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Apotex partly denied section 8 claim on basis of ex turpi causa principle

On May 23, 2012, Justice Snider released her decision in Apotex v Merck involving Apotex’s section 8 claim regarding the drug lovastatin.  Justice Snider considered two questions:  1)  whether Apotex is entitled to section 8 compensation and 2)  to what extent, if any, the ex turpi causa doctrine could be applied to reduce the quantum of liability.

Background

In 1993, Apotex applied for a Notice of Compliance alleging that it would not infringe Merck’s Canadian Patent No. 1,161,380 on the basis that it would not use the patented AF-1 process.  On June 1, 1993, Merck commenced a prohibition proceeding under the Patented Medicines (Notice of Compliance) Regulations.  No decision ever issued as a result of the expiry of the statutory stay and Apotex received an NOC on March 27, 1997.  A patent infringement action was subsequently launched and in 2010, the ‘380 Patent was held valid and infringed by the lots of Apotex’s lovastatin product made using using the AF-1 process.

Relevant period of liability

Justice Snider held that Merck was liable for section 8 compensation for the period commencing May 25, 1996 (the date Apotex’s drug submission was placed on “patent hold”) and ending March 27, 1997 (the date of the issuance of the NOC).

Defence of ex turpi causa

The Federal Court of Appeal had previously held that ex turpi causa was capable of being raised as a discretionary factor under section 8(5) of the Regulations.  Justice Snider held that if during the relevant period Apotex would have been more likely than not to have sold lovastatin made by the infringing AF-1 process Apotex ought not to be able to recover for what would have been an otherwise illegal act.

Based on the evidence before her, Justice Snider determined:

…that, in the hypothetical world, it is more likely than not that any lovastatin produced and sold by Apotex would have used the Aspergillus flavipes micro‑organism [AF-1 process] until the approval of the non-infringing process on February 27, 1997. As established by the evidence before me, Aspergillus flavipes is really Aspergillus terreus. It follows that a process using Aspergillus flavipes would have infringed the ‘380 Patent. In other words, from the commencement of the Relevant Period to February 27, 1997, it is more likely than not that Apotex would have used the infringing AFI-1 process, assuming the litigation risk of doing so. Pursuant to s. 8(5), I would exercise my discretion to prohibit Apotex from recovering any compensation during that period…I have no evidence beyond speculation, that Apotex would have infringed the ‘380 Patent during the period of February 27, 2007 to March 26, 2007, once it had the necessary approval for the AFI-4 process. I would not reduce or eliminate Apotex’s entitlement to damages during that period.

A copy of the the decision can be found here.