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But-For Result in Prohibition Proceeding Does Not Give Rise to Section 8 Claim for Damages

The Ontario Superior Court recently dismissed a claim for damages brought by Apotex under section 8 of the Patented Medicines (Notice of Compliance) Regulations. The Ontario Court held that the circumstances of Apotex’s claim did not entitle it to compensation, and further found that even if the circumstances had given rise to compensation, Apotex did not sustain any damages.


In February 2008, Apotex filed an Abbreviated New Drug Submission for its Apo-Atomoxetine product, a generic version of Eli Lilly’s STRATTERA. A Form V was also filed at the same time, indicating Apotex would wait for the 735 Patent to expire. In August 2008 however, Apotex served Eli Lilly with a Notice of Allegation shortly after Teva, a generic competitor, brought an impeachment action against the 735 Patent. In response, Eli Lilly commenced a prohibition proceeding under section 6 of the Regulations, resulting in an automatic 2 year stay on the issuance of a Notice of Compliance.

The Federal Court heard the Teva action before Apotex’s prohibition proceeding, and found the 735 Patent to be invalid. Following the Teva decision, Apotex received a Notice of Compliance for its Apo-Atomoxetine product prior to its own prohibition proceeding. Although the Federal Court found against Apotex on every single one of its allegations, the proceeding was dismissed on the basis of mootness.

The section 8 claim for damages arose from the fact that Eli Lilly commenced a prohibition proceeding, which was later dismissed by the Federal Court.


The Ontario Court found it clear from the Federal Court decision that, but for the determination in the Teva action, Apotex would have been prohibited from receiving its NOC until the expiry of the 735 Patent. The Ontario Court affirmed that only “unsuccessful, withdrawn, or discontinued prohibition applications give rise to section 8 damages”, and allowing Apotex to claim damages even after all its allegations had been dismissed on the merits would allow it to be a “free rider”:

[38] Two critical matters to take into account in assessing the amount of compensation to which Apotex might be entitled here are the fact that Apotex’s claims failed and the fact that the court would have issued a prohibition order until 2016 in the absence of the Teva action. Those elements are so core to the damages scheme under the Regulations that they should lead to an assessment of damages at zero.

The Ontario Court further emphasized the importance of Apotex’s NOA in its analysis and found it “particularly telling” that Apotex chose not to raise allegations about the invalidity of the 735 Patent:

[47] The importance of the second person’s Notice of Allegations cannot be overstated in this analysis. When a second person decides to issue a Notice of Allegations, it chooses what allegations to make. The nature of those allegations inevitably affects the first person’s decision about whether to commence a prohibition application or whether to let the NOC issue and then pursue the second person for breach of patent. The combination of the allegations Apotex made and the prohibition application Lilly commenced led Barnes J. to conclude that the Minister should be prohibited from granting Apotex a NOC until the 735 Patent expired. Once that issue has been decided, Apotex should not get a second chance to raise new and better arguments that might have led to a different outcome. That principle is no different than core principles of issue estoppel which require a litigant to raise all issues in a single proceeding.

Damages Assessment

Even if the circumstances had given rise to a right of compensation, the Ontario Court found that Apotex did not sustain any damages during the relevant liability period. While Apotex argued that it was not risk-averse and had sufficient raw materials and manufacturing capacity to launch its generic product, the Ontario Court found that it would not have taken Apotex any more or less time to get to market in the hypothetical world than it did in the real world.

The Ontario Court looked to Apotex’s behaviour in the real world as a proxy for what its conduct would have been in the hypothetical world. Apotex was initially content with waiting for the 735 Patent to expire to receive its NOC, as evidenced from its Form V. It was only once Teva’s impeachment action became public that it changed its mind. Even after receiving an NOC in the real world, Apotex declined to immediately enter the market. Instead, it spent 6 months trying to pursue a possible joint venture with Teva, as well as an advisory opinion from the Competition Bureau that such a venture would not violate competition laws, to avoid the risk of the patent being reinstated on appeal.

On these facts, the Ontario Court concluded that Apotex would not have launched its product any earlier in the hypothetical world due to risk of patent infringement and dismissed Apotex’s claim for section 8 damages. A copy of the decision can be found here.