Federal Court Of Appeal Dismisses Teva's Levofloxacin Damages Appeal

On February 8, 2018, the Federal Court of Appeal issued public reasons for its decision dismissing Teva's appeal relating to the damages and costs awarded against it for its infringement of Janssen's patent for levofloxacin (LEVAQUIN): Teva Canada Ltd v Janssen Inc, 2018 FCA 33. As previously reported, the Federal Court awarded close to $19 million in damages and pre-judgment interest to the plaintiffs: Janssen Inc v Teva Canada Ltd, 2016 FC 593 and subsequently granted $1 million in costs: 2016 FC 727.

General approach to quantification. Teva argued that the Court below had erred in principle by applying a "broad axe" approach to its assessment of damages, contrary to Apotex Inc v Merck & Co, Inc, 2015 FCA 171, which requires "perfect compensation". In rejecting this argument, the Court of Appeal noted that its comment to this effect was made in the context of a discussion as to the purpose of an award of damages for patent infringement, rather than a calculation. The but-for world is a hypothetical and theoretical construct, and the Court below had properly considered economic proof of the nature of the levofloxacin market and the likely outcomes in that market absent Teva's infringement.

Construction of the but-for world. Teva alleged that the Court below erred by finding that:

LEVAQUIN would have competed directly against the two other respiratory fluoroquinolones on the market, but not against other antibiotics; the market would have been highly promotion sensitive; and levofloxacin and moxifloxacin would have been preferred equally by prescribers during the relevant years. The Court of Appeal held that each finding had a proper evidentiary foundation.

Mitigation. The Court of Appeal rejected each of Teva's arguments alleging failures by Janssen to mitigate its loss as impermissible requests to re-weigh evidence.

Quantification of lost sales to hospitals. Teva alleged a number of errors which broadly related to the Court's finding that Janssen's indirect sales to hospitals in the but-for world were a certain proportion of its total sales in the real world, with respect to the period for which the Court calculated the loss. The Court of Appeal found that the lower Court's findings on this issue were supported by evidence.

Janssen US was a person claiming under the patentee. The Federal Court had concluded that Janssen US was a person claiming under the patentee because it had "the license or permission, by...