Federal Court of Appeal confirms infringement of Merck’s patent on lovastatin and also holds Merck liable for section 8 damages in respect of the same patent

In two decisions rendered in December 2011, the Federal Court of Appeal highlighted the unique dynamic presented by the Patented Medicines (Notice of Compliance) Regulations and the Patent Act.

By judgement dated December 19, 2011, the Federal Court of Appeal dismissed Apotex’s appeal and confirmed the lower court’s finding of infringement of Merck’s Canadian Patent No. 1,161,380 (“380 Patent”). The 380 Patent claims a process to make lovastatin. The Court of Appeal upheld the trial judge’s finding that certain batches (though not all) of Apo-lovastatin were made using the patented process. In doing so, the Court of Appeal determined that the trial judge had sufficient evidence to reach her conclusions and it was not the place of the appellate court to re-weigh the evidence. The cause of action of this proceeding (patent infringement) is founded in the Patent Act.

The same panel also heard an appeal of the same trial judge’s decision in respect of a section 8 claim made by Apotex. Section 8 entitles a generic manufacturer to sue for damages suffered as a result of being held off the market because of an unsuccessful proceeding under the Patented Medicines (Notice of Compliance) Regulations. Merck unsuccessfully tried to obtain a prohibition order under the Regulations in respect of the 380 Patent. Apotex sought compensation under section 8 which was denied by the trial judge.

The Court of Appeal reversed her decision finding that the 1998 version of the Regulations applies and under that version, Merck is liable to Apotex for damages (the trial judge held that the 1993 version applied). The Court of Appeal reasoned that because Merck’s prohibition application was “alive” as of March 1998 (i.e. the Federal Court of Appeal had jurisdiction to hear an appeal of the application), Merck was subject to the 1998 version. The 1993 version limits liability to the time period after patent expiry. The 1998 version does not and is therefore broader in its scope.

The Court went on to hold that the liability provision does not include an ex turpi causa provision and one cannot be read in (e.g. to limit liability to circumstances of non-infringement). Rather, the Court held that section 8(5) of the Regulations provides a decision-maker with the ability to consider such factors when deciding on quantum.

The Court remitted the matter to the trial judge for determination of various legal and factual findings with the express provision that the infringement finding can act to mitigate or vitiate the section 8 claim.

Appellate Decision – Infringement

Appellate Decision – Section 8