On May 22, 2014, the Federal Court of Canada issued an injunction curtailing Janssen Inc.’s marketing of its drug ustekinumab (STELARA®) in ongoing patent litigation with AbbVie Corporation and related companies. The Court had previously found that certain claims of the patent in issue were both valid and infringed. This most recent decision addressed whether AbbVie was entitled to an injunction and, if so, under what terms and conditions, if any. The remaining bifurcated issues as to damages or profits are scheduled to be heard in September 2015.
Background of the case
The Court at the outset distinguished this case from most other patent cases on the basis that, while AbbVie sells a product in Canada which competes with Janssen’s STELARA product, AbbVie’s product does not fall within the scope of the patent claims at issue. In fact, no one, other than Janssen, sells a product in Canada that comes within those claims. The Court also acknowledged the apparent medical need for STELARA, as at least a portion of psoriasis sufferers in Canada require it for the effective treatment of their condition.
In these unique circumstances, the Court felt compelled to balance AbbVie’s rights to the exclusive use of its claimed invention with a medical need by some members of the Canadian public to have continued access to the infringing drug that Janssen was desirous of continuing to sell.
Permanent injunctions usually follow findings of infringement and validity in Canadian patent cases
Reciting well-established patent jurisprudence, the Court confirmed that a permanent injunction will normally follow once the Court has found that a patent is valid and has been infringed. An injunction will be refused “only in very rare circumstances”. The Court added that the three-part test for interlocutory injunctions does not apply for final or permanent injunctions. Rather, to obtain a final or permanent injunction, a party need only establish its legal rights, and the Court need only assess the appropriateness of an injunction. Irreparable harm and balance of convenience, per se, are thus not relevant, though they may inform the determination as to the appropriateness of an injunction.
The Court did however note the rare situation of the Unilever case where a final injunction was not ordered due to a unique set of facts, including that: the patent had less than two years of life left; the patentee did not sell a product that came within the scope of the patent, although it sold a competitive product; and, the defendant’s product was made by people with disabilities, who were otherwise unemployable (and particularly vulnerable given the economic recession at the time of the decision).
The unique injunction crafted by the Court
In determining the appropriateness of a permanent injunction, the Court considered the following: (a) what are the plaintiffs requesting? (b) what is the defendant proposing? (c) what interests are the plaintiffs seeking to protect? (d) what interests is the defendant seeking to protect? and (e) what interests does the public have?
The Court noted, among other things, that the injunction requested by the patentee, AbbVie, comprised certain significant exceptions, such as the continued use of STELARA by existing patients and the use by new patients in particular circumstances. The Court also highlighted its finding that, for some patients in Canada, there is no alternative to STELARA in the effective treatment of their psoriasis. This case was therefore unlike numerous other patent actions where the subject matter of the patent is directed to something that is readily replaced by, or substituted with, another equivalent or otherwise suitable product. In such cases (e.g., a watch or bicycle), the public may lose its ability to acquire or use one such product, but it can readily access a reasonable alternative. The Court therefore found it necessary to keep in mind the needs of the public at large.
Ultimately, the Court granted an injunction, which it designed to curtail the marketing of STELARA while ensuring that medical information on the product continued to be available. Unlike a traditional injunction, which would have more fully prevented Janssen from continuing to deal in STELARA, this injunction notably permits physicians to continue prescribing STELARA to patients already receiving that drug and to new patients, provided that their own physicians have determined that STELARA is necessary for treatment of their psoriasis. In addition, Janssen will be required to pay a royalty to AbbVie for any continuing sales.
The Court rejected certain terms requested by AbbVie, namely, that:
- physicians certify the need for STELARA. Such rigour is overly restrictive and too skeptical of the integrity of doctors. The Court did however enjoin Janssen from influencing doctors;
- Janssen notify provincial drug formularies about the injunction and its terms, thus potentially impacting the provision of and funding for STELARA. Rather, the Court left Janssen to do so if required by law, and AbbVie to provide information as may be necessary;
- Janssen be ordered to comply only with lawful requests from Health Canada. The Court found that Health Canada would not knowingly make an unlawful or frivolous request; and
- Janssen issue a letter to physicians advising of the patent at issue and the outcome of the proceeding. AbbVie could do so itself if it so desired.
The Court also prohibited Janssen from conducting phase IV trials, unless required by law to do so. To do otherwise, the Court held, would undermine the terms of the injunction, as such trials would require Janssen to recruit new patients.
Finally, the Court declined to stay the injunction for a period of time. The Court held that a party seeking a stay must provide some evidence as to hardship and found no such evidence on the record. To the contrary, the Court noted that Janssen became aware of the risk of an injunction shortly after launching its STELARA product and pursued that market despite the risk. Further, the terms of the injunction did not prevent Janssen from marketing STELARA altogether, but rather merely curtailed some of its activities.
Impact on future patent cases
This decision of the Federal Court of Canada illustrates the flexibility of the Court to tailor an equitable remedy, such as an injunction, to the particular facts of a case. In addition, the decision demonstrates that the Court will uphold the long-standing and general practice to grant permanent injunctions in favour of a successful patentee unless there are exceptional circumstances, such as a particular public interest in the invention as was found in this case. Where consumers or the public at large may replace or substitute an infringing product for a reasonable alternative product, the Court will be more inclined to grant a permanent injunction, particularly where, as in this case, the patentee has a competing product even if such product is outside the scope of the claims at issue.
It remains to be seen what particular impact this decision will have on other patent litigants in Canada who are seeking permanent injunctions in cases where there may be arguments against the granting of such injunctions. For example, the Federal Court of Canada has yet to adjudicate any patent trials involving non-practicing entities (NPEs) or patent assertion entities as plaintiffs. In the United States, since the U.S. Supreme Court’s decision in eBay, NPEs are frequently denied permanent injunctions. In eBay, the Supreme Court reasoned that where an NPE’s threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest.
Accordingly, it is anticipated that future decisions in Canada that consider the appropriateness of permanent injunctions will strive to strike a balance between the general practice of granting permanent injunctions in favour of a successful patentee with carefully considering whether there are any exceptional circumstances that run counter to the granting of a permanent injunction. Important considerations for the Court may include whether the infringing product may be substituted with a reasonable alternative, and whether, based on the particular interests of the parties and the public at large, damages alone may be sufficient compensation. For example, where an NPE uses the threat of an injunction for undue leverage, does not have a competing product or other particular interest in the market, is only interested in obtaining licensing revenues, and would enjoy a greater financial benefit with ongoing and/or future royalties, there may be an argument that damages alone are adequate; however, such an argument would need to be balanced against the general practice of granting permanent injunctions, particularly where an infringing product may be substituted with a reasonable alternative.