CaseApotex Inc. v. Eli Lilly and Company, 2015 ONCA 305

Drug: STRATTERA® (atomoxetine hydrochloride)

Nature of caseMotion to Strike Claim for Unjust Enrichment

Successful partyEli Lilly and Company and Eli Lilly Canada Inc. (Lilly)

Date of decisionMay 5, 2015

Summary

On May 5, 2015, the Court of Appeal for Ontario dismissed Apotex’s appeal from the Ontario Divisional Court, which struck out Apotex’s claim for unjust enrichment in a damages action under s. 8 of thePatented Medicines (Notice of Compliance) Regulations (Regulations), finding that it was plain and obvious that the claim could not reasonably succeed. In so doing, the Court of Appeal confirmed once again that a “second person” claiming damages under s. 8 of the Regulationscannot claim the profits of the “first person”.  

Background

Lilly brought a prohibition application under s. 6 of the Regulationsagainst Apotex in respect of Canadian Patent No. 2,209,735 (the “‘735 Patent”) relating to the use of STRATTERA® in the treatment of Attention Deficit Hyperactivity Disorder. In September 2010, the ‘735 Patent was invalidated in rem following an action commenced by Teva Canada Limited. As a result, Apotex claimed damages under s. 8 of theRegulations, which included a claim for unjust enrichment for the profits earned by Lilly during the period Apotex was kept off the market. Apotex would not have otherwise earned these profits selling its generic product.

To support its claim for unjust enrichment, Apotex pleaded: (1) that it suffered a deprivation by the delay in the issuance of the NOC for its generic product; (2) Lilly enjoyed a corresponding benefit by an extension of its market exclusivity equivalent to Apotex’s delay, resulting in a windfall to Lilly; and (3) there is no juristic reason for Lilly to retain that windfall.

Apotex did not suffer a deprivation

Apotex framed its claim for unjust enrichment on alleged misrepresentations made by Lilly when it obtained the ‘735 Patent and Lilly’s subsequent reliance on the ‘735 Patent in invoking the prohibition proceedings.  Apotex submitted that because this case is based on a finding of invalidity and allegations of misrepresentation, the Regulations cannot provide a valid juristic reason for Lilly to be immune from an unjust enrichment claim.

The Court held that regardless of whether the Regulations constitute a complete code, or whether the absence of a juristic reason exists – two grounds upon which courts have previously dismissed claims for unjust enrichment under s. 8 of the Regulations – Apotex’s claim for unjust enrichment is flawed and must fail on the basis that there was no corresponding deprivation to Apotex as a result of Lilly’s profits earned while Apotex was prohibited from entering the market.

The Court stated at para. 41 of its decision that “[p]ut simply, Apotex was never deprived of the portion of Lilly’s revenues represented by its monopolistic profits because Apotex would never have earned those profits.”  The Court held that this factor precludes reliance on unjust enrichment as a stand-alone cause of action.  Further, even if Apotex’s pleadings could be read as seeking a restitutionary remedy for a tort committed against it by Lilly, this is not a case where such an exceptional remedy of disgorgement of profits would be available.

Link

Apotex Inc. v. Eli Lily and Company, 2015 ONCA 305