Federal Court of Canada awards damages to generic company

The first decision to substantially address section 8 of the Patented Medicine (Notice of Compliance) Regulations

The Federal Court of Canada issues its first decision on a regulatory provision allowing a generic to claim damages from a brand company for being improperly kept off the market.

In Canada, the Patent Act is linked to the drug ap-proval system by the Patented Medicine (Notice of Compliance) Regulations (the “Regulations”) which allow a brand company to prevent marketing ap-proval of generic drug product for up to two years pending the resolution of patent disputes.

The Regulations contain a provision, section 8, which grants a right of action to a generic company whose drug product has been wrongly kept off the market on the basis of a proceeding commenced by a brand company pursuant to the Regulations.

Section 8 has existed since 1993 but this is the first substantive decision that the Federal Court has is-sued in respect of it.

In the case, Apotex sought damages from Merck for improperly preventing it from obtaining marketing approval for its alendronate product.

Merck argued, among other things, that section 8 was unconstitutional and beyond the court’s jurisdic-tion, since it does not technically deal with patent issues. The court found against Merck, holding that the Regulations must be considered as a whole, and that section 8, which acts as a disincentive for seek-ing what is in effect an interlocutory injunction, is part of the balance of the Regulations. Accordingly, sec-tion 8 is valid federal legislation properly enabled by the Patent Act, and within the jurisdiction of the Fed-eral Court to enforce.

With respect to the remedy afforded Apotex, the Court held that a generic company is only entitled to claim damages or its own lost profits, as opposed to disgorgement of the brand company’s profits, as Apotex had claimed. All matters related to quantifi-cation of Apotex’s damages will be determined in a later trial.

We anticipate that the decision will be appealed.

Alison Lester
Gilbert's LLP