Canada: Federal Court Of Appeal Upholds Denial Of Innovator Profits And Refuses To Grant Damages For Future Lost Market Share In First Case Under S. 8 Of The PM(NOC) Regulations

In September 2008, the Federal Court released its first decision interpreting s. 8 of the PM(NOC) Regulations. This decision was split. Merck was successful in limiting Apotex to claiming its damages, rather than Merck's profits. Apotex was successful in arguing that the vires of the provision should be upheld and in arguing that its damages should include market share lost as a result of the Prohibition Proceedings. A full account of this decision can be found in Gowlings Publication: Life Sciences & Law 2009/10 Current Issues.

Both parties appealed this decision and the Appeal was heard in April 2009. The Court of Appeal just released its decision on June 4, 2009.

The Court of Appeal dismissed Apotex' appeal as a whole, with costs. Thus, Apotex is not entitled to claim Merck's lost profits in the damages reference to follow.

The Court of Appeal granted Merck's appeal insofar as it related to the issue of lost future market share. Instead of sending the issue back to the Trial Judge, it issued an order that Apotex' claim for lost permanent market share must be confined to those losses shown to have been incurred during the section 8 period. The remainder of Merck's appeal was dismissed. This means that section 8 is not ultra vires, and that the Federal Court does have jurisdiction to hear the proceeding.

Jurisdictional and Constitutional Issues

The Court of Appeal upheld the vires of section 8, as it is part of the balance in the Patent Act. The Court of Appeal relied on the recent decisions of the Supreme Court in Biolyse and AstraZeneca that discussed this balance. The Court of Appeal then held that the authority to devise remedies to prevent patent infringement comes with the power to ensure those remedies are used for that purpose, and not to perpetuate a monopoly beyond the statutory period. This is particularly the case when the balance sought is effective patent enforcement through the PM(NOC) Regulations and timely market entry of lower-priced generic drugs through the "early working" exception.

The Court of Appeal then expressed that concerns with the automatic stay include that the patentee has an interest in delaying the proceeding and in evergreening their products. Section 8, by imposing damages when the proceeding is withdrawn, discontinued or dismissed, alleviates those concerns. The Court of Appeal also suggested that the first person no longer has exclusive interest in delaying the progress of the proceeding. As a result of section 8, the first person must consider infringement and will consider the strength of its position before initiating a prohibition proceeding. Thus, section 8 helps ensure the use of the PM)NOC) Regulations for the purpose for which they are intended.

Further, the Court of Appeal accepted that it is common ground that section 8 encroaches on the provinces' jurisdiction over property and civil rights. However, the right of action created by section 8 is only available to a limited group of persons in a defined industry. Thus, the extent of the intrusion is minor. The Court of Appeal also found it significant that no Attorneys General of the Provinces or Territories sought to intervene, despite being notified.

The Court of Appeal also comments that as section 8 logically flows from the prohibition proceedings, it would normally be heard by the judge who heard the prohibition application, due to the presence of section 8(5) which provides that the conduct of the parties is to be considered. The only reason section 8 damages are adjudicated in a separate proceeding is that regard had to be had to the right of appeal.

The Court of Appeal upheld the jurisdiction of the Federal Court to hear proceedings pursuant to section 8. Although the right of the Governor-in-Counsel to make regulations cannot confer a jurisdiction that does not exist, the Federal Court has jurisdiction under s. 20(2) of the Federal Courts Act to hear the proceeding, as its relates to a regulatory scheme aimed at the prevention of infringement.


The Court of Appeal found no error in the Trial Judge's reasons regarding the phrase "damages or profits", found in the provision. The words of the provision must be read in their entire context and in conjunction with the scheme of the PM(NOC) Regulations. The purpose of the enabling statute must also be considered. Thus, the phrase must be read to mean the second person's damages or "lost" profits. Section 8 is meant to provide compensation for the loss resulting from the automatic stay.

Apotex' claim that it should be entitled to all the remedies afforded a patentee ignores the fact that it is not in that position. The generic company escapes charges of patent infringement by demonstrating that the patent is invalid or not infringed for the purposes of the proceeding. thus, it cannot claim an account of profits for infringement. It can only claim compensation for loss. Further, the Court of Appeal rejected the assertion that disgorgement of Merck's profits is necessary to achieve the balance underlying s. 55.2 of the Patent Act.

Lost Future Market Share

Finally, the Court of Appeal overturned Trial Judge's award of future lost market share to Apotex. The Court of Appeal held that the measure of compensation under the Regulations was within the discretion of the Governor-in-Council. The Governor-in-Council focussed on this issue and chose to limit the damages suffered to those suffered during the period. The Governor-in-Council could have extended the measure of losses to those caused during the period regardless of when they were suffered, but it did not do so. This clear intent must be given effect.

Thus, Apotex' claim for lost sales due to allegedly decreased market share must be confined to sales that can be shown to have been lost within the period.

Merck and Apotex will have 60 days from June 4 to seek leave to appeal this decision to the Supreme Court. However, July is not included in the counting of time.

A copy of the Judgment and Reasons for Judgment, respectively, may be found at the following links:


Reasons for Judgment

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.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

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.