Teva Canada Ltd. v. Pfizer Canada Inc., 2016 FCA 161

JudgeStratas, Ryer and Gleason, JJ.A.
CourtFederal Court of Appeal (Canada)
Case DateMay 31, 2016
JurisdictionCanada (Federal)
Citations2016 FCA 161;(2016), 483 N.R. 275 (FCA)

Teva Can. Ltd. v. Pfizer Can. Inc. (2016), 483 N.R. 275 (FCA)

MLB headnote and full text

Temp. Cite: [2016] N.R. TBEd. JN.004

Pfizer Canada Inc. (appellant) v. Teva Canada Limited (respondent)

(A-422-14; 2016 FCA 161)

Indexed As: Teva Canada Ltd. v. Pfizer Canada Inc.

Federal Court of Appeal

Stratas, Ryer and Gleason, JJ.A.

May 31, 2016.

Summary:

Wyeth and Wyeth Canada ("Wyeth") was the innovative manufacturer of venlafaxine hydrochloride ("venlafaxine"), which was marketed under the name Effexor XR. ratiopharm inc. ("Ratiopharm") wanted to market its generic version of venlafaxine. Wyeth's application for an order prohibiting the Minister from issuing a Notice of Compliance (NOC) to Ratiopharm was dismissed. Ratiopharm received its NOC for its version of venlafaxine on August 2, 2007, and launched its product into the Canadian market on September 18, 2007. Ratiopharm brought an action for damages against Wyeth under s. 8 of the Patented Medicines (Notice of Compliance) Regulations. Pfizer Canada Inc. was the corporate successor to Wyeth. Teva Canada Ltd. was the corporate successor to Ratiopharm.

The Federal Court found Pfizer liable for damages under s. 8 of the Regulations in the amount of $92,228,000, pre-judgment interest in the amount of $32,539,550.36, post-judgment interest at the rate of 3.0% on $124,766,550.36 (the sum of the damages and prejudgment interest) from the date of judgment until payment, and costs (see 451 F.T.R. 261 and 457 F.T.R. 217). Pfizer appealed.

The Federal Court of Appeal allowed the appeal. The court agreed with Pfizer on one of the issues it raised, namely the Federal Court's admission of and reliance upon hearsay evidence in the trial. The court set aside the judgment of the Federal Court, and remitted the matter to the Federal Court for redetermination.

Courts - Topic 4082

Federal Court of Canada - Jurisdiction - Federal Court of Appeal - Appeals from judgments of Federal Court - [See Practice - Topic 9256 ].

Evidence - Topic 1504

Hearsay rule - General principles and definitions - What constitutes hearsay - [See fourth Food and Drug Control - Topic 1108.2 ].

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - The Federal Court of Appeal discussed general principles regarding damages claims under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - See paragraphs 44 to 66.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the damages award - Pfizer appealed - Teva submitted that it did not bear the burden of proof concerning what would and could have happened in the hypothetical world had its venlafaxine product not been kept off the market - It submitted that Pfizer bore that burden of proof - Teva said that if evidence of what Alembic (the company relied upon by Teva to manufacture its venlafaxine product) would have and could have done in the hypothetical world were needed from Alembic, Pfizer had to call that evidence - The Federal Court of Appeal disagreed - Teva's position was that in the hypothetical world, Teva could have and would have obtained venlafaxine in sufficient quantities from Alembic - Teva bore the burden of proving that as part of its general burden to prove its loss - See paragraphs 53 to 66.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the damages award - Pfizer appealed - Pfizer submitted that the Federal Court was not mindful of the principles concerning damages claims under s. 8 of the Regulations - Teva relied on Alembic Pharmaceuticals to manufacture its venlafaxine product - Pfizer suggested that the Federal Court only had regard to Alembic's willingness and potential capacity, not actual capacity, to manufacture Teva's venlafaxine product at the relevant time - The Federal Court of Appeal disagreed - The court stated that "It is true that the Federal Court did not offer a great deal on the proper principles to be applied concerning the availability of s. 8 damages. However, it was mindful of these principles. ... Overall, the Federal Court was very much alive to the need for a firm causal link between failed proceedings under the PMNOC Regulations and the claimed loss" - See paragraphs 67 to 74.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - Wyeth and Wyeth Canada ("Wyeth") was the innovative manufacturer of venlafaxine hydrochloride ("venlafaxine"), which was marketed under the name Effexor XR - ratiopharm inc. ("Ratiopharm") wanted to market its generic version of venlafaxine - Wyeth's application for an order prohibiting the Minister from issuing a Notice of Compliance (NOC) to Ratiopharm was dismissed - Ratiopharm brought an action for damages against Wyeth under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - Pfizer Canada Inc. was the corporate successor to Wyeth - Teva Canada Ltd. was the corporate successor to Ratiopharm - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the amount of the damages award - Pfizer appealed - Pfizer submitted that the Federal Court wrongly admitted hearsay evidence on the point of whether Teva had proved that it could have supplied its version of venlafaxine in the hypothetical world - Pfizer submitted that the Federal Court wrongly adopted hearsay evidence from Mr. Major (a former executive of Ratiopharm (Teva)) - Teva relied upon Alembic Pharmaceuticals to manufacture its venlafaxine product - Some of Major's evidence consisted of things told to him by Alembic's personnel or information from other Ratiopharm (Teva) employees who got that information from Alembic's personnel - During the course of his testimony, Major was presented with emails and documents and was asked to comment on them - He neither authored nor received many of the emails and documents - The emails contained statements made by various employees of Alembic and Ratiopharm (Teva) and the documents were prepared by others or by persons unknown - The Federal Court of Appeal agreed with Pfizer that the Federal Court improperly admitted hearsay evidence -The error might have affected the outcome of the case - The Federal Court's judgment therefore had to be set aside - See paragraphs 75 to 121.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - Wyeth and Wyeth Canada ("Wyeth") marketed an extended release version of venlafaxine hydrochloride ("venlafaxine") under the name Effexor XR - Related to it was Canadian Patent 1,248,540 (the 540 patent), which was to expire on January 10, 2006 - On December 23, 2005, Wyeth listed Canadian Patent 2,199,778 (the 778 patent) on the Patent Register against Effexor XR - ratiopharm inc. ("Ratiopharm") wanted to market its generic version of venlafaxine - Wyeth applied for an order prohibiting the Minister from issuing a notice of compliance (NOC) to Ratiopharm - The 778 Patent was found to be not eligible for listing on the patent register for Effexor XR and Wyeth's prohibition application was dismissed - Ratiopharm received its NOC for its version of venlafaxine on August 2, 2007 - Ratiopharm brought an action for damages against Wyeth under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - Pfizer Canada Inc. was the corporate successor to Wyeth - Teva Canada Ltd. was the corporate successor to Ratiopharm - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the damages award - Pfizer appealed - Pfizer submitted that the Federal Court erred in selecting January 10, 2006, as the start of the period of loss, or, in other words, the time when Ratiopharm (Teva) would have been legally able to start selling its venlafaxine product in the market - Pfizer submitted that in the hypothetical world, Ratiopharm (Teva) would not have received a NOC allowing it to sell its venlafaxine product before February 13, 2006 - It said that when the 778 Patent was listed on the patent register, Ratiopharm (Teva) would have had to serve a notice of allegation addressing it and the Minister would then have been prohibited from issuing a NOC until 45 days had passed - The Federal Court of Appeal held that the Federal Court committed no error in principle in setting January 10, 2006, as the start date - See paragraphs 126 to 133.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the damages award - Pfizer appealed - Pfizer took issue with the Federal Court's conclusions concerning the entry and participation of Teva's generic competitors in the venlafaxine market in the hypothetical world - The Federal Court of Appeal stated that "Although the Federal Court did not have the benefit of Apotex Ramipril s. 8 FCA, it applied principles consistent with it and committed no error in principle. It proceeded on the basis that other generic manufacturers entering the market would have had to follow the PMNOC Regulations. It considered all of the evidence, in part guided by real world events and based on the evidence before it, to determine whether 'any other generics would have entered the market during the Relevant Period' and, if so, when ... Overall, in its analysis on this point, the Federal Court did not err in principle. And, in applying the principles to the evidence before it, it did not commit any palpable and overriding error" - See paragraphs 134 to 142.

Food and Drug Control - Topic 1108.2

Drugs - New and innovative drugs - Notice of compliance - Prohibition order (incl. compensation by first person) - [See both Interest - Topic 5009 ].

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations in the amount of $92,228,000, pre-judgment interest in the amount of $32,539,550.36, post-judgment interest at the rate of 3.0% on $124,766,550.36 (the sum of the damages and prejudgment interest) from the date of judgment until payment, and costs - Pfizer appealed - On the issue of pre-judgment interest, the parties disputed the date the cause of action arose - Pfizer submitted that the cause of action arose on August 1, 2007 when Pfizer's prohibition application was dismissed - At that point, the requirements for a claim under s. 8 of the Regulations were met - The Federal Court of Appeal agreed with the Federal Court that the cause of action arose on the date that the damages that were the basis for the claim actually began to be suffered - Here that was January 10, 2006 - See paragraphs 144 to 147.

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of (incl. rate) - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations in the amount of $92,228,000, pre-judgment interest in the amount of $32,539,550.36, post-judgment interest at the rate of 3.0% on $124,766,550.36 (the sum of the damages and prejudgment interest) from the date of judgment until payment, and costs - Pfizer appealed - Pfizer challenged the Federal Court's decision to calculate pre-judgment interest from the beginning of each month on the entire amount of Teva's lost profits in that month, rather than at the end of each month - The Federal Court of Appeal stated that "In the circumstances of this case, I see no legal error in the Federal Court's approach, nor any palpable and overriding error that would vitiate its decision. The award of interest is a discretionary matter: Courts of Justice Act, above, s. 130. There is no principle of law requiring that pre-judgment interest be calculated at some other date in the month" - See paragraphs 148 to 152.

Practice - Topic 9256

Appeals - Judgment by appeal court - Remittal to lower court - When appropriate - Pfizer Canada Inc. applied for an order prohibiting the Minister from issuing a Notice of Compliance to Teva Canada Ltd. for its generic version of venlafaxine hydrochloride - Pfizer's prohibition application was dismissed - Teva brought an action for damages against Pfizer under s. 8 of the Patented Medicines (Notice of Compliance) Regulations - The Federal Court found Pfizer liable for damages under s. 8 of the Regulations and quantified the damages award - Pfizer appealed - The Federal Court of Appeal allowed the appeal - The court agreed with Pfizer on one of the issues it raised, namely the Federal Court's admission of and reliance upon hearsay evidence in the trial - Pfizer had asked the court to exercise its power under s. 52(b)(i) of the Federal Courts Act and decide that the s. 8 damages claim had to fail on the basis of the evidentiary record left after the hearsay evidence had been excluded - The court stated that while it had the power to consider the matter without the hearsay evidence and make the judgment the Federal Court should have made, it would not exercise that power in this factually-complex circumstance where the result was unclear - The court remitted the matter to the Federal Court for redetermination - See paragraphs 153 to 170.

Counsel:

Peter Wilcox and Afif Hamid, for the appellant;

David W. Aitken, Marcus Klee and Sean Jackson, for the respondent.

Solicitors of Record:

Belmore Neidrauer LLP, Toronto, Ontario, for the appellant;

Aitken Klee LLP, Ottawa, Ontario, for the respondent.

This appeal was heard on December 1, 2015, at Toronto, Ontario, before Stratas, Ryer and Gleason, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Stratas, J.A., at Ottawa, Ontario, on May 31, 2016.

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