Ontario Superior Court dismisses claim for Section 8 damages

The Ontario Superior Court of Justice has dismissed a claim for damages brought by Apotex under section 8 of the Patented Medicines (Notice of Compliance) Regulations. The Ontario Court held that Apotex was not entitled to claim section 8 damages in the circumstances before it and that, in any event, Apotex had not sustained any loss (see Apotex v Eli Lilly, 2023 ONSC 1968).

Ground of dismissal #1: Apotex's failure in the underlying prohibition application

In August 2008, Apotex served a Notice of Allegation (NOA) under the Regulations with respect to Eli Lilly's 735 Patent and Apotex's Apo-atomoxetine, a generic version of Eli Lilly's STRATTERA®. Apotex served its NOA after its competitor Teva (then Novopharm) had already commenced an impeachment action with respect to the 735 Patent. In response to Apotex's NOA, Eli Lilly commenced a prohibition application under section 6 of the Regulations.

In October 2010, the Federal Court issued comprehensive reasons finding that Apotex's allegations were not justified. However, the Federal Court dismissed the prohibition application against Apotex on the basis of mootness. Apotex had already received a Notice of Compliance (NOC) for its Apo-atomoxetine product following an earlier decision from the Teva impeachment action where the Federal Court found the 735 Patent invalid. The Federal Court held that, but for the mootness, the Court would have issued a prohibition order (see 2010 FC 1065).

The Ontario Court held that Apotex was not entitled to claim section 8 damages in the circumstances, with Apotex having failed on the merits of the underlying prohibition application^[1] The Ontario Court held that:

"Two critical matters to take into account in assessing the amount of compensation to which Apotex might be entitled here are the fact that Apotex's claims failed and the fact that the court would have issued a prohibition order until 2016 in the absence of the Teva action. Those elements are so core to the damages scheme under the Regulations that they should lead to an assessment of damages at zero."^[2]

Ground of dismissal #2: Apotex sustained no loss

Even had Apotex been entitled to seek section 8 damages, the Ontario Court further found that Apotex did not suffer any damages during the time period for which it made its claim. The Ontario Court came to this conclusion after assessing the evidence and finding that Apotex would not have launched its generic atomoxetine product in the hypothetical "but-for" section 8 world until the same time as it did in the real world.

The Ontario Court found that Apotex would not have launched its generic atomoxetine product in the hypothetical world because of the risk of patent infringement. This was supported by the evidence. For instance, when filing its ANDS, Apotex filed Form Vs indicating it would await the 735 Patent's expiry before receiving its NOC.^[3] Apotex only changed its mind and decided to launch after the existence of Teva's impeachment action became public. Further, after receiving its NOC in the real world in September 2010, Apotex did not immediately launch its Apo-atomoxetine. Instead, it sought to negotiate a joint venture with Teva for generic atomoxetine due to the risk of patent infringement posed should the validity of the 735 Patent have been reinstated on appeal.^[4]

On these facts, the Court concluded that "I do not believe that Apotex would have launched Apo-Atomoxetine in the hypothetical world before the Federal Court set aside the 735 Patent and, even then, it would have continued to pursue the joint venture in the hypothetical world for the same reasons that it has advanced for doing so in the real world."^[5] As such, as Apotex would not have launched earlier in the hypothetical world than it did in the real world, it suffered no loss and was not entitled to any damages.

In another aspect of its assessment of Apotex's claim for damages, the Court also addressed the amount of rebates Apotex would have paid with respect to Apo-atomoxetine during the claimed period. The Court rejected Apotex's arguments, and instead found that a rebate rate based on Apotex's overall customer sales would apply, concluding that "It is up to Apotex to prove its damages on a balance of probabilities. That includes proving costs like rebates. Apotex's evidence of rebates is too limited and frail to satisfy the balance of probabilities onus."^[6]

The Court dismissed Apotex's claim for section 8 damages. Eli Lilly was represented by Gowling WLG's Marc Richard, Alex Gloor, Frédéric Lussier, Rebecca Johnston, Richard Dearden, and Karl Racine.