Canada: Now You See It, Now You Don’t—Infringement By An Intermediate

Last Updated: October 2 2006

Article by Lee Morrisroe, © 2006, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin in Intellectual Property - Special Patent Issue, September 2006.

The recent case of Abbott Laboratories v. Minister of Health and Ratiopharm addressed two notable issues, namely: (i) whether a patent is infringed by the production of a patented compound during an intermediate stage of the manufacture of a drug where the patented compound is not present in the finished drug; and (ii) whether a patent is invalid for anticipation in circumstances where the patented substance was previously made in the course of manufacturing another compound and the patented substance was not known or stabilized prior to the patentee’s invention.

Abbott applied under the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations) for a court order prohibiting the Minister of Health from issuing a Notice of Compliance (NOC) to Ratiopharm to market a generic version of the drug clarithromycin. At the first instance, the application was dismissed on the basis of non-infringement. The Federal Court of Appeal upheld the result, but took a different approach to the issues of infringement and validity.


Abbott manufactures an antibiotic drug named Biaxin. The active ingredient is clarithromycin (6-0-methylerythromycin A). Abbott holds an NOC for Biaxin and markets the drug in Canada.Ratiopharm applied to the Minister for an NOC for its generic version of Biaxin. Although there are no specific patents for clarithromycin per se, there are a number of patents related to methods of manufacturing the compound listed on the patent register maintained by the Minister under the NOC Regulations. This application related to three Abbott patents; the ‘274 patent; the ‘606 patent; and the ‘361 patent; but the issues of particular interest arose in relation to the ‘274 patent. Abbott claimed to have discovered three forms of clarithromycin, which it called Form 0, Form I and Form II. Ratiopharm’s proposed clarithromycin product contained Form II. It was accepted that Form 0 is produced during the process of making Form I or Form II. However, Form 0 is unstable; in fact, if nothing is done to Form 0 it becomes a different form of clarithromycin within a short period of time. It appeared that Form 0 was not identified as a unique substance until it was stabilized by the inventors named in the ‘274 patent.Subparagraph 5(1)(b)(iv) of the NOC Regulations requires that an entity seeking to market a generic version of a drug allege that "no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed."

Federal Court Decision

Ratiopharm asserted that, under the NOC Regulations, Abbott’s patent for clarithromycin Form 0 could only be asserted against the final product produced by Ratiopharm and not against an intermediate. Since its final product does not include Form 0, Ratiopharm argued that it did not infringe. The application judge accepted Ratiopharm’s argument. He acknowledged the existence of case law to the effect that the use of a patented product as an important part of an end product that is not itself the subject of a patent constitutes infringement. He also held, however, that this case law was not applicable to NOC proceedings and that the test to be applied was whether the "medicine" that Ratiopharm intended to market infringed Abbott’s patent. In other words, it was irrelevant whether an intermediate made during the Ratiopharm process infringed since that intermediate was not made, constructed, used or sold as medicine.

The application judge also considered Ratiopharm’s allegations of invalidity in relation to the ‘274 patent. One allegation was that the discovery of Form 0 was "inherent" in the discovery of clarithromycin. However, the application judge found this argument unconvincing. On the issue of inherency, he stated "As far as inherency is concerned, I am not aware of such a concept in Canadian patent law. It seems to me to be merely another label for anticipation." On the evidence before him, he found that anyone following the prior art would arrive at Form I or Form II, not Form 0. The crucial factor, as far as the application judge was concerned, was that until Abbott discovered Form 0, no one else knew of its existence, its characteristics or that it was an unstable polymorph that disappeared upon drying. Ratiopharm’s allegation of invalidity was therefore rejected.

Federal Court Of Appeal Decision

In considering the issue of infringement, the Court of Appeal held that the phrase "making, constructing, using or selling" in subparagraph 5(1)(b)(iv) of the NOC Regulations describes a range of activities that is broader than merely including a patented substance in a proposed new drug. In the Court of Appeal’s view, that phrase was broad enough to include the use of the patented substance at an intermediate stage in the production of the proposed new drug. The making of Form 0 was within the scope of the NOC Regulations whether it was actually found in a finished Ratiopharm product, or was made in the course of making Ratiopharm’s product and ceased to exist once the product was finished. As such, Ratiopharm’s non-infringement allegation was rejected.Moving to the issue of validity, the Court of Appeal felt that the relevant question was simply whether Form 0 was formed in the process of making Form I or Form II, to which the undisputed answer is "yes". The evidence indicated that a skilled practitioner who made Form I or II following the teaching of the prior art would inevitably make Form 0, even if no steps were taken to stabilize it. The fact that Form 0 might not be recognized did not matter.In reaching this result, the Court quoted from British and Canadian case law the maxim that "what infringes if later, anticipates if earlier".Thus, the Court of Appeal agreed with the application judge’s decision to dismiss Abbott’s application for a prohibition order in respect of the ‘274 patent, but for different reasons. The Court of Appeal’s view was that the application should not have been dismissed on the basis that Ratiopharm’s allegation of non-infringement was justified. Rather, it should have been dismissed on the basis that Ratiopharm’s allegation of invalidity due to anticipation was justified.The Federal Court of Appeal’s decision could have significant ramifications on the Canadian law of anticipation.


If a product is publicly disclosed and it is possible to reverse engineer it so as to identify the invention, then that is clearly anticipation. However, the Court of Appeal seems to have relied upon an inherent anticipation argument without addressing whether the prior art met the test set out in the Patent Act, namely, was the patented subject matter disclosed before the claim date in such a manner that the subject matter became available to the public in Canada or elsewhere? In prior cases, such as Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., in which courts had accepted that infringing acts must necessarily constitute anticipation if occurring early enough, there was a public disclosure. In the present case, however, the Court seemed to base its finding of anticipation not on the wording of the Patent Act, but instead on the following two principles: (i) for prior art to anticipate, it must disclose subject matter which, if performed, would necessarily result in infringement; and (ii) if lack of knowledge is not a defence to infringement then, as a matter of fairness, knowledge of the workings of the prior act should not be a prerequisite for anticipation.

Leave to appeal has been sought, so the Supreme Court of Canada may, if it chooses to hear the case, provide further guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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