Friday, January 18, 2013

Different Court, Same Result – the case for Judicial Comity

Friday, January 18, 2013

Case Considered: Apotex Inc v Abbott Laboratories Ltd 2013 ONSC 356

This decision by Quigley J. grants Abbott Laboratories’ motion for summary judgment denying Apotex’s claim for unjust enrichment for alleged violations of the Patented Medicines Notice of Compliance Regulations (PMNOC) beyond the scope specified in s.8 of the PMNOC. It is noteworthy that this is the first action brought before a Superior Court of record that arises from the PMNOC.

Apotex filed an Abbreviated New Drug Submission (ANDS) for Lansoprazole. Lansoprazole is a known drug used to treat stomach and intestinal ulcers, however it is also effective, in combination with antibiotics, to eradicate H. pylori, the bacteria that are a major cause of intestinal cancer. Canadian Patent No. 2,009,741 (‘741) discloses the second use of Lansoprazole.

Apotex also filed a Notice of Allegation (NOA), claiming that their generic product either did not infringe the ‘741 patent or that the ‘741 patent is invalid.

Abbott and Takeda filed an application prohibiting the Minister from issuing the Notice of Compliance (NOC), which prevents the Minister from issuing an NOC for 24 months. It is important to note that though the Minister may not issue an NOC, he or she may still examine the ANDS to determine if it satisfies all of the other requirements to be marketed as a drug.

Section 8 of the PMNOC provides for remedies where the statutory stay delays the generic’s entry to market. Section 8 has also been found by the Federal Court and Federal Court of Appeal to limit remedies available to actual loss suffered by the generic manufacturer caused by the stay.[1] The Federal Court of Appeal also noted that section 8 of the PMNOC is worded so as to exclude equitable relief where a generic is delayed from entry into the market by a statutory stay.[2]

Apotex and Abbott settled the PMNOC proceeding in 2008, allowing Apotex to enter into the market for Lansoprazole 8 months prior to the expiry of the ‘741 patent, while Apotex would restrict any damages to those permitted under section 8 of the PMNOC for a two year period preceding the agreed upon date for Apotex’s entry into the Lansoprazole market.

Due to other regulatory problems the Minister did not issue an NOC to Apotex for the generic Lansoprazole until one month after Apotex would have been permitted to enter the market under the settlement agreement.

Abbott asserted that the delay for the generic drug to enter the market was not due to the stay, but due rather to regulatory hurdles, and therefore Apotex should not be entitled to any remedy under the PMNOC.

Apotex discontinued its action in the Federal Court, and brought this action for unjust enrichment in the Ontario Superior Court instead.

In granting summary judgment, Quigley J. decided four issues.

First Quigley J. found that there was concurrent subject-matter jurisdiction between the Federal Court and provincial Superior Courts, and that the discretion to grant equitable relief is identical. Although the Federal Court is a statutory court, s.3 of the Federal Courts Act[3] describes the court as one of law, equity and admiralty.

Therefore, where the Federal Court and provincial Superior Courts have concurrent jurisdiction, and where the facts are similar, and the Federal Court chooses not to grant equitable relief, provincial Superior Courts will find this persuasive.

Secondly, Quigley J. found this was an appropriate case for summary judgment as there was no genuine issue for trial. Quigley J. found that as a matter of law, the question of whether s.8 of the PMNOC allows for a disgorgement of profit has been addressed by the Federal Courts fully and persuasively. Alternatively, the Judge found that there is substantial support for the proposition that summary judgment may be appropriate where the law is unsettled. More importantly, Quigley J. also found that the record before him was sufficient to make a determination – evidenced by Apotex waiving examinations for discovery.

Thirdly Quigley J. went into a lot of detail to support the Federal Court of Appeal’s decision in Apotex v Eli Lilly.[4] Quigley J. found the reasoning of Noel J.A. in Eli Lilly a well-reasoned and exhaustive judgment outlining why unjust enrichment is unavailable in cases such as the one currently before the Court. Noel J.A. does explain in his reasons that equitable relief may be available in a PMNOC proceeding only where a cause of action independent of section 8 of the PMNOC is alleged. Quigley J., surprisingly, also gave a lot of weight to the fact that leave to appeal the Eli Lilly decision was denied by the Supreme Court of Canada. The decision by the Supreme Court to not hear the appeal was interpreted by Quigley J. as support that the law as stated in Eli Lilly is conclusive, though he does not go so far as to assume that the Supreme Court supports the position. Finally, the clarity of s.8 of the PMNOC, especially after it was amended in 2006, supports the conclusion made in Eli Lilly.

Finally, Quigley J found Apotex failed to show that the test for unjust enrichment had been met. Namely, Apotex could not show that there was not a juristic reason to support the gain obtained by Abbott and the corresponding loss Apotex suffered. Quigley J. found two juristic reasons for the transfer of benefit, namely s.8 of the PMNOC and the settlement agreement that Abbott and Apotex entered. With respect to the PMNOC, Quigley J. found that it is a balance that creates some benefits for generic manufacturers such as the ability to work early, and therefore there will be some provisions that do not tilt in favor of generic manufacturers.

This decision shows that provincial Superior Courts support judicial comity and are therefore unwilling to decide cases related to patents, or other areas where the Federal Courts have a greater expertise, differently.

[1] Apotex Inc v Merck Inc, 2009 FCA 187
[2] Apotex Inc v Eli Lilly Canada Inc, 2011 FCA 358
[3] RSC 1985, c. F-7
[4] supra, note 2.