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Ontario Court rejects claim for unjust enrichment under PMNOC Regulations

Authored bySheldon Hamilton

The Ontario Superior Court of Justice has dismissed a claim by Apotex for unjust enrichment under the Patented Medicines (Notice of Compliance) Regulations ("Regulations"): Apotex Inc v Abbott Laboratories Limited, 2013 ONSC 356.

The decision confirms that:

  1. a claim for unjust enrichment (seeking disgorgement of revenues or profits) arising under the Regulations is not recoverable, even when the claim is asserted in a court of general jurisdiction; and,
  2. the Regulations are intended to constitute a complete legislative code, particularly with respect to the availability of equitable remedies beyond the legislative framework.

The Federal Court of Appeal had previously ruled that a claim for unjust enrichment was not available in the Federal Courts: Apotex Inc v Eli Lilly Canada Inc, 2011 FCA 358 ("Eli Lilly"). (This decision was discussed in the January 2012 issue of Rx IP Update. Leave to appeal to the Supreme Court of Canada was subsequently denied.)

Apotex’s claim arose from a proceeding under the Regulations started by Abbott in relation to lansoprazole (PREVACID). Abbott had already successfully asserted the same patent against Teva.

Abbott had started a proceeding against Apotex under the Regulations. As Takeda owned the patent, it was a necessary party. Following a hearing on the merits but before the Federal Court released the decision, the parties settled the case. Abbott agreed that Apotex could enter the market prior to patent expiry and Apotex reserved the right to claims damages under section 8 of the Regulations for a specified period of time. The agreement was silent on Apotex advancing a claim for unjust enrichment.

Apotex subsequently commenced proceedings in the Ontario Court against Abbott and Takeda seeking, in part, disgorgement of Abbott’s revenues or, alternatively, profits as a consequence of delay attributable to Abbott. A previous proceeding commenced by Apotex in the Federal Court was discontinued.

Abbott and Takeda moved for partial summary judgment seeking dismissal of the claim for disgorgement based on unjust enrichment. The Court identified four issues, resolving them as follows:

  1. Is the equitable jurisdiction of this court and the Federal Court the same?” The Court ruled that it does not have a broader equitable jurisdiction than the Federal Court on subject matter on which the jurisdiction of the two courts is concurrent. The award of damages for “alleged abuse by a patentee of the automatic stay provisions” of the Regulations is an example of such concurrent jurisdiction.
  2. Is this an appropriate case for summary judgment?” The case was appropriate for disposition by way of summary judgment. The Court noted that a Motions Judge can decide questions of law on a motion for summary judgment provided that a complete factual record is present. Moreover, the Court stated that the question of law was no longer unsettled.
  3. Should this court follow the reasoning of the Federal Court of Appeal?” The Court followed the Federal Court of Appeal decision in Eli Lilly, which decided that the Federal Court did not have jurisdiction to grant a remedy that section 8 intended to exclude absent a cause of action that is independent of the operation of section 8. As no such independent cause of action had been pleaded, the Court ruled that Apotex’s unjust enrichment claim for disgorgement could not succeed. The Motions Judge provided five reasons for this conclusion:
    1. Eli Lilly is a considered decision of the Federal Court of Appeal.
    2. While Eli Lilly might permit a claim where a plea of abuse of procedure exists, such facts had not been pleaded. Simply using the available procedure under the Regulations was not sufficient to sustain an unjust enrichment claim.
    3. The Supreme Court of Canada denied leave in Eli Lilly.
    4. The Court distinguished the Ontario decision in Apotex Inc v Eli Lilly, 2012 ONSC 3808, which permitted a claim in unjust enrichment to proceed following a motion to strike.
    5. The clarity of the Regulations permits one to discern that there was “parliamentary intention to create a complete code.” Absent cogent evidence of egregious conduct, the section 8 framework is a complete code:
      “…a remedy of unjust enrichment does not exist in the context of the remedies provided in s. 8 of the NOC Regulations because Parliament has excluded it.”
      The Court summarized its reasoning for following Eli Lilly, noting:
      “Just like the Apotex claim that was before the Federal Court of Appeal in Eli Lilly, Apotex in this case relies on the same delay, caused by the same invocation of the NOC Regulations, as the basis for both its claim under s. 8 and its claim in unjust enrichment. Any equitable rights which might have operated but for the NOC Regulations cannot be relied upon because: (a) the statute establishes a scheme for compensation and, as such, common law rights are excluded; and, (b) with irresistible clearness, Parliament intended to eliminate any claim to unjust enrichment.”
  4. Are there juristic reasons for the alleged enrichment of Abbott and Takeda?” While the earlier findings were sufficient to dispose of the case, the Court analyzed the merits of the unjust enrichment claim, in particular whether a juristic reason existed for the alleged enrichment (a defence to such a claim). The Court found that Apotex failed to discharge its burden to demonstrate on this issue. In particular, the Court ruled that two juristic reasons for the enrichment existed — the Regulations and the settlement agreement between the parties.

The decision continues the judicial trend towards restricting the remedies available to generics related to unsuccessful proceedings under the Regulations. Absent exceptional circumstances, the courts are increasingly reluctant to grant remedies in the face of the “code” laid down in the Regulations.

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