On May 10, 2013, Justice O’Reilly of the Federal Court of Canada issued Reasons for Judgment in Apotex’ section 8 claim against Pfizer in respect of the drug azithromycin and Canadian Patent 1,314,876. The 876 patent is generally directed to crystalline azithromycing dihydrate (AD) and related methods of manufacture.
In 2003, Justice Snider concluded that Apotex’s allegation of non-infringement of Canadian Patent 1,314,876 was justified. Under the Patented Medicines (Notice of Compliance) Regulations, a generic company that has been improperly kept of the market as a consequence of an unsuccessful prohibition proceeding may seek damages against the brand company for any loss suffered. The sole issue before Justice O’Reilly was whether Apotex had a valid claim to section 8 damages against Pfizer.
Pfizer submitted that Apotex was not entitled to section 8 damages because Apotex would have entered the market with infringing material and Apotex’s allegation of non-infringement before Justice Snider had misled Pfizer and the Court. Apotex’ tablets are made with azithromycin isoproanolatel monohydrate (AIM). Pfizer’s in-house scientists had tested samples of Apotex’s tablets in between 2008 and 2009 suggesting that Apotex’s tablets contain about 30 to 33% of azithromycin dihydrate. In 2012, Pfizer’s expert tested samples of Apotex’ tablets and bulk material and concluded that the bulk azithromycin was subtantially pure azithromycin dihydrate and that Apotex’s tablets contained a detectable, but unquantified, amount of AD.
Long Shadow of the previous Prohibition Application
Justice O’Reilly concluded that he was bound by stare decisis or judical comity to follow Justice Snider’s construction that claim 1 of the 876 Patent was directed to azithromycin dihydrate pure and simple. Justice O’Reilly also concluded that since Secton 6 and 8 are closely connected, a generic may not raise new allegations of invalidity or non-infringement not raises in the earlier prohibition proceeding:
 It is clear that s 8(5) permits the judge to consider all relevant circumstances in determining the amount of damages. On its face, this provision gives the judge a broad discretion. However, given the relationship between ss 6 and 8, the judge hearing the s 8 action must, in my view, have regard to the issues put in play in the s 6 application. In my view, this means that entirely new allegations of non-infringement or invalidity are not “relevant” for purposes of s 8. The NOA defined the issues in the s 6 application and, in my view, continues to define the limits of what is relevant for purposes of s 8.
 Accordingly, as the otiginal NOA stated that Apotex would not infringe the ‘876 patent, and made no reference to invalidity, I cannot now consider Apotex’s new submissions about the invalidity of the ‘876 patent.
Justice O’Reilly held that while the test results on Apotex’ tablets obtained by Pfizer’s in-house scientists in 2008 and 2009 were admissible, Pfizer had provided no expert evidence interpreting these test results. The 2012 testing of Apotex’ tablets was also insufficient as it did not provide direct evidence of the presence of AD before the expiry of the 876 Patent in March 2010. On the issue of infringement, Justice O’Reilly concluded Pfizer had not met its burden of establishing infringement:
 In my view, Pfizer has not established infringement of the ‘876 patent. The evidence, in summary, amounts to the following:
- The bulk material Apotex used to manufacture tablets did not contain any AD.
- The bulk material that Apotex kept as retained samples, in screw-top bottles, may have contained AD. If it did, the most likely explanation for its appearance was the exchange of isopropanol for water through the permeable cap.
- Tests of tablets reveal that:
- in 2006, Apotex’s tablets contained no AD;
- in 2008, 2009, and 2012, Apotex’s tablets contained AIM and a smallamount of another crystal that is probably not AD.
 This evidence supports only the possibility that Apotex’s tablets may have contained some small amount of infringing material before the expiry of the ‘876 patent. It is insufficient to support a conclusion, on a balance of probabilities, that Apotex’ s tablets did contain infringing material. Therefore, Apotex’ s s 8 claim cannot be defeated entirely, either on the basis that its damages should be reduced to zero under s 8(5), or according to the doctrine of ex turpi causa. The evidence before me, however, may be relevant to the amount of compensation that is appropriate under s 8(5), a matter to be determined separately.
The quantum of Apotex’ section 8 damages will be determined in a subsequent proceeding.
A copy of Justice O’Reilly’s Reasons for Judgment may be found here.