Pharma in brief - Canada: Federal Court reduces claim for section 8 damages based on defence of ex turpi causa [MEVACOR® (lovastatin)]

June 2012

Contacts

Key industry sectors

Case: Apotex Inc. v. Merck Frosst Canada Ltd.

Nature of case: PM(NOC) Regulations - Section 8 damages

Date of decision: May 23, 2012

Summary

On May 23, 2012, the Federal Court held that Merck Frosst Canada Ltd. (“Merck”) is liable to Apotex Inc. (“Apotex”) for damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”), but exercised its discretion to reduce the amount of compensation payable based on a defence of ex turpi causa.

On March 26, 1997, the Federal Court made an order dismissing Merck’s application for a prohibition order under section 6 of the Regulations in respect of the drug MEVACOR (lovastatin), without addressing the substantive issue of whether Apotex’s product would infringe. Apotex subsequently sued Merck for damages under section 8 of the Regulations. At trial, the Federal Court (per Snider J.) held that Apotex was not entitled to make a claim for section 8 damages under the 1993 version of the Regulations. The Federal Court of Appeal set aside that decision on the basis that the 1998 version of the Regulations applied, and remitted the matter to the Federal Court to determine: i) the period for which Merck is liable to Apotex for damages under section 8; and ii) whether the defence of ex turpi causa is applicable to reduce the compensation otherwise payable under section 8.

On remand, the Federal Court (per Snider J.) held that Merck is liable to Apotex for damages under section 8 of the Regulations beginning on the date that Apotex’s drug submission was placed on “patent hold” (May 25, 1996), and ending on the date that the Court dismissed the application for a prohibition order (March 26, 1997). The Court then considered whether to exercise its discretion under section 8(5) to reduce the compensation owing to Apotex during the relevant period.  Merck argued that Apotex’s damages should be reduced or eliminated, as some of the product that Apotex would have sold during the period of liability would have infringed a valid Merck patent. In support of its argument, Merck referred to a previous decision from a patent infringement action involving lovastatin in which the Court held that some of Apotex’s sales infringed Merck’s patent (2010 FC 1265, affirmed 2011 FCA 363). Justice Snider held that Apotex would have used an infringing process to produce lovastatin until February 26, 1997 and should not be entitled to damages for those sales. However, Apotex was entitled to compensation for the period beginning on February 27, 1997 and ending on March 26, 1997, as there was no evidence that Apotex would have infringed Merck’s patent during that period.

The amount of compensation owing to Apotex during the period from February 27, 2007 to March 26, 2007 will be determined in a subsequent phase of the trial.

Link to decision:

Apotex Inc. v. Merck Frosst Canada Ltd., 2012 FC 620

PDF Version

Download Pharma in brief - Federal Court reduces claim for section 8 damages based on defence of ex turpi causa [MEVACOR® (lovastatin)] (pdf 92kb)