No Equitable Disgorgement of a Pharma Innovator’s Profits in Ontario, Absent a Cause of Action Independent of the Operation of s. 8 of the PM(NOC) Regulations

No Equitable Disgorgement of a Pharma Innovator’s Profits in Ontario, Absent a Cause of Action Independent of the Operation of s. 8 of the PM(NOC) Regulations

Apotex Inc. v. Abbott Laboratories Limited, 2013 ONSC 356

In this case, Apotex claimed damages against Abbott Laboratories and
Takeda Pharmaceuticals based on unjust enrichment. On this motion, Abbott and
Takeda sought an order for partial summary judgment against Apotex under Rule
20 of the Rules of Civil Procedure. They asked the Court to dismiss
Apotex's claim for disgorgement of their revenues or profits from sales of
their patented medicine lansoprazole (PREVACID).

Motion is granted. The claim brought by Apotex for disgorgement of the
defendants' profits, based on unjust enrichment outside of the parameters of s.
8 of the NOC Regulations, is dismissed.

First, the Court decided that the
equitable jurisdiction involving subject-matter that is within the exclusive or
concurrent jurisdiction of the Federal Court, such as patent law, is not
narrower than that of the Superior Court.

The Court went on to find that it
was possible to have a "full appreciation" of the evidence and the
issues necessary to permit dispositive findings to be made because on this
summary judgment the Court had the benefit of a full evidentiary record.

The Court noted that the Federal
Court of Appeal’s jurisprudence has established that whatever jurisdiction the
Federal Court has to provide equitable relief under s. 20(2) of the Federal
Courts Act,
it cannot be used to grant a remedy which s. 8 was intended to
exclude, absent a cause of action being alleged that is independent of the
operation of s. 8. The Court provided five reasons for following the FCA

First, the FCA jurisprudence has
plainly and conclusively determined that unjust enrichment is not an available
remedy. The Court also noted that the FCA has vast experience in the
interpretation of the NOC Regulations.

Second, in this case, the statement
of claim was in all material respects the same, that is, effectively identical
to the statement of claim that underlay Apotex's claim of an unjust
enrichment-based remedy in the 2011 FCA Eli Lilly case.

There was no evidence of any
wrongful invocation of the NOC Regulations by Abbott or Takeda. It is
plain and at the core of the s. 8 damages regime that in some cases innovators
will succeed in their prohibition proceedings relative to the generic, while in
others they will not. That is exactly what triggers the s. 8 damages
entitlement. Parliament was aware of this. It knew some innovators would
succeed and some would not, but there is no suggestion that an innovator's
failure to succeed on such a case must necessarily amount to the wrongful
invocation of the provisions.

Third, Apotex sought leave to appeal
the FCA decision to the Supreme Court of Canada, but leave to appeal was

Fourth, while previous Ontario
decisions may have "permitted" Apotex's unjust enrichment claims to
escape having their pleadings struck, it was a far cry from suggesting that its
position has received any substantive approbation or judicial support on
the merits. The Court went on to distinguish the prior Ontario decisions.

Fifth, the clarity of the language
used by Parliament in enacting and amending s. 8 of the NOC Regulations
permitted the Court to discern that even if specific and express words were not
used to remove a generic manufacturer's cause of action for unjust enrichment,
there was a Parliamentary intention to create a complete code. Absent cogent
evidence of egregious conduct, the s. 8 framework is a complete code.

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."

In the event that Parliament did not intend to
exclude a claim to unjust enrichment, Apotex's claim remains untenable because
the onus is on Apotex to show that there is no juristic reason present for the
alleged unjust enrichment. Apotex cannot discharge that burden because validly
enacted statutes or regulations, such as the PM(NOC) Regulations, will
constitute a juristic reason for enrichment within the meaning of the unjust
enrichment test.