This country-specific Q&A provides an overview of the legal framework and key issues surrounding patent litigation law in Canada.
This Q&A is part of the global guide to Patent Litigation.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/patent-litigation/
What is the forum for the conduct of patent litigation?
Patent infringement actions in Canada can be heard in the first instance in either the Federal Court or in an appropriate court in one of the Canadian provinces. The Federal Court is a Court of national jurisdiction. Further, the Federal Court has exclusive jurisdiction over patent impeachment actions by which the Court can order that the Canadian Patent Office expunge a patent from the register. As such, the majority of patent infringement actions in Canada are brought in the Federal Court. While the Federal Court does not necessarily have patent specialists or technical Judges, many of the Judges have considerable experience with patent litigation.
References to the courts and their procedures throughout this paper are with respect to the rules and procedures of the Federal Court system, except where there is express reference to the provincial courts systems. While the substantive law of patent litigation will be the same throughout all jurisdictions, and the various provincial courts systems and procedures are similar to that of the Federal Court, there can be some differences.
What is the typical timeline and form of first instance patent litigation proceedings?
A patent infringement action will typically include at least pleadings, documentary and oral discovery, exchange of expert reports and trial before a Judge (no juries). The issues of infringement and validity (if raised) are typically heard and decided together with claims construction at trial.
It typically takes 2-3 years to obtain a first instance decision on infringement and validity. Many patent litigation proceedings in the Federal Court are specially managed, where a Judge or Prothonotary oversees the procedural aspects of the court to expedite the proceedings. Such proceedings can also be expedited, in which case the court will endeavour to have the action tried within two years of commencement.
Parties often consent to sever or bifurcate the issues of the quantification of damages/profits from the issue of liability. In the absence of consent, a party can bring a unilateral motion for bifurcation.
Can interim and final decisions in patent cases be appealed?
Interlocutory decisions within Federal Court proceedings will often be heard by a Prothonotary, and decisions of a Prothonotary are subject to appeal as of right to a Judge. Certain types of interlocutory proceedings as well as trials can only be heard by a Judge.
Appeals from interlocutory and final decisions of Judges of the Federal Court are available as of right to the Federal Court of Appeal.
Decisions of the Federal Court of Appeal may be appealed to the highest court, the Supreme Court of Canada, only with leave of the Supreme Court.
Which acts constitute direct patent infringement?
Direct infringement includes any act in Canada during the term of the patent and without the patentee’s consent which interferes with ‘the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used.’ (Patent Act, RSC 1985, c P-4, s. 42). The definition of ‘use’ of an invention has been broadly defined as any interference, in whole or in part, directly or indirectly, in the exclusive rights of a patentee.
Do the concepts of indirect patent infringement or contributory infringement exist? If, so what are the elements of such forms of infringement?
Indirect infringement (referred to as inducing infringement in Canada) occurs where a person induces or procures another person to infringe a patent. There are three elements required for a defendant to be found liable for indirect infringement:
a) A direct infringer has infringed the patent;
b) The completed act of direct infringement was influenced by the alleged inducer, such that without the influence, the direct infringement would not have otherwise occurred; and
c) The alleged inducer knowingly exercised this influence, in that they knew that the influence would result in the direct infringer engaging in the activity that is ultimately found to be infringing.
There is no recognized cause of action of “contributory infringement” in Canada.
How is the scope of protection of patent claims construed?
The scope of protection afforded to a granted patent is defined by the claims as purposively construed by the courts. The aim is to identify the words or phrases in the claims which describe the essential elements of the invention. The patent will be construed from the perspective of a person skilled in the art based on a reading of the patent specification as a whole, including the claims description and drawings, as of the date of publication.
In order to find infringement, the defendant’s apparatus, method or process must contain all essential claim elements of the subject claim(s) of the patent. Infringement can still be found where non-essential claims are missing or have been substituted.
Until recently, there was no prosecution or “file-wrapper” estoppel in Canada. However, as a result of recent legislative amendments, written communications between the applicant/patentee and the Commissioner, an officer or employee of the Patent Office or member of a re-examination board can now be introduced as evidence to rebut a patentee’s representations on claim construction.
What are the key defences to patent infringement?
Non-infringement: The defendant can plead that its activities are not an infringement of the asserted claim(s) as properly construed.
Invalidity: The defendant can challenge the validity of the asserted claim(s) on various bases (see Question 8).
Experimental Use: Based on the common law doctrine of experimental use, a defendant has historically been able to argue that the impugned acts are exempt from infringement if done privately and on a non-commercial scale or for a non-commercial purpose. New legislative amendments now include a codified exception where the allegedly infringing act was done solely for the purpose of experiments that relate to the subject matter of the patent. The full scope of this statutory exception has yet to be determined by the Courts.
Regulatory Use: It is not infringement where a person makes, constructs, uses or sells a patented invention ‘solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction use or sale of any product.’ (Patent Act, s. 55.2(1)). While it is still an open question, this exemption may be limited to activity related to generic pharmaceuticals in the context of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133.
Licence: A valid licence (express or implied) issued to the alleged infringer to engage in the impugned acts is a complete defence to the alleged infringement.
Exhaustion: Where a buyer purchases a patented article, there is a presumed implied licence to use, sell or deal with that patented article, subject to any restrictions imposed on the buyer by the patentee at the time of purchase.
Prior User Rights: Recent legislative revisions appear to have expanded the scope of prior user rights in Canada. Generally, if before the relevant date a person committed an act (in good faith) which would otherwise constitute infringement, it will not be an infringement if the person commits the same act on or after the relevant date. The full scope of protection afforded by the new amendments has yet to be determined.
This exception to infringement is generally unavailable where the person’s actions were only possible because they obtained knowledge of the claimed invention directly or indirectly from the patentee, whom they knew to be the source of the knowledge.
Time Limitations: In some circumstances, the defendant can assert defences based on statutory limitation periods (see Question 20), or based on common law equitable defences such as laches, acquiescence and estoppel.
What are the key grounds of patent invalidity?
Anticipation: Anticipation is concerned with whether the claimed subject matter was both disclosed and enabled by a single prior art reference, whether that reference was written, used, or otherwise available to the public in Canada or internationally. The disclosure requirement is met where the single reference includes all information which is needed to produce the claimed invention. The enablement requirement is met where the person skilled in the art would be able to produce the claimed invention without the exercise of any inventive skill.
The relevant date for considering anticipation is the patent’s Canadian filing date or, if available, priority date (for 3rd party disclosures), or one year prior to the Canadian filing date (for disclosures made by the applicant).
Obviousness: A patent claim is invalid if its subject matter would have been obvious to a person skilled in the art based on information that was available to the public before the claim date (the Canadian filing date, or if available, priority date). The steps in determining whether a claim is obvious as of the relevant date are:
- Identifying the notional “person skilled in the art”;
- Identifying the relevant common general knowledge of that skilled person;
- Identifying the inventive concept of the asserted claim, or where that cannot readily be done, construing the claim;
- Identifying what, if any, differences exist between the matter cited as part of the state of the art, and the inventive concept of the claim (or claim as construed); and
- Determining whether said differences constitute steps which would have been obvious to the person skilled in the art (as viewed without any knowledge of the alleged invention as claimed). Depending on the circumstances, the analysis may also include a consideration of whether it was “obvious to try”, which may consider factors such as the climate of the field at the time of the invention, attitudes, trends prejudices and expectations, as well as secondary factors such as commercial success/meritorious awards, but must not include any hindsight analysis.
Inutility: As an invention is required to be useful, any claim which is not useful is invalid for inutility. In determining whether a claim has sufficient utility, courts will identify the subject matter of the invention by construing the claims, and will ask whether the subject matter is useful – that is, capable of a practical purpose. Even a scintilla of utility may suffice. The inventor must have either demonstrated or soundly predicted the utility of the invention at the time of filing the patent.
Insufficient Disclosure: Where a patent specification fails to correctly and fully describe the invention and its operation or use as contemplated by the inventor, it is invalid for insufficiency.
Ambiguity: Patent claims must define distinctly and in explicit terms the subject matter of the invention for which an exclusive privilege or property is claimed.
Double-Patenting: Double patenting occurs where a patent claims the same subject matter of an invention that was claimed in an earlier patent. There are two types of double-patenting:
- ‘Conterminous’ double patenting: One or more claims of a patent are identical to one or more claims of an earlier patent.
- ‘Obviousness’ double patenting: The subject matter of a patent is obvious in view of an earlier patent.
Overbreadth: The monopoly of the patent must not exceed the invention made by the inventor, or the invention disclosed in the specification of the patent.
Non-Patentable Subject Matter: Invention ‘means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.’ (Patent Act, s. 2). The courts in Canada have recognized various classes of non-patentable subject matter, including higher life forms, methods of medical treatment, and other methods involving professional skill.
Wilful Material Misstatements: A patent is void if any material allegation regarding the patent in the applicant’s petition is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is wilfully made for the purpose of misleading.
How is prior art considered in the context of an invalidity action?
As discussed further in Question 8 above, prior art will be considered for some, but not all, grounds of invalidity. Whether a disclosure will constitute prior art will also depend on the date of the document
Can a patentee seek to amend a patent that is in the midst of patent litigation?
Re-examination: Any person (patentee or third party) may request re-examination of a claim of a patent at any time by filing with the Commissioner prior art, identifying the relevance of the prior art and the manner of applying it to the claim to be re-examined, and by paying a prescribed fee. A re-examination process can result in the original patent claims being upheld, found to be invalid, or amended.
Third parties do not have a right to participate in the re-examination proceedings beyond the initial filing of the prior art. Further, if the re-examination board determines that the request does not raise any substantial new questions affecting the patentability of the claim, the requesting party has no right to review or appeal. For these reasons, expungement actions in the Federal Court are typically preferred over re-examination proceedings.
The Federal Court has held that it can stay re-examination proceedings pending ongoing infringement proceedings, but it is unclear whether the court would be willing to stay an infringement action pending the determination of a re-examination proceeding.
Disclaimer/Reissue: In appropriate circumstances, disclaimer or reissue of a patent may also be available to a patentee. A disclaimer may be brought at any time but should be sought without delay when the defect is determined. A reissue can be sought within four years of grant.
Is some form of patent term extension available?
A Canadian patent has a term of 20 years from its Canadian filing date. Pursuant to recent amendments, where specific criteria are met, certain pharmaceutical patents may be eligible for extensions of up to 2 years through obtaining a Certificate of Supplementary Protection.
How are technical matters considered in patent litigation proceedings?
In Canadian patent litigation, it is typical for each party to submit evidence from an expert or experts of their choice, which typically takes the form of an affidavit or report, provided in advance of the expert giving evidence at trial. An expert has a duty to assist the court and provide an independent and unbiased opinion about matters within their expertise. The expert will likely be cross-examined for the first time at trial, as there is no right to pre-trial discovery of expert witnesses in the Federal Court.
Is some form of discovery/disclosure and/or court-mandated evidence seizure/protection (e.g. saisie-contrefaçon) available, either before the commencement of or during patent litigation proceedings?
A party to a Federal Court action must serve an Affidavit of Documents which lists all relevant non-privileged and privileged records that are, or were, in the party’s power, possession or control, or which they believe are in the power, possession or control of a non-party. A party must also produce to all other parties the non-privileged records in its power, possession or control.
Following documentary discovery the parties have a right to oral discovery of the parties adverse in interest to them in the litigation. A party adverse to the patentee is also permitted to examine any assignor of the patent, including named inventors. Documentary and oral discovery of third parties is available only by Court Order.
In exceptional circumstances, a person may seek additional injunctive relief outside of the discovery process, such as Norwich Orders requiring a person to participate in discovery in advance of the commencement of proceedings, or Orders for seizure such as Anton Piller Orders which allow a person to seize and preserve relevant evidence where it is established, among other things, that there is a real possibility the evidence would otherwise be destroyed.
Are there procedures available which would assist a patentee to determine infringement of a process patent?
There is robust document and oral discovery which provides the plaintiff with an opportunity to receive information on the defendant’s impugned process.
Additionally, where infringement of a patent granted for a process for obtaining a new product is alleged, ‘any product that is the same as the new product shall, in the absence of proof to the contrary, be considered to have been produced by the patented process.’ (Patent Act, s. 55.1). As such, provided that the plaintiff can demonstrate that the product in question is “new” and that the allegedly infringing product is the same, there is a presumption of infringement and the burden of proof will shift to the defendant to provide “proof to the contrary”.
Are there established mechanisms to protect confidential information required to be disclosed/exchanged in the course of patent litigation (e.g. confidentiality clubs)?
Parties in Federal Court patent litigation have historically obtained Protective Orders from the Court on consent which place heightened restrictions on the parties with respect to the treatment of confidential information exchanged during the course of the litigation. These Orders have supplemented the general implied undertaking at common law which prohibits a party from using documents produced by the other parties for any purpose other than the proceeding within which they were produced. This practice, however, is currently in flux, and patent litigators are waiting for further clarification from the Federal Court of Appeal.
Additionally, a party can also seek a “Confidentiality Order” from the Court that would provide for the treatment of information as confidential before the Court such that it is not publically available.
Is there a system of post-grant opposition proceedings? If so, how does this system interact with the patent litigation system?
Canada does not have a system of post-grant opposition proceedings. If a party wants to challenge the validity of a patent, they need to commence a patent impeachment action before the Federal Court or commence re-examination proceedings before the Patent Office (see Question 10).
To what extent are decisions from other fora/jurisdictions relevant or influential, and if so, are there any particularly influential fora/jurisdictions?
Canadian courts, including the Federal Court, will consider decisions from other foreign jurisdictions. The level of influence afforded to a foreign decision will depend in part on similarities between the law of Canada and the law of the foreign jurisdiction with respect to the issue at hand, even where there is no precedent in Canada law for a certain issue.
Foreign decisions, including with respect to equivalents of a Canadian patent, will not typically be binding on Canadian courts.
How does a court determine whether it has jurisdiction to hear a patent action?
As discussed above, the Federal Court and the appropriate provincial courts can hear patent infringement actions, but only in respect of Canadian patents, and not foreign patents. Additionally, the Federal Court has the exclusive jurisdiction to hear impeachment proceedings with respect to Canadian patents and expunge said patents from the register. The provincial courts can only declare a patent to be invalid as between the parties to the litigation.
Due to the principles of comity, anti-suit injunctions are available but are extremely rare. For example, they are issued only where a foreign court has assumed jurisdiction on a basis that is inconsistent with Canada’s rules of private international law relating to forum non conveniens such that it results in injustice to a litigant or potential litigant in the Canadian courts.
What are the options for alternative dispute resolution (ADR) in patent cases? Are they commonly used? Are there any mandatory ADR provisions in patent cases?
The most commonly used ADR procedures include negotiation, mediation, mediation-arbitration and binding or non-binding arbitration.
ADR requirements will depend on the governing courts system. The Federal Court does not presently require mandatory ADR in all patent cases, however ADR may be ordered by the Court or elected by the parties.
What are the key procedural steps that must be satisfied before a patent action can be commenced? Are there any limitation periods for commencing an action?
Once a Canadian patent has issued, a party may commence a patent action in the Federal Court. There is no requirement to serve a cease and desist letter or take other steps prior to commencing a patent action, however, new rules in the Patent Act require that any written demands comply with certain prescribed requirements, not as yet enacted. The regulations once enacted are expected to address bad faith allegations which fail to contain sufficient information to enable the recipient to assess its merits.
Pursuant to the Patent Act, a patentee cannot recover damages or profits for infringing conduct that occurred more than 6 years before the commencement of the infringement proceeding with respect to patents issued from applications filed on or after October 1, 1989. For patents issued from applications filed before these dates, the limitation period may be governed by the provincial legislation of the province where the infringing activities occurred, depending on the circumstances, and may be as short as two years. In some situations a patentee’s delay in asserting its rights may also lead to various common law equitable defences such as laches, acquiescence or estoppel.
Which parties have standing to bring a patent infringement action? Under which circumstances will a patent licensee have standing to bring an action?
A patentee and all persons claiming under the patentee can bring an infringement action. A person claiming under the patentee is someone who whether as a user, assignee, licensee or lessee has a title or a right that can be traced back to the patentee.
Where a person claiming under the patentee brings a patent infringement action, they must include the patentee as a party to the litigation – either as a plaintiff on consent, or as a named defendant.
Who has standing to bring an invalidity action against a patent? Is any particular connection to the patentee or patent required?
Impeachment proceedings may be commenced by ‘any interested person’ (Patent Act, s. 60), which has been interpreted broadly to include any person who is in competition with the patentee, who has been sent a cease and desist letter, or who has been otherwise accused of infringing a claim of the patent.
Are interim injunctions available in patent litigation proceedings?
Interim and interlocutory injunctions are available, but historically have been rarely granted in patent litigation proceedings. A moving party must satisfy a three-part test:
- There is a serious question to be tried;
- The claimant will suffer irreparable harm if the injunction is refused; and
- The balance of convenience favours the granting of an injunction.
Such injunctions are typically difficult to obtain in patent infringement proceedings, where claimants face difficulty in proving that the harm is irreparable because in most cases the courts have found that damages would be adequate compensation. However, the Federal Court has in recent times indicated that it is open to considering injunctions in appropriate circumstances, and has recently granted an interlocutory injunction in a patent case.
What final remedies, both monetary and non-monetary, are available for patent infringement? Of these, which are most commonly sought and which are typically ordered?
There are a number of different remedies available to successful plaintiffs in patent infringement actions:
Monetary Remedies: A successful patentee is often able to elect between damages suffered as a result of infringement and an accounting of the profits of the infringer.
Damages. A patentee (or person claiming thereunder) has a statutory right to damages for infringement, which are calculated based on the principle of restoration –to restore the claimant to the position it would have been in but for the infringement. This typically involves damages based on lost sales or a reasonable royalty.
Accounting of Infringer’s Profits. Instead of damages, a patentee may, at the court’s discretion, elect the equitable remedy of an accounting of the infringer’s profits resulting from the infringement.
Pre-grant Reasonable Compensation. A patentee or person claiming under the patentee is entitled to ‘reasonable compensation’ for any damages resulting from actions of the defendant taking place between the date of publication of the patent and the grant of the patent that would have constituted infringement if the patent had been granted on the date of publication. This is typically calculated as a reasonable royalty.
Interest. Pre-judgment and post-judgment interest is commonly awarded in Federal Court patent proceedings.
Permanent Injunctive Relief: Although permanent injunctive relief is an equitable remedy ultimately at the discretion of the Court, it is commonly granted to successful plaintiffs (see Question 26).
Delivery up/Destruction of Infringing Goods:A successful plaintiff may obtain an order that the defendant deliver up or destroy all infringing articles in its possession.
On what basis are damages for patent infringement calculated? Is it possible to obtain additional or exemplary damages?
- Damages are calculated either as (a) the claimant’s lost profits from sales lost as a result of the infringement, or (b) as a reasonable royalty for use of the patented invention.
- Assessing lost profits involves the Court determining what portion of the defendant’s sales would have been captured by the plaintiff if the infringing good had not entered the market. The quantum of damages may be reduced by the existence of a non-infringing alternative.
- A reasonable royalty is the hypothetical rate that the infringer would have paid to licence the patent if he had not infringed it. The question is what rate would have resulted from hypothetical negotiations between a willing licensor and licensee.
- Punitive or exemplary damages are available in Canada, but are awarded only where a defendant’s conduct has been malicious or strongly reprehensible. Wilful infringement is typically insufficient on its own to meet this threshold.
How readily are final injunctions granted in patent litigation proceedings?
As discussed above, although permanent injunctive relief is an equitable remedy at the court’s discretion, it is typically awarded where the court has found a patent to be valid and infringed.
Are there provisions for obtaining declaratory relief, and if so, what are the legal and procedural requirements for obtaining such relief?
A person who has reasonable cause to believe that a process used or proposed to be used, or any article made, used, sold or proposed to be made, used or sold by him may be alleged to constitute patent infringement can commence proceedings in the Federal Court against the patentee for a declaration of non-infringement (Patent Act, s 60(2)). A declaration of non-infringement can also be sought by way of counterclaim in a patent infringement proceeding.
As discussed above, expungement proceedings can also be brought in the Federal Court, in which the party bringing the proceedings would typically seek a declaration of invalidity.
What are the costs typically incurred by each party to patent litigation proceedings at first instance? What are the typical costs of an appeal at each appellate level?
The costs of litigation will depend greatly on the complexity of the litigation and the subject patent(s), as discussed further below.
Can the successful party to a patent litigation action recover its costs?
Costs are within the discretion of the Federal Court, which may consider anything it considers relevant. Some factors the Court will consider include the outcome of the litigation, the importance and complexity of the issues, the apportionment of liability, and the conduct of the parties.
The successful party is typically entitled to reimbursement of a portion of its legal fees (typically calculated in accordance with a legislative tariff), plus reasonable disbursements, including expert fees. However, the Federal Court can also choose to award a lump sum, calculated as a percentage of the actual legal fees of the party, or in exceptional circumstances, the Court may award full indemnity of the lawyers’ fees.
A plaintiff may be required to pay security for costs into the Federal Court; for example, where the plaintiff is resident outside the jurisdiction and there is reason to believe it has insufficient assets within Canada to satisfy a potential costs award.
The Federal Court will also consider formal settlement offers which meet certain prescribed requirements in calculating the costs to be paid. Where a party makes a written offer to settle that is not accepted by the other side and the offering party obtains a judgment equally favourable to, or more favourable than, the offer, the offering party will be entitled to double costs under the tariff beginning from the date of the offer.
What are the biggest patent litigation growth areas in your jurisdiction in terms of industry sector?
Changes in September 2017 to the Patented Medicines (Notice of Compliance) Regulations, which relate to pharmaceutical products in Canada, ended the dual litigation procedures available to innovative drug companies whereby they could first bring a proceeding seeking Health Canada to refrain from issuing a Notice of Compliance for a generic product and if unsuccessful bring separate patent infringement proceeding. Now, an innovative drug company can seek all relief only via a single, patent infringement proceeding. In view of these changes, the number of pharmaceutical patent infringement actions is expected to increase.
It is also expected that other recent changes in Canadian patent legislation and practice will result in growth opportunities in patent litigation across all industries. In particular, as discussed above, the Federal Court appears to be increasingly willing to consider interlocutory relief such as interlocutory injunctions, as well as summary relief including summary judgement or summary trial
What do you predict will be the most contentious patent litigation issues in your jurisdiction over the next twelve months?
Patent litigators are awaiting the implications of various recent legislative amendments discussed above, including the introduction of file-wrapper estoppel, the new prior-user provisions, and the specific requirements for written demand letters (see Questions 6 and 20).
Additionally, earlier this year the Federal Court issued a decision which departed from the traditional test for obviousness and held that prior art considered for obviousness no longer needed to be that which could be located from a ‘reasonably diligent search’. This is expected to result in an increase of discussion surrounding what prior art is citable in an obviousness analysis.
It is also expected that there will be continued evolution in the law of utility as a result of a 2017 Supreme Court of Canada decision which struck down the ‘promise doctrine’. Pursuant to this doctrine, if a patent had promised a specific utility, the invention would lack utility if that promise was unfulfilled.
Which aspects of patent litigation, either substantive or procedural, are most in need of reform in your jurisdiction?
There are currently no identifiable areas strongly in need of reform. As discussed above, it appears that the Courts are beginning to address the historic difficulty in obtaining interlocutory injunctions in patent litigation in Canada, and the Supreme Court of Canada struck down the ‘promise of the patent’ doctrine that had complicated Canada’s approach to patent utility.
What are the biggest challenges and opportunities confronting the international patent system?