Ontario Court Dismisses Apotex Patent Damages Case Grounded in 400 Year Old Statute of Monopolies

Summary

On March 8, 2021, the Ontario Court (2021 ONSC 1588) dismissed Apotex’s action against Eli Lilly (“Lilly”) by way of summary judgment, finding there was no genuine issue requiring trial. Apotex sought treble damages pursuant to the Ontario and English Statutes of Monopolies (“Monopolies Act”), and damages pursuant to the Trademark Act and the common law tort of conspiracy.

Apotex’s Monopolies Act claims were grounded in an English statute originally enacted in the 17th century. Relying on this statute and its Ontario equivalent, Apotex and other generic pharmaceutical companies have brought numerous actions over the past decade in the Ontario and Quebec provincial Courts seeking treble damages against innovative drug companies. These actions allege liability based upon alleged delay caused by the assertion of patents under the PM(NOC) Regulations that were subsequently invalidated. This decision is the first to dismiss these kinds of Monopolies claims, and Trademark Act claims on their merits. Initial attempts by innovators to strike them at the pleadings stage were largely unsuccessful given their novelty under Canadian patent law.  

The Court granted Lilly summary judgment, finding the Patent Act and PM(NOC) Regulations provide a “complete code” for the use of patents and available remedies when patents are invalidated. Consequently, Apotex’s claims were precluded because they were not contemplated by this carefully crafted regime. The Court also held that any harm to Apotex from being held out of the market “were authorized by law and flowed from the operation of law”.

The Court also found that Lilly’s listing of its patent on the patent register did not give rise to liability under the Trademark Act. At the time the patent was listed it was presumed to be valid.  The act of listing the patent, despite that patent later being declared invalid was not a false or misleading statement actionable under the Trademarks Act.

Finally, the Court concluded there was simply no evidence to support Apotex’s conspiracy claims.

Background

Apotex’s claim for damages arose from Lilly’s enforcement of its patent covering its antipsychotic drug, olanzapine. The patent issued in 1998 and was successfully asserted in PM(NOC) proceedings against Apotex, which delayed Apotex from launching its generic version of olanzapine. However, in subsequent proceedings involving a different generic manufacturer, Lilly’s patent was declared invalid under the Patent Act. Thereafter, Apotex unsuccessfully sought reconsideration of its PM(NOC) decision in an attempt to trigger section 8 damages.

Apotex subsequently commenced this action in the Ontario Court, seeking treble damages under the Statutes of Monopolies, as well as damages pursuant to the Trademarks Act, and the common law tort of conspiracy.

Key Takeaways

  • Patent Regime is “Complete Code” for Remedies: By invoking the PM(NOC) Regulations, Lilly exercised its rights under the Patent Act. In this circumstance, and owing to the “wholly statutory” nature of patent law, the Court ruled that the Patent Act and PM(NOC) Regulations constitute a “complete code” for remedies, precluding Apotex’s causes of actions. The Court emphatically rejected Apotex’s claims, finding they “undermine” Parliament’s carefully crafted patent regime:

Exposing a party to liability for damages simply because it successfully obtained a patent and exercised its rights based on its presumptive validity would remove one of the key benefits of the patent regime, which exists to foster and encourage innovation by protecting inventions for the benefit of the inventor for a limited period of time.

  • No Liability for Harm Caused by Operation of Law: Since the patent in suit was presumed valid at the time it was listed and enforced by Lilly, any alleged harm to Apotex was lawful. The subsequent invalidation of the 113 Patent ab initio (i.e. a declaration that the patent never existed) created an irreconcilable contradiction in Apotex’s argument for liability:

Apotex…wants it both ways, saying that Lilly never had a patent, but that Apotex was harmed by the patent. This cannot be right. If Apotex wants to say the patent never existed, then Lilly was never granted a monopoly, let alone an unlawful monopoly, and the prohibition has no application. If one is going to rewrite history, it should at least be done consistently.

  • No Retrospective Liability for Patent Holders: At the root of Apotex’s claims was the notion that a patent holder could be held retrospectively liable for asserting an extant patent that was later held to be invalid. The Court explicitly rejected this notion, finding: “But [patent impeachment] it does not create, retrospectively, the benefit asserted by Apotex that a patent holder is liable for acts that it had a right to take while the patent was extant”.

For more information, please contact the authors and see our Intellectual Property Litigation page.

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