BC Court of Appeal dismisses proposed consumer class action for invalid pharmaceutical patent

On Dec. 8, 2015, the British Columbia Court of Appeal dismissed a proposed class action by consumers against Pfizer Canada Inc. in connection with Pfizer’s now invalid patent which covered its VIAGRA® product.¹ The Court of Appeal overturned the lower court’s finding that the plaintiff’s claim disclosed a cause of action, one of the threshold requirements for certifying a class action. Britton Low, the proposed representative plaintiff, alleged that Pfizer unlawfully abused the patent system, and as a result, was able to overcharge purchasers of VIAGRA. The lower court found that it was plain and obvious that Mr. Low’s claim in waiver of tort could not succeed, but allowed his claims for interference with economic relations and unjust enrichment to go forward. However, in a unanimous decision, the Court of Appeal found that those claims also could not succeed.

In particular, the Court of Appeal held that the Patent Regulatory Regime² constitutes a complete code. Even though this regime includes no remedy for consumers for conduct alleged to have breached that regime, the Court held that:

...the completeness of the Patent Regulatory Regime forecloses parallel civil actions by consumers that are rooted in a breach of the Patent Act... [T]here is nothing in the legislation comprising the Patent Regulatory Regime ... that evinces an intention to allow consumers to make such claims.

Background

Pfizer obtained a patent on the use of several compounds, including sildenafil (the medicinal ingredient in VIAGRA), in the treatment of erectile dysfunction. In 2006, a generic manufacturer sought regulatory approval to market a copycat version of VIAGRA, and was thus required to address that patent pursuant to the Patented Medicines (Notice of Compliance) Regulations (the "NOC Regulations"). The generic asserted that Pfizer’s patent was invalid. Pfizer commenced a prohibition proceeding under those regulations, triggering an automatic stay of that generic’s regulatory approval. The Federal Court granted prohibition, finding the generic’s allegations to be unjustified, and the Court of Appeal upheld that order. However, the Supreme Court of Canada then found one of the allegations of invalidity to be justified and dismissed the prohibition application, allowing the generic to enter the market.

Patent Regulatory Regime is a Complete Code

The Court of Appeal held that several decisions of the Federal Court of Appeal support the notion that the Patent Regulatory Regime is a complete code as between brands and generics. For example, it highlighted a decision finding a claim by a generic manufacturer beyond the Patent Regulatory Regime could not possibly succeed because the allegedly wrongful acts were the same as those underlying liability under that regime.³ The Court of Appeal also referred to the Ontario Court of Appeal’s finding⁴ that the Patent Regulatory Regime does not leave room for any stand-alone equitable remedies.

The Court of Appeal noted that comprehensive statutory schemes may preclude common law rights, including unjust enrichment. It clarified that the Patent Regulatory Regime does not confer any direct benefit or protection on consumers and thus the absence of an enforcement mechanism in this regime cannot imply a common law private cause of action by a consumer.

As quoted above, the Court of Appeal concluded that nothing in the Patent Regulatory Regime conveys an intention to permit parallel civil actions by consumers that are rooted in a breach of the Patent Act. Indeed, it noted that it would make no sense to allow consumers to claim disgorgement of profits from brands when generics are precluded from doing the same based on identical allegedly wrongful acts.

In any event, the Court of Appeal noted that there was evidence that Parliament had in fact considered consumer interests and chose to create, for example, the Patented Medicines Prices Review Board to reduce prices deemed excessive.

No Cause of Action for Unjust Enrichment or Interference with Economic Relations

The Court of Appeal also held that Pfizer could not be liable for conduct grounding Mr. Low’s claim for interference with economic relations because it has no corresponding liability to generics (outside of the NOC Regulations) for the same conduct. This tort creates a “parasitic” liability as it requires a distinct unlawful act (or actionable civil wrong of some kind). A breach of statute (such as the Patent Act) must therefore be actionable outside the context of the statute itself. Mr. Low had alleged that Pfizer’s acts were actionable by third party generic drug manufacturers who were kept off the market. The Court of Appeal however noted that generics could only claim their own losses pursuant to the NOC Regulations. As such, it held that, if generics have no cause of action against brands beyond those regulations, then the entirely parasitic tort of unlawful interference with economic relations could not succeed.

The Court of Appeal confirmed that complete statutory codes, such as the Patent Regulatory Regime, exclude equitable claims in unjust enrichment and thus Mr. Low had no claim in this regard. It added that the lower court ought to have found that this claim had no prospect of success in any event, having held that Pfizer’s contracts with its direct purchasers (e.g., distributors or pharmacies) constituted a juristic reason for any benefits obtained by Pfizer. The Court of Appeal held that a single juristic reason is enough to defeat an unjust enrichment claim.

Conclusion

The Court of Appeal’s finding that none of the proposed claims met the very low threshold for establishing that the proposed class action discloses a cause of action during the certification process should provide some comfort to brands seeking to exercise patent rights which could subsequently be found invalid. In addition, its conclusion in the context of consumer claims that the Patent Regulatory Regime is a complete code clarifies the scope of, and available rights under, that regime. That finding, in line with recent jurisprudence involving generics, further confines the redress generics may seek for being kept off the market by application of the NOC Regulations to that expressly set out in those regulations.