Find and Stay in the Safe Harbour to Avoid Patent Infringement

December 30, 2019
By Noel Courage

The Canadian and US governments have created safe harbours (exemptions to patent infringement) to encourage product development.  Canada’s patent laws have a “safe harbour” exemption from patent infringement (s. 55.2(1) of the Canadian Patent Act).  There are other exceptions to infringement that will not be discussed in this article.1 The safe harbour applies to activities reasonably related to generation of information for a regulatory agency, such as Health Canada or the U.S. FDA. The Canadian safe harbour is based on a similar provision in U.S. law, but the Canadian law’s wording is broader.  The US law is limited to drug approval as the regulatory purpose. The Canadian law is not so limited, and applies to other types of regulatory approvals. For example, the Canadian safe harbor was litigated in the context of helicopter landing gear, and the Court found that the safe harbor was applicable in that context.2 Most of the safe harbor court decisions in Canada are in the pharmaceutical industry.

An aspect to keep in mind about the safe harbours in both countries is that the activities must be genuinely for regulatory purposes. It is critical to keep this limit in mind to avoid infringement. If a company is producing drug batches, and some of them are for regulatory purposes, those batches may be exempted from patent infringement of a competitor’s product patent. However, the safe harbor will not extend to drug batches produced for any commercial purpose. This was recently demonstrated in a U.S. case involving Amgen (patent owner) and Hospira.3 In that case, Hospira made seven drug batches that were found to be for the purpose of obtaining FDA approval, receiving the benefit of the safe harbor to avoid patent infringement. These regulatory purposes included qualifying Hospira’s process and equipment to make the drug, as well as drug testing (eg. biosimilarity, stability, continued process verification). The safe harbor did not extend to fourteen other batches of Hospira's drug  that were described as, "commercial inventory to support single dose vial launch stock." Hospira’s submission of information about certain drug lots to the FDA did not bring the manufacture of those lots within the Safe Harbour.4

As well, later redesignation of samples from a commercial purpose to a regulatory purpose did not bring them within the safe harbour. Hospira redesignated the samples from being commercial inventory to “continued process verification”, but they were still found to infringe. 

Going the other way, product developers should also note that the safe harbour may also not apply if a product that is originally genuinely used for regulatory purposes is later commercialized subsequent to the regulatory purposes. 

To minimize the risk of infringement, it is important to carefully keep records evidencing the original and continued sole regulatory purpose.5 As a best practice, unused product originally obtained for regulatory purposes should later be either producible or destroyed in a documented manner. This was demonstrated in a Canadian court case where Apotex had carefully prepared evidence to account for all its test drug for regulatory purposes. Apotex provided an undertaking to the Court that whatever was left over after the regulatory process is completed would be destroyed.6 The safe harbor applied to the drug used for regulatory purposes, and there was no patent infringement.

The safe harbours provide a useful tool for  companies intending to do development for regulatory-related purposes. The boundaries of the infringement exception must be kept in mind, since any commercial purpose risks infringement. To take advantage of the safe harbor, the regulatory purpose should be the only purpose, and there should not be a change in character to or from a commercial purpose. If a safe harbor is not applicable, a local attorney should be consulted about other possible exceptions to infringement, or mitigation strategies, such as designing around, or invalidating, a patent.

1 Additionally, section 55.3(1) of the Patent Act, in force on December 13, 2018, states: An act committed for the purpose of experimentation relating to the subject-matter of a patent is not an infringement of the patent (not yet construed by a court). There is also a common law exception to patent infringement which is created in court decisions, not statutes passed by the government. The common law exception is narrow, for example permitting testing of an invention merely to see if it works. The narrow scope of this common law exemption was part of the reason for enacting the broader safe harbor. 

2 Eurocopter v. Bell Helicopter Textron Canada Ltée, 2012 FC 113, aff’d 2013 FCA 219. We are not aware of a Canadian case in the context of innovative drug development (competing innovative companies), or use of a patented research tool, so there is still some uncertainty as to how the safe harbor applies in those situations. The safe harbor should have applicability to the innovative drug development context because, as noted above, it was considered to be available in the context of a mechanical device case involving two innovative competitors developing helicopter landing gear.

3 Amgen Inc. v. Hospira, Inc. (No. 1:15-cv-00839-RGA; Fed. Cir. 2019) regarding a patent for methods of manufacture of the biologic erythropoietin (EPO), in the context Hospira filing a Biologics License Application for its biosimilar EPO.

4 See footnote 3 of the court decision. 

5 In a case showing the detriment of inadequate records, Apotex Inc. v. Sanofi-Aventis, 2013 FCA 186, the generic company, Apotex, could not produce records showing the destruction of the disputed lots of drug clopidogrel. It was concluded that there was patent infringement because Apotex had not demonstrated that the experimental and regulatory use exemption applied to those lots. 

6 Teva Canada Ltd. and Apotex v. Novartis AG, 2013 FC 141. In that case, the leftover material was not covered by the safe harbour, but could nonetheless be retained subject to the undertaking that it will be destroyed after reaching its expiry date. 

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