Compensation for Losses Granted Under Section 8 of the PM(NOC) Regulations
Apotex Inc. v. Merck & Co., Inc., 2010 FC 287 (O'Reilly, J.)

March 12, 2010

H.B. Radomski, Ken Crofoot, and Jerry Topolski for the Plaintiff, Apotex Inc. (“Apotex”)

Patrick Kierans, Brian Daley, Azim Hussain, and Andres Garin for the Defendants, Merck & Co., Inc. et al. (“Merck”)

Apotex brought an action against Merck under Section 8 of the PM(NOC) Regulations.  Apotex sought compensation for having been kept out of the norfloxacin market for several years while the parties were in litigation. 

As a preliminary matter, the Court held that the 1998 version of the Regulations (as opposed to the 1993 version) applied, as Merck’s application for prohibition was still “pending” before the courts as of March 1998, i.e., as of the date in which the 1998 version came into force.  Accordingly, the primary issue before the Court was the following: if Merck had not sought an order prohibiting Apotex from obtaining a Notice of Compliance (“NOC”), would Apotex have been able to get onto the market and, if so, when?

The Court held that Apotex would have entered the market sooner had it not been prohibited by the operation of the Regulations and the prohibition order Merck obtained in 1995 (which order was ultimately set aside by the Supreme Court of Canada in July 1998).  Apotex demonstrated that it had access to a supply of norfloxacin from Delmar under a supply agreement with Novopharm during the period following when the Minister could first have issued a NOC in June 1993.  However, the Court found that there were problems with the supply from Delmar, and with the supply agreement with Novopharm.  As such, the Court concluded that Apotex would not have been able to get on the market until one full year after it would have received its NOC (i.e., June 1994). 

In sum, the Court allowed Apotex’s action against Merck under Section 8 of the Regulations, and found that Apotex was entitled to compensation for the losses it suffered during the period between June 1994 and July 1998.  As this action was bifurcated, the Court only addressed Apotex’s entitlement to obtain compensation.  Quantification of appropriate compensation will be determined in a subsequent trial.

By: Michael Crichton, Gowling Lafleur Henderson LLP