New Guideposts For The Fact-Intensive Hypothetical World Of Generic Damages Claims

The past year has seen significant evolution in the Canadian law of generic pharmaceutical damages claims under section 8 of the Patented Medicines (Notice of Compliance) Regulations. Such claims are calculated by considering the generic manufacturer's loss in a hypothetical world where it starts selling without the alleged delay occasioned by the regulations. Recent s.8 damages decisions have highlighted the highly factual and circumstance-specific nature of this calculation. However, these recent decisions also shed some light on how the Court will attempt to quantify generic damages claims going forward.

Most notable among these decisions, the Federal Court of Appeal issued on March 14, 2014 its highly anticipated decisions1 concerning generic damages claims by Teva and Apotex. Those claims followed prohibition proceedings involving Apotex and Teva related to generic versions of ramipril, marketed by Sanofi as ALTACE®. The Court of Appeal grappled with the unique facts presented by the appeals and ultimately dismissed all innovator appeals and all but one the generics' appeals. The successful appeal varied a trial judgment to exclude a generic competitor from Apotex's hypothetical market and thus increase Apotex's claim. The ramipril liability appeals were not without controversy, and both were issued with lengthy dissenting reasons.

The Court of Appeal majority held that both generic claimants and generic competitors are subject to the regulations in the hypothetical world, except for the sole purpose of determining the start date of the period of liability. Majority and dissenting reasons on this issue recognized that this approach could serve to inflate each generic claimant's hypothetical market share thus providing a potential windfall to the generics beyond the loss they suffered during the period of liability.

However, having held generic claimants to be subject to the regulations, the Court of Appeal held that generics would send Notices of Allegation to address patents listed against the drugs they sought to copy. Innovators would thus have notice of the generic claimants impending hypothetical market entry. The Court of Appeal therefore largely did away with the notion that innovators would be taken by surprise by a generic launch in the usual circumstances, a notion applied recently for example in the Federal Court's pantoprazole decision.2 In effectively rejecting this notion, the Court of Appeal may have facilitated the...