Statute of Monopolies action dismissed via summary judgment

10 March 2021

The Ontario Superior Court of Justice has dismissed a claim[1] brought by Apotex for treble damages and an accounting of the innovative defendants' profits brought under the Statute of Monopolies, the Trademarks Act, and at common law. This is the first final decision issued in a series of similar cases currently before the Ontario and Quebec Superior Courts.



Background

In litigation under Canada's Patented Medicines (Notice of Compliance) Regulations, Eli Lilly successfully resisted allegations of invalidity made by Apotex before the Federal Court in respect of Eli Lilly's "113 Patent" covering (inter alia) the compound olanzapine, the active ingredient in ZYPREXA®. The Federal Court thus issued an order prohibiting Apotex from selling generic olanzapine (2007 FC 455). Subsequently, certain claims of the 113 Patent were invalidated in an impeachment action involving Eli Lilly and Novopharm.

In 2013, Apotex commenced the within proceeding, alleging that Eli Lilly's invocation of the 113 Patent in the earlier prohibition proceedings violated the UK and Ontario Statutes of Monopolies, sections 7(a) and (d) of the Trademarks Act, and amounted to an unlawful conspiracy. As a remedy, Apotex sought treble damages and an accounting of Eli Lilly's profits.

Apotex (and at least one other generic manufacturer) has commenced various similar claims in the Ontario and Quebec Superior Courts over the last decade. Many of these cases have resisted motions to strike on the basis of being "novel" allegations. However, none of these cases has proceeded to final determination, either at trial or via summary judgment.

In this motion, Eli Lilly sought summary judgment on two primary grounds:

  1. That Apotex's claim was barred by the Limitations Act, 2002; and
  2. That any harm allegedly suffered by Apotex was caused by the operation of the PM(NOC) Regulations and the Court Order in the earlier prohibition proceeding, and that any damages recoverable by Apotex for being kept off the olanzapine market are confined to those available under s. 8 of the PM(NOC) Regulations.

The Court's reasons

In a first for these Statutes of Monopolies claims, the Court granted summary judgment and dismissed the entirety of Apotex's claim. Schabas J. held that Apotex was only kept out of the market (if at all) by operation of law, with the Patent Act and PM(NOC) Regulations constituting a complete code governing the issuance, use, and available remedies in respect of patents of invention. Schabas J. held that Eli Lilly was legally entitled to the steps it took, and that granting the remedies sought by Apotex would undermine Parliament's carefully crafted balancing of the interests of all involved stakeholders:

[115] …The claims made by Apotex arise from the patent regime and Lilly's exercise of rights it had under the 113 Patent. While Apotex attempts to dress up Lilly's acts in seeking a patent and listing the 113 Patent on the Patent Register as wrongful due to the subsequent voiding of the patent, Lilly was exercising rights which exist under the Patent Act. Absent a "stand alone cause of action" or a claim "totally independent of the regulatory regime," to use the language of the Ontario Court of Appeal and the Divisional Court, in my view the Patent Act and the PM(NOC) Regulations constitute a "complete code" which precludes causes of action arising from the operation of that code.

[116] To accept Apotex's argument that it may nevertheless pursue the causes of action it has pleaded would, as Lilly argues, "drastically upset Parliament's statutory regime." I would add that it would undermine it. Exposing a party to liability for damages simply because it successfully obtained a patent and exercised its rights based on its presumptive validity would remove one of the key benefits of the patent regime, which exists to foster and encourage innovation by protecting inventions for the benefit of the inventor for a limited period of time.

While the Court "reluctantly" dismissed Eli Lilly's Limitations Act argument[2], it also individually considered each of the three causes of action asserted by Apotex and found none to be tenable.

In respect of the Statutes of Monopolies claims, the Court criticized Apotex's argument as being internally inconsistent, and ignoring the "patents for invention" (as distinguished from "improper and invalid" grants of monopolies by the Crown), which were expressly excluded from the reach of the Statutes of Monopolies. The Court equally found Apotex's position to be based on an improper, retroactive reading of the Patent Act.[3]

In respect of the Trademarks Act claim[4], the Court found "nothing untrue or false in any material respect" regarding the impugned statements, and that these statements did not disparage or discredit Apotex. In particular, Apotex's claim was premised solely on Eli Lilly's "Form IVs" – regulatory documents that have statutorily prescribed contents – as making "false statements" that the 113 patent was, inter alia, valid. The Court found that:

At the time it was completed, Lilly did have the 113 Patent for Olanzapine. That is essentially all that was stated. The Form IV made no reference to Apotex, directly or indirectly, or to any other entity. In short, Apotex has raised no genuine issue requiring a trial on this cause of action.

Finally, Apotex's claim under the tort of conspiracy was dismissed as Apotex led no evidence to support a standalone cause of action. The Court held that it was insufficient for Apotex to rely only on the fact that certain claims of the 113 Patent were found to be invalid, years after the impugned acts were alleged to occur, as evidence of a conspiracy. Eli Lilly's actions were ordinary commercial transactions, not improper acts.[5]

In the result, Eli Lilly's motion for summary judgment was granted. Eli Lilly was represented by Gowling WLG's Marc Richard, Alex Gloor, and Rebecca Stiles.


[1] Apotex Inc. v Eli Lilly Canada Inc. et al, 2021 ONSC 1588

[2] Paragraph 78

[3] Paragraphs 123-137

[4] Paragraphs 138-144

[5] Paragraphs 145-147


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