Merck & Co. et al. v. Apotex Inc. et al., (2015) 475 N.R. 201 (FCA)

• Judge: Dawson, Stratas and Boivin, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: July 23, 2015
• Jurisdiction: Canada (Federal)
• Citations: (2015), 475 N.R. 201 (FCA);2015 FCA 171

Merck & Co. v. Apotex Inc. (2015), 475 N.R. 201 (FCA)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

Temp. Cite: [2015] N.R. TBEd. AU.007

Apotex Inc. and Apotex Fermentation Inc. (appellants) v. Merck & Co., Inc. and Merck Canada Inc. (respondents)

(A-242-13; 2015 FCA 171; 2015 CAF 171)

Indexed As: Merck & Co. et al. v. Apotex Inc. et al.

Federal Court of Appeal

Dawson, Stratas and Boivin, JJ.A.

July 23, 2015.

Summary:

Apotex was found liable for patent infringement: see (2010), 381 F.T.R. 162. The patent, issued to Merck & Co., was a product-by-process patent for the anti-cholesterol drug lovastatin (AFI-1 process). Compensatory damages were calculated on the basis that the trial judge rejected the argument advanced by Apotex that the availability of non-infringing lovastatin (AFI-4 process) should be taken into account in assessing damages: see (2013), 437 F.T.R. 1. Apotex appealed.

The Federal Court of Appeal dismissed the appeal. While the trial judge erred by rejecting the legal relevance of the non-infringing alternative when computing the compensatory patent infringement damages, Apotex failed to establish that, notwithstanding its manufacturing capacity, it could and would have sold non-infringing lovastatin in place of infringing lovastatin.

Patents of Invention - Topic 3821

Infringement actions - Damages - General - The principal issue raised on this appeal was whether, when calculating damages for patent infringement, it was relevant to consider the availability of non-infringing alternative products available to the infringer - The Federal Court of Appeal concluded that, as a matter of law, the availability of a non-infringing alternative was a relevant consideration - The statutory basis for a claim to damages "by reason of the infringement" was s. 55(1) of the Patent Act - The issue was a question of statutory interpretation - Any ambiguity was settled when the purpose and the statutory context of the provision were considered - The Act invoked the principle of causation in the quantification of compensatory damages - "Perfect compensation requires consideration of: (i) what, if any, non-infringing product the defendant or any other competitors could and would have sold 'but for' the infringement; and, (ii) the extent lawful competition would have reduced the patentee's sales. I find support for this analysis in American jurisprudence and in the decision of the Supreme Court in Monsanto." - The trial judge's policy reasons for rejecting the legal relevance of non-infringing alternatives did not withstand scrutiny - See paragraphs 38 to 72.

Patents of Invention - Topic 3821

Infringement actions - Damages - General - Apotex had been found liable for patent infringement - The patent, issued to Merck & Co., was a product-by-process patent for the anti-cholesterol drug lovastatin (AFI-1 process) - Compensatory damages were calculated on the basis that the trial judge rejected the argument advanced by Apotex that the availability of non-infringing lovastatin (AFI-4 process) should be taken into account in assessing damages - Apotex appealed, submitting that the damages should be reduced because it had available a non-infringing product that it could and would have used - The Federal Court of Appeal dismissed the appeal - While at law a non-infringing alternative was legally relevant, Apotex failed on the evidence adduced at trial to establish that, notwithstanding its manufacturing capacity, it could and would have sold non-infringing lovastatin in place of infringing lovastatin - See paragraphs 73 to 95.

Patents of Invention - Topic 3827

Infringement actions - Damages - Profits - Accounting - The Federal Court of Appeal noted that the ordinary monetary remedies available for patent infringement were damages and an accounting of profits - "While the [Patent] Act does not explicitly provide for an accounting of profits, it references this remedy in paragraph 57(1)(b) which allows a court, in an action for infringement, to make an order 'for and respecting inspection or account'. The jurisprudence makes clear that this remedy exists as an alternative to damages." - See paragraph 58.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 16].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161; 167 D.L.R.(4th) 577, refd to. [para. 26].

Monsanto Canada Inc. et al. v. Schmeiser et al., [2004] 1 S.C.R. 902; 320 N.R. 201; 239 D.L.R.(4th) 217; 2004 SCC 34, consd. [para. 28].

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. 38].

Teva Canada Ltd. v. Pfizer Canada In. - see Pfizer Canada Inc. et al. v. Novopharm Ltd. et al.

Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153; 296 N.R. 130; 2002 SCC 77, refd to. [para. 38].

Free World Trust v. Electro Santé Inc. et al., [2000] 2 S.C.R. 1024; 263 N.R. 150; 2000 SCC 66, refd to. [para. 42].

Snell v. Farrell, [1990] 2 S.C.R. 311; 110 N.R. 200; 107 N.B.R.(2d) 94; 267 A.P.R. 94; 72 D.L.R.(4th) 289, refd to. [para. 44].

Clements v. Clements, [2012] 2 S.C.R. 181; 431 N.R. 198; 2012 SCC 32, refd to. [para. 45].

King Instruments Corp. v. Perego (1995), 65 F.3d 941 (Fed. Cir), refd to. [para. 52].

Rite-Hite Corp. v. Kelley Co. (1995), 56 F.3d 1538 (Fed. Cir.), refd to. [para. 52].

Grain Processing Corp. v. American Maize-Products Co. (1999), 185 F.3d 1341 (Fed. Cir.), refd to. [para. 54].

Lubrizol Corp. v. Imperial Oil Ltd., [1997] 2 F.C. 3; 206 N.R. 136; 71 C.P.R.(3d) 26 (F.C.A.), refd to. [para. 59].

United Horse Shoe and Nail Co. v. Stewart and Co. (1888), 5 R.P.C. 260; 13 App. Cas. (H.L.), consd. [para. 61].

Domco Industries Ltd. v. Armstrong Cork Canada Co. and Congoleum Co. et al. (1983), 76 C.P.R.(2d) 70 (F.C.T.D.), varied (1986), 3 F.T.R. 289; 10 C.P.R.(3d) 53 (T.D.), refd to. [para. 64].

JAY-LOR International Inc. et al. v. Penta Farm Systems Ltd. et al. (2007), 313 F.T.R. 1; 59 C.P.R.(4th) 228; 2007 FC 358, refd to. [para. 64].

Eurocopter v. Bell Helicopter Textron Canada Ltd. et al. (2013), 449 N.R. 111; 2013 FCA 219, refd to. [para. 71].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1; 84 D.L.R.(4th) 291, refd to. [para. 74].

Advanced Building Systems Pty Ltd. et al. v. Ramset Fasteners (Aust.) Pty Ltd., [2001] FCA 1098; 52 I.P.R. 305 (F.C. Aust.), refd to. [para. 79].

Statutes Noticed:

Patent Act, R.S.C. 1985, c. P-4, sect. 55(1) [para. 38].

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/98-166, sect. 8 [para. 28].

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

Authors and Works Noticed:

Cotter, Thomas F., Comparative Patent Remedies: A Legal and Economic Analysis (2013), pp. 189 to 190 [para. 60].

Schlicher, John W., Patent Law: Legal and Economic Principles (1997), generally [para. 56].

Counsel:

Andrew Brodkin, Harry Radomski, Mark Dunn, Jordan Scopa and John Meyers, for the appellants;

Steven Mason, Andrew Reddon, David Tait and Brooke MacKenzie, for the respondents.

Solicitors of Record:

Goodmans LLP, Toronto, Ontario, and Taylor McCaffrey LLP, Winnipeg, Manitoba, for the appellants;

McCarthy Tétrault LLP, Toronto, Ontario, for the respondents.

This appeal was heard at Toronto, Ontario, on January 14-15, 2015, before Dawson, Stratas and Boivin, JJ.A., of the Federal Court of Appeal. In reasons written by Dawson, J.A., the Court delivered the following judgment, dated July 23, 2015.