged was infringed and the Respondents own the second Design, which Zero Spill seeks to invalidate. The Court of Appeal remitted the issue of infringement back to the Court on the basis that the Court erred in respect of requiring Zero Spill to lead evidence pursuant paragraph 5.1(a) of the Industrial Design Act. The Court of Appeal found that the Court should have determined the validity of the second design but because of the expiry of the Design in the period between the Court's judgment and the hearing of the appeal, the validity is now moot and the issue was not remitted to the Court. 

Also at issue were infringement and validity of patents. The Court of Appeal considered the issue of construction raised by Zero Spill in respect of one of the patents, and rejected this ground on the basis that it must presume that all of the record was reviewed by the Court. The Court is entitled to prefer certain evidence and that can only be set aside on the basis of palpable and overriding error. The Court of Appeal also found that Zero Spill did not establish palpable and overriding error with respect to infringement. With respect to the second patent, the Court of Appeal found no errors in the construction of the patent and therefore dismissed Zero Spill's appeal on the issue of infringement. However, the Court of Appeal found that the Court's approach to anticipation and obviousness was incorrect, and these issues were remitted to the Court for determination for two patents.

Compliance with Order in the Absence of Stay Renders Appeal of Order Moot
Sherman v. Pfizer Canada Inc., 2015 FCA 107

The Prothonotary ordered the production of certain documents, and the Court dismissed the appeal of this Order as moot. This is a further appeal.

The appellants appealed the Prothonotary's Order but did not seek to stay the order and indeed, produced documents to the respondents. The Court held that the appeal was moot on the basis that the Order had been substantially complied with, and refused to exercise the Court's jurisdiction to hear the appeal notwithstanding this compliance. The Court of Appeal found no reviewable error in this regard.

Trademark Decisions

Interlocutory Injunction Against Use of OMEGARED Upheld on Appeal
Jamieson Laboratories Ltd. v. Reckitt Benckiser LLC, 2015 FCA 104

The Federal Court of Appeal has upheld an interlocutory injunction awarded in a trademark proceeding (2015 FC 215, unreported), with a small variance to provide 30 days to comply, rather than forthwith. The injunction prohibits Jamieson from using the word OMEGARED and mandates the recall of products and other materials that would offend the terms of the prohibition.

Reckitt owns and licences the mark MEGARED for supplements containing omega-3 fatty acids. Jamieson now markets omega-3 fatty acid products under the name OMEGARED, following a rebranding in January 2013 when the products were called SUPER KRILL.

The Appeal Court summarized the Federal Court decision. All the elements of the tripartite test from RJR-McDonald v. Canada (Attorney General), [1994] 1. S.C.R. 311 were found to be present:

  • A serious issue to be tried – finding that Jamieson had undertaken its rebranding effort with the dominant purpose of frustrating Reckitt's entry into the Canadian market.
  • Irreparable harm – finding that Reckitt's damages in the event of success in the underlying action would be impossible to calculate, given that Reckitt would never have had the chance to operate its business in the absence of Jamieson's infringing behavior. Also finding loss of goodwill and quality concerns among customers.
  • Balance of convenience – finding that Jamieson had proceeded with its rebranding activity "eyes wide open" to the possibility of legal action by Reckitt.

Although the Court of Appeal found that the motions Judge delved too far into the merits of the case, this was not fatal to the decision. On balance, the decision was upheld and only the procedural matter of its implementation was varied.

Refusal to Register Mark Upheld – No Evidence of First Use Was Adduced By the Applicant
1104559 Ontario Ltd. v. Home Hardware Stores Limited, 2015 FC 566

The applicant appealed the refusal to register HOME TEAM & DESIGN in association with sales and installation of exterior residential and commercial products, namely, windows, doors, patio doors, storm doors, eavestroughs, siding, garage doors, awnings, sunrooms, screen rooms, skylights, decks and railings.

The respondent opposed, and argued that the mark had not been used in conjunction with the services since the claimed date of first use, or of the filing date. The applicant had not filed any evidence in support of the registration. The respondent had provided web searches dating back to 2001.

No error was found in the registrar's decision, as the Federal Court held it was reasonable and supported by fact and law. The appeal was dismissed.

Opposition Board's Decision Allowing an Application for a Colour on Packaging Upheld a Second Time on Appeal
Rothmans, Benson & Hedges, Inc. v. Imperial Tobacco Products Limited, 2015 FCA 111

Rothmans appeals an earlier order (2014 FC 300) upholding the rejection of its opposition to two trademark applications for an ORANGE PACKAGE DESIGN in association with manufactured products, namely cigarettes.

On appeal, it was made clear that Rothmans was not arguing the registrability of the marks had they been used as described, rather they argued that the applications are not representative of the marks as used. However, this was held to be a new argument on appeal, and so it was not unreasonable for the Board to not consider them. Despite all the arguments made, the Board's decision was upheld.

Industry News

Health Canada has published a Guidance Document: Drug Submissions Relying on Third-PartyData (Literature and Market Experience).

Health Canada has published a revised Guidance Document: Reconsideration of Decisions Issued for Human Drug Submissions.

Health Canada has announced an Information Sharing Pilot, and provided an Information package on Participation in the Information Sharing Pilot for the Evaluation of Generic Drug Applications Involving the Centralised Procedure of the European Union.

Health Canada has announced a change to the Drug Products Database Online, indicating it will include all approved but not marketed products.

Health Canada has published a Quality of Natural Health Products Guide.

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