The Intellectual Property Review: Canada

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 pharmaceutical patent owners to obtain, in certain circumstances, a Certificate of Supplementary Protection (CSP) for an extended protection of up to two years.

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 Trademarks 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 the earlier of 75 years after the first publication of the work, or 100 years after which the work is made. 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. However, moral rights may be waived in whole or in part.

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. CIPO 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 legislation in Canada directed to a private right of action to protect trade secrets. 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.

Patented medicines are also subject to price regulation under the Patent Act. The Patented Medicine Prices Review Board (PMPRB) has jurisdiction under the Patent Act to prevent patentees from abusing their patent rights by charging 'excessive' prices.9

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.10 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.

Recent developments

i Legislation and treaties

Despite the covid-19 pandemic, Canada has seen many developments on the IP front in the past year.

In response to the covid-19 pandemic, the federal government introduced the Covid-19 Emergency Response Act,11 adding a provision in the Patent Act allowing the Minister of Health to apply for authorisation until 30 September 2020 to make, construct, use and sell a patented invention for a public health emergency. No authorisations under the new provision appear to have been made before the 30 September 2020 deadline. In addition, the government pursued interim orders and other policy changes to expedite the development of covid-19-related products.

On 1 July 2020, the Canada–United States–Mexico Agreement (CUSMA)12 officially came into force. The Canada–United States–Mexico Agreement Implementation Act13 (the Implementation Act) was introduced earlier in 2020, making a number of changes to Canada's IP statutes to align them with the CUSMA provisions. Notably, the Copyright Act was amended to extend the copyright term for anonymous and pseudonymous works, and cinematographic works of a dramatic character. While CUSMA also requires extending the general term of copyright from 50 to 70 years from the life of the author, the Implementation Act is silent on this particular change. Canada has up to two and a half years to extend the copyright term. Further, the Implementation Act was silent on patent-term restoration (PTR), intended to allow patent holders to recover time lost owing to unreasonable delays in patent issuance. Canada has four and a half years to implement the PTR.

On the trademark front, CIPO announced in December 2020 that it would accept requests to expedite the examination process of certain trademark applications associated with medical wares and services related to efforts against covid-19.

ii Jurisprudence

In 2019, the government amended the PMPRB's Patented Medicines Regulations.14 The key changes included the addition of new factors for the PMPRB to consider such as pharmacoeconomic value, a new list of international comparator countries that removed the US and Switzerland while adding several others, and a new method for calculating net prices that was intended to capture third-party payments (e.g., pursuant to formulary listing agreements). In June 2020, following a challenge to some of the amendments, the Federal Court struck down the new price calculation but upheld the other impugned provisions. This decision is currently under appeal in the Federal Court of Appeal. In a separate challenge, the Superior Court of Quebec also struck down the new price calculation in December 2020 on constitutional grounds.15

The Supreme Court of Canada did not render IP-related decisions in 2020. However, in June 2020, the Supreme Court of Canada granted leave to appeal the Federal Court of Appeal's York University v. The Canadian Copyright Licensing Agency.16 The issues before the Supreme Court are whether the Copyright Board's tariffs are mandatory, and whether copying made by the University constitutes fair dealing. The Supreme Court's decision is expected to impact many educational institutions in Canada.

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.17 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. Case law and corresponding guidance from CIPO suggest that fixed dosages and fixed dosing schedules are patentable subject matter, although this approach has recently come under scrutiny.18 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. As of June 2019, while an applicant needs either to use or intend to use a trademark in Canada in order to file an application, it no longer needs to indicate which of those two conditions apply in the application. 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 provide for the registration of non-traditional trademarks such as scents, sounds, textures and 3D shapes.

The Act prohibits the registration of certain trademarks, such as 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, that the trademark is confusing with a trademark or trade name previously adopted by the third party or that the application was made in bad faith.

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.

Enforcement of rights

i Possible venues for enforcement

The Federal Court 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 has 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.

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.

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 Trademarks 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.19

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.20

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

Pre-trial 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, although there are examples showing that in certain circumstances the Federal Court will grant interlocutory relief.21

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 rare, the Federal Court of Appeal 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.22

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 or for important questions of law.

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 Trademarks 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.

Trends and outlook

i Legislative amendments

The year 2020 was a busy one on the legislative and treaty front. The government focused efforts on the covid-19 pandemic, introducing new policies and amending legislation to help manage the pandemic. The ratification of the CUSMA and consequential amendments to IP statutes will have significant effects on rights holders and the strategies they deploy in Canada.

ii Jurisprudence

At the end of 2018, the Patent Act was amended to make file wrapper evidence admissible to rebut representations made by a patentee as to claims construction. In 2019, one case was heard and decided on this new provision, finding that foreign prosecution history is also admissible in certain circumstances. However, the Federal Court of Appeal disagreed with the Federal Court's interpretation, finding that admissible prosecution history is limited to communications with the Canadian Patent Office.24 More cases citing this provision may be tried in 2021, which will give the courts further opportunity to clarify the scope of admissibility of file wrapper history in Canadian patent practice.

By the end of 2019, no action had proceeded to trial under the amended PM(NOC) Regulations, which were implemented in September 2017. The year 2020 saw the first full trial and decision under the amended PM(NOC) Regulations, which was later upheld on appeal.25

The year 2020 also saw the first decisions under the CSP regime for pharmaceutical patents.26 These cases provide important guidance on the new regime, and additional cases working their way through the courts will provide further clarity.

An application for judicial review challenging key provisions of the amended Patented Medicines Regulations was heard and decided by the Federal Court in June 2020.27 The court struck down the new price calculation but upheld the other impugned amendments. This decision is currently under appeal and cross-appeal in the Federal Court of Appeal. In addition, 2020 saw a separate constitutional challenge to the PMPRB and amendments, which was decided by the Superior Court of Quebec in December 2020.28 In this decision, the court also struck down the new price calculation.

The year 2020 saw several notable trademark decisions in Canada. The Federal Court of Appeal confirmed that a bricks-and-mortar presence in Canada is not necessarily required to establish that a trademark has been 'used' in Canada.29 The Federal Court of Appeal also confirmed that a trademark registration is a defence to an action for passing off.30 The amendments to the Trademarks Act that came into force in June 2019 have been the subject of considerable debate and discussion among practitioners. The courts will continue to have opportunities to consider these issues as cases that engage these new provisions make their way through the litigation process.

Footnotes

1 Caroline Henrie is an associate, Adam Haller is Of Counsel, 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, 1985, 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 Canada v. Galderma Canada, 2019 FCA 196 at para 10.

10 Food and Drug Regulations, CRC, Chapter 870.

11 SC 2020, Chapter 5.

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

13 SC 2020, Chapter 1.

14 SOR/94-688

15 Merck Canada Inc v. Procureur général du Canada, 2020 QCCS 4541.

16 Appeal from 2020 FCA 77.

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

18 Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research, 2020 FCA 30.

19 Trademarks Act, RSC, 1985, Chapter T-13, Sections 6, 20.

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

21 Sleep Country Canada Inc v. Sears Canada Inc, 2017 FC 148; Arysta Lifescience North America, LLC v. Agracity Crop & Nutrition Ltd, 2019 FC 530; and TFI Foods Ltd and I-MEI Foods Co, Ltd v. Every Green International Inc, 2020 FC 808.

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

23 Canmar Foods Ltd v. TA Foods Ltd, 2019 FC 1233, and 2021 FCA 7.

24 Allergan Inc v. Sandoz Canada Inc, 2020 FC 1189.

25 Amgen Inc v. Pfizer Canada ULC, 2020 FC 522, affirmed in 2020 FCA 188.

26 GlaxoSmithKline (GSK) in Glaxosmithkline Biologicals SA v. Canada (Health), 2020 FC 397; ViiV Healthcare ULC v. Canada (Health), 2020 FC 756.

27 Innovative Medicines Canada v. Canada (Attorney General), 2020 FC 725.

28 Merck Canada inc c. Procureur général du Canada, 2020 QCCS 4541.

29 https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/484960/index.do Miller Thomson LLP v. Hilton Worldwide Holding LLP, 2020 FCA 134.

30 Group III International Ltd v. Travelway Group International Ltd, 2020 FCA 210

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