Important Changes Made to Canada’s Patent Legislation

In our article dated November 6, 2018, the Goodmans IP team reported on the introduction by the Federal Government of Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures. In addition to implementing this year’s budget provisions, Bill C-86 also contained many IP-related amendments, including some important changes to Canada’s Patent Act. The Bill received Royal Assent on December 13, 2018, and thus many of its IP provisions, discussed below, are now in force.

Experimental Use Exemption

New subsection 55.3(1) of the Patent Act seeks to codify the common law exemption to patent infringement for non-commercial research and experimentation. Specifically, this new subsection provides that “an act committed for the purpose of experimentation relating to the subject-matter of a patent is not an infringement of the patent.” New subsection 55.3(2) allows the Governor in Council to make regulations as to what factors and circumstances are to be considered in determining whether an act falls within the exemption. No such regulations have yet been promulgated.

As we observed in our November 6 post, given that these acts were already protected from infringement at common law, and given that a non-commercial experiment is unlikely to cause the patentee to suffer damages, this part of the legislation may be of little practical significance. This observation is subject, however, to how the courts interpret new subsection 55.3(1) and to the specific wording of any regulations that may be promulgated.

Effective Date: New subsection 55.3(1) applies to any action or proceeding that was not finally disposed of by December 13, 2018.

Patent Prosecution Statements as Evidence

New section 53.1 of the Patent Act now permits written communications between patent applicants and the Commissioner of Patents, or any part thereof, to be admitted into evidence to rebut any representations made by the patentee in respect of the construction of the claims of the patent. The written communication must have been made during prosecution of the application for the patent or the application of a re-issued patent, in a disclaimer filed in respect of the patent, or during re-examination proceedings relating to the patent. With regard to patents issued from a divisional application, written communications made during prosecution of the parent application are also admissible.

As we observed in our November 6 post, the use of patent prosecution histories is standard practice in U.S. patent litigation, but their use in Canadian patent litigation was essentially unheard of. This amendment could provide an important tool to those seeking to defend claims for infringement as it should ensure that the patentee does not make representations in Court that are at odds with submissions it made to the Commissioner of Patents in order to obtain the patent.

Effective Date: New section 53.1 applies to any action or proceeding that was not finally disposed of by December 13, 2018.

Prior Use Exemption

Section 56 of the Patent Act has been amended to expand the exemption from infringement by a prior user. The former version of section 56 provided that every person who, before the claim date, “purchased, constructed or acquired the subject matter defined by the claim, has the right to use and sell to others the specific article, machine, manufacture or composition of matter patented and so purchased, constructed or acquired without being liable to the patentee or the legal representatives of the patentee for so doing.”

New section 56 applies to any person who, before the claim date, “in good faith, committed an act that would otherwise constitute an infringement of the patent”, or “made serious and effective preparations to commit such an act”, and states that it is not an infringement “if the person commits the same act on or after that claim date.” However, this prior use exemption is not applicable where the person was able to commit the act or make the preparations to commit the act only because they obtained knowledge of the claimed subject-matter directly or indirectly from the applicant of the patent and the person knew that the applicant was the source of the knowledge. New section 56 also contains provisions dealing specifically with who can avail themselves of the prior use exemption in cases where the business is transferred.

Effective Date: New section 56 applies to any action or proceeding commenced on or after October 29, 2018. Former section 56 continues to apply to any action or proceeding commenced before October 29, 2018.

Patent Demand Letters

New section 76.2 of the Patent Act now provides that patent demand letters must comply with minimum requirements. However, these minimum requirements are to be set out in regulations that have not yet been proclaimed or published.

Interestingly, section 76.2 applies to any written demand “received by a person in Canada” but the demand may relate to an invention “patented in Canada or elsewhere”. Thus, a demand letter relating to a foreign patent will have to comply with this section if the letter is sent to a person in Canada.

Subsection 76.2(2) provides that a person who receives, or is aggrieved as a result of, a demand letter that fails to comply with the requirements may apply to the Federal Court for redress, which may include any relief it deems appropriate, including the recovery of damages, punitive damages, an injunction, a declaration or an award of costs. If the non-compliant letter is sent by a corporation, its directors and officers may be held jointly and severally liable if they directed, authorized, assented to, acquiesced in or participated in the sending of the letter.

The regulations that may be made by the Governor in Council include: what constitutes a written demand or an aggrievement; the minimum requirements for demand letters; and the factors and circumstances the Federal Court may consider when a proceeding is brought in respect of a demand letter.

Effective Date: Section 76.2 is now in force, however, no regulations have yet been promulgated or published as to the minimum requirements for demand letters.

Standard-Essential Patents

New section 52.1 relates to standard-essential patents. It provides that a “licensing commitment” in respect of a “standard-essential patent” binds the patentee and any subsequent owner of the patent. The Governor in Council may make regulations in respect of what constitutes a “licensing commitment” or a “standard-essential patent”, but no regulations have yet been promulgated or published.

Effective Date: Section 52.1 applies to any action or proceeding that was not finally disposed of by December 13, 2018.

Authors: Dino Clarizio and Abid Khalid