Coulda, Shoulda, But Not Likely Woulda: Federal Court Of Appeal Affirms Finding That Generic Would Not Have Used A Non-Infringing Alternative

The Federal Court of Appeal has affirmed the Federal Court's decision awarding an accounting of profits to ADIR and Servier Canada Inc. (Servier), concluding that Apotex Inc. and Apotex Pharmachem Inc. (Apotex) would not have used a non-infringing alternative (NIA).

Background

In 2008, the Federal Court found that Servier's patent for the drug perindopril was valid and infringed by Apotex. Apotex's liability was affirmed on appeal. A trial on an accounting of profits ensued and Apotex was ordered to remit the aggregate amount of C$61 million plus interest. In a first appeal by Apotex, the Court of Appeal held in 2017 that the Federal Court had erred in the profits determination by finding that the NIA defence was not available to Apotex as a matter of law. The Court of Appeal sent the matter back to the Federal Court for re-determination.

On redetermination, the Federal Court found in 2018 that while Apotex could have obtained non‑infringing perindopril, Apotex had not established that it was more likely than not that it would have done so. No reduction to Apotex's profits over the infringing period was granted, as we reported.

On this latest appeal, Apotex sought to overturn the re-determination decision on the bases that (i) the Federal Court committed a palpable and overriding error in finding that it was more likely than not that Apotex would have declined to acquire non-infringing perindopril from foreign suppliers and that (ii) the Federal Court did not apply the correct legal test for a NIA in the hypothetical world.

No errors of law

In disposing of Apotex's appeal, the Court of Appeal provided an overview of the legal principles and jurisprudence applicable to consideration of NIAs as a defence in the assessment of damages and the accounting of profits.

The Court of Appeal rejected Apotex's argument that the approach to NIAs in an accounting of profits should be distinguished from that in an assessment of damages. As similar principles apply, the Federal Court did not err in applying the "could" and "would" analysis to an accounting of profits. What is important is that the four questions identified in Lovastatin be considered and weighed in determining whether an infringer's profits should be reduced because of the availability of NIAs:

Is the alleged non-infringing alternative a true substitute and thus a real alternative? Is the alleged non-infringing alternative a true alternative in the sense of being economically viable? At...