The Federal Court denied Apotex’s section 8 claim relating to esomeprazole on the basis that its product would have infringed a valid AstraZeneca patent. This aligns with a previous decision of the court that placed significant weight on patent infringement in the context of section 8 damages (reported here). There was no dispute that Apotex’s Apo-esomeprazole product infringed, and the court’s interpretation of the Supreme Court of Canada’s (SCC) decision in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36 that the same patent was valid was central to the decision.
Background
As we reported, in 2010 Apotex successfully defended a prohibition application relating to esomeprazole. After Apotex launched its Apo-esomeprazole product, AstraZeneca sued Apotex for patent infringement and Apotex sued AstraZeneca for section 8 damages.
In the infringement action, the Federal Court found that AstraZeneca’s patent was novel and not obvious, but lacked utility. The Federal Court of Appeal upheld the decision on utility, but the SCC reversed, holding that the patent was not invalid for lack of utility.
Considerations on Patent Infringement
In the section 8 action, AstraZeneca sought to rely on the SCC decision to disentitle Apotex to damages either because (i) no damage had arisen (a requirement of subsection 8(1) of the Regulations) or (ii) the court should exercise its discretion under subsection 8(5) to prevent recovery for sales that would necessarily infringe the patent.
The court concluded it was preferable to consider patent infringement in the but-for world under subsection 8(5) rather than subsection 8(1). However, the court did not preclude the possibility that patent infringement would be a consideration under subsection 8(1).
Disentitlement Pursuant to Subsection 8(5)
The court also concluded AstraZeneca’s section 8 liability was completely offset by Apotex’s infringement of the patent. It determined that the SCC decision effectively found the patent to be, and to always have been, valid. Accordingly, to allow Apotex to recover damages would be to provide compensation for profits that it never could have rightly made.
Apotex argued: (i) the change in the law brought about by the SCC decision was not foreseeable; (ii) AstraZeneca had started several prohibition applications, which were all discontinued or dismissed; and (iii) the regime imposed by the Regulations would be unbalanced if section 8 liability could be offset by a subsequent finding of infringement. Apotex noted a generic is not entitled to damages under section 8 if it loses prohibition proceedings but subsequently succeeds in an infringement action, since section 8 liability is tied to the prohibition proceedings. The court found that patent infringement outweighed all of these factors.
What Happens in the Real World Happens in the But-For World
Apotex also attempted to defend against AstraZeneca’s reliance on the SCC decision by alleging events in the but-for world would have unfolded differently than they did in the real world. Apotex asserted there was no evidence AstraZeneca would have sued Apotex for patent infringement; the parties would not have settled the matter before a trial; the SCC would have granted leave to appeal or the SCC would have decided such an appeal the same way.
AstraZeneca disputed the relevance of hypothetical infringement actions in the but-for world, and led no positive evidence on the issue.
The Federal Court held on the facts that what happened in the real world would have occurred in the but-for world, albeit six months earlier. Apotex would have been found to have infringed a valid patent in the but-for world. Notably, however, the court explained that its complete offset of section 8 liability under subsection 8(5) was independent of how the promise doctrine would have evolved in the but-for world.
Apotex has appealed the decision.
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