How Effective is the Practice of ‘Skinny Labelling’ to Avoid Patent Infringement?
Major changes to the protection of pharmaceutical formulations were recently made in light of the Australian Full Federal Court decision in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161. As reported by my colleague, Rosemary Manhire-Heath in an earlier article, at present time, these patents for pharmaceutical formulations are no longer eligible for an extension of their patent term, which prior to 1 December 2025 was extension of up to 5 years. Whilst we wait to see if this decision stands in light of Otsuka’s application for special leave to the High Court of Australia, filed on 18 December 2025, at least for now, only patents claiming active pharmaceutical ingredients alone are eligible for patent term extensions.
When seeking registration of the medicine with the Australian Register of Therapeutic Goods (ARTG), generic manufacturers may exclude indications from the product information sheet, a strategy often used by generic companies to “carve-out” their position in the market to avoid patent infringement . This practice is known as “skinny labelling”.. The use of skinny labelling to avoid patent infringement and/or an interlocutory injunction was discussed in two key cases.
Skinny Labelling Case Study 1: Leflunomide
The first case is Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd & Ors [2013] HCA 50, whereby in July 2008, the Appellant Apotex obtained Australian Register of Therapeutic Goods (ARTG) registration of its generic product ‘Apo-Leflunomide’, otherwise known as ARAVA® and had intent to market its generic product for the treatment of rheumatoid and psoriatic arthritis.
Sanofi-Aventis was the owner of the API patent for the compound leflunomide (AU529341) and had a second patent (AU670493) which referred to the use of the product for treating ‘rheumatic complaints’. At the time the patent was filed, this included rheumatoid and psoriatic arthritis – the same indications for which ARAVA® was approved by the TGA. However, the PI sheet stated that ‘Arava is not indicated for the treatment of psoriasis that is not associated with manifestation of arthritic disease’ – though it is now known that patients with psoriatic arthritis are likely to develop psoriasis. The API patent expired in 2004.
In light of Apotex’s registration of ARAVA®, Sanofi commenced proceedings in the Federal Court, claiming that Apotex threatened to infringe AU670493, Sanofi’s medical use patent for using leflunomide for the treatment of the skin disorder psoriasis.
The High Court found that Apotex’s proposed supply of Apo-Leflunomide did not infringe the Sanofi medical use patent. The product information document for Apo-Leflunomide stated that:
‘Apo-Leflunomide is indicated for the treatment of:
- Active Rheumatoid Arthritis
- Active Psoriatic Arthritis.
- Apo-Leflunomide is not indicated for the treatment of psoriasis that is not associated with manifestations of arthritic disease.’
The High Court held that Apotex’s approved product information document did not instruct recipients to use the unpatented pharmaceutical substance in conjunction with Sanofi’s patented method. Specifically, it could not be inferred or shown:
‘…that Apotex had reason to believe that the unpatented pharmaceutical substance, which it proposes to supply, would be used by recipients in accordance with the patented method, contrary to the indications in Apotex’s approved product information document’.
This suggests that the practice of excluding indications from the product information sheet of therapeutic drugs should be a successful defence against infringement, at least in similar circumstances to those of the present case.
Skinny Labelling Case Study 2: Pregabalin
The second relevant case was the case of Warner-Lambert Company LLC v Apotex Pty. Ltd [2014] FCAFC 59, which concerned the compound pregabalin.
In this case, Apotex failed to avoid an interlocutory injunction, even after excision of the indication in question from the product information sheet and the provision of promotional materialstating that the product was not indicated for the excised indication, which concerned the treatment of neuropathic pain. This demonstrates that indirect infringement by supply cannot be avoided if there is at least “reason to believe” that the pharmaceutical compound will be used in an infringing way.
Notably, the Apotex promotional material included:
- A pro forma letter intended to be sent to prescribers who were medical practitioners practising in Australia. The content of which was entitled, “IMPORTANT INFORMATION WHEN PRESCRIBING PREGABALIN”;
- A pro forma letter intended for pharmacists who distribute the prescribed medicine. The content of which was entitled, “IMPORTANT INFORMATION WHEN DISPENSING PREGABALIN”;
- There was also a circular entitled “APOTEX PRODUCT LAUNCH APOTEX-PREGABALIN”
The Full Court ultimately extended the interlocutory injunction to include “any product containing pregabalin which is indicated for ‘adjunctive therapy in adults with partial seizures with or without secondary generalization’ (or any substantially similar indication) but is not indicated for the treatment of neuropathic pain (or any sub-category of neuropathic pain)”. This was because most sales of pregabalin were likely to be for ‘off label’ pain use, given that the market for the treatment of seizure was almost non-existent in Australia, compared to the market for the treatment of pain.
This case therefore highlights the considerations that are important to generic companies who practice skinny-labelling. Specifically, it demonstrates that whether an interlocutory injunction can be avoided will depend on various factors; one of which includes the percentage of the market held by the excised indication. The outcome therefore relies on a thorough assessment to be made on a case-by-case basis.
Tips for Generic Pharmaceutical Companies Seeking Early Market Entry in Australia
The practice of skinny labelling can be an effective defence against infringement, particularly if there is no reason to believe that the generic supplier is using the pharmaceutical product in an infringing way. However, considering real-world markets, this tactic may not be enough to avoid a finding of infringement, especially if it is expected that doctors will prescribe “off-label” use of the product. Australian Courts therefore look beyond the Product Information sheets, taking a number of factors into consideration, including what the promotional materials, conduct and context suggest when assessing whether the skinny labelling genuinely avoids a patented use or if it is simply a tactic for carving a “non-infringing” position on paper.
We therefore advise all our clients in the generic pharmaceutical space to exercise caution when seeking to apply skinny labelling practices. If you have any further questions related to the above article, our specialist pharmaceutical patent team will be happy to assist.
