Section 8 of the PM(NOC) Regulations – No Claim for Disgorgement or Accounting of Profits
Apotex Inc. v. Eli Lilly Canada Inc. 2009 FC 378 (Tabib, P.)

July 3, 2009

Jerry Topolski for the Plaintiff, Apotex Inc. (“Apotex”)
Patrick Smith for the Defendant, Eli Lilly Canada Inc. (“Lilly”)

The Plaintiff, Apotex, brought an action pursuant to Section 8 of the PM(NOC) Regulations (“Regulations”) against the Defendant, Lilly. Lilly sought an Order striking out paragraphs 1(b) and 22 to 28 of Apotex’s Statement of Claim, in which Apotex sought disgorgement of Lilly’s revenues in application of the principles of unjust enrichment.

Lilly argued that as a result of the decision of the Federal Court in Apotex Inc. v. Merck and Co. Inc., 2008 FC 1185 (“Merck”) which was upheld by the Federal Court of Appeal (Merck Frosst Canada Ltd. et al., v. Apotex, 2009 FCA 187), it is plain and obvious that a generic is precluded, in a claim pursuant to Section 8 of the Regulations, from asserting a claim for disgorgement or accounting of a first person’s profits.

Apotex argued that the decision in Merck is not determinative of the issue because it is specifically mentioned in the decision that Apotex’s claim for unjust enrichment was dropped at trial and was not considered.

The Court held that, following the decision in Merck, the proper interpretation of Section 8 of the Regulations is that it includes only remedies that would compensate a generic for loss it has suffered. The remedy of an accounting of profits has the same remedial aim as the remedy of unjust enrichment, in that it would return to the Plaintiff what rightly belongs to it, being the revenues or profits earned through the infringing use of its intellectual property. The generic is not a patentee and cannot claim damages for an accounting of profits for infringement.

Furthermore, the Court held that a cause of action between private parties based on unjustified enrichment or abuse of process is outside the jurisdiction of the Federal Court.

The Court concluded that it was plain and obvious that any claim made by Apotex in its statement of claim seeking a disgorgement of the profits or the excess revenues realized by Lilly cannot succeed, and must be struck.

Lilly’s motion also sought an Order extending the time within which to file its statement of defense or staying the action pending its motion for leave to appeal the underlying Federal Court of Appeal decision to the Supreme Court of Canada. The stay was declined.

By: Clare McCurley, Deeth Williams Wall LLP