Overview

Life sciences and pharmaceuticals were and remain the most active areas of intellectual property litigation in Canada in 2023. In the past few years, after major changes in the legislative regime and due to COVID-19, the Federal Court has increasingly taken steps to improve efficiencies, including by adopting proactive case management practices, facilitating virtual and hybrid hearings, as well as encouraging summary proceedings. These developments have helped the court to meet its target two-year timeline from commencement of litigation to decision. There have also been notable developments in substantive case law, particularly relating to infringement of indication patents.

Canadian pharmaceutical litigation occurs most often under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”). The Regulations tie regulatory approval of generic drugs to the patent rights held by innovative drug companies and aim to balance patent enforcement with timely access to generic medicines. Although there are patents that fall outside of the regime of the Regulations, such patents can and are often litigated in parallel with those under the Regulations and are often subject to similar rules and timelines.

Under the Regulations, an innovative drug company can commence legal proceedings for an order prohibiting Canada’s Minister of Health from granting marketing approval for a generic drug until all relevant patents expire. Commencing legal proceedings under the Regulations results in an automatic 24-month stay on regulatory approval for the generic drug. The 24-month stay means that proceedings under the Regulations should be determined within a two-year timeline.

In 2017, the Regulations were amended to, among other things, convert the former abbreviated litigation system (no discovery, paper-record only) into more traditional litigation, with full discovery rights and viva voce evidence at trial. These amendments were intended to address complaints that the abbreviated proceedings were not conclusive on questions of patent infringement and validity, and that their abbreviated nature impeded full consideration of certain patent issues. However, the 24-month stay and the resulting deadline to determine disputes under the Regulations was unchanged, meaning that the parties and the court must accomplish substantially more on the same timeline.

There have been several procedural developments in response to this increased time pressure, together with changes to the rules of patent litigation. Parties have also used summary proceedings to get early resolution of potentially determinative issues (eg, patent infringement on the basis of product labels).

Procedural Developments

There are a few recent procedural developments which are particularly notable for clients from outside of Canada.

Case management

Since 2020, the Federal Court has instituted bespoke and comprehensive case and trial management guidelines tailored for intellectual property and pharmaceutical disputes, including under the Regulations. These guidelines reflect a trend by the court to bring proceedings to a close as efficiently as possible and to limit unco-operative behaviour between parties during litigation. For example, a case management judge is assigned immediately upon the commencement of litigation to ensure the litigation proceeds in a timely manner and to provide the parties with an accessible point of contact at the court. The case management judge is also responsible for resolving disputes that arise between the parties in the lead-up to trial, and for hearing all interlocutory motions in the first instance.

The new guidelines also include a “checklist” that must be completed by both parties at the commencement of litigation, which forces parties to set a schedule to trial at the outset – this schedule includes any interlocutory motions the party intends to bring during the litigation. The guidelines also contemplate early discovery plans, which are meant to circumvent disputes about insufficient documentary production and the relevance of questions asked during oral discovery. It is, however, debatable whether discovery plans in fact achieve their intended purpose based on present experience.

Inventor discovery

The Federal Court has recently confirmed that the party challenging the validity of a patent has the right to seek examination for discovery from every named inventor on the patent. The court will require the patentee to describe the roles of inventors early in the litigation and to facilitate discovery of inventors who are still employees of the company. The court will also require the patentee to co-operate and make reasonable efforts to provide known contact information of non-employee inventors.

However, a patentee has no obligation to facilitate discovery of inventors who are not under their control. Since many inventors reside outside of Canada where Canadian courts have no jurisdiction, this means that the party challenging the patent must initiate foreign judicial proceedings for subpoenas or commission evidence if they want discovery of the inventors who are not employees and do not reside in Canada. This process can be long – to be useful, it must be initiated early in the litigation so that inventor testimony can be obtained before trial, and ideally, before the party prepares its expert evidence. 

Factual witness statements for trial

The court has had to balance the move towards full trials with viva voce evidence against the need for shorter trials (ten days or less) in order to accommodate the high volume of pharmaceutical cases with strict 24-month timelines – along with all the other cases that fall under the Federal Court of Canada’s jurisdiction. Based on the most recent practice guidelines and recent experience with particular Federal Court judges, there is a trend towards requiring written statements or affidavits containing the trial evidence in chief of all fact witnesses, including inventors, in the months before trial. This is meant to obviate, or at least limit, examinations-in-chief at trial, while preserving a complete cross-examination before the trier of fact. It has the added advantage of making all factual evidence known to both parties before the trial, which of course greatly benefits the cross-examiner.

Summary proceedings

Parties have also leveraged other procedures, most notably summary trials, to obtain early decisions from the court to resolve key issues. A summary trial is different from a full trial in that it involves only a subset of the issues in the litigation, the evidence-in-chief is led in writing but is still subject to cross-examination at trial, and the hearing itself is shorter (generally less than one week).

The Canadian Federal Courts Rules provide that a party has a right to seek summary trial on any issue after the pleadings have closed and before trial, provided the issue is suitable for summary disposition. The court will typically adjudicate the suitability of the summary procedure at the hearing itself, once all the evidence-in-chief has been tendered. In practice, this means that a party can invoke such a procedure without the consent of the other party, including before discovery.

The summary trial procedure has been used recently by generic pharmaceutical companies seeking to dismiss patent actions based on non-infringement. However, this is no guarantee that a case will be dismissed since the court can make any factual and legal findings to dispose of an issue. This means that, not only can the court refuse a party’s request for a declaration of non-infringement, but it can also further decide that a party is infringing and issue a declaration of infringement in favour of the patentee.

For example, in the two cases involving paliperidone (Janssen v Pharmascience, 2022 FC 62 and Janssen v Apotex, 2022 FC 107), Pharmascience and Apotex each brought a motion for summary trial to dismiss Janssen’s patent infringement actions because their respective product monographs were not indicated for the dosage regimen claimed. The court concluded that the issue was suitable for summary trial but held in both cases that the generic companies would indirectly infringe by inducing others to infringe through the information contained in their product monographs. How these decisions impact Canadian jurisprudence on patent infringement by inducement is discussed further below.

Summary trials in the context of proceedings under the Regulations are new and relatively untested. The fact that a party has brought a motion for summary trial does not automatically pause other steps in the proceeding (most notably discovery) without both parties’ consent and is subject to the court’s discretion. This is because the summary trial may not be dispositive and the 24-month timeline from the commencement of trial remains. Indeed, there have been cases where preparations for summary trials have proceeded in parallel with preparations for the main action, arguably negating any cost savings offered by summary proceedings.

Multiple patents, multiple generic parties, same drug

In parallel proceedings involving different parties but the same patents and drug, the court will generally arrange for a single trial judge to hear all related cases, obviating the need for multiple judges to become familiar with the subject matter. Furthermore, joint trials on validity issues raised by multiple different parties have been scheduled on consent. Additionally, consecutive trials have been scheduled to reduce duplicative evidence where there are multiple actions involving different generic drug companies filed at around the same time (eg, within a few months of one another).

There is still some uncertainty in circumstances where actions against generic entrants are staggered over a longer period of time (eg, more than six months). Canada’s Federal Court of Appeal has declined to recognize a “first mover” advantage for early generic filers, which may encourage cooperation between generic companies against a patentee during litigation. Although validity defences raised by one party is not necessarily binding on a subsequent party, in practice, a validity decision will often be the same across cases because the actions are likely to be decided by the same trier of fact – absent very different evidence or a very different record.

Legal Developments

Infringement by inducement

There have been recent developments in Canadian law related to infringement by inducement. Indirect infringement by inducement arises most often in pharmaceutical litigation where an innovator company alleges infringement of a patent that claims “use” of a drug product. Generic companies do not “use” drug product but rather, make them available for physicians to prescribe and patients to use. So, to establish infringement of a “use” claim, a patentee must establish that the generic company indirectly infringed by inducing physicians or patients to use the drug product as claimed – most commonly by its product monograph.

In Canada, there is a three-part test that a patentee must meet to prove inducement:

• acts of direct infringement were completed;
• those acts were influenced by the alleged inducer such that without the influence infringement would not take place; and
• the influence was knowingly exercised by the inducer.

Until recently, it was difficult to enforce “new use” patents in Canada for previously approved pharmaceutical products because generic companies could routinely “carve out” or “skinny label” their product monographs to exclude the patented use or indication. Inducement cases involving “skinny labels” would often fail on the second or third branch of the inducement test. Canadian courts have also commented that policy considerations favoured early generic entry for an unpatented indication over the enforcement of patent rights. However, this appears to have changed in the last couple of years.

In another case involving paliperidone (Teva v Janssen, 2023 FCA 68), the Federal Court of Appeal overturned a trial finding that Teva did not induce infringement of Janssen’s patent for certain dosing regimens of long-acting injectable paliperidone. The court applied the three-part test but held that “encouragement” was sufficient to meet the second criterion – this was arguably a new development in pharmaceutical law. On the facts, Teva’s product monograph contained references to both infringing and non-infringing uses and because the infringing use was one basis for approval, it was irrelevant that physicians used their own skill and judgement in prescribing the drug rather than slavishly following the indications in the generic product monograph.

In two other paliperidone cases (mentioned above), carving out indications for the infringing dosing regimens by Apotex and Pharmascience did not overcome a finding of infringement (the details of the carve-outs were redacted but it can be inferred from the reasons that the patented indications were removed). In both cases, the court held that physicians would have known from the generic product monographs that the infringing dosing regimen was one option in the recommended dosing range, even if there was no reference to the claimed dosing regimen per se.

In another recent decision involving macitentan (Apotex v Janssen, 2023 FCA 220), the Federal Court of Appeal upheld a trial judge’s finding that Apotex induced infringement through its product monograph. In this case, the patent at issue claimed a combination therapy of macitentan and a PDE5 inhibitor to treat pulmonary arterial hypertension (PAH). Apotex’s product monograph referenced only monotherapy for the treatment of PAH. Nonetheless, the trial judge held that Apotex induced infringement because most (though not all) physicians and patients would use macitentan in combination with a PDE5 inhibitor (ie, “off-label”) – the pivotal clinical trial that demonstrated the safety and efficacy of the combination treatment was widely known to physicians in the field and this clinical trial was referenced in Apotex’s product monograph.

Thus, reference to an important clinical trial in this particular field (ie, a rare disease) was sufficient to establish inducement. The court was not persuaded by the fact that some patients could and would use a generic product as indicated and not infringe the patent, nor by the fact that the generic company could not market the combination therapy because it had been carved out of its product monograph.

These recent decisions suggest that, while the three-part test for inducement has not facially changed, Canadian courts no longer accept that a “skinny label” is an answer to infringement by inducement. This is obviously a welcome change for holders of “use” patents, and it is expected that these patents will be asserted more often over the coming years.

Remedies

The outcome in a recent adalimumab case departed from long-standing Canadian jurisprudence that a permanent injunction will follow a finding that a patent is valid and infringed, in the absence of exceptional circumstances. In AbbVie v Jamp, 2023 FC 1520, the court held that AbbVie’s patent for certain adalimumab formulations was infringed by Jamp’s biosimilar product SIMLANDI. Surprisingly, the court did not issue a permanent injunction despite finding that the patent was valid and infringed. It instead ordered running royalties to be quantified and determined at a subsequent trial.

For context, AbbVie had marketing approval for adalimumab, which it sold in different formulations and concentrations, including at 40 mg/0.8 ml vial in a pre-filled syringe and 40 mg/0.4 ml in a pre-filled syringe and autoinjector. AbbVie also had marketing approvals for formulations and concentrations that it did not sell, including an 80 mg/0.8 ml formulation.

The Regulations only apply to marketed products (see AbbVie v Canada (Minister of Health), 2022 FC 1209). Indeed, Jamp Pharma was permitted to obtain marketing approval without being subject to litigation under the Regulations because AbbVie did not “market” their 80 mg/0.8 ml product in Canada. Jamp, on the other hand, sought approval for a 40 mg/0.4 ml syringe and an 80 mg/0.8 ml syringe, based on comparisons to AbbVie’s HUMIRA, but sold only their 80 mg/0.8 ml product in Canada (which AbbVie did not sell).

The court agreed with Jamp that there should be no injunction despite a finding that AbbVie’s patent was valid and infringed. SIMLANDI was one of two 100 mg/ml formulations available to adults and the only 80 mg/0.8 ml formulation in Canada. The court noted that injunctions were a discretionary remedy and considered various factors, including public harm, the parties’ conduct, and other equitable factors; interestingly, it referenced cases involving non-practising entities outside of the pharmaceutical context. Specifically, the court relied on evidence that some patients would be negatively impacted by a switch in formulations (public harm), and that AbbVie chose not to market this formulation (patentee’s conduct). The public interest outweighed the patentee’s interest in this case.

The facts of AbbVie were undoubtedly strongly influenced by the unique adalimumab biosimilar landscape – to date there are eight approved adalimumab biosimilars in Canada, and many provincial governments have mandated, or intend to mandate, biosimilar substitution to reduce public healthcare costs. It therefore appears that this case has set a new precedent for alternative remedies in pharmaceutical patent cases and will no doubt be cited and developed in years to come.