Case: Apotex Inc. v. Abbott Laboratories, Limited 2013 ONCA 555

Drug: PREVACID® (lansoprazole)

Nature of case: Appeal of partial summary judgement dismissing Apotex’s claim for unjust enrichment in the Ontario Superiour Court

Successful party: Abbott Laboratories, Takeda Pharmaceuticals, Company and Takeda Pharmaceuticals America

Date of decision: September 12, 2013

Summary

On September 12, 2013, the Ontario Court of Appeal (“ONCA”) issued its decision in Apotex Inc. v. Abbott Laboratories, Limited 2013 ONCA 555 (“Abbott”).  The ONCA upheld the lower court decision granting partial summary judgment dismissing Apotex Inc.’s claim for unjust enrichment. In so doing, the ONCA has finally put to rest the irksome issue of whether a second person claiming damages pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) can claim the profits of the first person. This issue was clarified by Parliament in the 2006 amendments to the Regulations but was pursued by generics who continued to argue that, in contrast to the Federal Court, the Ontario Court had the jurisdiction to consider a common law cause of action for unjust enrichment.  With Supreme Court review of Abbott unlikely, this issue now appears to have been definitively settled.

The Decision under Appeal

Apotex appealed from the decision of Mr. Justice Quigley who granted the defendants partial summary judgment and dismissed Apotex’s claim for disgorgement of profits (Apotex Inc. v. Abbott Laboratories Ltd, 2013 ONSC 356).  Quigley J. considered whether he should follow the Federal Court of Appeal decision in Apotex v. Eli Lilly 2011 FCA 358 ("Eli Lilly") in which the Court held that section 8 is a "complete code" with the result that the Court's jurisdiction is limited to providing the remedy provided under section 8 of the Regulations which has been held not to include disgorgement of an innovator's profits. Quigley J. considered whether the Regulations provide a juristic reason for the enrichment pleaded by Apotex. He concluded that it could not and that, based on the authority of Eli Lilly, Apotex’s claim for unjust enrichment was untenable as a matter of law.

The Basis for the ONCA Decision

On appeal, Apotex argued that it was entitled to assert a claim for a disgorgement of profits on the basis that a settlement agreement between the defendants and Apotex could be determined to be unenforceable at trial on the basis of section 8 of the Regulations. The Court of Appeal rejected Apotex’s interpretation of the settlement agreement holding that the agreement contemplated no damages beyond those calculated under section 8.

Importantly, however, the Court of Appeal held that if the settlement agreement was held to be unenforceable, the damage suffered by Apotex could not extend beyond those calculated under section 8 and could not include a disgorgement of profits. The Court of Appeal rejected Apotex’s argument that it was entitled to pursue an unjust enrichment claim despite the existence of the Regulations. The Court of Appeal expressly held that the profits earned by the defendants as “first persons” are due to the regulatory scheme of the Regulations which constitute a “valid juristic reason” for the first person’s profits and revenues for the period. As Apotex could not make out a constituent element of the cause of action, there was no genuine issue for trial on its claim.

The Issue of Profits Appears to be Definitively Settled

Since the Supreme Court denied leave to appeal from the Eli Lilly decision, Supreme Court review of the Abbott decision is unlikely. This appears to have the effect of definitively settling the law regarding section 8 claims for a first person’s profits: no cause of action for unjust enrichment lies with a second person in an action under, or in conjunction with, section 8 of the Regulations whether the action is brought in a provincial Superior Court or the Federal Court.

More to come…

The Court of Appeal has another opportunity to weigh-in on the scope of section 8 relief on an appeal of the decision in Apotex Inc. v. Eli Lilly Canada  2012 ONSC 3808. That decision involved a motion to strike a similar cause of action for unjust enrichment. Mr. Justice Macdonald dismissed the motion on the basis that it was not plain and obvious that Apotex’s claim would fail.  Leave to appeal that decision to the ONCA was granted by the Divisional Court of Ontario (2013 ONSC 1135) who considered that there were not only conflicting decisions on the issue (in light of Quigley J.’s decision in Abbott) but also reason to doubt the correctness of the decision.

Link to decision:

Apotex Inc. v. Abbott Laboratories, Limited, 2013 ONCA 555