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ONCA Confirms Generics Limited to Section 8 Damages in the Face of an Innovator’s Legitimate Exercise of Rights under the PM(NOC) Regulations


On August 16, 2022, the Ontario Court of Appeal (ONCA) released its decision in Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587.  The ONCA denied Apotex’s appeal of a lower court summary judgement decision that dismissed Apotex’s novel claims under the UK and Ontario Statutes of Monopolies, the Trademarks Act, and at common law (see our PiB of the Superior Court decision).

Importantly, the ONCA decision reaffirms that innovators are not liable beyond damages available under section 8 of the Patented Medicines (Notice of Compliance) Regulations (the Regulations) for the legitimate exercise of their rights under the Patent Act and the Regulations.

Background

Eli Lilly Canada Inc. and Eli Lilly and Company (collectively, Lilly) were the respective Canadian licensee and owner of the 113 Patent, which was listed on the Patent Register in respect of Lilly’s drug Zyprexa® (olanzapine). Lilly succeeded in litigation against Apotex under the Regulations relating to the 113 Patent, with the resulting Prohibition Order blocking Apotex from entering the olanzapine market in Canada. The Order was upheld on appeal.

Lilly engaged in parallel litigation against Novopharm Limited (Novopharm); however, Lilly was unsuccessful in obtaining a prohibition order against Novopharm.

Lilly then commenced an infringement action against Novopharm, who counterclaimed to invalidate certain claims of the 113 Patent. Certain claims of the 113 Patent were ultimately declared to be invalid in rem on the basis of the now-discredited promise doctrine (the Novopharm Decision).

Apotex’s Novel Claims

Apotex did not meet the requirements for a damages claim under section 8 of the Regulations because its challenge against the 113 Patent was unsuccessful.  Apotex therefore brought a motion for reconsideration of the Prohibition Order on the basis of the Novopharm Decision so that it could seek damages under section 8 of the Regulations. After the motion was dismissed, Apotex commenced the action in issue asserting novel claims under:

  • the Statutes of Monopolies, alleging that the 113 Patent was an unlawful monopoly;
  • the Trademarks Act, alleging that Lilly made false and misleading representations when seeking to list the 113 Patent on the Patent Register; and
  • the common law tort of conspiracy, alleging that Lilly conspired to restrain trade by obtaining an invalid patent, listing it on the Patent Register, and litigating the patent under the Regulations.

ONCA Rejects Apotex’s Grounds for Appeal

The ONCA considered and rejected each of Apotex’s grounds of appeal, upholding the motion judge’s ruling that Apotex’s claims were without merit and that Apotex had not suffered any damages caused by Eli Lilly:

The Regulations are a Complete Damages Code

The ONCA noted that Apotex voluntarily engaged the Regulations and to the extent that it suffered damages as a result, they were caused by the operation of the Regulations and not by Eli Lilly. Apotex did not meet the requirements for a section 8 claim and could not seek the same relief by alleging other statutory and common law claims. In this way, the ONCA agreed that the Regulations are a “complete code” for the purposes of determining whether damages were available to Apotex in the circumstances.

No Liability for Actions Taken Under the Scheme of the Regulations

The ONCA held that no liability could arise for actions that Eli Lilly was authorized by law to take and reaffirmed its earlier decision in Harris v. GlaxoSmithKline, 2010 ONCA 872, which held that “there can be no liability when the defendant merely employs regular legal process to its proper conclusion”.

No Claim under the Statute of Monopolies

The ONCA rejected Apotex’s argument that the Statute of Monopolies only exempts valid patents and the 113 Patent was never a valid patent because it was void ab initio. The ONCA noted that the Statute of Monopolies does not distinguish between valid and subsequently invalidated patents, emphasizing that Eli Lilly’s 113 Patent was valid at the time of its grant and therefore explicitly excluded from liability under s. 5 of the Statute of Monopolies.  The Court held that this was in keeping with the historical context of the Statute, which was intended to limit abuses by the Crown in granting “letters patent” to regulate industries “independent of merit or invention”.

No Misrepresentation in Seeking Listing of the 113 Patent

The ONCA agreed with the motion judge that there was no misrepresentation in the information included in Eli Lilly’s Form IV supporting listing of the patent. All the information divulged on the Form IV was correct, and there was “nothing untrue or false in any material respect.”

No Evidence of a Conspiracy

The ONCA agreed with the motion judge that Apotex had failed to lead any evidence of a conspiracy to monopolize the sale and manufacture of olanzapine. Apotex’s reliance on Eli Lilly’s patent registration was insufficient to constitute an unlawful act, as Eli Lilly’s actions were authorized under the Patent Act and its Regulations.

Guiding Principles on Cost Assessments to Ensure Access to Justice

While the ONCA held that Apotex had failed to show that the motion judge’s cost award merited appellate intervention, the Court took the opportunity to reiterate the guiding principles that should be followed on costs assessments under s. 131 of the Courts of Justice Act.

The Court held that while the Court should “critically examine” each of the enumerated factors in rule 57.01(1) of the Rules of Civil Procedure (result achieved, amounts claimed, complexity and importance of the issues etc.), as a second step the court should then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”. Cost awards should be “objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case” and not merely a simple calculation of the successful party’s actual costs incurred. The Court held that “consistency with comparable awards in like cases is desirable”.



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