I FORMS OF INTELLECTUAL PROPERTY PROTECTION

Canada provides statutory protection for patents, trademarks, copyright and industrial designs, and common law protection for trade secrets and against passing off. The relative importance of each of these rights depends primarily on the type of protection that is required and the kinds of third-party activities that are of concern.

i Patents

Pursuant to the Patent Act,2 an inventor may obtain a patent for any new, useful and non-obvious art, process, machine, manufacture or composition of matter or any new, useful and non-obvious improvement thereof. Patents are issued by the Canadian Intellectual Property Office (CIPO) and are presumptively valid for 20 years from the date of filing with, historically, no ability to renew or extend. Amendments to the Patent Act that entered into force in September 2017 permit an extension of up to two years for certain pharmaceutical patents in certain circumstances.

A patentee has the exclusive rights to make, use and sell their patented invention. Any act that interferes with these rights constitutes an act of infringement. Infringers are liable for any damages to the patentee or any person claiming under the patentee, as well as for potential equitable relief, such as a permanent injunction or disgorgement of profits.

ii Trademarks

Trademarks find their origin in both common law and statute. Pursuant to the Trade-marks Act,3 the holder of a registered trademark can take action against any person using the trademark or a confusingly similar trademark. A registered trademark may be enforced anywhere in Canada. A registered trademark holder is not required to establish goodwill or a reputation as a prerequisite for enforcement. This is not the case where a party relies on unregistered common law rights and must show a reputation in order to enforce its rights.

A registered trademark holder can also bring an action where use of its trademark by a third party depreciates the goodwill associated with that trademark even in the absence of confusion. This may apply where unauthorised use of the trademark stands to tarnish or dilute its value and is typically alleged in cases of comparative advertising or spoof products.

Trademark registrations are valid indefinitely, as long as the appropriate renewal fees are paid. If a registered mark is not used in the marketplace for an extended period of time, however, a third party can seek to expunge the registration for non-use.

iii Copyright

The Copyright Act4 prevents the unauthorised copying, performance or publication (where not already published) of original artistic, dramatic, musical and literary creations. Registration of copyright is not a prerequisite for enforcement but provides the registration holder with the presumption of ownership and subsistence of copyright in any eventual enforcement proceedings.

In general, the term of copyright protection is the life of the author plus 50 years. Where the author is unknown, the term is restricted to 50 years after the first publication of the work. In neither case is the term extendable or renewable.

The Copyright Act also grants moral rights to the original author of a work. These rights comprise the right of attribution in association with the work and the right to the integrity of the work, which includes: the right not to have the work altered in some cases; and the right not to have the work associated with a product, service, cause or institution. Moral rights cannot be assigned and remain in the hands of the author even if the copyright has been assigned.

The Copyright Act also contains a reversion provision under which, with some exceptions, any assignment or grant of interest in copyright ends 25 years following the author's death with the rights reverting back to his or her estate.

iv Industrial designs

The Industrial Design Act5 allows for the registration of original visual features of shape, configuration, pattern and ornament that appeal to and are judged solely by the eye applied to a manufactured article. The Canadian Intellectual Property Office recently announced that colour can now form part of a combination of features that constitutes a registrable design. Designs must be registered within 12 months of being published and are valid for 10 years provided that the appropriate maintenance fees are paid. The 10-year term of industrial design registration cannot be extended or renewed.

v Trade secrets

There is no trade secret legislation in Canada. Instead, these rights are protected by contract law (e.g., confidentiality agreements) and in some cases according to the common law relating to fiduciary and related obligations.

vi Other IP statutes and regulations

The regimes described above are the foundation of Canada's IP landscape. Other specific pieces of legislation exist to fill perceived gaps in the availability of protection for certain technologies. For example the Plant Breeders' Rights Act6 provides protection for new plant varieties, while the Integrated Circuit Topography Act7 covers the three-dimensional configurations of electronic circuits embodied in integrated circuit products or layout-designs.

vii Pharmaceuticals

Canada has adopted a number of regulations that play an integral role in the protection of IP relating to pharmaceuticals.

The Patented Medicines (Notice of Compliance) Regulations8 (the PM(NOC) Regulations) link the patent status of brand-name medicines with the regulatory approval process for subsequent entry products. The PM(NOC) Regulations provide a mechanism whereby a 'first person' (typically a brand-name manufacturer) who has received approval to sell a new drug is permitted to identify and enforce certain types of patents against one or more 'second persons' (typically a generic drug or biosimilar manufacturer) that files a drug submission for authorisation to market a subsequent entry product based on comparison to the brand. In September 2017, the government amended the PM(NOC) Regulations to alter the procedural and substantive details of disputes under the regulations. Disputes under the old regime were summary procedures that did not result in a final determination of patent infringement or validity. Rather, those cases concerned only a threshold decision of whether the Minister of Health should be prevented from issuing market authorisation to the manufacturer of the subsequent product. As of September 2017, proceedings under the PM(NOC) Regulations can lead to final findings on infringement and validity of a patent. Disputes under the new regime come with enhanced document production obligations and appeal options compared to the prior regime.

Under the old regime, once a first person initiated a proceeding under the regulations, the Minister of Health was automatically prohibited from issuing market authorisation to the subsequent entrant until the case was dismissed or two years had passed, whichever was sooner. A successful subsequent entrant had a cause of action against the first person for damages caused by the automatic delay in its market approval. Under the new regime, the first person has the option to forgo the automatic stay (and the potential liability for damages) and allow the subsequent entrant to enter the market 'at risk'.

Also particular to the pharmaceutical field is a statutory period of data exclusivity under the Food and Drugs Act and Regulations available for eligible innovative drugs that contain previously unapproved medicinal ingredients.9 Under this scheme, a generic drug manufacturer is prohibited from relying on data submitted for the innovative drug directly or indirectly for eight years from the date of first approval of the innovative drug. The data exclusivity period can be extended for a further six-month term for paediatric studies in some cases.

II RECENT DEVELOPMENTS

i Legislation and treaties

This past year was particularly active on the legislative and treaty front.

Following the US withdrawal from the Trans Pacific Partnership (TPP), Canada and other remaining TPP countries signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) in March 2018. The CPTPP suspends a number of IP-related provisions that had originally been part of the TPP. Some of the more significant provisions that were suspended as a result of the CPTPP related to: patent term extensions, data protection for pharmaceuticals and biosimilars; the term of copyright; and technological protections measures.

On 30 November 2018, Canada, the United States and Mexico signed the Canada-United States-Mexico Agreement (CUSMA) to replace the existing North American Free Trade Agreement (NAFTA).10 The CUSMA contains a number of provisions relevant to various heads of intellectual property including some provisions that were suspended by CPTPP. The CUSMA will, among other things, require adjustments to patent terms for unreasonable delays by the patent office, extend data protection for biologics, allow authorities to initiate border measures against counterfeit goods that are passing through Canada (existing provisions excluded such in-transit goods) and extend copyright from 50 to 70 years plus the life of the author. The CUSMA has not yet been implemented and the agreement provides many years to implement some of the changes.

In October 2018, the government of Canada introduced a budget implementation act (BIA) that contained a number of procedural substantive amendments to many of Canada's IP statutes. The legislation received royal assent in December and many of the provisions are now in force. Some of the more significant changes are summarised below.

On patents, the BIA included a new provision in the Patent Act allowing a court to admit the prosecution history of the patent in litigation for the purpose of claim construction in certain circumstances. This modifies long-standing Supreme Court precedent that extrinsic evidence, such as the prosecution history, is not relevant to claim construction. The BIA also broadened the existing experimental use and prior use defences to infringement. To address bad-faith allegations of patent infringement, the BIA created a right of action to persons who receive a demand letter that does not meet requirements to be defined in regulations.

On trademarks, the BIA made a number of procedural changes to opposition and non-use cancellation proceedings. The BIA also inserted provisions into the Trademarks Act allowing parties to assert bad faith as a ground of invalidity and opposition, and placing limits on the enforcement of a registered trademark without use during the first three years of registration.

On copyright, the BIA introduced a new section regulating the content of notices of copyright infringement sent pursuant to the 'notice and notice' regime. The BIA also makes extensive amendments to the Copyright Board and its processes.

On 5 November 2018, amendments to the Industrial Design Act and accompanying regulations came into force. These amendments make a number of changes to the process for the registration of industrial designs, including implementing the Hague Agreement in Canada.

Finally, the government announced that a number of changes to the Trademarks Act that were enacted some time ago would come into force on 17 June 2019. These changes include: the implementation of the Nice classification system and Madrid protocol, eliminating filing grounds and declarations of use, expanding protection for non-traditional marks, and allowing priority claims and divisional applications. These changes will have a significant impact on prosecution practice in Canada.

ii Supreme Court jurisprudence

The Supreme Court of Canada issued only one IP decision in 2018.11 The relatively narrow issue in the case was whether a rights holder or internet service provider (ISP) is responsible for the ISP's costs in disclosing information to the rights holder pursuant to a Norwich order12 further to the 'notice and notice' in the Copyright Act. The Supreme Court of Canada held that the rights holder was responsible for the ISP's reasonable costs that did not arise solely by virtue of the Act.

III OBTAINING PROTECTION

i Patents

Patentable subject matter is circumscribed by Section 2 of the Patent Act, which defines an invention as any new and useful art, process, machine, manufacture or composition of matter. Higher life forms, such as plants and animals, are not patentable. Compounds, microorganisms, peptides, proteins or other biological material and their uses are generally patentable, provided that the conditions of novelty, non-obviousness and utility are met.

Similarly, the Patent Act dictates that no patent will be granted for any mere scientific principle or abstract theorem. There is no per se exclusion for business method patents in Canada.13 However, a mere practical embodiment or application is not a sufficient basis for patentability. Claims to an unpatentable novel formula or abstract idea will not be saved by the fact that they contemplate the use of a physical tool (e.g., a computer) to give the formula a practical application.

At one time, methods of medical treatment were excluded by statute. While that provision was repealed many years ago, courts have continued to invalidate claims to methods of medical treatment, often on the basis that they are in essence directed to the unpatentable exercise of professional skill. These 'methods of medical treatment' include surgical techniques and dosing ranges but do not typically capture diagnostic methods. Recent case law and corresponding guidance from CIPO suggest that fixed dosages and fixed dosing schedules are patentable subject matter.14 In the context of novel pharmaceutical compounds, or old compounds for which a new medical use has been discovered, the prohibition on patenting methods of medical treatment can sometimes be accommodated by claiming the use of the compound for the treatment of a disease or as a Swiss-style use claim.

The Patent Act provides a one-year grace period in which disclosures made by an inventor or a person who received information directly or indirectly from the inventor will not be citable as anticipatory prior art against the inventor's own application for the same invention. Any other public disclosure made prior to the filing date (or priority date if applicable) is citable.

ii Trademarks

Statutory trademark rights are obtained through registration. An application for trademark registration may be based on prior use of the trademark in Canada, proposed use in Canada (with the registration being issued once use has been confirmed) or use and registration abroad. As mentioned above, amendments to the Trademarks Act that are coming into force in June 2019 eliminate the need to identify a filing basis in an application for registration. For goods, a trademark is 'used' when it is marked on the goods or their packaging, or associated with the goods in any other manner such that notice of the association between the mark and the goods is given at the time of transfer. For services, a trademark is 'used' if it is used or displayed in the performance or advertising of the services.

While the majority of registered trademarks are either words or two-dimensional designs, recent amendments specifically contemplate and facilitate the registration of non-traditional trademarks such as scents, sounds, textures and 3D shapes.

The Act prohibits the registration of certain trademarks, for example, trademarks that are:

  1. a word that is primarily merely the name or surname of an individual;
  2. clearly descriptive or deceptively misdescriptive of the goods or services for which registration is sought;
  3. the name in any language of the goods or services; or
  4. confusing with a registered trademark.

Third parties may oppose an application on a number of grounds including that the trademark is not registrable or that the trademark is confusing with a trademark or trade name previously adopted by the third party.

iii Copyright

Copyright automatically subsists in all original literary, dramatic, musical or artistic works subject to certain requirements relating to the author or creator's citizenship or residency. Copyright protection attaches to the concrete form of expression and does not extend to protect ideas, opinions, plans, schemes, or methods underlying the particular written expression thereof.

The requirement of originality has been interpreted to mean that the work required the exercise of skill and judgement. Originality may be found in the selection or arrangement of existing works, such as in a compilation. In such cases, copyright may exist in the constituent parts and separately in the compilation as a whole.

IV ENFORCEMENT OF RIGHTS

i Possible venues for enforcement

The Federal Court of Canada shares jurisdiction with the provincial superior courts in most enforcement matters. However, the Federal Court has exclusive jurisdiction to invalidate a patent or trademark in rem, or to issue a declaration of non-infringement. The Federal Court also has exclusive jurisdiction in other special cases, such as certain stages of litigation under the PM(NOC) Regulations.

While most IP cases are heard in the Federal Court, it has no jurisdiction to hear claims based solely in common law. Therefore, actions related to trade secrets and breaches of confidential information, or ownership of intellectual property, must be brought in one of the provincial superior courts.

ii Requirements for jurisdiction and venue

A patentee or 'person claiming under the patentee' may sue for patent infringement. The term 'person claiming under the patentee' has been held to include both exclusive and non-exclusive licensees.

While any person sued for patent infringement can allege in defence that the patent is invalid as between the parties, the Patent Act also provides that any interested person can seek a declaration of invalidity that will be effective in rem.

Similarly, if a person has reasonable cause to believe that their actions or proposed actions may constitute patent infringement, that person may seek a declaration of non-infringement in the Federal Court.

iii Obtaining relevant evidence of infringement and discovery

Typically, evidence is collected from opposing parties through documentary and oral discovery proceedings. Whether a party is entitled to documentary or oral discovery, or both, depends on whether a proceeding is brought as an action or an application.

Anton Piller orders (i.e., civil search warrants for the purpose of preserving evidence that is in danger of being destroyed) are available in Canada, but the threshold to obtain them is high. Also, the orders must be executed carefully to avoid later scrutiny from the court. These orders are primarily used in the context of counterfeit goods.

iv Trial decision-maker

All matters before the superior courts and Federal Court are heard by a single judge. None of these courts have specialised judges to deal with intellectual property matters. As a result of the focused nature of the Federal Court's jurisdiction, however, many of the judges of that court have developed considerable expertise in dealing with complex intellectual property matters.

v Structure of the trial

As patent trials are typically complex, the liability and validity issues may be separated from the quantification of damages. If this type of bifurcation is ordered, then document production, examinations for discovery, and the hearing are restricted to issues of validity and liability. If the patent is held to be valid and infringed, then damages are quantified in the second phase of the case.

The general rule in civil litigation is that the party that makes an allegation must prove it on a balance of probabilities. A plaintiff in an infringement action must establish all of the facts on which its claim is based. A defendant raising a positive defence must establish all of the facts on which its defence is based.

Patents and other intellectual property registrations benefit from a presumption of validity. In the case of patents for example, a plaintiff in an infringement action need not prove that the patent is valid as a prerequisite to asserting it.

Expert witnesses are typically called upon to testify in complicated IP cases. While the role of an expert witness is to assist the court, experts are retained by the individual parties. Parties are limited to five experts in most cases.

The Federal Courts Rules allow for jointly appointed experts, conferences of experts before trial and a practice sometimes referred to as 'hot-tubbing', wherein experts give their evidence at trial concurrently.

vi Infringement and defences

Patents

Patent claims must be read purposively in light of the entire specification. The description portion of the specification cannot be used to expand or limit the scope of the claims and extrinsic evidence is inadmissible. The courts have rejected an approach to claim construction based on the spirit or substance of an invention, as this would run counter to the public interest in being put on notice by the patent claims. An unnecessary limiting element in a patent claim may be considered a self-inflicted wound on the part of the patentee. There is no doctrine of file wrapper estoppel in Canada.

Infringement must take place in Canada to be actionable. Infringement is deemed to take place in Canada when an imported product is made abroad by a process covered by a Canadian patent. Similarly, if an important intermediate in a manufacturing process is covered by a Canadian patent, the importation of the final product into Canada will be considered an infringement. A party that knowingly induces another party to infringe a patent is liable for infringement.

A defendant is entitled to allege patent invalidity as part of its defence. While lack of novelty and obviousness are common grounds of invalidity, cases based on lack of utility or sufficiency of disclosure have become more prominent in Canadian jurisprudence.

Other defences to patent infringement provided for in the Patent Act and by common law include prior use, experimental use and repair, and exhaustion of rights, among others.

Trademarks

Infringement under the Trade-marks Act is deemed to take place when a person sells, distributes or advertises goods or services in association with a confusing trademark. In determining whether the use of the trademark would likely lead to confusion, the Court will consider: (1) the inherent distinctiveness of the trademarks and the extent to which they have become known; (2) the length of time the trademarks have been in use; (3) the nature of the goods, services or business; (4) the nature of the trade; and (5) the degree of resemblance between the trademarks in appearance or sound or in the ideas suggested by them.15 Other statutory and common law causes of action relate to the goodwill associated with a trademark and damage caused to such goodwill by virtue of another party's use of the exact trademark, or a confusing trademark.

Copyright

It is an infringement of copyright for any person, without consent, to do anything that under the Copyright Act only the owner of the copyright has the right to do. As the set of rights varies depending on the precise type of work, what constitutes infringement varies from case to case. In general, infringement occurs where a party copies an original work or a substantial part thereof. There are a number of exceptions and defences available, notably fair dealing for the purpose of research, private study, education, parody or satire.16

vii Time to first-level decision

The time to a first-level decision depends on a number of factors, including: the venue in which the case is brought; the manner in which it is brought (action or application); the scope and complexity of the allegations and defences; and most notably, the conduct of the parties.

Patent cases tend to be complex and are typically decided within 24 to 36 months of the day the case is filed. Applications and other summary proceedings proceed to hearing faster than actions, typically in the range of 12 to 18 months.

viii Remedies

Pretrial remedies

Interlocutory injunctions are seldom issued in IP cases as a person must be at risk of irreparable harm to warrant the grant of an injunction pending trial. This has been very difficult to establish in IP cases. Two recent cases, however, show that in certain circumstances, the Federal Court will grant interlocutory relief.17

Post-trial remedies

Post-trial remedies typically include damages, permanent injunctions or both, which unlike interlocutory injunctions are consistently awarded in IP disputes.

Damages are intended to compensate the plaintiff for its lost profits arising from the infringement of its rights. Damages for convoyed sales and other losses may be recoverable in some cases. In most cases, the court has the discretion to award the plaintiff an accounting of the defendant's profits in lieu of damages.

Punitive and exemplary damages can be awarded in certain IP disputes. While these remedies are generally considered rare, the Federal Court of Appeal recently upheld an award of punitive damages in a patent case in which the Court held that a 'sophisticated' defendant had exhibited 'deliberate and outrageous' conduct by making an infringing product that it 'knew or should have known' was the subject of a patent.18

Other common remedies include: declarations of infringement, non-infringement and invalidity of the applicable registration; delivery up or destruction of offending goods; and pre- and post-judgment interest on any monetary awards.

In general, a successful party is entitled to its costs of the litigation on a partial indemnity basis, plus compensation for reasonable disbursements.

ix Appellate review

Decisions of the superior courts and the Federal Court can be appealed as of right to the provincial courts of appeal or the Federal Court of Appeal respectively, all of which typically sit in three-member panels. As in the courts of first instance, there are no specialised appeal panels that deal exclusively with IP matters.

The standard of review varies depending on the nature of the decision under appeal. On determinations of fact, trial judges are given significant deference. A factual determination will only be overturned on the basis of a palpable and overriding error. In contrast, legal determinations made by the trial judge are assessed on a standard of correctness. With few exceptions, new evidence is not admissible on appeal.

Appeals from the courts of appeal are available with leave to the Supreme Court of Canada. Leave is only granted in cases of national and public importance.

x Alternatives to litigation

While there are alternatives to litigation, they are limited in scope. The Patent Act does not include a formal opposition procedure. A party wishing to oppose an application may file prior art in protest to an application. Re-examination may also be requested on the basis of prior art. In neither case does the objecting party play an active role.

By contrast, the Trade-marks Act provides for pre-registration opposition proceedings. These oppositions can be far more cost-effective than litigation before the Federal Court. At the opposition stage, the legal onus is on the applicant to establish that its application is in compliance with the Act, whereas once registered, the onus is on the challenger to establish that the registration should be expunged.

V TRENDS AND OUTLOOK

i Legislative amendments

2018 was a busy year on the legislative and treaty front. While the government is focused on ratification of the CUSMA and making any consequential amendments, practitioners are coming to terms with a significant number of amendments that have recently come, or will soon be coming, into force. These changes, across nearly all of Canada's major IP statutes, will have significant effects on rights holders and the strategies they deploy in Canada.

ii Jurisprudence

The courts have been dealing with the fallout of a 2017 patent law decision of the Supreme Court of Canada in which the court reversed years of jurisprudence and rejected the 'promise doctrine', the idea that a patent is invalid for lack of utility where an otherwise useful invention fails to live up to statements in the patent that the invention will achieve a particular result.19 This decision led to a flurry of activity testing whether the Supreme Court's decision left space to invalidate patents based on promised results under theories of invalidity other than the inutility. These arguments have, for the most part, been unsuccessful.

The first cases arising from the new PM(NOC) Regulations are making their way through the system. The courts have already dealt with a number of novel interlocutory issues arising from the changes. More such decisions and the first decisions on the merits are expected in the near future.


Footnotes

1 Adam Haller is a senior associate and Kristin Wall is a partner at Norton Rose Fulbright Canada LLP.

2 RSC, 1985, Chapter P-4.

3 RSC, 1985, Chapter T-13.

4 RSC, 1984, Chapter C-42.

5 RSC, 1985, Chapter I-9.

6 SC 1990, Chapter 20.

7 SC 1990, Chapter 37.

8 SOR/93-133, as amended.

9 Food and Drug Regulations, SOR/2006-241, Section C.08.004.1.

10 This agreement is known in the United States and generally elsewhere as the United States – Mexico – Canada Agreement (USMCA).

11 Rogers Communications Inc. v Voltage Pictures, LLC, 2018 SCC 38.

12 A Norwich order requires the third parties to disclose information about a wrongdoer, often before the issue of proceedings. In this context, the internet service provider would usually be required to identify the individual whose IP address was implicated in the potential copyright infringement.

13 Canada (Attorney General) v. Amazon.com, Inc, 2011 FCA 328.

14 Abbvie Biotechnology Ltd v. Canada, 2014 FC 1251.

15 Trade-marks Act, RSC, 1985, Chapter T-13, Sections 6, 20.

16 Copyright Act, RSC, 1984, Chapter C-42, Sections 27, 29.

17 Reckitt Benckiser LLC v. Jamieson Laboratories, 2015 FCA 104 and Sleep Country Canada Inc v. Sears Canada Inc, 2017 FC 148.

18 Bell Helicopter Textron Canada Limitée v. Eurocopter, société par action simplifiée, 2013 FCA 219.

19 AstraZeneca Canada Inc. v Apotex Inc., 2017 SCC 36.