Court of Appeal Rejects Apotex’s Claim for Unjust Enrichment

Gilbertson Davis LLPAppeals, Civil Litigation, Intellectual Property0 Comments

In the recent decision of Apotex Inc. v. Eli Lily and Company, the Ontario Court of Appeal has dismissed a claim by Apotex, a pharmaceutical company that  produces generic pharmaceuticals. In the case, the defendant Eli Lilly relied upon the PM(NOC) patent regulations to restrict Apotex from entering the market and selling a generic version of a pharmaceutical which was subject to a patent. That patent was ultimately invalidated. Apotex claimed that claimed that Eli Lilly had been unjustly enriched by making revenues of some $70 million as it was wrongfully delayed from entering the market and making revenues itself. It argued that allowing Eli Lilly to retain its monopolistic profits and only pay Apotex its lower lost revenues would result in a windfall to Lilly that encourages patent holders to improperly delay others from entering the market.

Ultimately, the Court’s objection to Apotex’s position was that Apotex could not show a sufficient link between the monopolistic profits made by Eli Lilly and the more modest losses Apotex sustained by not selling its generic version. The Court considered the two main ways unjust enrichment claims arise. The first is where there is a direct transfer of wealth from one party to another without proper consideration in return. That was not the case here. The second way is through finding a “causal connection” between the detriment suffered by the plaintiff and a benefit received by the defendant. The court noted that, while the public at large may have suffered by paying monopolistic prices during this time, Apotex was not deprived of monopolistic profits, as Apotex would have sold its generic versions at a lower price, and never would have earned such monopolistic profits. As the PM(NOC) regulations already provide for compensation for the losses suffered by a company improperly delayed from entering the market, there was nothing additional Apotex could claim for.

The Court went on to point out that, while it is possible to disgorge all of the profits obtained by a defendant from an underlying wrongful act, that remedy is distinct from the independent claim of unjust enrichment and, further, is a remedy that is limited only to exceptional circumstances that the court held were not present in this case.

If you have an issue concerning intellectual property or unjust enrichment, contact us for an initial consultation.

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