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Hands Off My Profits

In a decision released May 5, 2015, the Court of Appeal for Ontario has upheld the Divisional Court’s decision that had struck Apotex’s claim for disgorgement of the profits Lilly had earned while it kept Apotex’s generic atomoxetine hydrochloride product off the market through the invocation of the statutory stay under the PM(NOC) Regulations. Apotex had argued that Lilly was unjustly enriched and accordingly had sought disgorgement of Lilly’s profits, as a stand alone cause of action, separate from Apotex’s section 8 claim advanced in the same action.

The Court of Appeal held that Apotex’s plea was unsustainable because it could not establish the necessary “corresponding deprivation” required for the test for unjust enrichment. Rather, it was the public that suffered the deprivation from having to pay higher prices for the drug:

…the pleading itself makes a case for deprivation of the public of the difference between Apotex’s prices and Lilly’s monopolistic prices. Though Apotex was clearly deprived of revenues and sales, the pleading does not allege that Apotex was deprived of those monopolistic profits.

The Court of Appeal did not endorse prior decisions holding that section 8 is a “complete code” as held below and also in the decision of the Federal Court of Appeal in Apotex v. Eli Lilly. The Court noted that the British Columbia Superior Court had rejected this argument, at least with respect to consumer claims, in Low v. Pfizer, a class action seeking compensation for consumers who had overpaid for Viagra due to Pfizer having wrongly obtained and relied upon the Viagra patent. An appeal from this decision in Low is scheduled to be heard by the British Columbia Court of Appeal in September 2015.

On the issue of whether the NOC Regulations are a sufficient “juristic reason” for the windfall realized by Lilly, the Court of Appeal again referred to the decision in Low: “if, on the facts as proved, the patent was “wrongfully obtained through knowing and deliberate non-disclosure, amounting to an abuse of the system”, that “may be sufficient to exclude the patent legislation as a sufficient juristic reason”

A copy of the Court of Appeal’s reasons may be found here.