Friday, May 13, 2011

No Section 8 Damages for Permanent Loss of Market Share

Teva Canada Ltd v Sanofi-Aventis Canada Inc / ramipril (NOC) 2011 FCA 149 Dawson JA: Noël JA; Sharlow JA dissenting, affm’g 2010 FC 1210 Simpson J, affm’g 2010 FC 150 Milczynski Pr

In Sanofi-Aventis / ramipril 2011 FCA 149 Dawson JA, in a brief decision from the bench for herself and Noël JA, affirmed the FCA’s holding in Merck Frosst Canada Ltd v Apotex Inc / alendronate (NOC) 2009 FCA 187 that section 8 of the NOC regulations does not permit recovery of losses – in particular loss of market share – suffered after the expiry of the statutory stay, even if those losses were caused by the stay. Sharlow JA in dissent was of the view that Merck Frosst was wrongly decided [14], while the majority felt it should not be disturbed [5]. (Note that Noël JA wrote for the Court in Merck Frosst.)

Sharlow JA dissented on the basis that “[t]he damages contemplated by section 8 are intended to be analogous to the undertaking a party is normally required to offer when seeking an interlocutory injunction in ordinary commercial litigation,” and “an undertaking in damages is normally broad enough to cover all losses resulting from the injunction” [12]. There is a great deal to be said for Sharlow JA’s position as a matter of principle. On the other hand, while section 8 is analogous to an undertaking, it is not one. The rights of the second person are defined by the regulations, and, as the various RIASes make clear, the scheme as a whole is intended to "balance" enforcement of patent rights with encouragement of generic entry. Thus while Sharlow JA at [14] criticized as a "narrow" and "literal" interpretation of the relevant provision in Merck Frosst, it is quite reasonable to suppose that an interpretation which is in some ways unprincipled may be required to give effect to the precise balance sought by the legislature. This was in effect the position taken by the FCA in Merck Frosst at [101-102] in having regard primarily to the text rather than principles of causation in interpreting the amended section 8.

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