Date: 20110502
Docket: A-473-10
Citation: 2011 FCA 149
CORAM: NOËL
J.A.
SHARLOW
J.A.
DAWSON J.A.
BETWEEN:
TEVA CANADA LIMITED
Appellant
and
SANOFI-AVENTIS CANADA INC., and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Respondents
REASONS FOR JUDGMENT
(Delivered from the Bench at Ottawa, Ontario, on May 2, 2011)
DAWSON J.A.
[1] The
respondents to this appeal have sued the appellant, Teva Canada Limited (Teva),
for patent infringement. In response to the statement of claim Teva filed a
statement of defense and counterclaim. Among other things, Teva counterclaimed
for compensation under section 8 of the Patented Medicines (Notice of
Compliance) Regulations, SOR 93/-133 (Regulations). The claim was
for losses suffered during the period Teva (formerly Novopharm Limited) was not
in receipt of a Notice of Compliance (NOC) for its drug Novo-ramipril as a
result of proceedings commenced under section 6 of the Regulations.
Included in the claim for compensation was a claim for damages for Teva’s
permanent loss of market share. At paragraphs 135, 136 and 143 of its third
amended statement of defense and counterclaim Teva asserted:
135. The
commencement of the NOC Proceedings resulted in lost sales and a permanent loss
of market share to Novopharm for Novo-Ramipril capsules.
136.
In
addition, Novopharm was denied the opportunity to significantly enhance its
reputation for the introduction of new products in advance of its competitors.
As a result of this delay, Novopharm was prevented from obtaining increased
sales and market share for its non-ramipril products.
[…]
143. Furthermore,
during the periods in which Novopharm was being delayed by the Defendants by
Counterclaim, Apotex received an NOC for its 1.25, 2.5, 5 and 10 mg
ramipril capsules. If Novopharm had been approved on the same day as Apotex and
ratiopharm, Novopharm would have had a greater share in the marketplace than it
currently has. Moreover, Novopharm will be unable to capture a larger
percentage of the market share over time due to its late entry. Accordingly,
Novopharm claims its damages for lost market share as well.
[2] Relying
upon this Court’s decision in Apotex Inc. v. Merck & Co., 2009 FCA
187, [2010] 2 F.C.R. 389 (leave to appeal refused [2009] S.C.C.A. No. 347)
a Prothonotary of the Federal Court struck out the reference to the permanent
loss of market share in paragraph 135 of the pleading, struck out paragraph 136
in its entirety and struck out the last two sentences of paragraph 143 of the
pleading (2010 FC 150, 364 F.T.R. 122).
[3] On
an appeal from that decision, a Judge of the Federal Court, in a de novo
decision, agreed that the impugned portions of the counterclaim that referred
to loss incurred after the period defined in section 8 of the Regulations
should be struck out (2010 FC 1210, 88 (C.P.R. (4th) 465). On consent, an order
issued reinstating portions of the counterclaim that had been struck out to the
extent they referred to damages incurred within the statutory period. In the
Judge’s view, this Court’s decision in Merck made it plain and obvious
that the claim for loss of a permanent market share was hopeless and disclosed
no reasonable cause of action. In the words of the Judge, a “second person may
claim damages resulting from a loss of market share, but only for losses
actually incurred within the period [of liability defined in subsection 8(1) of
the Regulations]. Section 8 does not provide any entitlement to damages
in respect of losses incurred outside the period.”
[4] We
agree. The present pleading cannot be distinguished from that considered by
this Court in Merck. As both the Prothonotary and the Judge recognized,
the Merck decision is binding upon the Federal Court.
[5] In
argument, Teva submitted that the decision in Merck should not be
followed. However, in Miller v. Canada (Attorney General), 2002 FCA 370,
293 N.R. 391, at paragraph 10, this Court held that it will not depart from the
decision of a previous panel unless “the previous
decision is manifestly wrong, in the sense that the Court overlooked a relevant
statutory provision, or a case that ought to have been followed.” See also Eli
Lilly and Co. v. Novopharm Ltd. (1996), 67 C.P.R. (3d) 377 (F.C.A.) at page
380; Glaxo Group Ltd. v. Canada (Minister of National Health and Welfare)
(1995), 64 C.P.R. (3d) 65 (F.C.T.D.) at pages 67 and 68; Janssen Pharmaceutica
Inc. v. Apotex Inc., [1997] F.C.J. No. 169 (F.C.A.) at paragraph 2; Aventis
Pharma Inc. v. Apotex, 2005 FC 1283 at paragraphs 361 to 368.
[6] In
Merck this Court neither overlooked a relevant statutory provision nor
failed to have regard to a prior decision that ought to have been followed. The
decision in Merck has not been shown to be manifestly wrong. The Judge
made no error in its application to the pleading before her.
[7] For these
reasons, the appeal will be dismissed with costs.
“Eleanor R. Dawson”
“I agree
Marc Noël J.A.”
SHARLOW J.A. (Dissenting Reasons)
[8] I
respectfully disagree with the disposition of this appeal proposed by my
colleagues. I reach that conclusion for the following reasons.
[9] Teva
sought in its pleadings compensation under section 8 of the Regulations
for the permanent loss of market share it suffered during the period defined by
that provision because, during that period, other generic producers of ramipril
entered the market ahead of Teva. In this Court, Teva argues that it should not
be barred from asserting that claim merely because the quantification of that
loss necessarily takes into account an estimate of sales that Teva would have
made after the end of the period.
[10] In my
view, Teva’s allegations are based on an interpretation of section 8 that its
words can reasonably bear, and that is consistent with the purpose of section 8
as reflected in the Regulatory Impact Analysis Statements published when the Regulations
were first enacted in 1993, and when the current version of section 8 was
enacted in 1998.
[11] The Regulations establish a legal
procedure that amounts to a mandatory injunction for a period of time during
which the Federal Court must assess, on a prima facie basis, an
allegation that a listed patent is not valid or will not be infringed by a
particular generic product. Section 8 of the Regulations is a counter
balance to the power of an innovator drug company to cause this mandatory
injunction to be imposed in a particular case, merely by commencing a
prohibition application. If it is determined that an innovator was not
justified in causing the mandatory injunction to be imposed, the innovator must
compensate the generic drug producer.
[12] The damages contemplated by section 8 are
intended to be analogous to the undertaking a party is normally required to
offer when seeking an interlocutory injunction in ordinary commercial
litigation. An interlocutory injunction is an extraordinary remedy because it
imposes a potentially onerous burden on a party before any wrong is proved. For
that reason, an undertaking in damages is normally broad enough to cover all
losses resulting from the injunction, in the event it is determined that the
injunction should never have been imposed.
[13] In my view, section 8 of the Regulations
was intended to be similarly broad, and should be so interpreted. Nothing
within section 8 or in the Regulatory
Impact Analysis Statements discloses an intention on the part of the Governor
in Council to impose an artificial limitation on the normal method of computing
damages that would result from the analogous situation of an interlocutory
injunction imposed without justification.
[14] Thus, it is arguable that the losses Teva
has been barred from claiming are within the scope of the phrase “loss suffered
during the period”, in the context of section 8 of the Regulations. I am
not persuaded that the narrow interpretation of section 8 adopted in Merck,
which turns on a literal interpretation of the word “suffered”, is correct, or
that Miller should preclude this Court from permitting the
interpretation of section 8 adopted in Merck to be reconsidered in the
context of Teva’s claim.
[15] I express no opinion on whether the facts
of this case are distinguishable from the facts in Merck.
[16] For these reasons, I would have allowed
this appeal and made an order permitting Teva to amend its pleadings
accordingly.
“K. Sharlow”
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