CASE: Eli Lilly et al. v. Novopharm Limited (Federal Court)

DRUG: Olanzapine (ZYPREXA®)

NATURE OF CASE: Motion for Mareva Injunction – section 8 damages claim (PM(NOC) Regs)

DATE OF DECISION: March 2, 2010

SUMMARY:

On March 2, 2010, the Federal Court denied a motion brought by Novopharm Limited (“Novopharm”) seeking a Mareva injunction enjoining Eli Lilly Canada Inc. (“Lilly Canada”) from transferring its revenues to its parent company, Eli Lilly and Company (“Lilly US”). Novopharm’s alternative request for an order requiring Lilly Canada to post security for damages was also denied.

Previously, Lilly Canada had unsuccessfully sought a prohibition application in response to a notice of allegation in which Novopharm alleged that Canadian Patent No. 2,014,113 was invalid (2007 FC 596). Subsequently, Novopharm commenced an action for damages pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations.

Novopharm brought a motion for a Mareva injunction based on a concern that Lilly Canada may become judgment proof prior to the date of trial. In Canada, the following requirements for a Mareva injunction must be established:

  1. The plaintiff must establish a strong prima facie case for potential success at trial;
  2. The plaintiff must provide/demonstrate (a) full and frank disclosure, (b) particulars of the claim, (c) assets within the jurisdiction, (d) risk of removal or dissipation of assets in order to frustrate judgment, and (e) an undertaking as to damages; and
  3. The plaintiff must satisfy the tripartite test for an interlocutory judgment, namely (a) the presence of a serious question to be tried, (b) irreparable harm should the injunction not be granted, and (c) that the balance of convenience favours the moving party.

Novopharm failed to provide any undertaking as to damages and the Court did not permit waiver of this requirement. In particular, the Court rejected Novopharm’s assertion that “it is a certainty that Lilly will have to pay damages to Novopharm” and noted that section 8(5) of the Regulations provides that the Court shall take into account all relevant matters to assess the quantum of damages. As a result, the Court found that “it is not a certainty that Novopharm will be awarded any damages as a result of the section 8 hearing.” The Court went on to deny the alternative request for security on the basis that Novopharm was unable to “convincingly establish” the likely award it would receive in the section 8 case, if any.

Novopharm’s inability to quantify its damages with any particularity also supported the Court’s finding that there was no irreparable harm. Novopharm’s position with regard to this issue was speculative. Further the Court found that Novopharm failed to establish on balance of probabilities that Lilly Canada will be unable to satisfy a judgment, if granted.

Lastly, the Court found that Novopharm had failed to establish that Lilly Canada is about to remove its assets from Canada or that in sending its profits to its parent, it is acting in anything other than the ordinary and usual course of business. A mere “suggestion” is insufficient evidence for a Mareva injunction.

LINK TO DECISION:

Eli Lilly Canada Inc. v. Novopharm Limited