In Canada, innovator drug companies can protect their market exclusivity from generic copycats by asserting patents against the generic manufacturer in litigation under the PM(NOC) Regulations. Until now, the consequences of losing PM(NOC) litigation was the potential payment of damages to the generic whose market access was delayed by the litigation. These so-called “section 8 damages” are limited to the actual loss suffered by the generic during that specific period of delay. Public policy is such that the profits earned by the innovator during that period cannot, however, be disgorged pursuant to section 8 of the PM(NOC) Regulations.

In this potential class action, however, the representative plaintiff seeks disgorgement of the profits Pfizer earned during the period it prevented generic competition from Teva for VIAGRA by asserting a patent that was ultimately found invalid in PM(NOC) litigation. The plaintiff’s claim is based on the theory that people overpaid Pfizer for VIAGRA relative to what they could have paid had Pfizer not wrongfully delayed generic competition through the assertion of an invalid patent.

The plaintiff asserts three causes of action: (1) unlawful interference with economic relations; (2) waiver of torts; and (3) unjust enrichment. The proposed class includes all British Columbia residents who purchased VIAGRA between January 1, 2006 and November 30, 2012, representing the period from Teva’s application for generic approval to the decisions invalidating and voiding its VIAGRA patent.

While a class has yet to be certified, the recent motion decision in Low v. Pfizer signals a potential significant paradigm shift, whereby profits earned by innovators during PM(NOC) litigation, are at risk. Justice Smith refused to strike some significant aspects of the plaintiff’s claim on a preliminary motion, holding that it was not “plain and obvious” that all of the plaintiff’s causes of action were futile. For the full decision see: Low v. Pfizer.

This watershed ruling raises the spectre of significant economic liability in future class actions against innovators who frequently engage the special patent enforcement provisions of the PM(NOC) Regulations.