Unfair Competition Claim under Trade-marks Act Allowed to Stand

Apotex Inc v Eli Lilly / atomoxetine, 2013 ONSC 1135 Ducharme J refusing leave to appeal re 2012 ONSC 3808

As noted in my previous post, the Ontario Divisional Court granted leave to appeal respecting Macdonald J’s refusal to strike Apotex’s claim for disgorgement of Lilly’s profits. However, in the same decision, the Divisional Court refused to grant leave from Macdonald J’s refusal to strike Apotex’s claim for damages for unfair competition, under ss 7(a) and (d) of the Trade-marks Act. That claim, in effect, was that Lilly had abused the patent system by “by registering on the Patent Register a patent which was ultimately declared invalid and commencing the prohibition proceeding” [18].

The test for leave from a refusal to strike is an onerous one [5], so this says little as to the merits. When the issue is dealt with substantively, it will be interesting to see how Harris v GlaxoSmithKline 2010 ONCA 872 aff’g 2010 ONSC 2326 (blogged here) is dealt with. In that case, Harris was a representative plaintiff in a class action seeking damages on the basis that GSK had abused the NOC system by bringing "objectively baseless” NOC proceedings which had all failed [22-23]. Harris’ claim was based on the tort of abuse of process, conspiracy and waiver of tort. The ONCA affirmed the order of the Perell J striking the claims and dismissing the action. In so holding the ONCA remarked that

[46] GSK submits, correctly in my view, that the appellant "cannot convert the legitimate interest of a patentee in protecting (and monetizing) its intellectual property rights into anti-competitive monopoly practices in order to conjure up the improper predominant purpose required for the tort of conspiracy."

[50] Applying that test to the case at hand, the motion judge stated the following at para. 94 of his reasons:

In the case at bar, GSK's NOC Proceedings were not contrary to law or to statute. GSK's NOC Proceedings were the opposite of unauthorized; they were proceedings that GSK was entitled to bring. In other words, they were acts that GSK was at liberty to commit. The NOC Proceedings are actually a response to NOC's initiated by Apotex and two other generic manufacturers. GSK has a statutory right to show that the generic manufacturer's allegations are "not justified."

This seems to imply a broad rule that registering patents on the Patent Register and bringing NOC proceedings cannot be wrongful. The atomoxetine litigation is distinguishable both on the cause of action and because the plaintiff has a different interest, but this broad principle nonetheless seems applicable. It seems likely that this issue will eventually make its way to the ONCA once again, and it will be interesting to see whether that court holds that the same principle does indeed apply under the Trade-marks Act. If the ONCA were inclined to rethink the Harris decision without expressly reversing it, this might be an opportunity.