Until January 2013, the law of generic claims under section 8 of the Patent Medicines (Notice of Compliance) Regulations (the “NOC Regulations”) differed depending on the court chosen by the generic. Federal Court jurisprudence had clearly prohibited generics from advancing claims for innovator profits in the context of claims under the NOC Regulations. This position is consistent with the legislative intent of Parliament which expressly removed the term “profits” from the relevant statutory language. Nevertheless, generic pharmaceutical companies could continue to pursue claims for innovator profits if they sued in the Ontario Court since all motions to strike such claims in that court had been unsuccessful.

This juridical inconsistency was relieved on January 15, 2013 when Justice Quigley of the Ontario Superior Court of Justice released a comprehensive decision in Apotex v. Takeda and Abbott (2013 ONSC 356). His decision held, for the first time in an Ontario court, that generic drug companies are prohibited from claims of disgorgement of an innovator drug company’s profits in the context of claims made under the NOC Regulations. Arising from a motion for partial summary judgment, the decision brings the Ontario Superior Court in line with jurisprudence from the Federal Court of Appeal.

Apotex had alleged in its statement of claim that Takeda and Abbott wrongfully invoked the NOC Regulations and that such wrongful invocation entitled Apotex to disgorgement of Takeda’s and Abbott’s profits on the basis of unjust enrichment. Justice Quigley disagreed and found that,

the NOC Regulations are a delicate and complicated balance of competing interests. Recognition of Apotex’s claim to unjust enrichment would frustrate Parliament’s policy decision to preclude the disgorgement of the innovator’s profits from a claim for s. 8 damages. Section 8 is part of a “complete and comprehensive scheme that both supplies the duty and provides the necessary adjudicative machinery such that resort to the common law is duplicative in any situation where the common law applies.” (para. 172)

The framework for, and the balance struck by, Canada’s laws addressing pharmaceutical inventions figured prominently in the Court’s decision. The Court also addressed the equitable jurisdiction of the Ontario Superior Court, Federal Court of Appeal jurisprudence and the requirements of unjust enrichment.

Apotex argued the broader equitable jurisdiction of the Ontario Superior Court permitted it to pursue the same disgorgement remedy previously denied by the Federal Court. However, Justice Quigley concluded this equitable jurisdiction is no wider than that of the Federal Court when dealing with subject matter within that Court’s concurrent jurisdiction.

Justice Quigley also considered recent Federal Court of Appeal jurisprudence, which granted a motion by Eli Lilly to strike Apotex’s claim against it for unjust enrichment, finding that the Federal Court’s jurisdiction to grant equitable relief could not be used to grant a remedy that section 8 of the NOC Regulations was intended to exclude (Apotex. v. Eli Lilly Canada Inc., 2011 FCA 358). Justice Quigley held that while he was not bound by stare decisis to the Federal Court of Appeal decision, the doctrine of judicial comity supported adherence to it. Justice Quigley also independently found that the NOC Regulations constitute a comprehensive scheme and complete code and, as such, a remedy for unjust enrichment does not exist in the context of remedies provided in the NOC Regulations.

Justice Quigley’s decision went on to address whether, in any event, Apotex had established the third element of the tripartite test for unjust enrichment; namely, whether there is an absence of a juristic reason for any enrichment. Justice Quigley found that Apotex did not satisfy the test as the NOC Regulations themselves constitute a juristic reason for any alleged enrichment. Justice Quigley also noted the NOC Regulations strike a balance with the “early working” provisions of the Patent Act, which permit accelerated market entry of generic products in Canada. He found that permitting Apotex to claim disgorgement of the innovator’s revenues or profits would disrupt this balance.

Despite this comprehensive decision by Justice Quigley, the future of claims for innovator profits in the Ontario courts awaits final resolution. The decision, at time of publication, is currently under appeal to the Ontario Court of Appeal.