Canada: Damages Reference: NIA Held To Not Be Available; Section 8 Damages Not Payable After Successful Infringement Claim (Intellectual Property Weekly Abstracts - Week Of October 16, 2017)

Last Updated: October 20 2017
Article by Chantal Saunders, Beverley Moore, Adrian J. Howard and Jillian Brenner

Most Read Contributor in Canada, October 2017

Patent Decisions

Damages reference: NIA held to not be available; section 8 damages not payable after successful infringement claim

AstraZeneca Canada Inc. v. Apotex Inc., 2017 FC 726

Drug: esomeprazole

The Federal Court recently issued the public decision in the reference on the patent infringement finding and the section 8 damages finding between AstraZeneca and Apotex. The section 8 case and the infringement case were heard separately, but the references were consolidated. The parties resolved most of their quantification issues prior to the hearing. The Court was left to determine whether: Apotex had a non-infringing alternative ("NIA"); how to reconcile the section 8 judgment with the infringement judgment, the allowance for profits on profits and the allowance for the United States District Court award for infringement.

In considering Apotex's NIA argument, the Court held that the onus rests on Apotex to prove that a NIA was available, and the cost of such an alternative. Apotex proposed a number of hypothetical formulations. However, the Court held that none of them had been shown to be approvable and commercially viable. Apotex was instead relying on extrapolation of data. The Court held that this approach was unacceptable. Apotex was asking the Court to predict a result it could have established itself. The Court was not prepared to draw those inferences. The Court considered all of the evidence put forward by the parties and held that Apotex had failed to establish on a balance of probabilities that it would have had an available NIA.

Apotex argued that its entitlement to damages as a result of the section 8 case should be set off against AstraZeneca's entitlement to damages in the infringement case. AstraZeneca argued that Apotex had not suffered any financial loss, but rather a lost opportunity to infringe its patent. In considering the arguments, the Court held that its discretion under section 8(5) must consider all of the circumstances bearing on the claim. The Court held that in order to recover any losses, Apotex would have necessarily had to infringe AstraZeneca's patent. Thus, if Apotex had entered the market during the section 8 period, it would have been required to disgorge its profits. As a result, Apotex was not entitled to recover any damages under section 8, as it had suffered no loss.

In considering profits on profits, the Court held that where it is not possible to know precisely how the infringer put its profits to use, it will be assumed to have made the most beneficial use of them, and compounded interest is the presumptive approach. No evidence was led as to how Apotex made use of its profits. The Court set the rate at prime compounded annually. Apotex did not disclose its tax statements, so no tax adjustment was made on the award of profits on profits.

Finally, the U.S. District Court had made an award to AstraZeneca for Apotex's infringement of an unrelated patent in the U.S. and the parties disagreed as to the legal effect of that judgment on recovery in these proceedings. Apotex was exporting esomeprazole to the United States that infringed the patent in this case. The Court held that AstraZeneca would be deprived of full recovery if Apotex does not have to disgorge any profits it made on U.S. exports. Thus, Apotex was ordered to disgorge all such profits less its portion of the U.S. judgment.

Allegations of obviousness and inutility found not justified

Pfizer Canada Inc. v. Teva Canada Limited, 2017 FC 777

Drug: PRISTIQ Form I ODV succinate

This application pursuant to the Patented Medicines (Notice of Compliance) Regulations involved allegations of obviousness and inutility. The reasons in an application resulting from a Notice of Allegation sent by Apotex Inc. related to the same drug were released separately (see 2017 FC 774, our summary here) and involved allegations of non-infringement, anticipation, double patenting, and overpromising arising out of section 27(3). The parties in the within application agreed on the construction of the asserted claims. The Court found that Teva's allegations of obviousness and inutility were not justified.

The Court set out the relevant considerations for an allegation of obviousness. The Court rejected Teva's argument that there is an over-arching inventive concept that applies to all the asserted claims. The Court determined the inventive concept of each asserted claim and then determined that a gap existed between the state of the art and the inventive concepts. The Court then considered whether the skilled person would have come directly and without difficulty to the solution taught by the patent. Teva argued that its witnesses were blinded but the Court considered this to be a question of relevance, reliability and weight, and concluded that a skilled person would not have come directly and without difficulty to the solution in the patent. The doctrine of obvious to try was applied by the Court, and the Court ultimately concluded that it was not more or less self-evident that what is being tried ought to work. Teva's allegation of obviousness was not justified.

In light of the Supreme Court's decision in AstraZeneca, the Court set out that the first question to be answered in respect of utility is to identify the subject-matter of the invention as claimed in the patent, and the second question is whether that subject-matter is useful. The Court also assessed utility on a claim by claim basis and found the allegations of inutility were not justified.

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