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Outside the Strike Zone: Pleading s. 8 Damages for Loss of Market Share and Sales of Other Products

In Pharmascience Inc v Pfizer Canada Inc, 2015 FC 1134, Justice Zinn of the Federal Court of Canada reversed the underlying Order of Prothonotary Aalto and held that the portions of Pharmascience’s Amended Statement of Claim, alleging lost sales of products other than pregabalin, should not be struck.

In 2013, the Federal Court dismissed Pfizer’s prohibition applications in relation to Pharmascience’s pregabalin product (see our previous post, here). In its action for damages pursuant to section 8 of the PM(NOC) Regulations, Pharmascience’s pleading states:

[35]  Therefore, Pfizer’s invocation of the PM(NOC) Regulations and its commencement of Prohibition Proceeding #1 and Prohibition Proceeding #2 have resulted in lost sales to Pharmascience for the Pharmascience Capsules, the Pharmascience 225 Capsules and other, non-pregabalin products.

[36]  In addition, during the Exclusionary Period and the Second Exclusionary Period, Pharmascience lost its opportunity for significantly enhancing its reputation for introducing new products on the market in advance of its competitors, thereby increasing the sale of Pharmascience’ s products. As a result of this lost opportunity, Pharmascience was prevented from obtaining increased sales and market share for its non-pregabalin products.

Prothonotary Aalto allowed Pfizer’s motion to strike these paragraphs, relying on the decision in Eli Lilly Canada Inc v Novopharm, in which a motion for leave to amend a pleading to include similar allegations was dismissed. On appeal, Justice Zinn noted that a pleading may only be struck where it is “plain and obvious that the claim sought to be struck discloses no reasonable cause of action.” He held that the impugned paragraphs should not be struck because the Court has recognized losses of the type alleged in the impugned paragraphs as potentially recoverable.

Justice Zinn distinguished the Eli Lilly decision on the basis that it concerned a motion to amend a pleading following a trial to determine the scope of liability, not a motion to strike. In addition, Justice Zinn noted that leave to amend the pleading was granted in part, provided that the amendment was particularized. Justice Zinn clarified that the question of whether Pharmascience’s pleading is sufficiently particularized was not relevant to Pfizer’s motion to strike. Pfizer did not bring a motion for particulars, and the fact that Pfizer was able to plead to similar allegations in Teva Canada Limited v Pfizer Canada Inc, Court File T-1496-13 was evidence that Pfizer was able to respond to a similar pleading. He therefore allowed the appeal, and dismissed Pfizer’s motion to strike.

A copy of Justice Zinn’s Order and Reasons may be found here.