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26 March 2018
General approach to quantification
Construction of 'but-for' world
Quantification of lost sales to hospitals
Janssen was US person claiming under patentee
Assessment of damages
On February 8 2018 the Federal Court of Appeal issued public reasons for its decision dismissing Teva's appeal relating to the damages and costs that the Federal Court had awarded against it for its infringement of Janssen's patent for levofloxacin (Levaquin).(1) The Federal Court had awarded close to C$19 million in damages and pre-judgment interest to the plaintiffs (for further details please see "Federal Court grants Janssen nearly C$20 million against Teva for patent infringement")(2) and subsequently granted C$1 million in costs.(3)
Teva argued that the Federal Court had erred in principle by applying a 'broad axe' approach to its assessment of damages, contrary to Apotex Inc v Merck & Co, Inc,(4) which requires "perfect compensation". In rejecting this argument, the Federal Court of Appeal noted that its comment to this effect had been made in the context of a discussion as to the purpose of an award of damages for patent infringement, rather than a calculation. The 'but-for' world is a hypothetical and theoretical construct and the Federal Court had properly considered economic proof of the nature of the levofloxacin market and the likely outcomes in that market absent Teva's infringement.
Teva alleged that the Federal Court had erred by finding that:
The Federal Court of Appeal held that each finding had a proper evidentiary foundation.
The Federal Court of Appeal rejected each of Teva's arguments alleging failures by Janssen to mitigate its loss as impermissible requests to reweigh evidence.
Teva alleged a number of errors which broadly related to the Federal Court's finding that Janssen's indirect sales to hospitals in the but-for world were a certain proportion of its total sales in the real world, with respect to the period for which the court had calculated the loss. The Federal Court of Appeal found that the lower court's findings on this issue were supported by evidence.
The Federal Court had concluded that Janssen US was a person claiming under the patentee because it had had "the license or permission, by acquiescence, of Daiichi, to be involved in the chain of the sale of tablets made in Puerto Rico by Janssen Puerto Rico, through Janssen US to Janssen Canada". The Federal Court of Appeal rejected Teva's arguments on this issue, finding that:
The Federal Court of Appeal rejected Teva's assertions that the Federal Court had erred in calculating the damages owed to Janssen US. Teva had failed to demonstrate any error in that analysis and it had been open to the Federal Court to prefer Janssen's expert evidence over Teva's.
The Federal Court of Appeal rejected Teva's argument that the C$1 million lump-sum costs award was excessive. Contrary to Teva's submissions, it is not necessary for a lump-sum award to correspond to the amount that an assessment officer would assess.
The Federal Court decision is one of the few decisions relating to the assessment of damages in the context of infringement of a pharmaceutical patent. Damages for infringement have also been assessed for patents relating to lovastatin (for further details please see "'Non-infringing alternative' defence in assessment of damages for patent infringement")(5) and cefaclor.(6)
For further information on this topic please contact Abigail Smith at Smart & Biggar/Fetherstonhaugh by telephone (+1 416 593 5514) or email (email@example.com). The Smart & Biggar website can be accessed at www.smart-biggar.ca.
(1) Teva Canada Ltd v Janssen Inc, 2018 FCA 33.
(3) 2016 FC 727.
(4) 2015 FCA 171.
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