[1] J. MACDONALD J.: -- This motion by Eli Lilly and Company and Eli Lilly Canada Inc. (the "applicants") to strike out parts of the statement of claim delivered by Apotex Inc. (the "respondent") pursuant to rule 21.01(1)(b) or rule 25.11(b) and (c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 arises from the following circumstances.

[2] The applicants manufacture and sell Strattera, a drug comprised of atomoxetine hydrochloride. The applicant Eli Lilly and Company was the owner of the Canadian patent for this pharmaceutical product during the relevant time. The respondent is a generic drug company which competes with the originators of drugs, such as the applicants. The respondent wanted to bring its generic version of atomoxetine hydrochloride to market.

[3] The Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the "PMNOC Regulations") passed pursuant to the Patent Act, R.S.C. 1985, c. P-4 applied. Pursuant to these regulations, the applicant had submitted its patent list to the minister. The list included the patent for the aforesaid pharmaceutical product. The minister placed the submitted patents on the patent register pursuant to the PMNOC Regulations.

[4] The respondent needed to obtain a Notice of Compliance ("NoC") from the minister to market its generic version of atomoxetine hydrochloride in Canada. The placing of the applicants' [page686] patent in the patent register meant that, to comply with the PMNOC Regulations, the respondent either had to await the expiry of the applicants' patent or make an allegation attacking the patent or disputing its application to its generic drug. The respondent delivered a notice of allegation.

[5] The applicant, pursuant to the PMNOC Regulations, then commenced a proceeding in the Federal Court for an order prohibiting the minister from issuing a NoC to the respondent for its generic drug. The PMNOC Regulations provide that the minister was thereby precluded from issuing a NoC to the respondent until the earlier of (a) disposition of the prohibition proceeding or (b) 24 months from the commencement of that proceeding. Consequently, the respondent could not obtain a NoC for it generic drug and was unable to market it in Canada.

[6] Another generic drug company instituted an action in the Federal Court seeking to invalidate the applicants' patent and was successful. The patent was declared to be invalid and void while the applicants' prohibition proceeding was pending. As a result, the applicants' prohibition proceeding was dismissed, and the minister issued a NoC to the respondent for its generic drug.

[7] The respondent states that it was delayed in obtaining its NoC for approximately 23 months by reason of the applicants' voided patent having been listed in the patent register and by the applicable provisions of the PMNOC Regulations.

[8] The respondent instituted action against the applicants claiming, inter alia, damages pursuant to s. 8 of the PMNOC Regulations, damages or an accounting pursuant to s. 53.2 of the Trade-marks Act, R.S.C. 1985, c. T-13, disgorgement of the applicants' revenues or profits from the sale of Strattera and damages or an accounting of the applicants' profits as the respondent may elect and as may be otherwise available in law, all based on being delayed in marketing its generic drug by the steps which the applicants took under the PMNOC Regulations. Rule 21.01(1)(b)

[9] Rule 21.01(1)(b) states:

[10] No evidence is admissible on this motion, pursuant to rule 21.01(2)(b).

[11] The test for striking out claims is clearly established and was reiterated by the Supreme Court of Canada in R. v. Imperial Tobacco Canada Ltd., [2011] 3 S.C.R. 45, [2011] S.C.J. No. 42, 2011 SCC 42, at paras. 17-25. As stated by Chief Justice McLachlin, at para. 17:

[12] The fact that the law has not yet recognized a particular cause of action is not determinative on a motion to strike. The law is not static and unchanging. It is evolving continuously to meet the needs of a dynamic society. In dealing with novel claims on a motion to strike, the court must ask whether, assuming the facts pleaded to be true, there is a reasonable prospect that the claim will succeed. As McLachlin C.J.C. held in R. v. Imperial Tobacco Canada Limited, supra, at para. 21, "[t]he approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial".

[13] A motion to strike proceeds on the basis that the facts pleaded are true unless they are manifestly incapable of being proven: Operation Dismantle Inc. v. Canada, 1985 CanLII 74 (SCC), [1985] 1 S.C.R. 441, [1985] S.C.J. No. 22, at p. 455 S.C.R. Rule 25.11(b) and (c)

[14] Rule 25.11(b) and (c) states:

[15] Motions of this type also proceed on the basis of the allegations as pleaded and without evidence: Prete v. Ontario (1993), 1993 CanLII 3386 (ON CA), 16 O.R. (3d) 161, [1993] O.J. No. 2794 (C.A.), at p. 168 O.R., leave to appeal to the Supreme Court of Canada refused (1994), 17 O.R. (3d) xvi, [1994] 1 S.C.R. x, [1994] S.C.C.A. No. 46. As [page688] Strathy J. held in Carney Timber Co. v. Pabedinskas, [2008] O.J. No. 4818, 2008 CanLII 63163 (S.C.J.), at para. 17, the common thread of the criteria of rule 25.11 is that the facts pleaded are irrelevant to the issues before the court, or are so prejudicial that the pleading or portion thereof should be struck in spite of their relevance. In addition, when the law applicable to claims pleaded is not fully settled, the claim should not be struck out pursuant to this rule: R.D. Belanger & Associates Ltd. v. Stadium Corp. of Ontario Ltd. (1991), 1991 CanLII 2731 (ON CA), 5 O.R. (3d) 778, [1991] O.J. No. 1962 (C.A.), at p. 782 O.R. The court must accept the facts as pleaded in the statement of claim as proven unless they are patently ridiculous or incapable of proof, and must read the statement of claim generously with allowance for inadequacies due to drafting deficiencies: Nash v. Ontario (1995), 1995 CanLII 2934 (ON CA), 27 O.R. (3d) 1, [1991] O.J. No. 4043 (C.A.), at para. 11. Section 8 of the PMNOC Regulations

[16] The respondent has sued for damages pursuant to s. 8 of the PMNOC Regulations. The applicants move to strike out this aspect of the pleading. Section 8 of these regulations states:

[17] The "first person" referred to in s. 8 is the person who has filed a new drug submission. In this case, the first person is the applicants. The "second person" is the person who has sought a NoC and whose submission compares its proposed drug with that marketed in Canada under an NoC issued to a first person, and in respect of which a patent list has been submitted. The respondents are a "second person".

[18] The applicants submit that the purpose of s. 8 is to compensate a second person for the damage actually suffered in circumstances where its allegations of non-infringement or invalidity of the first person's patent are justified. Here, the applicants submit, the applicants' prohibition application was dismissed for mootness because the patent had been declared to be invalid and void and not because the respondent's allegations of invalidity were upheld. Consequently, the applicant submits that s. 8 does not apply.

[19] The issue under rule 21.01(1)(b) is this: is it plain and obvious that the prohibition action was not dismissed within the meaning of s. 8(1) of the PMNOC Regulations?

[20] The formal judgment of the Federal Court as issued and entered states "This Court adjudges that this application for an order prohibiting the Minister from issuing a Notice of Compliance is dismissed with the issue of costs to be reserved." It is not necessary for me to decide in this motion whether the formal judgment properly should be understood in the light of the reasons for that dismissal and whether, as so qualified, the formal judgment falls within the intended ambit of s. 8(1). Given the wording of the formal judgment, I am satisfied that it is not plain and obvious that this dismissal cannot come within the ambit of s. 8 of the PMNOC Regulations.

[21] In addition, it cannot be said that the claim for damages pursuant to s. 8 of the PMNOC Regulations is scandalous, frivolous or vexatious, or an abuse of the process of the court, contrary to rule 25.11(b) and (c). That is because the law in respect of claims pursuant to s. 8 is not fully settled and it cannot be said that the applicants' submission about the intended nature of s. 8 relief is clearly correct. [page690]

[22] The applicants also submit that the respondent has not pleaded material facts claiming that it has suffered damages. The applicants state that the respondent has pleaded only that it was delayed, and has failed to plead that it was ready to enter the market and sell its product during the period of the alleged delay.

[23] Section 8 of the PMNOC Regulations is notable in that it states that the first person "is liable to the second person for any loss suffered" within the described time periods. The liability for "any loss" and the absence of limiting language based on causation principles means that the range of potentially recoverable damages is very broad. In Apotex Inc. v. Merck & Co., [2009] F.C.J. No. 712, 2009 FCA 187, at paras. 87-91, the Federal Court of Appeal interpreted s. 8 in a manner which placed reasonable limits upon its broad language. Compensation for the loss resulting from the operation of the automatic stay (the inability to obtain a NoC pursuant to the PMNOC Regulations) is to be computed by reference to the loss suffered by the second person by reason of the stay, or the profits that it would have made during the period when it was prevented from going to market. The compensation is for prejudice actually suffered by a second person by reason of the operation of the stay.

[24] In paras. 40 and 41 of the statement of claim, the respondent has pleaded that, because of the operation of the PMNOC Regulations, its NoC was delayed until September 2010, a period of over 23 months and, as a result, it has suffered damages. Consequently, in the Rule 21 context, the respondent having pleaded that it suffered damages, it has not omitted to plead a loss such that a claim has not been properly asserted. In the Rule 25 context, reading paras. 40 and 41 of the statement of claim generously, it is clear that the respondent asserts implicitly that it was in a position to market its generic drug. The fact that the respondent has not pleaded that it was ready to enter the market with its generic drug as of October 2008 is not a pleading defect. To plead that would be to plead evidence in support of the claim that being delayed in marketing the generic drug caused the respondent to suffer damages, contrary to rule 25.06(1), which states:

[25] The applicants submit that s. 8 of the PMNOC Regulations does not create an entitlement to disgorgement of the first [page691] person's profits, citing Apotex Inc. v. Merck, supra. The respondent's unjust enrichment allegations raise other aspects of the PMNOC Regulations and are based on equitable principles. Paragraph 50 of the statement of claim states that, because the respondent was delayed in obtaining its NoC for the generic drug, the applicants were free from competition from the respondent for the period of delay. Paragraph 51 alleges that this delay was caused by the following:
(a) the applicants obtained and listed their patent in the patent register; and (b) the applicants consciously took advantage of the

[26] Paragraph 52 of the statement of claim then states, in part,

[27] The respondent's reliance on the equitable claim of unjust enrichment means that it must plead material facts in support of the three criteria for such a claim which are found in Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, at p. 987 S.C.R., namely, enrichment of the applicant, a corresponding deprivation of the respondent and the absence of a juristic reason for the enrichment.

[28] The subparagraphs of para. 52 of the statement of claim do that. Paragraphs 52(a) and (b) plead that the applicant was enriched. Paragraph 52(e) pleads that the respondent suffered a deprivation. Paragraph 52(f) pleads that the benefit and the deprivation corresponded. Paragraph 52(g) pleads the absence of a juristic reason for retaining the enrichment. Paragraph 52(h) pleads facts in support of disgorgement as the proper remedy for the alleged equitable unjust enrichment which amplify upon the aforesaid absence of a juristic reason.

[29] In my view, pursuant to rule 21.01(1)(b) it is not plain and obvious that the PMNOC Regulations and, in particular, s. 8 thereof limit the claims which a plaintiff who relies on these regulations may make, so that the respondent herein is entitled only to the remedies which s. 8 provides and is not entitled to make an equitable unjust enrichment claim. These regulations say nothing about limiting such a plaintiff's rights of recovery. Only explicit statutory language may take away existing rights such as causes of action: see Rawluk v. Rawluk, 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70, [1990] S.C.J. No. 4; Crystalline Investments Ltd. v. Domgroup Ltd., [2004] 1 S.C.R. 60, [2004] S.C.J. No. 3, 2004 SCC 3; Apotex Inc. v. Abbott Laboratories, Ltd., [2010] O.J. No. 5449, 2010 ONSC 6909 (S.C.J.), at paras. 52 and 53, leave to appeal refused [2011] O.J. No. 3311, 2011 ONSC 3988 (S.C.J.). For these reasons, the pleading also does not contravene rule 25.11(b) and (c).

[30] In addition, the applicants submit that the equitable remedy of disgorgement of the applicants' profits is not available to the respondent, on the authorities, because the respondent made no contribution to the applicants' profits in the time that the respondent was unable to market its generic drug.

[31] While there is authority to support that contention, it is not plain and obvious that it will prevail. The claim has a reasonable chance of success. Consequently, the claim should not be struck out. My reasons are as follows.

[32] In Kerr v. Baranow, [2011] 1 S.C.R. 269, [2011] S.C.J. No. 10, 2011 SCC 10, the court considered the principles governing unjust enrichment claims and resulting remedies in the context of separated common-law spouses. The decision clearly is [page693] premised upon spousal relationships and the financial aspects thereof, facts which are quite distinct from those at bar, which involve unrelated corporations competing vigorously for a share of the Canadian pharmaceuticals market. Nonetheless, while the facts in Kerr v. Baranow are very different, the court explored the principles governing unjust enrichment and resulting remedies in more general terms and its conclusions are both influential and instructive.

[33] At paras. 55 and following, Cromwell J., for the court, held that it is not correct to say that there are only two choices of remedy for unjust enrichment, namely, a monetary award assessed on a fee-for-services basis or a proprietary award which generally takes the form of a remedial constructive trust. Cromwell J. held, at para. 58, that restricting the money remedy to a fee-for-services calculation is inappropriate, for four reasons.

[34] The second reason given by Cromwell J. was that restricting the money remedy in this manner is inconsistent with the inherent flexibility of unjust enrichment. At para. 71, he noted that the court has often emphasized the flexibility of equitable remedies and the need to fashion remedies that respond to various situations in principled and realistic ways. Turning specifically to remedies for unjust enrichment, at para. 72, Cromwell J. referred to Pacific National Investments Ltd. v. Victoria (City), [2004] 3 S.C.R. 575, [2004] S.C.J. No. 72, 2004 SCC 75, at para. 13, where Binnie J. noted that the concept of unjust enrichment "retains a large measure of remedial flexibility to deal with different circumstances according to principles rooted in fairness and good conscience". At para. 73, Cromwell J. held that, in unjust enrichment claims, a monetary award ". . . must match, as best it can, the extent of the enrichment unjustly retained by the defendant".

[35] The third reason given by Cromwell J. for not restricting a money remedy to a fee-for-services calculation was the history of the development of the unjust enrichment principle. In addressing this history, at paras. 74 and following, Cromwell J. focused on domestic unjust enrichment cases and the equitable remedies which are appropriate therein. At para. 79, he considered the equitable remedy of an accounting of profits. He did not discount it as a possibility while also doubting that it was well suited to domestic situations. Cromwell J. then went on to speak more generally of unjust enrichment and remedial monetary awards therein, as follows:

[36] Consequently, there is room for an accounting of profits and an order for disgorgement thereof to develop further as a remedy for unjust enrichment, depending on the facts of the case. In this case, which does not turn on economic activities undertaken together, it now may well be unduly rigid to state that if the respondent can prove an unjust enrichment, it is not entitled to an accounting of the applicant's profits and to disgorgement thereof unless it can prove that it contributed to generating those profits. The respondent's claim appears to have a reasonable prospect of success and from a Rule 21 perspective, I conclude that it is not plain and obvious that it must fail. From a Rule 25 perspective, the Applicant has failed to establish that the relevant parts of the statement of claim are scandalous, frivolous or vexatious, or an abuse of the process of the court. The Trade-marks Act Claim

[37] The applicants move to strike out all of the respondent's claims pursuant to the Trade-marks Act. Paragraphs 42 and 43 of the statement of claim state:

[38] It is the respondent's contention that letters patent of invention issued pursuant to the Patent Act and in the patent register pursuant to the PMNOC Regulations became misrepresentations of fact when the Federal Court found that the patent was invalid and void. This decision was upheld on appeal to the Federal Court of Appeal and leave to appeal to the Supreme Court of Canada was denied. Both counsel agree that the effect of this decision is that the patent was void ab initio, pursuant to s. 62 of the Patent Act. Consequently, the respondent contends, by registering a patent subsequently found to have been void ab initio, the applicants assertion of the patent amounted to a misrepresentation of fact.

[39] The applicants have not pleaded yet and nothing herein establishes their version of what they thought or did. The assertion that they made no false representations because they were entitled by law to list the patent in the patent register, and that, at the time the applicants took the steps in issue, [page696] they believed that they had a valid patent and were entitled to list it in the patent register, are not properly before the court in this motion.

[40] Subsections 7(a) and (d) of the Trade-marks Act state:

[41] Whatever the applicants may have thought when they listed their patent in the patent register, the subsequent determination that the patent was void ab initio means that the applicants did not hold a patent, and had no right to register it. Neither party has provided me with case law based on these circumstances. Apparently, the governing legal principles have not been determined. In my opinion, there is a reasonable prospect that the applicants can be held to have made assertions of fact which, by reason of the retroactive voiding of the patent, were false. Given that, the respondent does not need to assert or prove that the applicants knew that such statements were false, in order to come within s. 7(a) of the Trade-marks Act: see S. & S. Industries Inc. v. Rowell, 1966 CanLII 53 (SCC), [1966] S.C.R. 419, [1966] S.C.J. No. 22, at p. 425 S.C.R. This claim, therefore, has a reasonable prospect of success, subject to the following.

[42] The applicants also assert that listing the patent in the patent register was part of a court proceeding and, as a result, absolute privilege protects them from the respondent's claims. The applicants rely on [page697] Fabian v. Margulies (1985), 1985 CanLII 2063 (ON CA), 53 O.R. (2d) 380 at 381, [1984] O.J. No. 1023 (H.C.J.). Clearly, an absolute privilege exists for statements made in court proceedings. However, there is real doubt that listing the patent in the patent register was part of a court proceeding. Under the PMNOC Regulations, the patent is filed with the ministry and the minister enters it in the register. In my view, these steps are most likely to be regarded as administrative or ministerial precursors to the court proceeding which was instituted later, when the applicant commenced its prohibition proceeding. On this basis, it is not plain and obvious that these steps are properly regarded as part of a court proceeding and thus subject to the privilege in issue. For the same reason, the relevant pleadings are not scandalous, frivolous or vexatious, or an abuse of the process of the court.

[43] The applicants are also sued on the basis that they made additional false and misleading statements and representations by commencing the prohibition proceeding, which was based on the patent which was later voided. Characterizing the institution of the prohibition proceeding in the Federal Court as the making of statements and representations raises the issue of absolute privilege for everything said in litigation, as the respondent accepted during argument.

[44] The respondent submits, however, that this case falls within an exception to the privilege. Clearly, there are exceptions to the rule of absolute immunity for statements made in litigation. Causes of action may be based on the institution or conduct of a court proceeding, including malicious prosecution, abuse of process, a claim for damages based on an undertaking given in an interlocutory injunction proceeding and a claim pursuant to s. 8 of the PMNOC Regulations. The respondent submits that s. 7 of the Trade-marks Act is another example.

[45] With the exception of pleading that the applicants commenced the prohibition proceeding which contained allegedly false statements and representations, the statement of claim says nothing relevant to either the privilege or the exceptions thereto. The applicants' statement of defence, in which allegations of fact relevant to its assertion of privilege will be made, has not been delivered. The respondent's reply and joinder of issue, in which allegations of fact relevant to its assertion of an exception to the privilege will be made, has not been delivered.

[46] In relying on Fabian v. Margulies, supra, the applicant implicitly argues that its assertion of privilege does not need to be pleaded for it to be raised in this motion. In the Fabian case, a doctor who had testified as a defence medical expert in a [page698] personal injury action was sued by the plaintiff against whom he had testified, for the content of his medical- legal report and for his testimony at trial. Labrosse J. (as he then was) struck out the statement of claim as disclosing no cause of action and dismissed the action. The Court of Appeal upheld the decision [(1985), 1985 CanLII 2063 (ON CA), 53 O.R. (2d) 380 at 384 (C.A.)], stating that Labrosse J.'s reasons correctly set forth the law.

[47] It is therefore interesting to note that Labrosse J. referred to "the defence of absolute privilege". At p. 382 O.R. of his reasons, he stated:

[48] The usual rule is that a statement of defence must be delivered for a defence to be raised and ordinarily, a statement of defence is not delivered before a motion to strike out the statement of claim as disclosing no cause of action. In the Fabian case, the plaintiff was self-represented and it may be that his statement of claim was sufficiently generous in its allegations that, when the allegations were assumed to be factual, the court had an adequate basis in that motion for finding that the defence of absolute privilege clearly would apply. In addition, I note that nothing in the Fabian decision suggests that there was any question therein of the interplay between the privilege and a principled exception thereto.

[49] The argument in the case at bar raises complex questions about the interplay between the privilege and an alleged exception, in circumstances which, properly speaking, are devoid of many factual underpinnings for determination of these legal issues. Nonetheless, the background case law and the submissions show what could be relevant. Complicating the analysis is the retroactive effect of the order which declared the patent to be void. This appears to be a relevant issue because, at the time the applicants made the assertions in issue in the prohibition proceeding, they held a patent which could have appeared to be valid and thus to substantiate the assertions in issue. Weighing against this, however, is the Federal Court's finding that the patent was invalid and void because one of the applicants had failed to disclose in its application for the patent all of the information which was required to be put in the public domain. The question of whether that applicant knew or ought to have known that the patent had been obtained improperly could be relevant to whether privilege attaches to its assertions about that patent. The other applicant, while closely related, may well be in a different position because it did not apply for the patent and may [page699] neither have known, nor had any reason to know of the lack of disclosure in the patent application.

[50] I conclude that the question of whether the commencement of the prohibition proceeding, viewed as false or misleading statements or representations, is subject to absolute privilege or is subject to one of the principled exceptions to that privilege is an unsettled legal question which should not be resolved by means of this motion, at this early stage of the litigation, when many of the relevant facts are not before the court. See R.D. Belanger & Assocs. Ltd. v. Stadium Corp. of Ont. Ltd., supra; Nash v. Ontario, supra, at para. 11; and Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 CanLII 9923 (ON CA), 68 O.R. (3d) 457, [2003] O.J. No. 4656 (C.A.), at para. 39.

[51] As mentioned, as part of its Trade-marks Act claims, the respondent has pleaded, in para. 48 of the statement of claim, that the applicants "unjustly profited" from their conduct, and the respondent claims an accounting of these unjust profits. The applicants did not directly attack this pleading or claim, but stated generally, in arguing against disgorgement as a remedy, that there were no claims or causes of action pleaded which could give rise to disgorgement. Disgorgement may be an adjunct of a claim for an accounting, namely, the paying over of the moneys for which a defendant is held liable to account. I therefore note that, in relation to the Trade-marks Act claims, s. 53.2 of the Act specifically entitles the court to make an order for the recovery of "profits". Unspecified Causes of Action

[52] In addition to the various specific claims for an accounting of the applicants' profits which have been mentioned, the respondent has claimed the following in the statement of claim:

[53] This pleading is in addition to the claim pursuant to the Trade-marks Act and the unjust enrichment claim. Allegations of fact are made in respect of the Trade-marks Act claim and the unjust enrichment claim but I can find no allegations of fact which support claims "otherwise available at law". The applicants are correct that a bald claim like this, unsupported by assertions of fact capable of constituting a cause of action, contravenes rule 25.06(1).

[54] As such, para. 1(f) of the statement of claim discloses no reasonable cause of action. I order it struck out. [page700] Order

[55] With the exception of grounds of relief in the notice of motion and the allied constitutional question which were severed for a separate hearing and with the exception of para. 1(f) of the statement of claim which I order struck out, the motion is dismissed. The respondent shall have 14 days from the release of these reasons in which to amend the statement of claim to plead properly in place of that which has been struck out and an additional seven days in which to serve its amended statement of claim. The applicants' statement of defence shall be delivered within 21 days thereafter.

[56] The respondent has been substantially successful and I award it costs. If the parties cannot agree on the quantum of costs, the respondent's brief written submissions shall be delivered within 14 days of the release of these reasons and the applicants' brief written submissions shall be delivered within 28 days.