On March 8, 2021, the Ontario Superior Court granted summary judgment dismissing novel claims by Apotex under the UK and Ontario Statutes of Monopolies, the Trademarks Act, and at common law. It is the first decision on the merits of Apotex's novel claims and arises in the context of litigation relating to Eli Lilly's patented olanzapine product (marketed as Zyprexa®). The decision stands to impact numerous actions brought by generics on similar grounds against various innovator companies.

Procedural Background

Apotex Inc. and Apotex Pharmachem Inc. (collectively, Apotex) brought an action in the Ontario Superior Court seeking damages against Eli Lilly Canada Inc. and its related companies (collectively, Lilly) under the Statutes of Monopolies,1 the Trademarks Act,2 and the common law tort of conspiracy. All of Apotex's causes of action were premised on the invalidation of certain claims of Canadian Patent No. 2,041,113 (the 113 Patent).

The 113 Patent was listed on the Patent Register in respect of Lilly's drug Zyprexa® (olanzapine). Lilly succeeded in litigation against Apotex under the PM(NOC) Regulations3 relating to the 113 Patent, including on appeal (the Prohibition Order). As such, Apotex was unable to obtain its Notice of Compliance (NOC) for olanzapine.

In parallel litigation, Lilly was unsuccessful in obtaining a prohibition order against Novopharm Limited (Novopharm). Lilly subsequently commenced infringement proceedings against Novopharm, who counterclaimed to invalidate certain claims of the 113 Patent. The impugned claims were ultimately declared to be invalid in rem on the basis of the now discredited promise doctrine (the Invalidity Decision).4

Once the claims of the 113 Patent at issue were declared invalid, an NOC issued to Apotex. Apotex then brought a motion for reconsideration of the Prohibition Order so that it could seek damages under section 8 of the PM(NOC) Regulations, which motion was dismissed.5

Apotex commenced the action in issue within two years of the Invalidity Decision, claiming under:

  • the Statutes of Monopolies, alleging that the 113 Patent was an unlawful monopoly;
  • the Trademarks Act, alleging that Lilly made false and misleading representations when seeking to list the 113 Patent on the Patent Register; and
  • the common law tort of conspiracy, alleging that Lilly conspired to restrain trade by obtaining an invalid patent, listing it on the Patent Register, and litigating the patent under the PM(NOC) Regulations.

The Summary Judgment Motion

Lilly brought a motion for summary judgment to dismiss Apotex's action on the basis that (i) the claims were out of time under the Limitations Act;6 and (ii) any harm suffered by Apotex was caused by operation of the PM(NOC) Regulations and the Prohibition Order, and damages were not recoverable other than under section 8 of the PM(NOC) Regulations. Lilly's motion for summary judgment was granted and Apotex's action was dismissed. In addition to assessing the merits of Apotex's claims, the Court found that it was appropriate to deal with the claims by summary judgment given that there were no facts in dispute and the issues raised would either end the action or narrow the remaining issues.

Limitations Act not a bar in this case

The Court denied the limitations defence "with some reluctance", finding that a declaration of invalidity was a necessary element of each of Apotex's causes of action and that Apotex had commenced the action within two years of that declaration.

Patent Act and PM(NOC) Regulations are a Complete Code

The Court agreed with Lilly that the actions alleged to have caused harm to Apotex were authorized by law and flowed from the operation of law. Section 8 of the PM(NOC) Regulations provides the only remedy available (if any) for damages which may flow from invoking the PM(NOC) Regulations.

The Court found that patent law is "wholly statutory" and that the Patent Act7 and the PM(NOC) Regulations constitute a "complete code" governing the issuance and use of patents. This includes the available remedies when patents have been infringed or found to be invalid. Apotex's claims were all premised on Lilly exercising its legitimate rights under the Patent Act and the PM(NOC) Regulations, which preclude causes of action arising from the operation of that "complete code". To conclude otherwise would "drastically upset" and "undermine" the statutory scheme, which exists to foster and encourage innovation by protecting inventions.

In assessing the merits of each of Apotex's claims, the Court found:

  • Statutes of Monopolies claims: Both statutes explicitly exclude patents from the prohibition on monopolies. Further, if Lilly was deemed never to have been granted the patent (and therefore no monopoly that could be considered unlawful), the prohibition has no application. In other words, assuming the statutes are valid, they do not support Apotex's claims. The Court left open questions as to the validity of the Statutes of Monopolies.
  • Trademarks Act claims: Apotex's allegations under the Trademarks Act amounted to holding Lilly liable "for doing something it had a right to do when it held a presumptively valid patent". There was nothing in the Form IV submitted to list the 113 Patent on the Patent Register that was untrue, false, disparaging, or discrediting of Apotex, and Lilly "was at liberty" to submit the Form IV at the time.
  • Conspiracy claim: Lilly's actions were found to be lawful. The Court further found that, even if Lilly's motives were improper (of which there was no evidence), its actions in invoking the PM(NOC) Regulations do not constitute a conspiracy. The Court noted that the Ontario Court of Appeal reached the same conclusion in a consumer class action which alleged that the patent holder had misused the PM(NOC) Regulations to delay entry of a less expensive generic into the market. In that case, the Court of Appeal found that the patentee was entitled to defend the validity and scope of its patents, and doing so was not unlawful or anti-competitive, and did not constitute conspiracy.

This decision reinforces that the patent regime would be undermined if a patentee could be held liable for damages for successfully obtaining a patent and exercising its rights based on its presumptive validity in circumstances where the patent is later invalidated. The Court found that Apotex's claims were an attempt to "dress up" Lilly's acts in seeking, listing, and litigating the 113 Patent as wrongful due to its subsequent invalidation. However, such claims were precluded by the "complete code" of the Patent Act and PM(NOC) Regulations.

***

Decision: Apotex Inc. v. Eli Lilly Canada Inc., 2021 ONSC 1588

Footnotes

1 An Act concerning Monopolies, and Dispensation with penal laws, etc., R.S.O. 1897, c. 323 and An Act concerning Monopolies and Dispensation with Penal Laws, and the Forfeitures thereof, 1624, 21 Jac. I, c.3.

2 R.S.C. 1985, c. T-13.

3 SOR/93-133.

4 An appeal before the Federal Court of Appeal was dismissed in 2012, and application to the Supreme Court of Canada was dismissed in 2013.

5 The Federal Court of Appeal dismissed Apotex's subsequent appeal in 2013, with leave to appeal to the Supreme Court denied in 2014.

6 Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

7 R.S.C, 1985, c. P-4.

Originally Published by Norton Rose, March 2021

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.

Law around the world
nortonrosefulbright.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.