) ) APOTEX INC. Plaintiff (Respondent) – v. –, 2013 ONSC 5937

CITATION : Apotex Inc. v. Eli Lilly and Company, 2013 ONSC 5937 DIVISIONAL COURT FILE NO.: 379/12 DATE: 20130919 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT LAX, SACHS AND GRACE JJ. BETWEEN: ) ) APOTEX INC. Plaintiff (Respondent) – and – ELI LILLY AND COMPANY and ELI LILLY CANADA INC. Defendants (Appellants) )) )) )) )) )))) David Conklin and Nando De Luca , for the Plaintiff (Respondent) Patrick S. Smith and Todd J.

Burke , for the Defendants (Appellants) ) ) ) HEARD at Toronto: September 19, 2013 GRACE J. (orally) [ 1 ] With leave, the appellants, Eli Lilly and Company and Eli Lilly Canada Inc. (hereinafter “Eli Lilly”) appeal from the decision of Macdonald J., dismissing their motion to strike the portion of the amended claim of the respondent Apotex Inc. (hereinafter “Apotex”) which is based on an unjust enrichment claim for disgorgement of profits. When the motion judge’s decision was released, the state of the law was, arguably, unsettled.

He did not have the benefit of the thorough reasons of Quigley J. in Apotex Inc. v. Abbott Laboratories Ltd. et al. 2013 ONSC 356 (S.C.J.) (hereinafter “ Abbott ”) which was recently affirmed by the Court of Appeal, 2013 ONCA 555 . [ 2 ] Apotex conceded before us that it cannot assert a claim for disgorgement of profits under the Patented Medicines (Notice of Compliance) Regulations (hereafter the “ Patent Regulations ”).

It argues that despite the Patent Regulations , it is entitled to pursue a disgorgement claim on the basis of an independent cause of action and that its pleading discloses such a claim. [ 3 ] In Abbott , Apotex made the same argument. At para. 6, the Court of Appeal wrote: … the simple answer to that argument is that the profits or revenues earned by the respondents for which the appellant claims disgorgement are due to the operation of the regulatory scheme of the Patent Regulations.

The respondent’s right to be in the market to the exclusion of the appellant and therefore to earn its profits or revenues is that provided for by the Patent Regulations. Those Regulations constitute a valid juristic reason for the respondents’ profits and revenues for the period in question. This precludes the appellant’s claim for disgorgement.

[ 4 ] Apotex maintains that the case at bar is distinguishable because: (

a) We are dealing with an appeal from a motion to strike under Rule 21, whereas Abbott involved a motion for partial

summary judgment under Rule 20; (

b) The underlying patent issued to Eli Lilly (hereinafter “the Eli Lilly patent”) was found to be invalid; and (

c) The amended statement of claim alleges that Eli Lilly made representations which were materially false and misleading when it listed its patent on the patent register. [ 5 ] Apotex submits that the last two items give rise to an independent cause of action which would take it outside of the Patent Regulations . We accept that the test on a Rule 21 motion is different and higher than the test applicable for motions for

summary judgment. We also accept that the standard of review on an appeal of this kind is correctness. However, we do not agree that Apotex has asserted a cause of action which is outside the ambit of the Patent Regulations . Section 7(2)(

b) of the Patent Regulations addresses the consequences of a court’s declaration that a patent is not valid. In this case, a Notice of Compliance was issued under s. 7 of the Patent Regulations, seven days after the declaration of invalidity of the Eli Lilly patent. [ 6 ] The representations and statements that Apotex alleges were false and misleading were made on a form prescribed by s. 4 of the Patent Regulations .

Rather than supporting an independent cause of action, both allegations arise from the Patent Regulations which are a part of a complete statutory code governing patent law. [ 7 ] We agree with the decisions of Quigley J. in Abbott and the Federal Court of Appeal in Apotex Inc. v. Eli Lilly Canada Inc. 2011 FCA 358 . At para. 152, Quigley J. wrote: Apotex has argued that the legislation does not oust prior rights and it assumes that there was a pre-existing cause of action, but that cannot be the case in these circumstances.

A generic drug manufacturer has no right to patent-related restitution based on unjust enrichment or otherwise that has no statutory background or foundation.

Here, the background or foundation and the only source of the entitlement is to be found entirely in the statutory framework that Parliament created, and as is plain from its language, both initially and as amended, and from the Federal Court of Appeal’s decision in Eli Lilly , that framework constitutes a complete code and does not leave room for any stand-alone equitable remedies. [ 8 ] While it may be possible to assert a claim that is totally independent of the regulatory regime governing patents, the amended statement of claim in this case does not disclose such a claim.

It is therefore plain and obvious that the amended statement of claim discloses no reasonable cause of action based on unjust enrichment. [ 9 ] The appeal is allowed and the relief sought in subparagraph (

a) of the Notice of Appeal is granted. LAX J. [ 10 ] I have endorsed the Appeal Book as follows, “This appeal is allowed with costs as agreed to the appellants, in the amount of $15,000 for oral reasons given and recorded. In view of our disposition of the appeal, success on the motion before Macdonald J. was equally divided. As a result, there should be no costs of that motion. Any costs paid by the appellants to the respondent should be reimbursed.” LAX J. SACHS J. GRACE J. Date of Reasons for Judgment: September 19, 2013

Date of Release: September 24, 2013 CITATION : Apotex Inc. v. Eli Lilly and Company, 2013 ONSC 5937 DIVISIONAL COURT FILE NO.: 379/12 DATE: 20130919 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT LAX, SACHS AND GRACE JJ. BETWEEN: APOTEX INC. Plaintiff (Respondent) – and – ELI LILLY AND COMPANY and ELI LILLY CANADA INC. Defendants (Appellants) ORAL REASONS FOR JUDGMENT GRACE J. Date of Reasons for Judgment: September 19, 2013 Date of Release: September 24, 2013