Canada’s Federal Court of Appeal Sets Aside Teva’s Venlafaxine Section 8 Award for Improper Reliance on Hearsay Evidence

On May 31, 2016, Canada’s Federal Court of Appeal (FCA) overturned a decision of Zinn J of the Federal Court awarding Teva Canada Limited (Teva) Section 8 damages to compensate for the statutory delay triggered by Pfizer Canada Inc.’s (Pfizer) application under the Patented Medicines (Notice of Compliance) Regulations concerning Teva’s venlafaxine hydrochloride products (Pfizer’s EFFEXOR XR®) (Pfizer Canada Inc v Teva Canada Limited, 2016 FCA 161; rev’g 2014 FC 248). 

The FCA first confirmed that in determining lost sales in the hypothetical “but-for” world, the plaintiff must show that it “would have” and “could have” pursued its pleaded course of action.  The FCA noted that the plaintiff bears the burden of proving the “but-for” world on the balance of probabilities and that the defendant bears the burden of proving any alternate theory it advances of the “but-for” world.

More importantly, the FCA criticized Zinn J’s reliance on inadmissible hearsay evidence from Teva (then ratiopharm) that it could have supplied its venlafaxine products in the “but-for” world.   Teva adduced no direct evidence from its supplier; rather, it relied on the evidence of a former ratiopharm executive who gave evidence based on, inter alia, things told to him by the supplier’s employees or information from other ratiopharm employees who obtained that information from the supplier.  The FCA characterized these types of evidence as hearsay and double hearsay respectively.  Because Zinn J’s reliance on the hearsay evidence may have affected the outcome of this case, the FCA set aside the decision below and remitted the case back for redetermination, excluding the inadmissible hearsay evidence.