Case reference: Apotex Inc. v. Eli Lilly and Co., 2015 ONCA 305
This historical case summary discusses the decision identified above. Later decisions and legislative changes may affect how it applies today. Obtain legal advice about your circumstances.
The defendant used the process established by the Patented Medicines (Notice of Compliance) Regulations to keep the plaintiff’s generic version of the defendant’s patented drug out of the market for two years. Because the defendant’s patent was later invalidated, the plaintiff became entitled under s. 8(1) of the Regulations to recover the damages it suffered during the period it was excluded from the market. The plaintiff brought an action against the defendant asserting a claim of unjust enrichment and seeking disgorgement of the monopolistic profits the defendant made on sales of the drug during the two-year period, over and above what the plaintiff would have earned from sales of its generic drug at lower prices. The motion judge dismissed the defendant’s motion to strike the claim. The Divisional Court reversed that decision. The plaintiff appealed.
Held, the appeal should be dismissed.
In order to succeed in a claim for unjust enrichment, a plaintiff must prove (1) an enrichment of or benefit to the defendant; (2) a corresponding deprivation of the plaintiff; and (3) the absence of a juristic reason for the enrichment. The plaintiff did not suffer a corresponding deprivation. It was never deprived of the portion of the defendant’s revenues represented by its monopolistic profits because it would never have earned those profits. Even if the plaintiff’s pleadings could be read as also seeking unjust enrichment as a restitutionary remedy for an underlying legal wrong such as misrepresentation or abuse of process, this was not a case in which the exceptional remedy of disgorgement would be available. Effectively, the plaintiff was asking the court to designate it as the de facto beneficiary of the wrongfully obtained monopolistic profits despite recognizing in its pleadings that it was the public that suffered actual deprivation as a result of the monopolistic pricing. Moreover, remedial unjust enrichment is an exceptional remedy that should not be invoked unless other available remedies are inadequate. Generic companies can be made whole through the process established under s. 8 of the Regulations.
Unjust Enrichment
The Supreme Court of Canada recently discussed the elements of unjust enrichment in Professional Institute of the Public Service of Canada v. Canada (Attorney General), [2012] 3 S.C.R. 660, [2012] S.C.J. No. 71, 2012 SCC 71, at paras. 148-58. With respect to the first and second elements, the enrichment and the corresponding deprivation, the court explained, at para. 151, that they are “the same thing from two different perspectives” or “two sides of the same coin”. These elements are “properly understood to connote a transfer of wealth”: at para. 152. Since “the purpose of the doctrine of unjust enrichment is to reverse unjust transfers of wealth”, the first question the court asked in that case was whether the government was enriched at the plaintiffs’ expense. The court affirmed that the government’s gain had to correspond to the plaintiffs’ loss for the unjust enrichment claim to succeed.
In the family law context, courts have recognized that there need not be quantifiable equivalence between the enrichment and the deprivation. In Pettkus v. Becker, [1980] 2 S.C.R. 834, [1980] S.C.J. No. 103, Dickson J. applied the doctrine of unjust enrichment to find that a constructive trust arose where unmarried spouses each contributed to the successful establishment of a beekeeping business and the purchase of property. The court held that the elements of unjust enrichment that formed the basis for the constructive trust — enrichment and corresponding deprivation — were satisfied by Ms. Becker’s contribution of unpaid labour over 19 years under the reasonable expectation that she had an interest in the farm. The court explained that a “causal connection” must exist between the enrichment and the deprivation. It stated, at p. 852 S.C.R.:
For the unjust enrichment principle to apply it is obvious that some connection must be shown between the acquisition of property and corresponding deprivation. On the facts of this case, that test was met. The indirect contribution of money and the direct contribution of labour is clearly linked to the acquisition of property, the beneficial ownership of which is in dispute.
*source: Ontario Reports
