A Brief Guide to the Law of Patent Ownership in Canada

In the majority of cases, determining who is an inventor and/or who may own rights in an invention is straightforward.

However, there are some circumstances where the lines are blurred. In order to avoid unnecessary and costly disputes over patent inventorship and ownership, it is essential to have a practical understanding of how patent law in Canada bears on these issues. Individuals and corporations should take care to protect their rights to their inventions, whether as inventors, owners or co-owners. A lax and undocumented approach can result in expensive litigation and a loss of ownership rights.

Who qualifies as an “inventor”?

The question of identifying at least one “inventor” is not often complicated. The difficulty arises when assessing whether others have also contributed to the invention, and are therefore considered co-inventors. This distinction between an inventor and a non-inventor is an important one as only an inventor, or the inventor’s legal representative,[1] can apply for a patent in Canada.[2]

Interestingly, the term “inventor” is not defined in the Patent Act. Canadian courts have provided guidance over the years, however, it will be appreciated that determining who qualifies as an “inventor” is a fact-driven inquiry. The Supreme Court of Canada has defined an “inventor” generally as the person whose conception gives rise to the invention, and as the person that sets the conception or discovery into a definite and practical shape.[3] An inventor is a person who contributes to the concept of the invention (i.e., the inventive concept). This person does not need to be wholly responsible for the invention, but he or she made a new, inventive and useful contribution to the invention.[4] Even minor contributions to the inventive concept can be sufficient to qualify the person as an inventor, as long as the work included some inventive ingenuity.[5]

In some instances, it may be easier to determine who is not an inventor. For example, non-inventors include persons who solely posed the problem leading to the idea, or persons who carried out the mechanical acts or testing as to whether the invention works.[6]

Who owns the invention?

Once the issue of who the inventors are has been determined, the next question that may arise is who owns the rights to the invention. The simplest situation is where there is an express agreement between the parties governing ownership of inventions and/or assigning all rights to inventions. In such cases, this express agreement governs and there is not often a dispute as to who owns the invention. It is those cases where there is no agreement that are more troublesome. These cases generally fall into two categories: the inventor is an employee or the inventor is an independent contractor.

Employees

The Patent Act is silent as to ownership of a patent in an employment context, and so one must look to the common law. Generally, it is presumed the employee will have ownership of his or her invention and any resulting patent for discoveries made during the course of employment.[7] This presumption holds true even where the employee’s invention is useful for the employer’s business, the employee made use of the employer’s time, co-employees, and material, and the employee allowed the employer to use the invention.[8] There are, however, two main exceptions to this presumption: (i) there is an express agreement to the contrary, and (ii) the employee was hired for the express purpose of inventing or innovating.[9] In both of these cases, ownership rests with the employer.

The Federal Court of Canada has outlined a list of eight factors a court should consider in deciding whether an employee was hired to invent. These factors are:[10]

1. whether the employee was hired for the express purpose of inventing;
2. whether the employee at the time of hiring had previously made inventions;
3. whether the employer had incentive plans encouraging product development;
4. whether the conduct of the employee once the invention was created suggested ownership was held by the employer;
5. whether the employee’s invention was the product of the problem the employee was instructed to solve (i.e., whether it was his duty to make the invention);
6. whether the employee’s invention arose following his or her consultation through normal company channels (i.e., was help sought?);
7. whether the employee was dealing with highly confidential information or confidential work; and
8. whether it was a term of the employee’s employment that he or she could not use the ideas that he or she developed to his or her own advantage.

Not all eight factors must be present for a finding that the employee was hired to invent, nor is any one factor more important than another. Since the enquiry is highly dependent on the particular facts of each case, it is recommended that employers ensure all employees who are in positions where they may invent enter into written employment contracts that specifically provide that all inventions are owned and assigned to the employer

Independent Contractors

The Federal Court’s approach to determining ownership of patent rights for employees also applies to independent contractors. It is presumed that a contractor owns all rights to an invention he or she has made unless there is an agreement, express or implied, to the contrary.[11] To determine whether there is an implied agreement, the court may look to the particular circumstances of the case and the conduct of the parties to determine whether a term should be implied into the relationship that the contractor assigned any or all rights to the invention.[12] Because of the uncertainty this may present, it is recommended that the parties enter into a written agreement governing ownership of inventions.

Co-ownership of patent rights

In Canada, care must be taken when exploiting the rights granted by a patent that is owned by two or more people. In particular, it has been held that a co-owner of a patent can independently make or sell the invention covered by a patent without consent of the other co-owners. Likewise, a co-owner of a patent can, without the consent of the other co-owners, assign or license his or her entire interest in the patent to another single party, whereby the new purchaser becomes a co-owner. However, a co-owner cannot do anything to dilute the interest of the other co-owners. For example, a co-owner cannot grant a licence to more than one third party, cannot assign only a portion of his or her interest in the patent, or assign his or her entire interest to more than one assignee without consent of the other co-owners.[13]

The rights of co-owners of a Canadian patent should be contrasted with those of a U.S. patent. In the United States, absent an agreement to the contrary, each co-owner of a patent may make, use, offer to sell, or sell the patented invention within the U.S., or import the patented invention into the U.S. without the consent of and without accounting to, the other co-owners.[14] U.S. courts have also held that co-owners may license the rights to the invention without recourse to the other owners.

Best practices

Inventors, employers, employees and independent contractors must all be aware of who contributes to an invention and of ownership rights to their inventions. Best practice is to avoid the risk of a dispute and litigation over ownership by expressly setting out in a written agreement who will own the rights to any inventions that are made in the course of the employment or contract. With regard to inventorship, parties are encouraged to keep detailed notes and records of the work they perform in order to record any contribution they may have made to the inventive concept.

Rights as between co-owners of patents vary between countries and these differences should be kept in mind when co-owners are seeking to exploit patent rights. Co-owners and prospective licensees should be mindful that consent from other co-owners of a Canadian patent should be obtained, especially where non-exclusive licences are granted.

Ascertaining who may exploit the rights granted by a patent, especially when there are multiple inventors or when the patent is owned by two or more people, can be complicated.

Do not hesitate to contact members of the Goodmans IP team if you have any questions.

Authors: Dino Clarizio and Abid Khalid

[1] Section 2 of the Patent Act, R.S.C., 1985, c. P-4 defines a “legal representative” as including “heirs, executors, administrators of the estate, liquidators of the succession, guardians, curators, tutors, transferees and all other persons claiming through applicants for patents and patentees of inventions”.

[2] Supra note 1 at s. 27(1).

[3] Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77 at paras 54 and 97.

[4] Dino P. Clarizio et al., Hughes and Woodley on Patents, Patents for Inventions and Trade Secrets at 132 [Hughes], cited in Arctic Cat Inc. v. Bombardier Recreational Products Inc., 2016 FC 1047 at paras. 329 and 342, aff’d 2018 FCA 125.

[5] Drexan Energy Systems Inc. v. Canada (Commissioner of Patents), 2014 FC 887 at para 26.

Hughes, supra note 4 at 132.

Ibid at para 76.

(1994).