Canada: FCA maintains award of compound interest in Cefaclor’s claim for damages
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In the last Cefaclor decision, the Federal Court of Appeal upheld the award of compound interest as damages for the time value of money lost, where there is trial evidence to support the award .1
Being one of the oldest intellectual property cases in Canada, the history of the case is long and complex. The nearly 25-year legal battle arose out of a patent infringement action brought by Eli Lilly and Company and Eli Lilly Canada Inc. (collectively, “Lilly”) against Apotex Inc. (“Apotex”) in June 1997 in l antibiotic drug product cefaclor. About 12 years later, the liability judgment concluded that each of the eight patents in issue had been infringed by Apotex.2 The liability judgment was upheld by the Federal Court of Appeal,3 and following an unsuccessful leave to appeal to the Supreme Court of Canada,4 the determination of remedies rested with the Federal Court.
The lawsuit for the reference for damages took place in 2014, and resulted in the Federal Court awarding Lilly damages for her lost profits, including the award of compound prejudgment interest to hold account of the profits lost during the 17 years preceding the pronouncement of the reparation judgment. .5In Apotex’s appeal against that decision, the Federal Court of Appeal upheld the decision but referred the compound interest issue to the Federal Court for further consideration.6 Following another unsuccessful leave to appeal to the Supreme Court of Canada,seven the trial judge re-examined the evidence in light of the directions of the Court of Appeal and came to the same conclusion as before on the issue of compound interest.8 It was the trial judge’s decision on reconsideration that was the subject of the recent appeal to the Federal Court of Appeal.
In dismissing the appeal and upholding the award of compound interest, the Court of Appeal reiterated that âdamages for compound interest may reflect the time value of money owed or be intended to compensate for an opportunity. specific lost â.9 In this case, Lilly claimed and received compound interest to make up for the time value of money lost over the 17-plus years it took for damages to be awarded. A particular lost opportunity was not at issue in this case.
However, causation is still required to award compound interest. The Court of Appeal reiterated that compensation remains the concern and that the âcouldâ and âwouldâ test used to assess causation also applies to the assessment of a compound interest award. Although the unusually long period of time it took before damages were awarded was factored into the award of compound interest, Lilly was still required to show – and the Court of Appeal confirmed that she had demonstrated – the causal link, as well as to establish the loss she had suffered as a result of the time value of money through the evidence at trial.
Lilly was successfully represented by Anthony Creber, Marc Richard and Adam Heckman of Gowling WLG (Canada) LLP.
1. 2021 FCA 149
2. 2009 CF 991
3. 2010 FCA 240
4. 2010]SCCA n Â° 434
5. 2014 CF 1254
6. 2018 FCA 217
7. 2019]SCCA n Â° 75
8. 2019 FC 1463
9. 2021 FCA 149 23
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