On August 27, 2015, the Ontario Superior Court of Justice declined to strike1 a claim by Apotex against Eli Lilly and Company and Eli Lilly Canada Inc for treble damages and double costs pursuant to the almost 400-year-old Statute of Monopolies and its 118-year-old Ontario descendant (collectively, the "Monopolies Acts"). Apotex claimed these damages, along with damages under the Patented Medicines (Notice of Compliance) Regulations, following a prohibition proceeding involving the drug atomoxetine. There, Lilly had established that Apotex's allegations of invalidity were unjustified, but the Court nonetheless dismissed the proceeding on the basis that it was moot because it found the asserted patent invalid in a parallel impeachment action involving another generic manufacturer. Apotex then began this action for damages against Lilly in the Ontario Superior Court of Justice.
The Court held that it was premature to confine the Monopolies Acts to the history books before Parliament or a Court has had an opportunity to consider them in detail upon a proper factual background. The Court held that it was not plain and obvious that no claim could be advanced under either or both of those statutes.
Not plain and obvious that the Patent Act and NOC Regulations are a complete code
The high threshold for striking a claim was not in dispute: it must be plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action or that the claim has no reasonable prospect of success.
The Court was not satisfied that the Patent Act and the NOC Regulations constitute a "complete code" which preclude all other claims. For example, the Court found that the Patent Act itself does not address the consequences of an invalid patent as regards a frustrated competitor or consumer. The Court held that the jurisprudence addressing the "complete code" argument in respect of common law causes of action was inconclusive and thus, in the absence of a binding Court of Appeal decision accepting it, the law was not settled.
The Court disagreed that section 8 of the NOC Regulations is part of a complete and comprehensive scheme which provides both the duty and adjudicative machinery to deal with that scheme. The Court added that the outcome of the prohibition proceeding is irrelevant to the Monopolies Acts claims. Section 8 damages claims and Monopolies Acts claims were thus at least arguably distinct claims. The Court noted that neither the Patent Act nor its subordinate NOC Regulations explicitly purported to foreclose claims under the Monopolies Acts.
Not plain and obvious that the Monopolies Acts do not apply
The Court held that it was at least arguable that the 1624 Statute of Monopolies was among the body of law incorporated into Upper Canada in 1792 and thus survived through to the constitution in 1867. It was thus not plain and obvious that it is not in force in Ontario and other parts of Canada. The Court added that there was no question of validity raised about its more recent Ontario descendant, which is materially identical to the 1624 Statute of Monopolies.
The Court then found the Monopolies Acts to arguably apply to patents, at least in the manner alleged by Apotex. Having been found to be invalid and thus void ab initio, arguably the rights used to grieve Apotex were without lawful foundation and thus cannot be sheltered from the Monopolies Acts. The Court described Apotex's theory of the case to be that an unlawful monopoly was used to optionally and voluntarily list the invalid patent on the Patent Register where the foreseeable and intended effect was to cause Apotex to be grieved in obtaining its NOC and selling its product. The Court held that the purpose of the damages contemplated by the Monopolies Acts was to dissuade such use of unlawful monopolies.
The Court also did not find it plain and obvious that exemptions for "new manufactures" and "true and first inventor" applied as the patent in question was never a valid patent nor was it in respect of a "new manufacture" or "true first inventor". The Court applied similar logic to the argument that the Statute of Monopolies ought to be read down to avoid infringing on federal patent jurisdiction, holding that the claim arose from the invalidity of a patent, not the validity of one.
The Court permitted Apotex to take its Monopolies Acts claim to trial because it was not plain and obvious that Apotex's claim was bound to fail. The threshold has always been very low for allowing novel claims such as this one to proceed to trial. However, the Courts have yet to hold that a claim such as Apotex's Monopolies Acts claim is in fact viable. A trial judge, apprised of the complete factual circumstances and with a more fulsome review of the law, may well ultimately find claims such as Apotex's claim unfounded in law or untenable on the facts. Nonetheless, without further guidance from the Court, it is difficult to foresee what kinds of activities could potentially trigger claims under the Monopolies Acts, should such claims find traction in the Courts.
1 Apotex Inc v Eli Lilly and Company et al, 2015 ONSC 5396
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.