Canada: No Section 8 Liability For Valid And Infringed Patent In NEXIUM Proceeding

What happens when a patentee is unsuccessful in a prohibition application under the Patented Medicines (Notice of Compliance) (PMNOC) Regulations against a generic entrant, but subsequently prevails in an infringement action on the same patent? Can it be liable for section 8 damages under the Regulations? The answer appears to be no.

On February 15, 2018, the Federal Court issued a decision in Apotex Inc v AstraZeneca Canada Inc, 2018 FC 181, an action under section 8 of the PMNOC Regulations in which Apotex claimed damages for being delayed in marketing its esomeprazole magnesium product (a generic version of AstraZeneca's NEXIUM).

The Court held that AstraZeneca was not liable for any losses suffered by Apotex, as Apotex's claim would be fully offset by its liability for patent infringement in the but-for world.

AstraZeneca was not successful in its attempt to prohibit Apotex's market entry under the PMNOC Regulations as the Court had found Apotex's allegation of invalidity to be justified.  This gave rise to Apotex's section 8 claim for its alleged losses for delayed market entry.  AstraZeneca separately commenced a patent infringement action against Apotex while Apotex counterclaimed for invalidity.  As previously reported, AstraZeneca ultimately succeeded in the action in the Supreme Court of Canada. As a result of the Supreme Court decision, AstraZeneca argued in the section 8 action that Apotex was not entitled to any of its alleged losses, because had Apotex not been delayed to market by virtue of the PMNOC Regulations, Apotex would have nonetheless infringed a valid patent and any losses claimed to have been suffered would have been offset by its liability to AstraZeneca.

Apotex raised several counter-arguments, including a potential non-infringing alternative in the section 8 hypothetical world and an alternative construction of the hypothetical world in which the Supreme Court would not have decided AstraZeneca's appeal in the same way as it did in the real world.

The Court rejected Apotex's arguments and instead held that Apotex would have entered the market in the section 8 period with an infringing esomeprazole product, as it did in the real world, and that the patent infringement actions would have proceeded in the same manner such that AstraZeneca's patent would have ultimately been found valid.

In the result, since Apotex would have been liable to AstraZeneca for patent infringement, any damages that Apotex allegedly suffered in the section 8 period would have been fully offset by AstraZeneca's patent infringement claim, regardless of whether AstraZeneca claimed its own damages or elected to account for Apotex's profits.  Apotex has appealed.

In a separate judgment, and following the Supreme Court decision, the Court issued a declaration that Apotex infringed AstraZeneca's patent, rejecting Apotex's attempt to re-open the trial on new grounds of invalidity.

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