Monday, December 23, 2013

Onus, Modeling and Pre-Judgment Interest

Apotex Inc v Takeda Canada Inc / pantoprazole (NOC s 8) 2013 FC 1237 Phelan J
            PANTOLOC / pantoprazole / 2,092,694 and 2,089,748
Underlying NOC decision Solvay Pharma Inc v Apotex Inc / pantoprazole (NOC), 2008 FC 308 Gauthier J

This post briefly discusses some miscellaneous issues arising from Pantoprazole.


On this issue of Phelan J adopted [23] the summary provided by Hughes J in Apotex Inc v AstraZeneca Canada Inc / omeprazole (NOC) 2012 FC 559

[35] In brief, it may be said that the party who has led sufficient evidence to put an issue "in play", must, to succeed on that issue, put in sufficient evidence so that on the balance of probabilities, the relevant facts are accepted by the Court as having been proved. Thus Apotex must put in play and subsequently prove on the balance of probabilities the facts that it needs to establish its case for compensation. AstraZeneca must put in play and subsequently prove those facts that it asserts disqualifies Apotex or reduces or negates Apotex's claim for compensation.


Different experts took different approaches to determining Apotex’s share of the generic market. Harrington’s evidence (for Apotex) was based on data to which business judgment was applied to determine market shares, while Grottendorst (for Takeda) and Tepperman (for Apotex) used econometric models in their calculations. Phelan J did not prefer one approach to the other: “opinion evidence always contains subjective elements, educated choices even in a purely mathematical model. . . . There is no magic nor necessarily any compelling reason to use an econometric model” [82]. In the end, Phelan J accepted Harrington’s report as the basis for calculating Apotex’s market share, but he rejected Grottendorst because of specific defects in the model, and not because it used econometric modeling. It is clear that he would have been fully prepared to accept a report based on econometric modeling, if the specific model was sound [84].

Pre-Judgment Interest

The interest rate and the date that interest begins to run were both at issue.

Phelan J held that interest begins to run from Apotex’s patent hold date, March 2007, not the date on which Takeda’s prohibition application was dismissed. The applicable statute, the Ontario Courts of Justice Act, s 128(1) provides that interest runs from “the date the cause of action arose,” and Phelan J held that “the cause of action arose when the period of liability commenced” [174]. This makes sense from a compensation perspective, because that is when Apotex would have had the use of the money represented by the damages.

However, the interest rate is based on the rate in effect on the date of Apotex’s statement of claim, November 2008. Again this is based on the statute, s 127, which defines the prejudgment interest rate as “the bank rate at the end of the first day of the last month of the quarter preceding the quarter in which the proceeding was commenced” [171, Phelan J's emphasis]. While this result seems right as a matter of the statute, it is not particularly satisfactory from a compensation perspective; but the statutory interest rate provisions are not generally very satisfactory from a compensation perspective: see generally Bank of America Canada v Mutual Trust Co 2002 SCC 43

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