The Federal Court (FC) recently issued its Public Judgment and Reasons regarding the financial compensation to be paid by Apotex as a result of Apotex’s infringement of AstraZeneca’s Canadian omeprazole formulation patent in AstraZeneca v Apotex Inc, 2017 FC 726. AstraZeneca previously prevailed in the liability phase of the infringement actions (previously reported in E-TIPS® Newsletter here and here) and sought an accounting of profits earned by Apotex from the patent infringement. The parties required the FC to resolve four issues relating to the quantification of profits, which were all found in favour of AstraZeneca.

In particular, the FC found that Apotex did not have a viable non-infringing alternative (NIA) during the infringement period of 2003 to 2008. Apotex asserted multiple NIAs, either designed in-house (in-house NIAs) or from third party suppliers (third party NIAs).

The FC noted that in the hypothetical, but-for pharmaceutical world, the infringer’s failure to produce a viable NIA formulation in the real world was not a threshold bar to the use of the NIA defense. The FC formulated the question as: “Could the infringer have made the product had it attempted to do so at the relevant time and would the infringer have sold the product on some reasonable financial basis in substitution for the infringing product?” The FC also noted that, where an infringer brazenly infringed a valid patent, an inference could be drawn that no viable substitute was available.

Regarding the in-house NIAs, the FC found that they were made in non-commercial batches, without full stability, bioequivalency or clinical studies, and without obtaining the required regulatory approvals for commercial use. The FC further found that Apotex had no intention of ever developing these formulations for commercial exploitation. The FC determined that none of the in-house alternatives had been shown to be approvable or commercially viable.

Regarding the third party NIAs, the FC found that Apotex would only pursue these options after it had tried and failed to produce and commercialize its own formulation.

The FC also held that Apotex was not entitled to recover section 8 damages. The FC held that:

  • Apotex suffered no loss by being kept out of the marketplace during the relevant period;
  • AstraZeneca was entitled to recover an amount for profits-on-profits at the prime rate compound annually and without a deduction for tax effects; and
  • AstraZeneca was entitled to fully recover its claim to Apotex’s profits for its US sales, less the portion Apotex paid to AstraZeneca in satisfaction of a US judgment stemming from Apotex’s infringement of the US omeprazole formulation patent.

Summary by: Junyi Chen

E-TIPS® ISSUE

17 09 20

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