Digest of the Week | Non-Infringing Alternative

Intellectual Property — Patents — Actions for Infringement — Defences — General Principles

Plaintiff pharmaceutical company had received four patents for antibiotic cefaclor in 1980's, which were set to expire between October 1999 and July 2000 — In 1996, defendant pharmaceutical company was advised that it would face infringement action by plaintiff if it entered market with generic version of cefaclor — After defendant filed its first notice of compliance for antibiotic in 1997, it began selling its various capsules of cefaclor on Canadian market — In 1998, defendant entered into new contract with company to have cefaclor be made through new process thereby designing around plaintiff's patent by creating cefaclor 2 — Plaintiff brought successful action against defendant alleging that defendant infringed its patents for manufacture of antibiotic cefaclor — Trial judge found that defendant was not entitled to benefit of "non-infringing alternative" (NIA) defence and in reaching this conclusion, court rejected defendant's arguments regarding causation, applicability of Patented Medicines (Notice of Compliance) Regulations, applicability of U.S. jurisprudence, and economic logic — April 19, 2000 was found to be date on which defendant could have produced non-infringing cefaclor, as it was date that last of relevant patents expired and defendant had offered no evidence that its wish to add cefaclor to its portfolio would have prompted it to seek out non-infringing method prior to patent expiry — Defendant appealed — Appeal allowed in part — It was found that there was not sufficient evidence for trial judge to conclude that cefaclor 2 was objectively commercially viable substitute — Trial court was looking for persuasive evidence from defendant to effect that, had it not used infringing process in 1997, it would have sought out non-infringing process before 1998 and court found there was no such persuasive evidence — Based on quantities of cefaclor 2 produced, it would have been open to trial court to conclude that defendant had met its burden regarding capacity to obtain cefaclor 2 to enter market, but trial court found it would not have entered market at that time and trial court was ultimately correct to concluded that NIA defence was not available to defendant in this case.