Federal Court of Appeal rules on non-infringing alternatives and apportionment as defences to an accounting of profits from patent infringement

by Paul C. Jorgensen »

On February 2, 2017, the Federal Court of Appeal released a significant decision on accounting for profits, a remedy for patent infringement in Canada: Apotex Inc v ADIR, 2017 FCA 23. The appeal concerned two defences raised by Apotex (and a related company) to reduce the profits it had to disgorge for its wrongful export sales of generic perindopril (COVERSYL). The two defences - non-infringing alternatives (“NIAs”) and apportionment - are closely related, both contending that an infringer’s profits, in full or part, are not causally attributable to the infringement.

The Court of Appeal found that, in this circumstance, the Federal Court had erred in law by rejecting Apotex’s argument that the availability of NIAs reduced the profits to be disgorged. The question of whether an NIA was available on the facts was remitted to the Federal Court. The Court of Appeal upheld the Federal Court’s decision not to apportion Apotex’s foreign revenues between those received for perindopril and those allegedly received for non-infringing services.

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European Parliament approves CETA

On February 15, 2017, the European Parliament voted to approve the Canada-EU Comprehensive Economic and Trade Agreement (CETA). This approval paves the way for provisional application of CETA rules in Europe as early as April 1, 2017, although full implementation will require ratification by each EU member state. As previously reported, Canada is in the process of implementation through Bill C-30, which proposes to amend several important provisions under the Patent Act and Trademarks Act. Bill C-30 passed third reading in the House of Commons and was introduced to the Senate on February 14, 2017.

EU Parliament Press Release | Canada PMO Press Release

PMPRB News

Decision striking Alexion pleading challenging constitutionality of PMPRB regime upheld. On December 28, 2016, the Federal Court dismissed Alexion’s appeal of a decision striking Alexion’s constitutional challenge to the price regulation scheme and confiscatory powers found in sections 83-86 and 87(1) of the Patent Act. The decision arose in the context of a Patented Medicine Prices Review Board (PMPRB) proceeding relating to whether Alexion had sold SOLIRIS (eculizumab) at an excessive price. Alexion argued that the relevant provisions were ultra vires the powers granted by Parliament to regulate patents of invention and discovery under section 91(22) of the Constitution Act, 1867, falling instead within provincial jurisdiction over property and civil rights. The Court upheld the decision finding that the Prothonotary was correct to strike the pleadings: the constitutionality of the relevant provisions was previously determined in Canada (Attorney General) v Sandoz Canada Inc, 2015 FCA 249.

Alexion Pharmaceuticals Inc v Canada (Attorney General), 2017 FC 22.

New NEWSletter released. The PMPRB released the February 2017 issue of its NEWSletter. Under a new policy, the PMPRB will be moving patented generic drug price reviews to a complaint-based process, similar to the provisions for new and existing veterinary and over the counter drug products.

Federal Court dismisses Apotex’s application for judicial review regarding Apo-Progesterone ANDS

On February 1, 2017, the Federal Court dismissed Apotex’s application for judicial review of the Minister of Health’s refusal to approve its Abbreviated New Drug Submission (ANDS) for Apo-Progesterone: Apotex Inc v Canada (Health), 2017 FC 127. The Court found no breach of procedural fairness, and concluded that the Minister’s decision to refuse to approve the ANDS on the basis that the drug product contained unusually high levels of sodium lauryl sulfate (SLS) was reasonable. That the U.S. Food and Drug Administration had previously approved a different drug product with higher levels of SLS did not render the decision unreasonable.

Federal Court dismisses AstraZeneca’s prohibition application against Mylan’s naproxen-esomeprazole magnesium tablet product

In reasons released February 7, 2017, the Federal Court dismissed AstraZeneca’s application for a prohibition order regarding Mylan’s naproxen-esomeprazole product until after the expiration of Patent No. 2,449,098: AstraZeneca Canada Inc v Mylan Pharmaceuticals ULC, 2017 FC 142. The Court found that Mylan’s allegation of invalidity on the basis of obviousness was justified.

PMNOC proceedings

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