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Federal Court permits quia timet infringement claim to proceed

The test for sustaining a patent infringement action based on quia timet patent infringement (i.e. a claim based on likely future infringement) requires that the claim allege a deliberate expressed intention to engage in activity the result of which would raise a strong possibility of infringement; the activity must be alleged to be imminent and the resulting damage to the plaintiff must be alleged to be very substantial if not irreparable; and the facts pleaded must be cogent, precise and material: Connaught Laboratories Ltd v Smithkline Beecham Pharma Inc (1998), 158 FTR 194. To date, very few such patent infringement actions have survived a motion to strike. As a result, most infringement actions are commenced only after the alleged infringer has received its notice of compliance (NOC) and/or has launched.

On March 21, 2016, Barnes J. dismissed Teva’s appeal from a decision of Prothonotary Tabib declining to strike out Gilead’s statement of claim for quia timet patent infringement, in circumstances where the earliest Teva could receive its NOC is July 25, 2017 or earlier if the patent is invalidated following a trial commencing on November 28, 2016: Gilead Sciences, Inc v Teva Canada Limited, 2016 FC 336. Thus, Gilead’s claim was permitted to stand.

By way of background, during the pendency of proceedings under the Patented Medicines (Notice of Compliance) Regulations (PMNOC Regulations) related to tenofovir disoproxil fumarate products (Gilead’s TRUVADA and VIREAD), Teva brought an impeachment action related to the two patents that were the subject of those prohibition proceedings (Patents Nos. 2,298,059 and 2,261,619. The Court granted an order of prohibition regarding the ‘619 patent only, which will expire on July 25, 2017 (Gilead Sciences, Inc v Canada (Minister of Health), 2013 FC 1270). Teva discontinued its claim in the impeachment action with regards to the ‘059 patent.

In November, 2015, Gilead sued Teva for infringement of the ‘059 patent, which will expire on July 23, 2018. Teva brought a motion to strike Gilead’s claim. The Prothonotary allowed the action to continue on the basis of amended allegations of quia timet infringement. She inferred that Teva’s submission for an NOC was approvable and was on patent hold and Gilead was permitted to amend to so plead. Taken together with Teva’s stated intention to enter the market with its competing version of Gilead’s product as soon as it obtained its NOC, an amendment to particularize Gilead’s estimate of damages, and sufficient imminence, the Prothonotary was satisfied that the test had been met.

Teva agreed that the Prothonotary identified the right legal test for maintaining a quia timet proceeding, but disputed her application of that test. Specifically, Teva alleged that the temporal aspect of the test requiring imminent harm could not have been met: insofar as its product is on patent hold, an NOC cannot issue until Gilead’s patent is either declared invalid or expires. According to Teva, the alleged infringement could occur in 18 months at the earliest, if ever, which additionally defeats the requirement that the infringement be virtually inevitable.

Justice Barnes found that the evidence showed that Teva had “declared a clear intention” to market its competing product as soon as it could obtain an NOC, which could occur if the patent is invalidated during the impeachment action. He further found that absent contrary evidence from Teva, the Prothonotary’s inference that Teva’s product was on patent hold was “unassailable”. Justice Barnes accepted Teva’s argument that the issuance of an NOC was not inevitable, but found that inevitability was not required. Rather, and as the Prothonotary had held, the law indicated that “a strong possibility of infringement” sufficed.

Justice Barnes disagreed with Teva’s submission that the Prothonotary wrongly conflated the temporal aspect of imminence with the likelihood of an NOC issuing followed by an infringement, finding that she had clearly recognized the temporal requirement:

[31] Finally, I am satisfied that the probability that infringement will occur in July 2017 is sufficiently imminent to justify a quia timet action. The purpose of a quia timet action is to stop an event before it happens. Given that streamlined infringement actions may now be heard and determined in two years, it is neither premature nor pointless to institute such an action 22 months before the occurrence of the event to be avoided. To ask that a plaintiff wait until the event is so imminent that there is not enough time to reasonably bring the proceeding to conclusion would be to doom such actions to failure to achieve their goal or to impose unreasonably tight schedules on the parties and the Court.

However, Justice Barnes also noted that “imminence in the temporal sense may be relevant in the determination of the likelihood of a future event.”

In view of this decision, patentees should consider bringing actions prior to launch, if sufficient facts are available to support a reasonably imminent — 22 months was sufficient in Gilead — issuance of an NOC, coupled with facts to support an intention to launch. Teva may appeal as of right.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.