TEVA CANADA LIMITED Appellant v. PFIZER CANADA INC., PFIZER INC., AND PFIZER IRELAND PHARMACEUTICALS, 2014 FCA 138

Date: 20140527 Docket: A-93-14 Citation: 2014 FCA 138 CORAM: SHARLOW J.A. GAUTHIER J.A. MAINVILLE J.A. BETWEEN: TEVA CANADA LIMITED Appellant and PFIZER CANADA INC., PFIZER INC., AND PFIZER IRELAND PHARMACEUTICALS Respondents Heard at Toronto, Ontario, on May 26, 2014. Judgment delivered at Toronto, Ontario, on May 27, 2014. REASONS FOR JUDGMENT BY: MAINVILLE J.A. CONCURRED IN BY: SHARLOW J.A. GAUTHIER J.A. Date: 20140527 Docket: A-93-14 Citation: 2014 FCA 138 CORAM: SHARLOW J.A. GAUTHIER J.A. MAINVILLE J.A.

BETWEEN: TEVA CANADA LIMITED Appellant and PFIZER CANADA INC., PFIZER INC., AND PFIZER IRELAND PHARMACEUTICALS Respondents REASONS FOR JUDGMENT MAINVILLE J.A. [ 1 ] This is an appeal from an order of Justice de Montigny of the Federal Court dated January 22, 2014, bearing citation number 2014 FC 69 , which dismissed an appeal from an order of Prothonotary Aronovitch dated August 20, 2013. The Prothonotary had struck those portions of the appellant’s Statement of Claim seeking punitive and exemplary damages pursuant to an action under

section 8 of the Patented Medicines (Notice of Compliance) Regulations , SOR/93-133 (the NOC Regulations ) . [ 2 ] This is a case relating to the drug Viagra, which has been the object of much litigation. It is not necessary to summarize the long history of proceedings with respect to this drug. The relevant background for the purposes of this appeal may be adequately

described as follows. [3] On December 21, 2012, the appellant Teva Canada Limited (Teva) commenced this action in the Federal Court undersection 8 of the NOC Regulations seeking compensation for losses suffered during the period beginning on April 25, 2008 - the date italleges that the competent Minister would have issued to it a notice of compliance for its generic version of Viagra - and endingNovember 8, 2012 - the date the Supreme Court of Canada reversed the order granting the prohibition application brought by PfizerCanada Inc. and Pfizer Ireland Pharmaceutical (collectively referred to herein as Pfizer). [4] In addition to compensatory damages, Teva seeks punitive and exemplary damages.

Teva also seeks a quantification ofPfizer’s profits since, in its view, the governing rule for establishing the quantum of punitive damages is proportionality. Teva submitsthat subsection 8(4) of the NOC Regulations allows it to make these claims. That subsection provides that “the court may, in respect ofany losses referred in [subsection (1)], make any order for relief by way of damages that the circumstances warrant.” [5] Pfizer brought a motion to strike those portions of Teva’s Statement of Claim relating to punitive and exemplary damagesand the quantification of profits.

The Prothonotary agreed with Pfizer, and as noted above, her decision was upheld by Justice deMontigny. [6] The issue in this appeal is thus whether a claim for punitive and exemplary damages may be sustained under

section 8 of theNOC Regulations. I am of the view that such a claim cannot be sustained, substantially for the reasons expressed by Justice deMontigny at paragraphs 28 to 37 of his order, which I adopt. I however add the following brief comments. [7] Punitive damages may be awarded in exceptional cases of high-handed, malicious, arbitrary or highly reprehensiblemisconduct that represents a marked departure from ordinary standards of decent behaviour: Hill v. Church of Scientology of Toronto, (SCC), [1995] 2 S.C.R. 1130 at para. 196 (Hill); Whiten v.

Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595("Whiten") at para. 36. [8] I recognize that punitive damages are not limited to certain categories of claims: Vorvis v. Insurance Corporation of BritishColumbia, (SCC), [1989] 1 S.C.R. 1085 at pp. 1104-1105; Whiten at para. 67. I also recognize that punitive damageshave been found to be available in all types of cases, notably in patent infringement cases: Bell Helicopter Textron Canada v.Eurocopter, 2013 FCA 219, 449 N.R. 111 at paras. 180 to 184; Lubrizol Corp. v.

Imperial Oil Ltd., (FCA), [1996] 3F.C. 40, 67 C.P.R, (3d) 1 at p. 20 of the C.P.R. ed.; Whiten at para. 44. [9] That being said, however, punitive and exemplary damages cannot be available where the statutory regime underlying theclaim explicitly or implicitly precludes them.

This is the case under the NOC Regulations, which set out a comprehensive scheme withrespect to compensation resulting from the operation of the statutory stay it provides for. [10] Subsection 8 of the NOC Regulations specifically provides that “the first person [the innovator drug manufacturer] is liable tothe second person [the generic drug manufacturer] for any loss suffered during the period…” (emphasis added).

Our Court has held thatthis wording allows compensation for losses actually incurred by a second person by reason of the operation of the statutory staycontemplated by the NOC Regulations, but it does not allow for other types of relief, such as disgorgement of profits or punitivedamages: Apotex Inc. v. Merck & Co., 2009 FCA 187, [2010] 2 F.C.R. 389 at paras. 89 to 91 and 101-102, leave to appeal refused [2009] S.C.C.A. No. 347 (QL); Apotex Inc. v.

Eli Lily Canada Inc., 2011 FCA 358; 98 C.P.R. (4th) 323 at paras. 22 and 23; Apotex Inc. v.Sanofi-Aventis Canada Inc., 2014 FCA 68 at para. 109 (dissenting opinion supported on this point by the majority); Teva CanadaLimited. v. Sanofi-Aventis Canada Inc, 2014 FCA 67, at para. 91 (dissenting opinion supported on this point by the majority). [11] At the hearing of this appeal, Teva further raised the application of paragraph 8(5) of the NOC Regulations as a newjustification for seeking punitive damages.

That paragraph provides that in “assessing the amount of compensation the court shall takeinto account all matters that it considers relevant to the assessment of the amount, including any conduct of the first or second personwhich contributed to the disposition of the application under subsection 6(1)” (emphasis added). That paragraph relates to the assessmentof the losses suffered by the generic drug manufacturer as a result of the stay.

It allows the court to adjust the damages taking intoaccount the conduct of the parties with respect to the prosecution of the prohibition application initiated under the NOC Regulations,such as when a generic drug manufacturer would have improperly contributed to the delay in the disposition of the application, thusunduly increasing the losses it suffered. [12] However, by its terms, paragraph 8(5) cannot sustain a claim for punitive damages since, by their very nature, punitivedamages are not “compensation”: Hill at para. 196; Whitten at paras. 36 and 68. [13] The appeal should therefore be dismissed, with costs.

"Robert M. Mainville" J.A. “I agree K. Sharlow J.A.” “I agree Johanne Gauthier J.A.” FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD Docket: A-93-14 APPEAL FROM AN ORDER OF THE HONOURABLE JUSTICE DE MONTIGNY OF THE FEDERAL COURT OF CANADA, DATED JANUARY 22, 2014, DOCKET NUMBER T-2280-12 STYLE OF CAUSE: TEVA CANADA LIMITED v. PFIZER CANADA INC., PFIZER INC., AND PFIZER IRELAND PHARMACEUTICALS PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: May 26, 2014 REASONS FOR JUDGMENT BY: MAINVILLE J.A. CONCURRED IN BY: SHARLOW J.A. GAUTHIER J.A.

DATED: May 27, 2014 APPEARANCES : Jonathan Stainsby Devin Doyle For The Appellant Orestes Pasparakis Allyson Nowak For The Respondents SOLICITORS OF RECORD : Aitken Klee LLP Barristers and Solicitors Ottawa, Ontario For The Appellant Norton Rose Fulbright Canada LLP Barristers and Solicitors Toronto, Ontario For The Respondents