Apotex Denied Claim For Innovator's Profits Following PM(NOC) Litigation

The ongoing quest by generic pharmaceutical companies for the disgorgement of innovator profits following litigation under the PM(NOC) Regulations (the "Regulations") has hit a potentially fatal roadblock.

In unanimous reasons dated May 5, 2015 the Ontario Court of Appeal (OCA) held that an unjust enrichment claim made by a generic seeking an innovator's profits did not satisfy the Supreme Court of Canada's test for unjust enrichment because there was no deprivation of the generic company that corresponded to an enrichment of the innovator.1 The OCA's reasons apply even in situations where unjust enrichment claim is made outside the Regulations.

Facts in Brief

This was an appeal by Apotex from a Divisional Court decision to grant Lilly's motion to strike Apotex's claim for unjust enrichment. As a motion to strike, the facts as set out in Apotex's Statement of Claim are assumed to be true. The relevant facts asserted in Apotex's statement of claim were that Apotex was kept off the market by virtue of Lilly commencing a prohibition proceeding under the Regulations (a "prohibition proceeding"), that Apotex suffered a loss and that Lilly made sales during this period, and that Lilly supposedly made misrepresentations in obtaining and in listing the patent at issue on the Patent Register.

Statutory and Jurisprudential Background

Section 8 of the Regulations states that an innovator is liable to a generic for any "loss suffered" if a prohibition proceeding is withdrawn, discontinued, or dismissed by the Court. Notwithstanding this language, generics have argued that they should be entitled to more than their losses suffered after the culmination of prohibition proceedings. All previous decisions on point denied generics the ability to receive any profits made by the innovator that exceeded the generic's statutorily prescribed "loss suffered".

In particular, the Federal Court of Appeal (FCA) denied a claim by Apotex for unjust enrichment, citing a lack of jurisdiction. The FCA's reasoning was that it lacked jurisdiction because Parliament's intention in limiting s. 8 to the "loss suffered" was clearly to exclude claims to the innovator's profits.2 Nöel JA (as he then was) held in obiter that a cause of action made outside the Regulations may provide the FCA with jurisdiction to hear such a claim.

The OCA had also considered arguments for disgorgement made by Apotex in this context. Apotex attempted to argue that the Supreme Court's tripartite test...