Federal Court of Appeal Clarifies Test for Inducing Infringement for Generic/Biosimilar Drugs
In Teva Canada Limited v Janssen Inc, 2023 FCA 68, the Federal Court of Appeal emphatically rejected the Federal Court’s interpretation of the three-pronged test for inducing infringement of a patent and clarified the test’s application in the context of pharmaceutical medicines.
Janssen had brought an action pursuant to subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations involving Janssen’s drug INVEGA SUSTENNA (paliperidone palmitate) for the treatment of schizophrenia and related disorders. Janssen alleged that Teva would infringe Canadian Patent No. 2,655,335 (the “355 Patent”) if it were to enter the market with its own paliperidone palmitate product in Canada. The 355 Patent relates to dosing regimens for long-acting injectable paliperidone palmitate formulations for the treatment of schizophrenia and related disorders.
In the decision under review, the Federal Court rejected Teva’s invalidity challenge and found that Teva’s paliperidone palmitate product would directly infringe the 355 Patent’s product and medicament claims. Teva would not directly infringe the use claims of the patent, as Teva would not administer the drug itself. In addition, the Federal Court found that Teva would not induce infringement of the asserted claims of the 355 Patent. Teva appealed the validity and direct infringement findings; Janssen cross-appealed, arguing that the Federal Court erred in declining to find that Teva would induce infringement.
After dismissing the appeal in relation to obviousness, the Federal Court of Appeal found that the lower court erred in its interpretation of the three-pronged test for inducing infringement of a patent as set out in Corlac Inc v Weatherford Canada Inc, 2011 FCA 228 [Corlac]. The patentee is required to establish that:
i. the act(s) of infringement must have been completed by the direct infringer;
ii. the completion of the act(s) of infringement were influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place; and
iii. the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement.
At issue in the appeal was with how the Federal Court interpreted the second prong of the test. The Federal Court found that the decision in Corlac set out a more stringent test than had previously been required in the case law, in that a defendant will now not be found to induce infringement of a patent unless the patentee establishes that, “but for” the acts of the defendant, the infringement did not occur – or, in the context of an application under the PM(NOC) Regulations, would not occur. The Federal Court found that Janssen had not established that Teva’s product monograph (PM) for its paliperidone palmitate product influences physicians to prescribe the claimed doses to the point that, but for that dosing information, direct infringement would not occur.
In its review of this decision, the Federal Court of Appeal found that the Federal Court’s interpretation of the test for inducement applied an unduly onerous requirement at the second step, and incorrectly focused only on the skill and judgment of prescribing physicians, to the exclusion of the role Teva played in inducing infringement of the use claims in suit. The Federal Court of Appeal clarified that the decision in Corlac did not change the law regarding the requisite element for inducing infringement – at the second step of the analysis, what is required is proof that the putative infringer influenced the party that directly infringes to the point that, without such encouragement, infringement would not have occurred (or, in the context of an application under the PM(NOC) Regulations, would not occur). In the case of a generic drug (such as Teva’s product), “inclusion as one of the recommended uses within the PM for the drug of the alleged infringing use, among others, has been found to be sufficient to constitute the requisite encouragement to satisfy the second prong of the test for inducement”. It does not matter that physicians use their own skill and judgment in dispensing the drug, nor that they must make an active choice to perform the infringing use. All that is required to conclude that Teva would induce infringement of the use claims is that Teva’s PM incorporated all the dosing and administration elements of the product claims of the 355 Patent.
Since the decision regarding the second prong of the test was overturned, the Federal Court of Appeal continued to consider the third prong of the test – that the influence must be knowingly exercised by the inducer – and found that this element was easily met, as Teva must have been presumed to be aware of the contents of its PM and what it recommended. Teva’s paliperidone palmitate product would therefore induce infringement of the 355 Patent’s use claims, in addition to directly infringing the patent’s product and medicament claims.