Friday, April 21, 2023

Second Prong of Corlac Does Not Require “But For” Causation

Teva Canada Limited v Janssen Inc 2023 FCA 68 Stratas; Gleason; Woods JJA varg Janssen Inc v Teva Canada Ltd 2020 FC 593 Manson J

2,655,335 / paliperidone palmitate / INVEGA SUSTENNA / NOC action /

FC Infringement / FC Inducement

This decision represents a significant and welcome clarification of the law of inducement. It will be the new leading case on the second prong of the Corlac test, making it clear in order to establish inducement is it enough to show that the product was sold along with instructions to use it in an infringing manner. A couple of points regarding the construction of use and Swiss-type claims are also clarified.

The 335 patent relates to a dosing regimen for long acting injectable paliperidone palmitate formulations for treatment of schizophrenia. It has three sets of claims. Claims 1 to 16 are “product” claims that relate to prefilled syringes containing paliperidone palmitate adapted for administration in accordance with the claimed dosing regimens [15]. Claims 17 to 32 are “use” claims directed towards use of a dosage form according to the same regimen [16], and Claims 33–48 are Swiss-type claims to the use of paliperidone “for the preparation [or manufacture] of a medicament” [17] according to the same regimen. All claims were asserted.

In the judgment under appeal, Manson J found the asserted claims to be not obvious and valid. He also found that Teva would directly infringe the product and Swiss-type claims, but not the use claims. However, he found that Teva would not induce infringement of any of the claims [2]. Teva appealed on obviousness and direct infringement, and Janssen cross-appealed the finding of no inducement. Teva’s appeal on obviousness was dismissed for reasons specific to the case: [56]–[67].

Claim Construction

Product claim “for” use

Claim 1, which is representative of the product claims, is to prefilled syringes adapted “for administration” according to the dosage regimen [FC 124]. As discussed here, at first instance Teva had argued that it did not directly infringe the product claims because it did not actually prescribe or administer medications [FC 234]. Manson J rejected this argument on the basis that it is enough that “the capable, approved and intended use” for the Teva product incorporates the essential elements [FC 252]. The FCA affirmed, saying

[77] In the context of product claims like those in claims 1 to 16 of the 335 Patent (i.e., claims to a pharmaceutical preparation for use in the treatment of a condition), evidence that a generic company proposes to make or sell its product for the patented use (even if it is only one use among others) is enough to establish direct infringement in an action brought under section 6 of the PMNOC Regulations

In effect, a claim to a product “for” a use covers a product adapted and intended for that use, and not just the product when actually so used. The clarification is welcome. The FCA cited AB Hassle 2001 FCT 1264 [6], [33], [35–36] 2002 FCA 421 and Lilly v Apotex 2019 FC 884 [24–33] (discussed here). Both do stand for that proposition, but AB Hassle found that the product was not intended for the patented purpose, and Lilly v Apotex only concerned a motion allowing Lilly to amend its pleadings, so this seems to be the first time we have the point confirmed at the FCA level.

Swiss-type claim

In Novartis 2013 FC 985, Hughes J held, in effect, that a Swiss claim should be construed as a use claim, even though a Swiss claim is a product claim on its face: see here. At trial in this case, Teva urged Manson J to adopt the same position: [FC 159]. Relying on Hospira 2018 FC 259 [152–153], [268–323] affd 2020 FCA 30 [16–18], Manson J held that Swiss-type claims should be interpreted as being infringed if the medicament “is adapted for” administration according to the claimed dosing regimen [FC 163]. (So, the use claims and the Swiss claims both encompass products adapted for the infringing use.) The FCA affirmed:

[78] Similarly, in the context of Swiss-type product claims like those in claims 33 to 48 of the 335 Patent (i.e., claims to the use of a drug for the preparation of a medicament for use in treatment of a condition), evidence that a generic company proposes to make or sell its product for the patented use (even if it is only one use among others) is enough to establish direct infringement in an action brought under section 6 of the PMNOC Regulations

While the point was already established by Hospira, this is helpful in succinctly summarizing the law. It is also helpful in reaffirming the law, which can now be considered settled.


The most important aspect of the decision relates to infringement by inducement, and in particular the second prong of the test for inducement set out in Corlac 2011 FCA 228, which requires that the act of direct infringement was influenced by the alleged inducer. The second prong was determinative at first instance; Manson J found that Janssen had established the first of Corlac factor, namely direct infringement, but not the second, that the acts of direct infringement would be influenced by the alleged inducer [48]. (He did not go on to consider the third factor, the knowledge requirement.)

The FCA reversed Manson J on the second prong, after a thorough review of the caselaw which greatly clarified the nature of the “influence” requirement. It is also significant that this was a decision by the Court, rather than by a single judge with concurrences, as is more usual. The decision is evidently intended to settle this point.

The second step of the Corlac test requires that [46]

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.

On its face this seems to articulate a “but for” test, such that inducement is only established if the direct infringement would not have occurred but for the influence of the indirect party. Accordingly, Manson J explicitly characterized Corlac as requiring “but for” causation [FC 263], as have other cases, such as Bayer 2015 FC 797 [31] and Janssen 2019 FC 1355 [234] (both cited by Manson J). However, in my paper “Is 'But For' Causation Necessary to Establish Inducement?” (available on SSRN), I argued that the jurisprudence is not as clear on the standard for influence as this articulation of the test suggests. There are very few cases which actually apply a “but for” standard. The strongest case supporting a strict “but for” requirement is Slater Steel (1968), 55 CPR 61, 87, which stated that the influence must be the “sine qua non” of the infringement, and even that case is problematic authority, for a variety of reasons addressed in my paper. (And see also Nycomed 2011 FC 1441 affd 2012 FCA 195.) On the other hand, there are other cases, such as Novopharm 2006 FC 1411 affd 2007 FCA 251 and Genpharm 2003 FC 1443 affd 2004 FCA 413, that support a weaker “encouragement” standard.

As discussed here, Manson J acknowledged this apparent split in the caselaw [FC 259–64]. He explained it as a split is between the “earlier cases” [FC 264], and the “more recent cases” [FC 262], saying the earlier cases only required “some nexus” to the generic company [FC 261], while “in more recent cases,” the Court has “scrupulously” applied the Corlac test, “with particular focus on the second prong” [FC 262]. The implication is that Corlac changed the law, or at least the existing standard has been applied more stringently since Corlac. In particular, Manson J stated expressly that “[t]he ‘but for’ influence required in the second prong of the Corlac test requires a higher threshold for establishing inducement than was applied in the earlier cases” [FC 264].

The FCA reversed (all bold is my emphasis):

[82] We agree with Janssen that the Federal Court erred in law in holding that the decision of this Court in Corlac changed the law by incorporating a higher degree of causality at the second step of the analysis for inducing infringement. This error led the Federal Court to incorrectly apply an unduly onerous requirement at the second prong of the analysis for inducement and to incorrectly focus only on the skill and judgement of prescribing physicians to the exclusion of the role played by Teva in inducing infringement of the use claims in suit.

This statement by the FCA is clearly referring to Manson J’s remark at [FC 264], stating that “but for” was a higher standard for causation than had previously been required.

As discussed here, due to redactions in Manson J’s decision, it was not clear to me whether the “but for” element was crucial to his holding, but whether or not it was crucial to the outcome, it is clear that he applied a “but for” standard for causation. The FCA in the above paragraph described this standard as “unduly onerous.” Further, this statement is clearly referring to Manson J’s remark at [FC 264], in which he stated that “but for” was a higher standard than had previously been required. So, while the point might have been made more explicitly, putting these together, this implies that the influence exerted by the inducer need not be the “but for” cause of the direct infringement.

In the course of a thorough review of the caselaw, the FCA also specifically approved two cases articulating an “encouragement” standard. The FCA at [97] quoted with approval Novopharm 2006 FC 1411 [40], [42] affd 2007 FCA 251, in which von Finckenstein found inducement on the basis of a Product Monograph which “would be an encouragement” to infringe. The FCA [98] also quoted a passage from the same decision in which the application judge found the PM would “have the effect of inducing or encouraging” physicians to prescribe for the patented indications. The FCA at [95]–[96] also approved Genpharm 2003 FC 1443 affd 2004 FCA 413, in which “Justice Layden-Stevenson concluded that references (some of them subtle) to the patented use of omeprazole in Genpharm’s PM was sufficient to establish that Genpharm would infringe AB Hassle’s patent if Genpharm’s drug were allowed onto the market” [95] (my emphasis). These references reinforce the view that the FCA is endorsing an “encouragement” standard rather than a “but for” standard at the second prong. Conversely, in discussing Slater Steel, the FCA made no mention of the “sina qua non” passage, but quoted only passages referring to a more ambiguous “induced or procured” test [86].

The FCA also quoted with approval from Hospira 2018 FC 259 [326]–[327], [332]–[333], in which Phelan J held that “Infringement by inducement may be established by inferences reasonably drawn from the contents of the product monograph,” so that the second prong can be established when “the product monograph amounts to instructions or directions for infringement” [333]. In my article, I had suggested that this and other similar cases established a presumption that the physician would follow the directions in the PM, leaving open the possibility that this presumption could be rebutted by evidence showing eg that physicians never read the PM. That is, I took these cases to be saying that inducement “may” be established by showing that the PM instructs infringement, not that it necessarily “would” be established by such a showing. However, the FCA did not make any reference to a presumption, which is noteworthy in itself, as it suggests that these cases are not to be understood as turning on a presumption; the implication is that the instructions to infringe will in themselves establish infringement without the aid of a presumption. The FCA also pointed out that in Windsurfing (1985) 8 CPR(3d) 241 (FCA), the FCA had affirmed a finding of inducement when the inducer had sold a kit accompanied by instructions to assemble the components into a patented product, saying “I think it beyond dispute that the only inference to be drawn from the voluminous evidence in this case is that the respondent knew and intended that the ultimate purchaser would utilize the sailboard parts for the assembly of a usable sailboard which, upon assembly, would infringe the appellant’s patent” [85]. This also implies that strict but for causation is not required; it is enough that the inducer knew and intended the direct infringement.

In light of all this, the FCA reversed Manson J on the basis that he had made an error law at the second step of the Corlac test. The FCA stated:

[110] In the case of a generic drug, 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 in Hospira, AB Hassle, and Novopharm. In such circumstances, the infringing use is one of the bases for approval of the generic drug by Health Canada and one of the uses recommended to physicians. . .

This expressly states that all that is required is “encouragement.”

[112] Here, the Federal Court found that the capable, approved and intended use for the Teva product incorporated all the dosing and administration elements of the product claims, including the use of the continuous maintenance doses claimed in the 335 Patent. This finding inevitably leads to the conclusion that Teva would induce infringement of the use claims. Had the Federal Court properly understood and applied the test for induced infringement, no other conclusion was possible.

The reference to the approved use in [112] and [110] evidently reflects the PM. This is an explicit statement that if the PM instructs infringement, the second prong of the Corlac test is established.

The FCA did not explicitly state that “but for” causation is not required at the second prong, and indeed the Court repeated the Corlac test in very similar terms [109]. Nor did the Court expressly adopt an alternative “encouragement” test. Nonetheless, taken as a whole, it is now clear that in order to establish inducement, it is not necessary to establish that the influencer is or would be the “but for” cause of the direct infringement. It is now clear that the sale of a product accompanied by instructions to use the product in an infringing manner will be sufficient to establish the requisite influence. (Indeed, that is ultimately what happened on remand in Corlac itself: Corlac 2012 FC 76 [16]–[17].) This does not turn on any rebuttable presumption that the end-users will read the instructions and use the product accordingly, as no such presumption was mentioned by the FCA.

This will not affect the outcome in most cases; in the past, a party who sold a product accompanied by instructions to infringe would almost invariably be found to have caused the direct infringement. But the clarification should simplify the litigation. In the past we have seen a number of cases debating whether direct infringers, such as physicians and pharmacists, actually read the PM: see Abbott v Novopharm 2006 FC 1411 [40]; Solvay 2008 FC 308 [192]; Aventis 2006 FC 861 [44]; Allergan 2011 FC 1316 [161]. Presumably such evidence is now irrelevant.

I would also say that the FCA in this case truly did clarify the law. Manson J was not off on some frolic of his own; the view that “but for” causation was required at the second prong had a clear basis in Corlac, and was no doubt the most widespread reading of that decision. On the other hand, this is not a case in which the FCA reversed itself in the guise of clarification. The statement in Corlac was not necessary to the result, and was in tension with the holding and results in other cases, creating a real ambiguity in the law, which has now been resolved.

Finally, I will repeat a point I made in my article, which is that there is a separate question of causation with respect to damages. If infringement by inducement is established, the court may, and almost invariably will, grant injunctive relief. But in order to establish damages, it is necessary for the patentee to prove it suffered losses caused by the infringement, and “but for” causation must be established at that stage. (If an accounting is sought, “Nova v Dow” causation must be established.) In other words, encouragement to infringe is enough to get an injunction, but not enough to get damages.

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