ONSC Awards Substantial Indemnity Costs against Apotex in Equitable Disgorgement Case

ONSC Awards Substantial Indemnity Costs against Apotex in Equitable Disgorgement Case

Apotex Inc. v. Abbott Laboratories, 2013 ONSC 2958

Apotex sought equitable disgorgement of profits of Abbott and Takeda, on the ground of unjust enrichment. Specifically, Apotex claimed profits for the time during which it was prevented from selling a generic version of their patented drug Prevacid as a result of PM(NOC) proceedings pursued by Abbott and Takeda. In response, Abbott and Takeda brought a motion for partial summary judgment. The Court ruled in their favour, and dismissed Apotex’s claims for disgorgement of profits. As Abbott and Takeda were the successful parties, they each sought costs on a substantial indemnity basis.

Abbott and Takeda are each awarded costs on a substantial indemnity basis, given that Apotex was forum shopping and was found to have engaged in reprehensible conduct by claiming that Abbott and Takeda engaged in abusive conduct simply because they invoked the PM(NOC) Regulations for a valid purpose envisioned by Parliament. The quantum of costs that Abbott and Takeda requested is reduced.

Costs are only awarded on a substantial indemnity basis in exceptional cases, and the Court will use heightened costs to signal its disapproval to the losing party. In this case, Apotex’s conduct in alleging that the defendants engaged in wrongful conduct by using the PM(NOC) Regulations as part of their litigation strategy, without any evidence or air of reality, was found to be reprehensible. This was found to be the case, even though Apotex did not aggressively pursue these wrongful allegation claims, and simply advanced any possible ground of attack against the defendants.

Apotex was also found to have engaged in forum shopping, because it pursued an equitable action against Abbott and Takeda, despite its involvement in the previous case of Apotex v. Eli Lily where the Federal Court ruled that s. 8 of the PM(NOC) is a complete code, and does not allow parties to pursue equitable remedies. In addition, Apotex previously had tried to argue this point before the Federal Court in the current case, and had failed.