Apotex Inc. v. Eli Lilly and Co. et al., (2015) 334 O.A.C. 99 (CA)

• Judge: Doherty, Feldman and Blair, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 10, 2014
• Jurisdiction: Ontario
• Citations: (2015), 334 O.A.C. 99 (CA);2015 ONCA 305

Apotex Inc. v. Eli Lilly & Co. (2015), 334 O.A.C. 99 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. MY.002

Apotex Inc. (plaintiff/appellant) v. Eli Lilly and Company and Eli Lilly Canada Inc. (defendants/respondents)

(C58293; 2015 ONCA 305)

Indexed As: Apotex Inc. v. Eli Lilly and Co. et al.

Ontario Court of Appeal

Doherty, Feldman and Blair, JJ.A.

May 5, 2015.

Summary:

"Eli Lilly" owned the patent relating to the use of atomoxetine hydrochloride, marketed under the name "Strattera". Eli Lilly used the process established by the Patented Medicines (Notice of Compliance) Regulations (the PMNOC regulations) to keep Apotex's generic version out of the market for two years. Eli Lilly's patent was later invalidated. Apotex, in its Statement of Claim against Eli Lilly, claimed four heads of relief, including relief under s. 8 of the PMNOC regulations (compensation for the losses it suffered) and relief based on Eli Lilly's unjust enrichment (the monopolistic profits during the monopoly period). Eli Lilly moved to strike a number of the claims. The motion judge refused to strike the claim for unjust enrichment. With leave, Eli Lilly appealed.

The Ontario Divisional Court, in a decision reported at [2013] O.A.C. Uned. 648, reversed the motion judge's decision and struck the claim for unjust enrichment, finding that it was plain and obvious that it could not reasonably succeed. Apotex appealed.

The Ontario Court of Appeal dismissed the appeal.

Equity - Topic 1006

Equitable relief - General - Accounting of profits - [See first Food and Drug Control - Topic 1108.2 ].

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Dismissal of application for - Compensation by first person - In its Statement of Claim, Apotex claimed four heads of relief, including relief under s. 8 of the Patented Medicines (Notice of Compliance) Regulations (PMNOC regulations) and relief based on Eli Lilly's unjust enrichment (monopolistic profits Eli Lilly made during the period Apotex was excluded from the market) - A motion judge refused to strike the claim for unjust enrichment - The Divisional Court reversed the motion judge's decision - The Ontario Court of Appeal dismissed the appeal - "Apotex has pleaded unjust enrichment as a distinct cause of action based on the windfall earned by Lilly due to the operation of the PMNOC regulations. However, the portion of the windfall that is not compensable under s. 8 of the PMNOC regulations, the monopolistic profit, was not in any way transferred from Apotex or lost by Apotex. Therefore, the unjust enrichment claim as a stand-alone cause of action must fail on the ground that there is no corresponding deprivation." - See paragraph 53.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Dismissal of application for - Compensation by first person - In its Statement of Claim, Apotex claimed four heads of relief, including relief under s. 8 of the Patented Medicines (Notice of Compliance) Regulations (PMNOC regulations) and relief based on Eli Lilly's unjust enrichment (monopolistic profits Eli Lilly made during the period Apotex was excluded from the market) - A motion judge refused to strike the claim for unjust enrichment - The Divisional Court reversed the motion judge's decision - The Ontario Court of Appeal dismissed the appeal - "[E]ven if it could be argued that Apotex has pleaded the elements of an underlying legal wrong - such as misrepresentation or abuse of process - and is seeking restitutionary unjust enrichment as a remedy, this is not a case where the extraordinary remedy of disgorgement of profits to Apotex is available. This is not a bilateral context where Apotex is the only party that has been wronged by Lilly. Effectively, Apotex is asking the court to designate it as the de facto beneficiary of the wrongfully-obtained monopolistic profits despite recognizing in its pleadings that it was the public that suffered actual deprivation as a result of the monopolistic pricing. ... Apotex is not positioned as the sole party with a legitimate right to 'enforce' or 'deter' the underlying wrong. The pecuniary interests of consumers, and potentially other generic companies, are also implicated. Lilly did not owe Apotex an equitable duty, nor is this case akin to the 'exceptional' breach of contract cases where courts award restitution damages to a plaintiff in order to prevent a defendant from exploiting a bilateral agreement to its advantage." - See paragraphs 54 and 55.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Dismissal of application for - Compensation by first person - In its Statement of Claim, Apotex claimed four heads of relief, including relief under s. 8 of the Patented Medicines (Notice of Compliance) Regulations (PMNOC regulations) and relief based on Eli Lilly's unjust enrichment (monopolistic profits Eli Lilly made during the period Apotex was excluded from the market) - A motion judge refused to strike the claim for unjust enrichment - The Divisional Court reversed the motion judge's decision - The Ontario Court of Appeal dismissed the appeal - "[R]emedial unjust enrichment is an exceptional remedy that should not be invoked unless other available remedies are inadequate. The remedial unjust enrichment cases cited by Apotex all involve contexts where the ordinary remedies were insufficient to address the injury committed against the plaintiff's interest. In contrast, generic companies can be made whole through the process established under s. 8 of the PMNOC regulations, which requires significant compensation to be made by patent holders in the event of wrongful market exclusion." - See paragraph 56.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Dismissal of application for - Compensation by first person - Apotex argued that restricting a generic company's remedy to its actual losses under s. 8 of the Patented Medicines (Notice of Compliance) Regulations, created an incentive for patentees to misuse the regulations in order to make and retain windfall profits - The Ontario Court of Appeal stated that "[w]hile this argument raises important policy concerns, there are at least two answers to it. First, there may be other potential mechanisms to ameliorate the alleged disincentive, such as disgorgement to the parties who actually suffered the loss equivalent to the windfall - namely, the members of the public who purchased the drug during the monopoly period. ... Second, unlike in the 'profiting from wrong' cases ... there is a legislatively-enacted incentive structure that forms the context of this dispute. ... [T]he s. 8 scheme was developed by Parliament as a compromise between the interests of the public in encouraging research and development of new patentable drugs and in encouraging generics to market drugs at lower prices. ... If the legislative balance is flawed, it is open to Parliament to reconsider the incentive structure, taking into account all relevant factors including any competing public policy concerns." - See paragraphs 58 to 60.

Restitution - Topic 4

General principles - The principle of unjust enrichment - [See third Food and Drug Control - Topic 1108.2 ].

Restitution - Topic 67

Unjust enrichment - General - Persons entitled to claim - [See second Food and Drug Control - Topic 1108.2 ].

Restitution - Topic 102

Unjust enrichment - Bars - Statutory code - [See fourth Food and Drug Control - Topic 1108.2 ].

Restitution - Topic 121

Unjust enrichment - Remedies - General - [See third Food and Drug Control - Topic 1108.2 ].

Cases Noticed:

Novopharm Ltd. v. Eli Lilly & Co. (2010), 376 F.T.R. 227; 87 C.P.R.(4th) 301; 2010 FC 915, affd. (2011), 420 N.R. 188; 94 C.P.R.(4th) 95; 2011 FCA 220, leave to appeal refused (2011), 430 N.R. 397 (S.C.C.), refd to. [para. 9].

Eli Lilly Canada Inc. v. Apotex Inc. et al. (2010), 377 F.T.R. 157; 89 C.P.R.(4th) 345; 2010 FC 1065, refd to. [para. 10].

British Columbia v. Imperial Tobacco Canada Ltd. et al., [2011] 3 S.C.R. 45; 419 N.R. 1; 308 B.C.A.C. 1; 521 W.A.C. 1; 2011 SCC 42, refd to. [para. 19].

Kerr v. Baranow, [2011] 1 S.C.R. 269; 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, refd to. [para. 20].

Apotex Inc. v. Abbott Laboratories Ltd. et al., [2013] O.T.C. Uned. 356; 2013 ONSC 356; 107 C.P.R.(4th) 332, affd. [2013] O.A.C. Uned. 452; 2013 ONCA 555, refd to. [para. 22, footnote 3; paras. 36, 37].

Apotex Inc. v. Eli Lilly Canada Inc., [2009] F.T.R. Uned. 418; 76 C.P.R.(4th) 361; 2009 FC 693 (Prothonotary), affd. 2011 CarswellNat 6086 (F.C.), affd. (2011), 426 N.R. 173; 98 C.P.R.(4th) 323; 2011 FCA 358, leave to appeal refused (2012), 436 N.R. 384 (S.C.C.), refd to. [para. 22, footnote 3; para. 23, footnote 4; para. 60].

Apotex Inc. v. Nycomed Canada Inc. and Nycomed GmbH (2011), 426 N.R. 173; 2011 FCA 358, leave to appeal refused (2012), 436 N.R. 384 (S.C.C.), refd to. [para. 22, footnote 3; para. 23, footnote 4].

Low v. Pfizer Canada Inc. et al., [2014] B.C.T.C. Uned. 1469; 2014 BCSC 1469, refd to. [para. 32].

Pfizer Canada Inc. et al. v. Novopharm Ltd. et al., [2012] 3 S.C.R. 625; 436 N.R. 299; 2012 SCC 60, refd to. [para. 33, footnote 6].

Professional Institute of the Public Service of Canada et al. v. Canada (Attorney General), [2012] 3 S.C.R. 660; 438 N.R. 1; 300 O.A.C. 202; 2012 SCC 71, refd to. [para. 43].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 44].

Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [para. 47].

Cassano et al. v. Toronto-Dominion Bank (2007), 230 O.A.C. 224; 87 O.R.(3d) 401; 2007 ONCA 781, refd to. [para. 47].

Attorney General v. Blake,[2000] UKHL 45; [2001] 1 A.C. 268, refd to. [para. 48].

Insurance Corp. of British Columbia v. Dragon Driving School of Canada Ltd. et al. (2007), 234 B.C.A.C. 115; 387 W.A.C. 115; 278 D.L.R.(4th) 148; 2006 BCCA 584, refd to. [para. 50].

Insurance Corp. of British Columbia v. Lo - see Insurance Corp. of British Columbia v. Dragon Driving School of Canada Ltd. et al.

Apotex Inc. v. Sanofi-Aventis et al. (2014), 456 N.R. 279; 125 C.P.R.(4th) 403; 2014 FCA 68, affd. (2015), 470 N.R. 153; 2015 SCC 20, refd to. [para. 57].

Ratych v. Bloomer, [1990] 1 S.C.R. 940; 107 N.R. 335; 39 O.A.C. 103, refd to. [para. 57].

Statutes Noticed:

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, sect. 8 [para. 1].

Patented Medicines (Notice of Compliance) Regulations - see Patent Act Regulations (Can.).

Authors and Works Noticed:

Maddaugh, Peter D., and McCamus, John D., The Law of Restitution (2004), Looseleaf (2014 Release 14) pp. 3-4 to 3-6, 3-7 [para. 52]; 3-23 to 3-24 [para. 45].

McGuinness, Kevin, in C. Graham, ed., Halsbury's Law of Canada - Restitution (2012), pp. 606, 645 [para. 52].

Counsel:

David D. Conklin and Nando De Luca, for the appellant;

Patrick Smith and Todd J. Burke, for the respondents.

This appeal was heard on September 10, 2014, before Doherty, Feldman and Blair, JJ.A., of the Ontario Court of Appeal. In reasons written by Feldman, J.A., the Court delivered the following judgment, released on May 5, 2015.