Failure to Launch: BCCA Shuts Down Consumer Drug Patent Class Action

The British Columbia Court of Appeal recently clarified that there is no common law remedy available to consumers for breach of the Patent Act.

In Low, the plaintiff Low sought certification of an action on behalf of members of the class consisting of BC residents who had purchased Viagra from Jan. 1, 2006 to Nov. 30, 2012. Low pleaded that Pfizer had obtained an unlawful monopoly over VIAGRA through a patent that the Supreme Court of Canada concluded breached the disclosure requirements of the Patent Act. Low alleged that Pfizer had used this unlawful monopoly to charge an inflated price for VIAGRA, and that the difference between the actual price and the price Pfizer would have collected in the presence of generic competition represented “ill-gotten gains.” Low sought recovery for the tort of unlawful interference with economic relations and for unjust enrichment.

At first instance before the BC Supreme Court, Pfizer was unsuccessful in arguing that the Patent Act and related legislation completely governed the making of patented drugs, including all rights and remedies. Pfizer argued that the absence of a cause of action for individual purchasers in patent legislation barred Low from proceeding. The chambers judge disagreed and concluded that it was not plain and obvious that the Patent Act barred the plaintiff’s action.

On appeal, BCCA reversed the chambers judge and accepted Pfizer’s arguments. The BCCA noted decisions of the Federal Court of Appeal and the Ontario Court of Appeal that supported the notion that a complete code had been created by legislation that was specifically relevant to patent rights, namely, the Patent Act, Food and Drugs Act, Food and Drug Regulations, and Patented Medicines (Notice of Compliance) Regulations. The BCCA also noted that generic drug manufacturers were not able to claim unjust enrichment against brand name manufacturers that commenced PM(NOC) proceedings which were ultimately dismissed. The BCCA stated:

[68]         However, I am of the view that the completeness of the Patent Regulatory Regime forecloses parallel civil actions by consumers that are rooted in a breach of the Patent Act. In my opinion, there is nothing in the legislation comprising the Patent Regulatory Regime (and in the Patent Act particularly) that evinces an intention to allow consumers to make such claims. Saskatchewan Wheat Pool cautions that courts “must refrain from conjecture as to Parliament’s unexpressed intent” (at 226). As I have stated, patent rights are a construct of statute. The legislative regime creates rights which would not otherwise exist at common law. In effect, Low seeks to use the common law to expand the scope of those statutory rights and redefine the consequences of their breach by relying on Parliament’s silence. It is perhaps not strictly accurate to say that the statutes displace the common law in this case, since there would be no basis for any of the common law claims asserted if the statute did not exist. However, in circumstances such as these–where Parliament has comprehensively legislated a particular area of the law–the reasonable inference is that it did not intend to extend rights of recovery beyond those embodied in the regime

[69]         Courts have determined that the Patent Act constitutes a complete code as between brand name and generic manufacturers. Courts have also concluded that the completeness of the Patent Regulatory Regime prevents generic drug manufacturers from claiming disgorgement of profits based on unjust enrichment. It would make no sense logically or from a policy perspective to allow consumers to claim disgorgement of profits from brand names when generics are precluded from claiming the same based on identical wrongful acts.

The BCCA also addressed Low’s claim for unlawful interference with economic relations and unjust enrichment. The BCCA held that Low’s claim for unlawful interference could not proceed because Low did not have an independently actionable claim for breach of statute. Similarly, the BCCA held that the equitable claim for unjust enrichment could not be pursued due to the existence of a complete statutory code in the Patent Act and related legislation.

The BCCA’s decision  is available here.