Eli Lilly granted leave to add new cause of action of direct infringement of "composition for use" claims, absent allegation of direct infringement by patients

(Updated October 1, 2019)

On July 3, 2019, Eli Lilly was granted leave to amend its pleadings to introduce a new cause of action for direct infringement of claims relating to a new use without including an allegation of infringing use of the product by a direct infringer: Eli Lilly Canada v Apotex, 2019 FC 884. The Court, however, ordered that all issues related to the new cause of action are to be bifurcated and tried at the quantification phase, after all other issues have been determined.

Background

The underlying actions were brought by Eli Lilly against Apotex, Teva, Pharmascience/Riva, and Mylan (collectively, the Defendants) for infringement of four patents related to the drug tadalafil (Eli Lilly’s CIALIS). The generic manufacturers—apart from Apotex, which received approval earlier—received notices of compliance (NOCs) to sell tadalafil immediately after the expiration of Eli Lilly’s patent (784 patent) claiming use in the treatment of erectile dysfunction (ED). Their product monographs included treatment of ED in the indication statements. Each of the Defendants counterclaimed for a declaration of invalidity of each asserted patent. Construction and invalidity issues will be tried together, whereas infringement and compensation issues will be tried subsequently, in separate trials.

Proposed amendments

Just under nine months before the joint construction/invalidity trial, Eli Lilly sought leave to amend its pleadings to introduce new allegations against all the Defendants for infringement of the 784 patent by the manufacturing, importing and stockpiling of tadalafil for ED, and for springboard damages.

Decision granting leave to amend

Proposed amendments disclosed reasonable cause of action. The Defendants argued there was no reasonable cause of action as infringement of a use claim requires satisfaction of the tri-partite test for inducing infringement, which requires a finding of direct infringement (e.g. by patients). Here, Eli Lilly could not establish such direct infringement while the patent was still extant, as the Defendants did not receive their NOCs until the 784 patent expired. The Court noted that such defence had not previously been recognized in the jurisprudence on similar facts, and thus it was not plain and obvious that Eli Lilly’s new claim would fail. The Court instead found that the jurisprudence recognizes that claims for “a composition for use in the treatment of” can be construed as claiming a specific product and are therefore susceptible to direct infringement by manufacture for the purpose of the claimed use. Accordingly, as a claim for a vendible product can be directly infringed by making, importing or stockpiling the product, even if there has been no infringing use of the product by a direct infringer, Eli Lilly’s new claim was reasonably arguable.

Sufficient material facts were alleged. The Court found that it was reasonable that the allegations of importing and possession for commercial sales, to the extent based on the inference drawn from the date of first sales and from commercial practices gleaned through discovery, were sufficient to support direct infringement.

Prejudice addressed by bifurcation of new cause of action. The Court acknowledged that requiring the Defendants to prepare for trial on a new cause of action in less than nine months would be “unprecedented” and that the amendments were not brought in a timely fashion. To avoid prejudice to the Defendants, discoveries and determination of the new issues were ordered bifurcated, to proceed along with the issues of quantification after the first phase of the action.