The Ontario Superior Court (ONSC) has dismissed a claim for damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations (the Regulations) brought by Apotex Inc. (Apotex) for lost sales of its Apo-Atomoxetine product. The Court conducted a purposive interpretation of the Regulations and found that Apotex did not meet the statutory requirements for damages. Even if Apotex were entitled to damages, the Court held that Apotex did not suffer any losses because it would not have launched Apo-Atomoxetine earlier in the but-for world.
The Defendants (collectively, Eli Lilly) market the product STRATTERA® (atomoxetine). Canadian Patent No. 2,209,735 (the 735 Patent) was listed on the Patent Register in respect of STRATTERA®.
Apotex filed an ANDS for its generic Apo-Atomoxetine product. After Apotex filed its submission, another generic manufacturer, Novopharm Limited (Teva), commenced an impeachment action seeking a declaration that the 735 Patent was invalid (the Teva Action). Apotex then served Eli Lilly with a notice of allegation (NOA) and Eli Lilly commenced a prohibition application against Apotex under section 6 of the Regulations (the Apotex Application). Justice Barnes of the Federal Court heard both the Apotex Application and the Teva Action one after another.
Prior to issuing his decision in the Apotex Application, Justice Barnes allowed the Teva Action and declared the 735 Patent invalid. The declaration of invalidity allowed Apotex to receive its NOC for Apo-Atomoxetine. Justice Barnes then dismissed the Apotex Application on the basis of mootness – Apotex had already received its NOC. However, Justice Barnes also assessed Apotex’s allegations of invalidity and determined that the allegations were not justified on the record. But for the mootness determination, Justice Barnes was clear that the Apotex Application would have been allowed and that a prohibition order would have issued.
In February 2011, Apotex brought this section 8 action against Eli Lilly claiming damages for its lost sales of Apo-Atomoxetine.
The ONSC’s decision on the section 8 action has two parts: (1) liability; and (2) damages.
Apotex argued that because the Federal Court had dismissed the Apotex Application, it was entitled to section 8 damages. While section 8 of the Regulations provides that a second person is entitled to damages if an application for prohibition is “dismissed by the Court hearing the application”, the ONSC found that Apotex had not satisfied this statutory precondition.
Under the ONSC’s purposive interpretation of the Regulations, it was important that Justice Barnes would have allowed the Apotex Application but for it being moot. The ONSC recognized that the fundamental object of section 8 is to allow a party to seek damages where its market entry has been delayed by the unjustified imposition of the statutory two-year stay. In the Court’s view, whether the delay is warranted is determined by the content of the second person’s NOA and the first person’s prohibition proceeding. Because none of Apotex’s allegations were justified, the ONSC found that Apotex was not entitled to section 8 damages.
The ONSC proceeded to assess Apotex’s damages in the event it was wrong on the question of liability. Ultimately, the Court held that Apotex suffered no losses because it would not have entered the atomoxetine market earlier in the but-for world than it did in the real world. In making this determination, the Court relied on the following facts:
- Apotex did not initially challenge the 735 Patent. When Apotex filed its ANDS, it indicated on its Form V that it preferred to wait until the expiry of the 735 Patent rather than challenge the patent. Despite the relatively small risk (i.e., legal fees, potentially paying Eli Lilly costs, etc.) associated with challenging the 735 Patent, Apotex only decided to do so once Teva commenced its impeachment action.
- Apotex would have been at risk of paying Eli Lilly’s damages. Because generic prices are lower than brand prices, the cost of paying Eli Lilly’s damages upon a finding of infringement would have likely negated all profit that Apotex would have made by selling Apo-Atomoxetine. Given Apotex did not take the small risk of challenging the 735 Patent when it filed its ANDS, the Court found it unlikely that Apotex would have undertaken the larger risk of launching and potentially paying Eli Lilly’s damages.
- Apotex did not launch Apo-Atomoxetine upon the 735 Patent being declared invalid. Rather than launch immediately upon receiving its NOC, Apotex spent six months pursuing a joint venture with Teva. Apotex pursued this joint venture because there was a risk that the 735 Patent would be reinstated as a result of further appeals by Eli Lilly. The Court found that if Apotex did not launch in the real world due to the risk of an appeal, it would not have launched in the but-for world in which there was no decision on the 735 Patent.
Link to decision: Apotex v Eli Lilly, 2023 ONSC 1968