Wrongly excluded, rightly compensated: is "but for" the best solution?

Professors can make
excellent Kats ...
The IPKat is always thrilled to hear from former members of his blogging team, so it was with great excitement that he opened today's unexpected and unsolicited email from Professor Norman V. Siebrasse, one of three guest Kats in the first half of this year and, when he is not blogging, Professor of Law at the University of New Brunswick [Merpel struggles with his name: to her, it looks like the name of a legal case -- but this is the fate of anyone whose middle initial is 'V'].  Anyway, having opened the email with paws a-tremble, the IPKat found this miniature gem within it and an object lesson in how to write a concise, informative blogpost.  This is what Norman wrote:

In Canadian pharmaceutical law, a generic drug manufacturer seeking regulatory approval for a drug, in reliance on a comparison with a previously approved brand-name drug, must address the patents listed against that drug in a linkage system based on the US Hatch-Waxman Act
As under US law, the generic application triggers a statutory stay of the regulatory approval until the listed patents are addressed. However, in contrast with US law, if the listed patents are ultimately determined to be invalid or not infringed, so that with hindsight we can say that the generic was wrongfully kept out of the market by the statutory stay, the generic manufacturer is statutorily entitled to damages. The rationale is that the statutory stay is functionally equivalent to an automatic interlocutory injunction, and the statutory damages are equivalent to the damages on the undertaking that would be required of a patentee seeking an interlocutory injunction. 

In the first such case to go all the way to quantification, Apotex has been awarded C$215 million (approx €170 million) against Sanofi-Aventis for having wrongly been kept out of the market for ramipril (ALTACE). The judgment is available here. The basis for the calculation, discussed on Sufficient Description here, requires that the generic’s lost profits are caused by the stay on a strict “but for” basis, including an allowance for the likelihood of multiple generic entry, except that the generic is not entitled to the equivalent of springboard damages. Thus the magnitude of the award is not due to any peculiarity in the applicable principles related to the damages.
 The IPKat has lots of readers who work for, or with, originator pharma companies and plenty who belong to the generic sector. He hopes he will hear from them as to how they regard Canada's approach to assessing compensation in cases such as this.
Wrongly excluded, rightly compensated: is "but for" the best solution? Wrongly excluded, rightly compensated: is "but for" the best solution? Reviewed by Jeremy on Tuesday, November 06, 2012 Rating: 5

1 comment:

  1. Section 8 at least provides some redress for a generic who is wrongly exluded from the market as a reault of an invalid patent. The method by which the damages are calculated is not perfect, but no system is ever going to be perfect, as it involves hindsight speculation as future events which did not happen. Absent a DeLorean, some plutonium and a flux capacitor, then the courts are just guessing.

    However, one deficiency of the Canadian section 8 system is that the parties that really lose out by unjustified delayed generic entry are not compensated at all. Who, you may ask? That would be the public purse (i.e. Governments / Health Insurers / patients).

    Certain litigation systems have taken steps to plug this gap, such as the 3rd party undertaking seen in preliminary injunction cases in the UK and Australia. However, this mechanism is noticably absent from litigation systems in the rest of the world.


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