Ontario Court of Appeal upholds summary judgment dismissing Apotex’s claim for unjust enrichment and disgorgement of profits

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On September 12, 2013, a panel of three judges of the Ontario Court of Appeal unanimously upheld the decision of the Ontario Superior Court earlier this year to grant partial summary judgment to Abbott and Takeda, denying Apotex’s claim for disgorgement of profits on the basis of unjust enrichment.

The case involved a claim for damages arising from Abbott’s invocation of the Patented Medicines (Notice of Compliance) Regulations, relating to its drug Prevacid®. The PM(NOC) proceedings were ultimately discontinued by Abbott following a settlement agreement between the parties, and Apotex thereafter brought an action in the Ontario Superior Court for (a) damages under section 8 of the PM(NOC) Regulations, and (b) disgorgement of Abbott’s profits on the basis of unjust enrichment. On January 15, 2013, Justice Michael Quigley granted Abbott’s motion for summary judgment to deny Apotex’s claim for disgorgement.

In dismissing Apotex’s appeal, the Court of Appeal observed that Apotex had now conceded that its damages for any delay in obtaining access to the generic market is limited to its own lost profits.  Moreover, the Court held, even if the settlement agreement is unenforceable (which Apotex argued was a possible outcome of the trial), the remedy to Apotex could still not exceed its lost profits.

In holding that Apotex’s damages are limited to its own lost profits, the Court of Appeal put an end to any remaining debate over whether a generic can claim disgorgement merely because the innovator lawfully exercised its rights to invoke the PM(NOC) Regulations.  Indeed, the Court of Appeal confirmed that the operation of the PM(NOC) Regulations specifically authorizes an innovator to do so, and as a result a claim for unjust enrichment is not available:

The respondents’ right to be in the market to the exclusion of the appellant and therefore to earn its profits or revenues is that provided for by the Patent Regulations.  Those Regulations constitute a valid juristic reason for the respondents’ profits and revenues for the period in question.  This precludes the appellant’s claim for disgorgement.

As a result, the law in the Federal Court and in Ontario is now clear.  A generic cannot claim disgorgement of the innovator’s profits for delayed market entry caused by invoking the PM(NOC) Regulations.

McCarthy Tétrault was counsel of record for the respondent Abbott Laboratories Limited.

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