If a patentee is unsuccessful in a prohibition application under the Patented Medicines (Notice of Compliance) (PMNOC) Regulations against a generic entrant, but subsequently prevails in an infringement action regarding the same patent, can it be liable for Section 8 damages under the regulations? The answer appears to be no.

Facts

On February 15 2018 the Federal Court issued a decision in Apotex Inc v AstraZeneca Canada Inc (2018 FC 181). The case concerned an action under Section 8 of the PMNOC regulations, in which Apotex claimed damages for being delayed in marketing its esomeprazole magnesium product (a generic version of AstraZeneca's Nexium).

The court held that AstraZeneca was not liable for any losses suffered by Apotex, as Apotex's claim would be fully offset by its liability for patent infringement in the 'but-for' world.

Section 8 claim

AstraZeneca's attempt to prohibit Apotex's market entry under the PMNOC regulations was unsuccessful, as the court found Apotex's allegation of invalidity to be justified. This gave rise to Apotex's Section 8 claim for its alleged losses for delayed market entry. AstraZeneca separately commenced a patent infringement action against Apotex, which in turn counterclaimed for invalidity. AstraZeneca ultimately succeeded in its action in the Supreme Court (for further details please see "Promise doctrine struck down and AstraZeneca's NEXIUM patent upheld as useful").

As a result of the Supreme Court decision, AstraZeneca argued in the Section 8 action that Apotex was not entitled to any of its alleged losses, because had Apotex not been delayed to market by virtue of the regulations, it would nonetheless have infringed a valid patent and any losses claimed to have been suffered would have been offset by its liability to AstraZeneca.

Apotex raised several counterarguments, including:

  • a potential non-infringing alternative in the Section 8 hypothetical world; and
  • an alternative construction of the hypothetical world, in which the Supreme Court would not have decided AstraZeneca's appeal in the same way as it did in the real world.

Decision

The Federal Court rejected Apotex's arguments, holding that:

  • Apotex would have entered the market in the Section 8 period with an infringing esomeprazole product, as it did in the real world; and
  • the patent infringement actions would have proceeded in the same manner such that AstraZeneca's patent would have ultimately been found valid.

As a result, since Apotex would have been liable to AstraZeneca for patent infringement, any damages that Apotex had allegedly suffered in the Section 8 period would have been fully offset by AstraZeneca's patent infringement claim, regardless of whether AstraZeneca had claimed its own damages or elected to account for Apotex's profits. Apotex has appealed.

In a separate judgment, and following the Supreme Court decision, the Federal Court issued a declaration that Apotex had infringed AstraZeneca's patent, rejecting Apotex's attempt to reopen the trial on new grounds of invalidity.

For further information on this topic please contact Kevin Siu at Smart & Biggar/Fetherstonhaugh by telephone (+1 416 593 5514) or email (kpsiu@smart-biggar.ca). The Smart & Biggar/Fetherstonhaugh website can be accessed at www.smart-biggar.ca.

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