Federal Court of Appeal Confirms Test for Induced Infringement
May 17 2023
By: Dino P. Clarizio and Michal Niemkiewicz
A Canadian patent may be infringed by someone who directly makes, constructs, uses or sells the claimed invention, or by someone who induces another to infringe the patent. Recently, the Federal Court of Appeal re-affirmed the three-part test for inducing infringement, and in particular, clarified that what is required in the key second step of the test is that the “putative infringer influenced the party that directly infringes to the point that, without such encouragement, infringement would not have occurred.”
The Canadian Patent Act provides in subsection 27(4) that the patent’s “specification must end with a claim or claims defining distinctly and in explicit terms the subject-matter of the invention for which an exclusive privilege or property is claimed” and section 42 provides that the patentee is granted “the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used”. As a result of these two provisions, anyone who, without the patentee’s consent, makes, constructs, uses or sells the claimed invention infringes these exclusive rights and is liable to the patentee. This is typically referred to as “direct infringement”.
But what if there is someone who influences or encourages the direct infringer to carry out the infringing activities? Is this person also liable to the patentee for infringement? The Federal Court of Appeal in Teva Canada Limited v. Janssen Inc., 2023 FCA 68 (“Teva”) addressed this question and confirmed that a person who “induces” another to infringe is also an infringer.
The Federal Court of Appeal began by reviewing the history of the law of inducement in Canada, which it found began as early as 1906 where the Exchequer Court had held that a person induces another to infringe if, for its own ends and benefit, the person provides the materials for infringement. In 1988, the Federal Court first articulated a three-part test for determining inducement. Subsequently, the Federal Court of Appeal adopted the test in Dableh v. Ontario Hydro (1996), 68 C.P.R. (3d) 129 (F.C.A.) and MacLennan v. Produits Gilbert Inc., 2008 FCA 35. Of note, the latter case dealt squarely with the issue of what type of “influence” is required in the second prong of the test. The Court of Appeal It held that “the evidence must establish that the influence of the alleged inducer constitutes a sine qua non of the direct infringement”. This appeared to set the bar quite high, namely that, without the influence by the putative inducer, there would not have been infringement.
Three years later, the Federal Court of Appeal in Corlac Inc. v Weatherford Canada Inc., 2011 FCA 228 (“Corlac”) again dealt with the test for inducement and described the second prong as “the completion of the acts of infringement must be influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place.” This confirmed the high standard for the type of influence required and appeared to be akin to a “but for” standard – there would not be direct infringement but for the influence of the alleged inducer.
This issue came to a head again in the recent Teva case. At trial, the judge had held that Teva did not induce infringement because the evidence showed that prescribing physicians did not read generic product monograph but instead used their skill and judgment to prescribe the drug product. As a result, Teva did not influence the direct infringers. In reaching this decision, the trial judge relied on Corlac as establishing that a higher degree of causality was required at the second prong of the test.
The Court of Appeal in Teva overturned this decision and held that “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.” In the case of generic drug companies such as Teva, “inclusion as one of the recommended uses within the PM [product monograph] 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.” Thus, it was irrelevant that physicians, when prescribing the drug, used their skill and judgment rather than read the product monograph. All that is required is that Teva had provided instructions in its product monograph that, when followed, would have resulted in the infringement of the claimed dosing regimen. Whether anyone was actually induced did not appear to be a relevant consideration.
The Court of Appeal then addressed the last step of the test and confirmed that “the knowledge at issue in the third prong of the test is knowledge that the influence is being exercised, rather than knowledge that the resulting activity will be an infringement” citing its earlier decision in Hospira v. Kennedy Trust, 2020 FCA 30.
In the end, Teva was found to induce infringement of the dosing regimen claims because its product monograph instructed that its drug product be used in a manner that would result in infringement of the claims of Janssen’s patent. It was irrelevant whether prescribing physicians were in fact influenced by the product monograph.
Tags: Dino Clarizio, IP Litigation & Enforcement, Michal Niemkiewicz