Canada: Federal Court Decision In First Section 8 Damages Case Under The PMNOC Regulations: Section 8 Remedy Found Not To Include Innovator´s Profits

Apotex Inc. v. Merck & Co., Inc. et al. (October 21, 2008), Ottawa, T-1144-05 (Fed. Ct.)

In the first trial decision in an action brought pursuant to Section 8 of the Patented Medicines (Notice of Compliance) Regulations (the Regulations), Justice Hughes of the Federal Court has determined that the Federal Court has jurisdiction to hear and determine actions instituted under Section 8 of the Regulations, that Section 8 is properly enabled, and that the federal Parliament has the constitutional authority to pass Section 8. Of particular significance to innovator pharmaceutical companies will be the Federal Court's further determination that under sub-section 8(4) of the Regulations, generic pharmaceutical companies are not entitled to disgorgement of the profits made by the innovator company during the period of the Section 6 PMNOC proceedings in the event the application is withdrawn, discontinued or dismissed. Justice Hughes also decided that the generic company could recover its damages or lost profits for the period it was kept off the market, and that it could also claim recovery of damages that occurred during the same period and extended beyond this period for loss of permanent market share if the damages could not have been or were not rectified in the same period.

Background of the PMNOC Regulations

The Regulations were originally enacted in 1993 and replaced a compulsory license scheme for the sale of patented medicines in Canada. Under the Regulations, a generic pharmaceutical company may apply for a notice of compliance by comparing its product to an innovator product but must give notice to the innovator that its product will not infringe the innovator product, or that the patent is invalid, among other things (Section 5). The innovator company may then bring an application under Section 6 of the Regulations to prevent the issuance of a notice of compliance to the generic, thereby instituting an automatic 24-month stay. If the innovator's application is withdrawn, discontinued or dismissed, the generic company may bring an action under Section 8 of the Regulations to recover its losses.

This case deals only with the version of Section 8 of the Regulations in the form in which that section stood prior to amendments made to the Regulations in October 2006. Sub-section 8(4) of that version provided that in any proceeding brought claiming relief for such loss, "[t]he court may make such order for relief by way of damages or profits as the circumstances require in respect of any loss referred to in sub-section (1) [emphasis added]." The current version of Section 8 expressly limits the relief to "any order for relief by way of damages that the circumstances may require."

The Action

In this action, Apotex claimed recovery against Merck under Section 8 for the delay in launching Apo-alendronate due to the Section 6 proceeding commenced by Merck on May 29, 2003. That proceeding was dismissed by the Federal Court on May 27, 2005. The Minister immediately issued a Notice of Compliance to Apotex permitting it to sell its generic version of alendronate in Canada.

The decision by Justice Hughes was issued following a trial on the merits in which the parties submitted an agreement as to facts and document pertaining to preliminary issues for determination. The case was decided solely on the agreement as to facts and documents.

Although Merck & Co., Inc. was a named defendant in the case, shortly before trial an Order was issued on consent discontinuing the action against that entity. The action proceeded as against two Canadian Merck entities only.

The Issues

Merck raised the following issues for preliminary determination:

  1. Does the Federal Court lack jurisdiction to hear an action pursuant to Section 8 of the Regulations?
  2. Is Section 8 of the Regulations ultra vires Section 55.2(4) of the Patent Act, R.S.C. 1985, c. P-4, as amended; and
  3. Is Section 8 outside the scope of Parliament's power to make laws in relation to patents of invention and discovery, and an unlawful intrusion into the exclusive jurisdiction of the provinces pursuant to Section 92(13) of the Constitution Act, 1867, R.S.C. 1985, App. II, No. 5?

Apotex raised the following issues for preliminary determination:

  1. Is Apotex entitled to an election as between the damages it has suffered, if any, and the profits made by Merck, if any?
  2. What is the period of time in respect of which Apotex may claim recovery?
  3. Is Apotex entitled to recover for damages that continue after the period expires?

The Decision

Justice Hughes found that the Federal Court has jurisdiction to hear an action pursuant to Section 8, that Section 8 is enabled by Section 55.2(4), and that Section 8 meets all the criteria required for valid federal legislation, all with reference to specific provisions of the Regulations, the Patent Act, the Federal Courts Act, and the Regulations. Justice Hughes held that the Regulations are, in their pith and substance, regulations dealing with patents, and that the Regulations must be read as a whole.

Significantly, Justice Hughes dismissed Apotex's submission that it was entitled to elect between Apotex's damages or Merck's profits during the relevant period. Apotex argued that it should be entitled to such an election on the basis, among other things, that sub-section 8(4) provides for "relief by way of damages or profits." Justice Hughes reasoned from the context of the whole of the section that what is provided for is an Order compensating a generic company for loss. Justice Hughes held a generic company may not claim damages or an account of profits for infringement. If it has been kept off the market for a period of time, it may claim compensation for loss. Compensation in these circumstances takes the form of "damages or profits," and Justice Hughes held that the reasonable interpretation of those words in Section 8 is that the generic may seek, as a measure of its damages in the alternative, "the profits that it would have made if it had been able to market its product at an earlier time."

Justice Hughes further held that the period for which Apotex was to be compensated should not be reduced due to delay in Apotex serving its Notice of Application, but permitted Apotex to claim for damages for lost sales and lost permanent market share due to its delay in launch, during which period two other generic manufacturers entered the market — "provided that the marketplace did not rectify itself or Apotex could not have remedied the marketplace disadvantage before May 26, 2005." Justice Hughes made clear that these are matters of quantification to be left to the later trial.

This decision will undoubtedly be the subject of appellate review and with a series of cases nearing trial, we expect to see further developments on this important issue.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.