Transactions & Cases Detail



Transaction/Case Details

Federal Court awards Merck more than C$180 million in damages against Apotex for infringement of Lovastatin patent

DATE CLOSED

April 14, 2016

BUSINESS SECTOR

Pharmaceutical / Bio Life Sciences

LEAD OFFICE

Toronto

VALUE

180 Million CAD


OVERVIEW

On July 16, 2013 the Federal Court of Canada released the public version of a previously confidential ruling, quantifying the damages to which Merck Canada Inc. and Merck & Co. Inc (Merck) is entitled arising from the Court’s finding that Merck’s Canadian patent covering the blockbuster drug lovastatin was valid and infringed by Canadian generic drug manufacturer Apotex Inc. (Apotex) and its Winnipeg affiliate, Apotex Fermentation Inc. (“AFI”). The Federal Court awarded Merck Frosst Canada Ltd. and Merck & Co. Inc. (Merck)  damages, payable by Apotex Inc. more than C$180 million, the largest patent damages award in Canada to date.

The trial stemmed from an earlier liability ruling of the Federal Court that Merck’s lovastatin patent was valid and infringed by Apotex AFI.

Lovastatin was the first-in-class cholesterol-lowering statin prescribed to countless Canadians as MEVACOR(r).  Its discovery enabled the development of all the statins that would come later as brands like LIPITOR(r) and ZOCOR(r). In this case that took thirteen years to get to trial on the liability issues, multiple infringements were established based on clandestine manufacturing operations in Guangdong province, China, where most of the infringing lovastatin was made. The Court found infringement on the fabrication of testimony from witnesses in charge of the Guangdong operation, circumstantial evidence of motive, means and opportunity to infringe, as well as CSI-like DNA evidence establishing use of the infringing microorganism to manufacture some of the infringing lovastatin.

In December 19, 2011 The Federal Court of Appeal affirmed the liability decision and leave to appeal to the Supreme Court of Canada was subsequently denied.

The damages were ordered to be assessed at a subsequent trial. After documentary and oral examinations for discovery, the damages trial proceeded in April 2013.  In the end, after some 15 years of litigation, Merck was finally awarded damages. The parties’ experts ultimately agreed on the outcome of the accounting exercise to determine Merck’s lost profits. Apotex asserted a number of defences to reduce the number the accountants had agreed to; however, its main defence – that Merck should receive only nominal damages on the basis of what Apotex called the “non-infringing alternative (NIA) defence” – was rejected by the court. In essence, Apotex argued that it had a non-infringing alternative available to it, which Apotex could have sold without infringing the patent, and thereby harm Merck just as much as it did by selling the infringing tablets. For Apotex, this entailed that Merck’s losses were zero, or a nominal royalty.  The public reasons for Judgment released July 16, 2013 followed established Canadian and U.K. jurisprudence and rejected the NIA defence, concluding that the defence is not available to an infringer in Canada.

As a result, Apotex was found liable for Merck’s actual lost profits, with interest, which totals more than C$180 million.

On July 23, 2015,McCarthy Tétrault was successful in defending Merck against Apotex’s appeal of the damages award.

On April 14, 2016 the Supreme Court of Canada dismissed Apotex's appeal and ended the nearly twenty year patent infringement litigation.

McCarthy Tétrault LLP represented Merck, with a team led by Andrew Reddon.

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