Patent litigation in Canada: overview

A Q&A guide to patent litigation in Canada.

The Q&A gives a high level overview of patent disputes, including how patent infringement is assessed; the conditions for a declaratory judgment; invalidation proceedings; preliminary relief and enforcement options.

To compare answers across multiple jurisdictions visit the patent litigation Country Q&A tool.

This Q&A is part of the global guide to Patent Litigation. For a full list of jurisdictional Q&As visit www.practicallaw.com/patentlitigation-guide.

Fiona E Legere, McCarthy Tétrault LLP
Contents

Sources of law

1. What are the principal sources of law and regulation relating to patents and patent litigation?

In Canada, federal legislation governs all aspects of patent rights from the issuance of a patent through to the enforcement of granted patent rights in subsequent litigation. The Patent Act (RSC 1985, c P-4), along with its interpretation by courts, is the main body of federal legislation governing patent rights.

International treaties and conventions play a secondary role to the Patent Act and court decisions. For example, the WTO Agreement on Trade Related Aspects of Intellectual Property Rights 1994 and the Patent Cooperation Treaty 1970 are both relevant in Canada.

According to Canadian law, international treaties must be implemented into domestic legislation before coming into full force and effect. If there is a conflict between Canadian legislation and an international treaty obligation entered into by the Federal Government, the domestic legislation takes precedence. In the case of patents, the Patent Act and other statutes have incorporated the elements of various international treaties and conventions.

 

Court system

2. In which courts/government bodies are patents enforced?

Canada does not have a specialised or dedicated patent court. The Canadian Intellectual Property Office does not have any jurisdiction over patent litigation.

Patentees in Canada must bring patent infringement actions either before a provincial superior court (which has inherent and default jurisdiction over all matters) or before the Federal Court of Canada (which is statutorily endowed with jurisdiction over intellectual property matters).

Most patent infringement actions are filed with the Federal Court of Canada. The judges of the Federal Court do not have any specialised technical expertise or expertise in patent law.

 
3. Do the courts/government bodies deal with infringement and invalidity simultaneously or must invalidity actions be brought in separate proceedings?

The Federal Court of Canada has jurisdiction to address both infringement and invalidity allegations in the same proceeding. It is very common that infringement and invalidity are dealt with in the same proceeding.

 
4. Who can represent parties before the court and/or government body?

In Canada, a lawyer who is qualified in any jurisdiction in the country can represent a party before the Federal Court of Canada. Unrepresented litigants can also appear before the Federal Court of Canada. However, this is extremely uncommon in complex patent proceedings.

A registered patent agent or an inventor can represent a patentee before the Canadian Intellectual Property Office.

 
5. What is the language of the proceedings? Is there a choice of language?

The Federal Court of Canada is a bilingual court. English and French are the official languages and can be used in any proceeding before the Federal Court of Canada.

However, if a patent infringement proceeding is brought before a provincial superior court, the choice of language between English and French varies from province to province.

 
6. To what extent are courts willing to consider, or are bound by, the opinions of other national or foreign courts, or other national or international bodies, that have handed down decisions in similar cases?

Canada is a common law jurisdiction. Judges of the Federal Court of Canada will consider jurisprudence of other common law jurisdictions for guidance in patent matters. However, the Federal Court is not bound by the opinions of other national or foreign courts.

For example, the Federal Court in Canada has rendered a number of decisions that do not follow decisions in other jurisdictions regarding parallel patents (see Sanofi-Aventis v Apotex Inc. , 2011 FC 1486, rev'd 2013 FCA 186 in Canada, as compared with Sanofi-Synthelabo v Apotex, Inc., No 07-1438 (Fed. Cir. 2008) in the US; AbbVie Corporation v Janssen Inc, 2014 FC 55 in Canada, rev'd 2014 FCA 242, as compared with AbbVie Deutschland GmbH & Co. v Janssen Biotech, Inc., No. 13-1338 (Fed. Cir. 2014) in the US).

 

Substantive law

7. How is patent infringement assessed?

The Patent Act grants a patent owner the exclusive right, privilege and liberty of making, constructing or using the invention, and selling it to others, for the term of the patent (section 42, Patent Act). Patent infringement is a question of mixed fact and law. The scope of the claims and the corresponding monopoly granted is a question of law. The question of whether a product or method or any activity falls within the scope of the claims is dependent on the circumstances of each case and is a factual question to be determined with the assistance of expert evidence.

In Canada, the doctrine of equivalents does not apply to patent infringement proceedings. Instead, a court will conduct a purposive construction of the claims of a patent and will identify the essential elements of the claims. If the allegedly infringing activity has all of the essential elements of the claims, then a court will find that there is infringement. If the allegedly infringing activity does not have all of the essential elements of the claims, then a court will not find that there is infringement (Free World Trust v Électro Santé Inc., 2000 SCC 66; Whirlpool Corp. v Camco Inc., 2000 SCC 67).

 
8. What defences are available to an alleged infringer?

There are three main defences available to an alleged infringer:

  • Non-infringement.

  • Invalidity of the asserted patent.

  • Claimant's lack of entitlement to the relief sought.

 
9. On what grounds can a patent be invalidated?

Canada is a first-to-file patent system. In Canada, a patent can be invalidated on the following grounds:

  • Anticipation.

  • Obviousness.

  • Double patenting.

  • Covetous claiming.

  • Ambiguity.

  • Lack of sufficient disclosure.

  • Lack of utility or failure to meet the promise of the patent.

  • Unpatentable subject matter.

  • Fraud on the Patent Office

Each of these grounds is discussed briefly below.

Anticipation

A valid patent claim must not be anticipated (section 28.2, Patent Act). Anticipation requires disclosure and enablement of the claimed invention.

For a patent claim to be anticipated by a prior document, a person must be able to look at a prior, single publication and find in it all the information that is needed for practical purposes to produce the claimed invention without the exercise of any inventive skill (Apotex Inc. v Sanofi-Synthelabo Canada Inc., 2008 SCC 61). 

Obviousness

A valid claim must comprise inventive or non-obvious subject matter (section 28.3, Patent Act).

The test for obviousness is a four-step inquiry that has some similarities with the "obvious to try" test in UK jurisprudence (Apotex Inc. v Sanofi-Synthelabo Canada Inc., 2008 SCC 61, citing Pozzoli SpA v BDMO SA, [2007] F.S.R. 37, at para 23 (Eng. C.A.)). The four steps are as follows:

  • Identify the notional "person skilled in the art" and the relevant common general knowledge of that person.

  • Identify the inventive concept of the claim in question or, if that cannot readily be done, construe the claim.

  • Identify what, if any, differences exist between the matter cited as forming part of the state of the art and the inventive concept of the claim or the claim as construed.

  • Viewed without any knowledge of the alleged invention as claimed, assess whether these differences constitute steps that would have been obvious to the person skilled in the art, or whether they require any degree of invention.

In the fourth step, the question can be answered with the help of the "obvious to try" test, which in certain circumstances can be appropriate in technological fields where advances are usually the result of experimentation.

Double patenting

In Canada, a patent is granted for a single invention and a subsequent patent cannot claim the same subject matter (section 36(1), Patent Act). There are two forms of double patenting (Whirlpool Corp. v Camco Inc., 2000 SCC 67):

  • "Coterminous" double patenting, where at least one claim of a first and second patent is identical.

  • "Obviousness" double patenting, where the subject matter of the second patent is obvious in light of the first patent.

Recently, the Mylan Pharmaceuticals ULC v Eli Lilly Canada Inc (2016) FCA 119 (Federal Court of Appeal of Canada) case clarified the state of the law on obviousness-type double patenting. Prior art to be considered for double-patenting is limited to the claims of the earlier patent. Also, the earlier patent can be cited for double-patenting even if it was published within one year before the filing date of the second patent.

Covetous claiming

Covetous claiming refers to two instances in which the patent claims exceed their permissible scope, that is where the claims either (Lubrizol Corp. v. Imperial Oil Ltd. (1990), 33 C.P.R. (3d) 1 at paras. 71-72 (F.C.T.D.); rev'd 1992 CarswellNat 1049 (F.C.A.)):

  • Exceed the invention that was actually made.

  • Exceed the invention described in the patent specification.

Ambiguity

Patent claims must define distinctly and in explicit terms the subject matter for which exclusive rights are claimed (section 27(4), Patent Act). However, ambiguity is considered to be "a last resort, rarely, if ever, to be used" to invalidate the claims of a patent (Pfizer Canada Inc. v Canada (Minister of Health), 2005 FC 1725).

Sufficiency of disclosure

A patent must fully describe the invention in the specification. The skilled person in the art should be enabled, through a reading of the patent, to implement the invention described in the patent and to make the same successful use of the invention (Pfizer Canada Inc. v Novopharm Ltd., 2012 SCC 60).

Utility and promise of the patent

A patent must describe an invention that is useful or has utility (section 2, Patent Act). The invention must work or do what the patent specification says or promises that it will do. It is not necessary to establish that the invention could be or is a commercial success, it is sufficient that the patent provides a new, better or cheaper article, or that it offers the public a useful choice (Consolboard Inc. v MacMillan Bloedel (Sask.) Ltd. (1981), 56 C.P.R. (2d) 145 (S.C.C.)).

The patentee must have established utility as of the claim date, either by demonstration or by sound prediction (Apotex Inc. v Wellcome Foundation Ltd. (2002), 21 C.P.R. (4th) 499 (S.C.C.)). A sound prediction requires a factual basis for the prediction, a sound line of reasoning underlying the prediction and proper disclosure of the invention.

In Canada, there is a body of jurisprudence holding that where a patent specification also explicitly promises a particular outcome or result through the invention, the patentee will be held to that promise or the patent will be invalid (Eli Lilly Canada Inc. v Novopharm Ltd. , 2010 FCA 197) (see Question 38).

Unpatentable subject matter

An "invention" is "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" (section 2, Patent Act).

In Canada, case law has determined that the following subject matters are not patentable:

Although previously thought to be unpatentable, the Federal Court of Appeal, in Canada (Attorney General) v Amazon.com, Inc., 2011 FCA 328, recently ruled that business methods are not automatically excluded from patentability. However, a business method alone, with no practical application, will be considered abstract and not patentable.

Fraud on the Patent Office

A patent will be invalid if either (section 53, Patent Act):

  • Any material allegation in the petition of the applicant in respect of the patent is untrue.

  • 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.

 
10. Can a court only partially invalidate a patent or transform it into a utility model?

In Canada, a court can invalidate some, but not all, claims of a patent. However, there is no mechanism to transform a patent into a utility model in Canada.

 
11. Is it possible to amend patent claims during proceedings?

After a patent has been issued by the Canadian Intellectual Property Office, the claims cannot be subsequently amended during litigation proceedings.

 
12. Are there any grounds on which an otherwise valid patent can be deemed unenforceable?

An otherwise valid patent can be deemed unenforceable on the following grounds:

  • Expiry of limitation period. Actions for patent infringement are subject to a six-year limitation period (section 55.01, Patent Act; section 39(2), Federal Courts Act (RSC 1985, c F-7)).

  • Expiry of patent monopoly:

    • for patents filed before 1 October 1989, the patent monopoly in Canada lasts for 17 years from the date the patent is granted in Canada (section 45, Patent Act);

    • for patents filed after 1 October 1989, the patent monopoly in Canada lasts for 20 years from the Canadian filing date (section 44, Patent Act).

 

Parties to litigation

13. Who can sue for patent infringement?

The patentee and "all persons claiming under the patentee" can sue for patent infringement (section 55(1), Patent Act). In any action for infringement, the general rule is that the patentee must be made a party, either as a claimant or as a defendant (section 55(3), Patent Act).

Patent holder

The patentee is the person entitled to the benefit of the patent. The patentee can be the inventor, an assignee, a legal representative of the inventor (as defined in section 2 of the Patent Act) or any subsequent assignee or legal representative.

The grant of a licence by the patentee (even an exclusive licence) does not divest the patentee of all its rights, as a licence does not confer an interest in the property of the patent (Merck & Co. v Apotex Inc. , 2010 FC 1265 at para. 49, aff'd 2011 FCA 363).

The assignee of a patent has the same right to sue as its predecessor in title (Signalisation de Montréal Inc v Services de Béton Universels Ltée. (1992), 46 C. P. R. (3d) 199 (FCA) at para. 52). However, the assignment should be registered to avoid the risk of the assignment being found void due to any subsequent assignment.

Licensee

A licensee, whether exclusive or not, is a person claiming under the patentee who can sue for infringement. The licensee is not claiming for infringement of rights under the licence but for damage sustained as a result of the infringement of the patent (Armstrong Cork Canada Ltd. v Domco Industries Ltd. , 1982 CarswellNat 482 (S.C.C.) at para. 31). A licence does not need to be registered in order for a licensee to have a claim for damages (Apotex Inc. v Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193 at paras. 368-371 (Fed. T.D.), rev'd on other grounds (2000), 10 C.P.R. (4th) 65 (Fed. C.A.), rev'd on other grounds, [2002] 4 S.C.R. 153 (S.C.C.)). The licence can be an express licence but can also be implied from the relationship between the parties (Laboratoires Servier v Apotex Inc, 2008 FC 825 at paras. 70-77, aff'd 2009 FCA 222; Jay- Lor International Inc. v Penta Farm Systems Ltd. (2007), 59 C. P. R. (4th) 228 (FC) at paras. 23-38).

Distributor

In Canada, the law is not settled as to whether a distributor can claim under the patentee. It is possible that a distributor could claim under a patentee if the right asserted by the distributor can be traced back to the patentee (Apotex Inc. v Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193 at para. 360 (Fed. T.D.), rev'd on other grounds (2000), 10 C.P.R. (4th) 65 (Fed. C.A.), rev'd on other grounds, [2002] 4 S.C.R. 153 (S.C.C.)).

However, the Supreme Court's decision in Novopharm v Eli Lilly, [1998] 2 S.C.R. 129 casts doubt on this interpretation. The Court distinguished between a supply agreement and a sub-licence. The Court found that the sale of a patented item by a licensee grants the purchaser a right to use and re-sell the item (subject to the terms of any contract), but does not grant an independent right to operate under the licence.

Other

Where a patent is given as a security, the beneficiary is considered to be a person claiming under the patentee and therefore has a right to sue for infringement.

 
14. Under what conditions, if any, can an alleged infringer bring proceedings to obtain a declaratory judgment on non-infringement?

If a party has reasonable cause to believe that it may be alleged to infringe a patent, this party can bring an action in the Federal Court for a declaration of non-infringement (section 60(2), Patent Act). The party must be very specific in its pleadings on the declaration sought from the court, including details of the party's product, process or article that is expected to be the subject of infringement allegations (Installations Sportives Defargo Inc. c Fieldturf Inc., 2004 FC 1447).

A declaration of non-infringement can also be sought in situations where a defendant has been subject to an interlocutory order regarding one of its products and is unsure about whether selling another product would be infringing.

 
15. Who can be sued for patent infringement?

In Canada, the patentee, and "all persons claiming under the patentee" can obtain relief for all damage sustained from infringement (section 55(1), Patent Act). A claimant can name all defendants that are considered necessary.

There are three requirements for a person to be sued for inducing patent infringement (Corlac Inc. et al v Weatherford Canada Ltd. et al, 2011 FCA 228):

  • The act of infringement must be completed by the direct infringer.

  • The completion of the act of infringement must be influenced by the alleged inducer to the point that without this influence, direct infringement would not take place.

  • The influence must be knowingly exercised by the inducer.

 
16. Is it possible to add or remove parties during litigation?

Canadian courts can order at any time that a person who is not a proper or necessary party must cease to be a party, or courts can order that a person who should have been joined as a party, or whose presence is necessary, be added as a party (rule 104, Federal Courts Rules, SOR/98-106). The court will add a defendant to a patent infringement proceeding if it is necessary to ensure that all matters in dispute are effectively determined.

A defendant can commence a third-party claim against a person that is not a party and that the defendant claims may be liable to the defendant for all or part of the claimant's claim (rule 193, Federal Courts Rules). The defendant, with leave, can also commence a third-party claim against another person that is not a defendant to the action and that the defendant claims (rule 194, Federal Court Rules):

  • Is or may be liable to the defendant for relief, other than that referred to in rule 193, relating to the subject matter of the action.

  • Should be bound by the determination of an issue between the claimant and the defendant.

 

Enforcement options

17. What options are open to a patent holder when seeking to enforce its rights in your jurisdiction?

Civil proceedings

Under section 54(1) of the Patent Act, an action for patent infringement can be brought in the court of record that, in the province in which the infringement is said to have occurred, has pecuniary jurisdiction over the amount of the damages claimed and which, with regards to the other courts of the province, holds its sittings nearest to the place of residence or business of the defendant. Under this section, this court must decide the case and determine the costs. Assumption of jurisdiction by the court is of itself sufficient proof of jurisdiction.

Criminal proceedings

Under the Patent Act, patent rights only give rise to civil remedies. Patent holders cannot bring criminal infringement proceedings.

Border measures

Not applicable.

Other

Not applicable.

 
18. Is it compulsory to send a cease and desist letter to an alleged infringer before commencing patent proceedings?

In Canada, a patentee is not required to send a cease and desist letter to an alleged infringer before starting infringement proceedings. There are currently no consequences for making unjustified threats of patent infringement. However, depending on the actions taken by the patentee, there could be potential anti-trust issues for abuse of dominance (section 79, Competition Act, RSC 1985, c C-34).

 
19. To what extent are courts willing to grant cross-border or extra-territorial injunctions (preliminary or permanent)?

Under Canadian law, if a defendant is not physically present in Canada and has no presence or property in Canada, it will be difficult to prevent him from doing acts outside the jurisdiction.

Typically, where a foreign defendant's activities in Canada constitute patent infringement, courts will grant an injunction if the defendant has assets or a physical presence in Canada. If not, courts are likely to decline jurisdiction on discretionary grounds.

However, there may be a new approach that is emerging. Several cases indicate the possibility of extra-territorial injunctions, although none of these cases was decided in the patent law context. In the recent case of Equustek Solutions Inc. v Google Inc., 2015 BCCA 265, the British Columbia Court of Appeal upheld a worldwide interim injunction against Google, ordering it to de-index websites that violated the claimant's trade secrets. The claimant was suing the offending websites and successfully enjoined Google to de-index the sites in the interim. On 7 December 2016, the Supreme Court of Canada heard the appeal which required Google to de-index certain webpages from its search results worldwide. A decision is expected before mid-2017.

 
20. To what extent do courts recognise the blocking effect of "torpedo" actions abroad?

Canadian courts do not stay proceedings because of proceedings in other jurisdictions. "Torpedo" actions taken abroad will not have a blocking effect on Canadian proceedings.

 
21. To what extent are arbitration, and alternative dispute resolution (ADR) methods (such as mediation), available to resolve patent disputes?

Arbitration

In Canada, arbitration is available for parties to privately settle a patent infringement action. However, the Patent Office will not recognise and execute an arbitral award declaring a patent invalid. Arbitral awards can be subsequently filed in the Federal Court (rules 326 to 334, Federal Courts Rules).

See Arbitration procedures and practice in Canada: overview ( www.practicallaw.com/0-502-1672) .

ADR

In recent years, ADR methods have been used more commonly in complex patent litigation disputes in Canada.

See Litigation and enforcement in Canada: overview ( www.practicallaw.com/7-502-0711) .

 

Competition and anti-trust

22. Can a patent holder bring proceedings claiming both patent infringement and unfair competition for the same set of facts?

A patent holder cannot bring proceedings claiming both patent infringement and unfair competition for the same set of facts. In Canada, unfair competition issues are investigated by the Federal Competition Bureau. However, a patent holder can bring these issues to the attention of the Federal Competition Bureau.

 
23. To what extent can enforcement of a patent expose the patent holder to liability for an anti-trust violation?

In Canada, the Federal Competition Bureau is the government agency that has jurisdiction to monitor and prosecute anti-trust or anti-competitive behaviour under the Competition Act.

The Competition Bureau has set out its IP policy in the Intellectual Property Enforcement Guidelines (IPEGs). The IPEGs state that IP is like any other type of property and that the Competition Act applies to conduct involving IP rights to the same extent that it applies to conduct involving the exercise of any other property rights. When conduct goes beyond the mere exercise of an IP right, usually in the context of arrangements between competitors, the IPEGs state that the analysis will be the same as that generally applied under the Competition Act. For example, if an IP rights owner transfers or licenses its IP to an actual or a potential competitor in a way that creates, increases or maintains market power, then the general provisions of the Competition Act may be violated.

 

Procedure in civil courts

24. What is the format of patent infringement proceedings?

In Canada, the majority of patent infringement proceedings are brought before the Federal Court of Canada because of its access to each jurisdiction in the country, although each provincial superior court has jurisdiction to hear patent infringement actions.

The format of the proceedings is in the form of an action before a single judge of the Federal Court or provincial superior court. There are no jury trials for patent infringement actions in Canada.

 
25. What are the rules and practice concerning evidence in patent infringement proceedings in your jurisdiction?

Documents

Documents and affidavits are ordinarily used to establish evidence in Canadian patent infringement proceedings. These documents and affidavits are filed in court in accordance with the applicable rules of the jurisdiction.

Witness evidence

Live witness evidence is ordinarily used to establish evidence in Canadian patent infringement proceedings. If a witness is put forward on behalf of a party, the opposing party must have an opportunity to cross-examine that witness.

Expert evidence

Party-appointed experts are used in the majority of cases. Party-appointed experts must be impartial and must sign a code of conduct for impartiality. Courts in Canada rely on the experts to provide evidence on complex technical subject matters and as to what the person of ordinary skill in the art would have known as of the relevant date of the patent. If an expert is put forward on behalf of a party, the opposing party must have an opportunity to cross-examine that expert on his opinions. See also White Burgess Langille Inman v Abbott and Haliburton Co., [2015] 2 SCR 182, 2015 SCC 23.

Court-appointed experts are not used in Canadian patent infringement proceedings.

 
26. Is evidence obtained in criminal proceedings admissible in civil proceedings and vice versa?

The standard procedures for admissibility of evidence apply to civil proceedings and criminal proceedings (Canada Evidence Act, RSC 1985, c C-5; Federal Courts Rules, SOR/98-106). If evidence is deemed admissible according to the standard procedures, then evidence from a criminal proceeding can be admissible in a civil proceeding, and vice versa. There is no expedited procedure to obtain evidence that was previously admissible in another proceeding.

 
27. Is evidence obtained in civil proceedings admissible in other civil proceedings?

The standard procedures for admissibility of evidence apply to civil proceedings and criminal proceedings (Canada Evidence Act, RSC 1985, c C-5; Federal Courts Rules, SOR/98-106). If evidence is deemed admissible according to the standard procedures, then evidence from one civil proceeding can be admissible in another civil proceeding. There is no expedited procedure to obtain evidence that was previously admissible in another proceeding.

 
28. To what extent is pre-trial disclosure permitted and what other mechanisms are available for obtaining evidence from an adverse party or third parties?

Pre-trial discovery

In the Federal Court of Canada, the discovery process includes both (rules 222 to 248, Federal Courts Rules):

  • Documentary discovery, which involves the exchange by the parties of all relevant documents.

  • Oral discovery, which involves the questioning of a single representative of each adverse party.

Other mechanisms

The Federal Court can grant leave to seek discovery from a third party that is not a party to the proceeding (rule 238, Federal Courts Rules).

 
29. What level of proof is required for establishing infringement or invalidity?

In Canada, a party must establish infringement or invalidity on a balance of probabilities.

 
30. How long do patent infringement proceedings typically last?

In the Federal Court of Canada, patent infringement proceedings can last between two and ten years.

Fast-track procedures

Fast-track procedures are available. The Federal Court of Canada has issued a direction under which it will, if requested, accommodate a fast-track patent litigation proceeding where the hearing of the trial will be held within two years from the commencement of the action.

Timetable

It is possible to agree on a binding timetable of the proceedings, for example, in the context of a case management conference.

Delay

It is difficult to delay a proceeding in the Federal Court because of the active management of pre-trial matters.

 

Preliminary relief

31. Is preliminary relief available, and if so what measures are available and under what conditions?

Search and preservation orders

In Canada, in addition to the ordinary processes of documentary discovery under the Federal Courts Rules, a party can, in highly exceptional circumstances, obtain an Anton Piller order from the court. An Anton Piller order enables a party to search the opposing party's premises for relevant evidence or their alleged property, and to remove them accordingly. Such property can, and frequently does, include electronic material.

Anton Piller orders are highly exceptional and generally sought from the court on an ex parte (without notice) basis. While these orders are not infrequent in copyright infringement cases, they are much more exceptional in the patent context in Canada. Consequently, there are very few reported patent Canadian cases in which such orders have been made (Capitanescu v Universal Weld Overlays Inc., 1996 CarswellAlta 936, [1996] A.J. No. 1038; Cullom Machine Tool & Die Inc. v Bruce Tile Inc., 34 C.P.R. (3d) 296, 41 F.T.R. 153 (Fed. Ct. T.D.)).

In Canada, a court can grant an Anton Piller order if the following essential conditions are met (Celanese Canada Inc. v Murray Demolition Corp., 2006 SCC 36, at para. 35; Nintendo of America, Inc. v Coinex Video Games Inc., [1983] 2 F.C. 189 (C.A.)):

  • The claimant must demonstrate a strong prima facie case.

  • The damage to the claimant caused by the defendant's alleged misconduct, potential or actual, must be very serious.

  • There must be convincing evidence that the defendant has in its possession incriminating documents or items.

  • It must be shown that there is a real possibility that the defendant may destroy such material before the discovery process can do its work.

According to the Sedona Canada Principles Addressing Electronic Discovery, there is a non-binding obligation on counsel and their clients to preserve electronic documents which starts from the moment litigation is contemplated or is reasonably anticipated (https://thesedonaconference.org/publications).

Injunctions

Preliminary injunctions are available in Canadian patent law, although they are only granted in highly exceptional circumstances.

To obtain a preliminary injunction, the court must be satisfied that (RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.)):

  • There is a serious issue that needs to be determined (at trial).

  • The failure to award the injunction will result in irreparable harm being caused to the party seeking it.

  • The balance of convenience, taking into account the public interest, favours retaining the status quo pending the disposition of the action.

The first element is usually satisfied in bona fide litigation, and is not the element that sets the high bar for the award of preliminary injunctions. The second element (that irreparable harm will otherwise be caused) has proven to be the most difficult to satisfy in patent cases (AstraZeneca Canada Inc. v Apotex Inc., 2011 FC 505; Bayer Healthcare AG v Sandoz Canada Inc., 2007 FC 352; Laboratoires Servier v Apotex Inc., 2006 FC 1493; Aventis Pharma S.A. v Novopharm Ltd., 2005 FC 815; Merck & Co. v Nu-Pharm Inc., 2000 CarswellNat 154 (F.C.T.D.); Fournier Pharma Inc. v Apotex Inc., 1999 CarswellNat 854 (F.C.T.D.)), although the third element has also caused considerable difficulty to parties seeking an injunction (AstraZeneca Canada Inc. v Apotex Inc., 2011 FC 505).

The burden on a litigant to show that there is a serious issue to be tried is fairly low. The litigant needs only satisfy the court that it has raised at least one issue that is serious, that is, "neither vexatious, nor frivolous" (AstraZeneca Canada Inc. v Apotex Inc., 2011 FC 505, at para. 55; RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.)) nor "destined to fail" (Canada (Superintendent of Bankruptcy) v MacLeod, 2010 FCA 84 at para. 11). It has also been held that it needs only be shown that there is an "arguable case" (Astrazeneca Canada Inc. v Canada (Minister of Health), 2005 FCA 208, at para. 5).

The second element of the test (irreparable harm) is the largest hurdle for litigants seeking a preliminary injunction. "Irreparable harm" in this context refers to "the nature of a harm suffered rather than its magnitude". The nature of the harm that will be suffered without the granting of an injunction is the sort of harm that cannot be "quantified in monetary terms or which cannot be cured", often because one party cannot collect damages from the other (RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.)).

This stage of the analysis considers only harm that is likely to be suffered by the applicant for the injunction. The effect of an award/non-award of an injunction on the responding party is considered at the third stage. The third stage of the inquiry (the balance of convenience test) asks which party will suffer the greater harm from the granting or refusal of the injunction (RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.)). Other factors can be taken into consideration (AstraZeneca Canada Inc. v Apotex Inc., 2011 FC 505, at para. 57), including the effect of the decision on the public interest (RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311 (S.C.C.)).

Other

In the pharmaceutical sector, the Patented Medicines (Notice of Compliance) Regulations (PMNOC Regulations) (SOR/93-133) provide a mechanism for the entry of generic drugs onto the Canadian market. The PMNOC Regulations provide for a form of injunctive relief in respect of patents pertaining to drugs that are listed on a patent register with Health Canada. The PMNOC Regulations provide a mechanism to prevent the Minister of Health from issuing an approval relating to a generic drug company for period of up to 24 months when the parties adjudicate their rights before the Federal Court of Canada.

 
32. Can a protective writ be filed at the court at which an ex parte application may be filed against that defendant?

Not applicable.

 
33. What is the format/procedure of preliminary injunction proceedings?

General

In Canada, a preliminary injunction must be requested by way of a motion to the Federal Court of Canada (rule 373, Federal Courts Rules).

Level of proof

The burden on a claimant to show that there is a serious issue to be tried is fairly low. In effect, the claimant must show that there is an "arguable case" on infringement or validity. However, the claimant must also satisfy the court that the harm is the sort of harm that cannot be "quantified in monetary terms or which cannot be cured". The courts have often found that most harm can be quantified in monetary damages in the patent context.

For further details on the conditions for the granting of preliminary injunctions see Question 31, Injunctions.

Evidence

In the Federal Court of Canada, evidence in preliminary injunction proceedings is filed by way of affidavit evidence, including any factual or expert evidence. Court-appointed experts are not used in the Federal Court of Canada.

Patent validity

In Canada, the defendants will not ordinarily put the validity of a patent in issue in a preliminary injunction proceeding. The claimant must only satisfy the low threshold that there is an "arguable case" for infringement and validity.

Length of proceedings

Depending on the complexity of the preliminary injunction proceeding, a hearing usually takes less than one day. The Federal Court of Canada can expedite the schedule of the hearing of the motion as deemed necessary, but can take a few weeks to schedule (rule 385, Federal Courts Rules).

 
34. If a preliminary injunction is granted and the main infringement action is finally lost, can the defendant claim damages for the unjustified preliminary injunction?

In Canada, a party that brings a motion for an interlocutory injunction must give the court an undertaking to pay any resulting damages suffered by the enjoined party if the claimant is ultimately unsuccessful at trial (rule 373(2), Federal Courts Rules).

Although courts have some discretion to require an undertaking in damages, provincial courts typically require applicants to make an undertaking to pay resulting damages (Hapi Feet Promotions Inc. v Martin, 2005 CarswellNS 199, 39 C.P.R. (4th) 353 (N.S.C.A.)).

 

Final remedies

35. What remedies are available against a patent infringer?

Permanent injunction

In Canada, a permanent injunction can be granted against a patent infringer. An injunction will normally follow once the court has found that a patent is valid and has been infringed (Valence Technology Inc. v Phostech Lithium Inc., 2011 FC 174). The Federal Court can craft a limited injunction in circumstances where the infringing product has unique benefits, giving rise to a need by the Canadian public to have access to the infringing product (AbbVie Corp. v Janssen Inc., 2014 FC 489, rev'd 2014 FCA 241 on other grounds).

Monetary remedies

In Canada, the following monetary remedies are available against a patent infringer:

  • Damages resulting from infringement.

  • Reasonable compensation for infringement.

  • Reasonable royalty.

  • Accounting of profits.

For patents granted after 1 October 1989, the patentee is only entitled to damages for the time after the patent is granted. For the time between the publication and grant of the patent, the patentee is entitled to reasonable compensation (section 55(2), Patent Act).

Damages are a statutory remedy. The Patent Act entitles a patentee to all damages resulting from infringement (section 55(1)). The Patent Act seeks to compensate the patentee for losses suffered, in the same way as liability in tort.

The patentee must prove lost profits as a result of the infringement in order to receive compensation. If the patentee cannot prove lost profits, then it will be entitled to a reasonable royalty. Lost profits are assessed on the basis of a "but for" test (that is, what the patentee's profits would have been but for the infringement). The existence of a non-infringing alternative was recently held to be a relevant factor in determining what sales the patentee would have actually made (Merck & Co, Inc, et al v Apotex Inc, et al, 2015 FCA 171).

For any infringing sale that the patentee would not have made under the "but for" test, the patentee is entitled to a reasonable royalty. The patentee bears the burden to prove what sales it would have made and what the reasonable royalty should be.

A successful patentee can elect between damages and accounting of profits (sections 55(1) and 57(1)(b), Patent Act). The court has discretion to deny the equitable remedy of an accounting of profits. An accounting of profits is considered an exceptional remedy.

Punitive damages and aggravated damages are available. Aggravated damages are compensatory but are awarded when the defendant's conduct has been high-handed or oppressive, increasing the claimant's humiliation or anxiety. The defendant's motives must include malice or bad faith.

Punitive (or exemplary) damages are intended to punish the defendant. They express the community's outrage at the defendant's egregious conduct. Punitive damages can only be awarded where the combined award of general and aggravated damages is insufficient to achieve the goals of punishment and deterrence. Punitive damages are likely to arise from the defendant's abuse of the court's process, rather than from the nature of the infringement. Wilful and knowing infringement is not sufficient to warrant punitive damages (Bauer Hockey Corp. v Sport Maska Inc., 2014 FCA 158 at para. 25). Punitive damages must be clearly pleaded.

In the Federal Court, the assessment of liability for patent infringement and the assessment of damages are often separated into different trials. Liability is assessed first, and damages proceedings are then held if necessary. This bifurcation is less likely before the provincial superior courts.

Delivery up or destruction of infringing goods

An order for delivery up can be made as an ancillary order to an injunction order.

Publication of the decision

The Federal Court of Canada publishes most of patent infringement decisions on its website. The decisions are then reported in Canadian publications.

Recall order

Not applicable.

Declaration of infringement and validity

The claimant can obtain a declaration that the claims of the patent are valid and that the defendant has infringed them.

Others

The court can award pre- and post-judgment interest, typically starting from the date of notice of the claim. Courts can also award compound interest for an accounting of profits, but not for damages.

 

Appeal procedure

36. What avenues of appeal are available for a defeated party and under what conditions?

Decisions in patent infringement proceedings can be appealed to the Federal Court of Appeal. The entire appeal process takes between ten and 18 months. A party can bring a motion to stay the relief granted, but must satisfy the same test as for an interlocutory injunction (see Question 31, Injunctions) (Janssen Inc. v Abbvie Corporation, 2014 FCA 176).

 

Litigation costs

37. What level of cost should a party expect to incur to take a case through to a first instance decision, preliminary injunction proceedings and appeal proceedings?

The litigation costs for a patent infringement proceeding can vary drastically depending on the parties and the patents at issue (from Can$400,000 to Can$3 million). Attorneys' fees and costs are recoverable from a losing party. In the Federal Court of Canada, the costs recoverable are capped according to a Tariff in the Federal Courts Rules. This amount is usually substantially less than a party's actual costs.

 

Reform

38. What are the important developing and emerging trends in your country's patent law?

A shift in recent jurisprudence has changed how Canadian courts ascertain "the promise of the patent" as a prerequisite to a patent's validity. This change has played a role in invalidating some Canadian patents covering pharmaceutical drugs. Innovators are increasingly frustrated with their losing track record before the Federal Court of Canada and Federal Court of Appeal, which appears to be the result of these courts' approach to interpreting the promise of the patent.

With the Supreme Court currently unwilling to grant leave to appeal on this issue, one company recently served the Government of Canada with a notice of intent to submit a claim to arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA) ("Notice of Intent to Submit a Claim to Arbitration under NAFTA Chapter Eleven," Eli Lilly and Company (Disputing Investor) and the Government of Canada (Disputing Party) (7 November 2012)). The innovator company alleges that the invalidation of its patent, as a result of "a new judicial doctrine whereby utility is assessed not by reference to the requirements in the Patent Act that the invention be 'useful,' but rather against the 'promise' that the courts derive from the patent specification", is inconsistent with Canada's commitments under NAFTA. This Chapter 11 claim has renewed the debate about the difficulties and weaknesses associated with the current promise of the patent doctrine.

 

Online resources

Federal Courts Rules

W http://laws-lois.justice.gc.ca/eng/regulations/sor-98-106/index.html

Description. This website provides access to the Federal Court Rules.

Patent Act

W http://laws-lois.justice.gc.ca/eng/acts/p-4 ( www.practicallaw.com/5-621-1881)

Description. This website provides access to the Patent Act.

Patent Rules

W http://laws-lois.justice.gc.ca/eng/regulations/sor-96-423/index.html ( www.practicallaw.com/1-621-1883)

Description. This website provides access to the Patent Rules.

Competition Act

W http://laws-lois.justice.gc.ca/eng/acts/C-34/page-1.html ( www.practicallaw.com/2-621-1887)

Description. This website provides access to the Competition Act.

Patented Medicines (Notice of Compliance) Regulations

W http://laws-lois.justice.gc.ca/eng/regulations/sor-93-133/index.html ( www.practicallaw.com/0-621-1888)

Description. This website provides access to the Patented Medicines (Notice of Compliance) Regulations.

Canadian Legal Information Institute (CanLII)

W www.canlii.org/en

Description. CanLII is a non-profit organisation managed by the Federation of Law Societies of Canada. CanLII's goal is to make Canadian law accessible for free on the Internet. The website provides access to court judgments, tribunal decisions, statutes, and regulations from all Canadian jurisdictions.

Federal Court of Canada

W http://cas-ncr-nter03.cas-satj.gc.ca/portal/page/portal/fc_cf_en/Index

Description. Official website of the Federal Court of Canada.

Canadian Intellectual Property Office

W www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/Home

Description. Official website of the Canadian Intellectual Property Office.



Contributor profile

Fiona E Legere

McCarthy Tétrault LLP

T +1 416 601 8134
F +1 416 868 0673
E flegere@mccarthy.ca
W www.mccarthy.ca

Professional qualifications. Ontario, 2011

Areas of practice. Intellectual property; litigation; pharmaceutical patent litigation; telecommunication patent litigation; patent disputes; patent infringement; multi-jurisdictional patent litigation.

Non-professional qualifications. Bachelor of Medical Science, Honours, Specialisation in Biochemistry, University of Western Ontario

Recent litigation and transactions

Significant counsel work at hearings on behalf of global companies, including in the following cases:

Languages. English

Professional associations/memberships.

  • American Intellectual Property Law Association (AIPLA).

  • Toronto Intellectual Property Group (TIPG).

  • Intellectual Property Institute of Canada (IPIC).

  • Law Society of Upper Canada (LSUC).

  • Ontario Bar Association (OBA).

  • Canadian Bar Association (CBA).

Publications.

  • "The Pitfalls of 'The Promise of the Patent'", Canadian Intellectual Property Review, June 2013 Volume 29.

  • "Could Canada follow recent U.S. decisions awarding millions for P2P filesharing?" Internet and E-Commerce Law in Canada, October 2009 Volume 10, No. 6.

  • Contributor to the firm's IP/IT blog (www.canadiantechlawblog.com/author/flegere).


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