Low v Pfizer Canada Inc, 2014 BCSC 1469

The plaintiff, Low, sought to certify a class action against Pfizer, the manufacturers of Viagra. Low alleged that Pfizer wrongfully obtained and relied on Canadian Patent No. 2,163,446 (“‘446 patent”), which inflated the price of Viagra by delaying the introduction of competing generic versions. [1] The ‘446 patent was held to be invalid by the Federal Court (2012 FC 1339), which decision was affirmed on appeal (2014 FCA 13). [15]

At issue was whether the plaintiff’s claim discloses a cause of action for the purposes of the BC Class Proceedings Act. [3] The causes of action pled were i) unlawful interference with economic relations; ii) waiver of tort; and iii) unjust enrichment. [18]

Only claims for unlawful interference with economic relations and unjust enrichment disclosed a cause of action. [98-100]

After reviewing the jurisprudence on liability arising from breach of a statute, the Court held that breaching a statute that does not provide for a remedy for such a breach could give rise to or be evidence of common law causes of action, other than negligence. [31]

The Court also held that “Parliament clearly chose not to create a right of action for consumers arising directly out a breach of the [Patent] Act.” [34] But, the Court agreed that the Patent Act “does not explicitly or by implication bar an action by consumers if the conduct that was in breach of statute is also relevant to a common law cause of action.” [34]

Unlawful Interference with Economic Relations

Regarding the tort of unlawful interference with economic relations, the Court found that this cause of action met the required threshold of not being “certain to fail”. [54] The Court followed the Supreme Court decision in Bram Enterprises (2014 SCC 12), and the three-part test for unlawful interference, which requires: “(1) the defendant intended to injure the plaintiff’s economic interests; (2) the interference was by illegal or unlawful means; and (3) the plaintiff suffered economic loss or harm as a result.” [38]

As to the first part of the test, the Court deferred the factual determination of Pfizer’s intention and stated that “[a]t this stage, it is sufficient that the plaintiff explicitly pleads that Pfizer intended to cause him and other Class Members economic harm.” [53]

Addressing the second part of the test, the Court held that the cause of action created under s. 8 of the PM(NOC) Regulations could possibly satisfy the second part. [42-50] In so holding, the Court distinguished Federal Court of Appeal (2009 FCA 187) and Ontario Superior Court (2013 ONSC 5937) decisions holding that s. 8 of the Regulations cannot found a cause of action for unjust enrichment. The Court made the distinction on the basis that decisions in question “stand only for the proposition that the damages recoverable by a generic manufacturer in an action under s. 8 are limited by the language of that section. They do not address a right of action by another party arising under the unlawful means tort.” [48]

Waiver of Tort

The Court held that “it is plain and obvious that a claim in waiver of tort cannot succeed in this case.” [72]

The Court defined waiver of tort as “the plaintiff gives up the right to sue in tort and elects to base the claim in restitution. This allows the plaintiff to recover the benefits obtained by the wrongdoer, rather than damages measured by the plaintiff’s loss.” [56]

The Court alluded to the uncertainly in the law with regards to whether waiver of tort is an independent cause of action or merely an alternate remedy. [57] However, the Court decided that it was unnecessary to resolve that general uncertainty, and ruled that in this case waiver of tort could only be an alternate remedy. [59]

The Court stated that “[w]hatever waiver of tort may be, it must be based on some identified wrongdoing.” [60] The Court went on to find such wrongdoing to be missing in this case because the statutory patent system provides “no remedy for ultimate consumers of patented–even wrongly patented—products.” [64]

Unjust Enrichment

The Court held that it is “not plain and obvious that the pleadings disclose no cause of action” based on unjust enrichment [86], specifically on the basis that a wrongfully-obtained patent may not provide a juristic reason for Pfizer’s enrichment. [85, 97]

The Court relied on the Supreme Court’s decision in Pacific National (2004 SCC 75) for the three elements of unjust enrichment: “(1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment.” [75] The Court found that the first two elements were established. [76] In the third element, the plaintiff must establish a prima facie absence of a juristic reason, upon which showing the defendant has the burden of disproving the absence. [77]

The Court held that the “question of whether Pfizer’s reliance on the patent provides a juristic reason may involve a fact specific inquiry into Pfizer’s knowledge and intention. When a patent holder relies on its patent in good faith and has no reason to expect that it will be declared invalid, a subsequent declaration of invalidity may not negate the juristic reason for enrichment. At the other extreme, one cannot imagine reliance on a patent being a sufficient juristic reason if the patent was obtained by fraud.” [84]

The Court went on to state that even in the absence of fraud in obtaining a patent, juristic reason may be undermined if the “patent was wrongfully obtained through knowing and deliberate non-disclosure, amounting to an abuse of the system. Depending on the evidence, that allegation may go to issues of reasonable expectation and public policy and may be sufficient to exclude the patent legislation as a sufficient juristic reason.” [85]

Commentary

This decision brings one step closer the possibility of wide-ranging, class-based, third-party liability created by patents that are found to be “wrongfully obtained”. While a full determination of the issues at trial will be more informative than these preliminary findings made under a very low threshold of “no possibility of success”, the specter of remote and unpredictable third-party liability remains troubling, especially to patentees who have invested in and taken risks associated with entering the patent system. Considering the frequency of patent validity challenges in PM(NOC) cases alone, the issue could become potentially quite significant.

This case is also interesting to compare with the Eli Lilly NAFTA challenge, seeking $500 million in damages from the Canadian government for, amongst other things, allegedly wrongly expropriating certain Eli Lilly drug patents when the Federal Court invalidated them. Common in both cases is the fact that the courts actively invalidated patents for non traditional reasons. For example, in the Viagra decision the Supreme Court attempted to invalidate the Viagra patent for lack of adequate disclosure and emphasized the requirement of such disclosure to fulfil the patentee’s obligations under the patent bargain.

In Eli Lilly, the Patentee is looking for an extraordinary remedy for being found to have (wrongly, in their view) violated the bargain at the heart of the patent system. On the other hand, in this case it is the public that is looking for an extraordinary remedy for the violation of the bargain at the heart of the patent system. Ponder whether these litigations reflect a healthy attempt to put a check on a patent system gone wrong or whether they reflect opportunistic litigants simply seeking to game the legal system.