Patent enforcement through the courts in Canada

11 minute read
11 January 2016


Enforcement through the courts

At trial

What level of expertise can a patent owner expect from the courts?

The Federal Court has in-depth knowledge of the substantive and procedural aspects of patent litigation. It has exclusive jurisdiction to hear cases regarding conflicting patent applications and the impeachment of a patent. Several judges appointed to the bench are designated experts in this area of law.

Are cases decided by one judge, a panel of judges or a jury?

Trials are decided by a single judge of the Federal Court. Juries were once used to determine issues of fact, but this practice has been suspended.

If jury trials do exist, what is the process for deciding whether a case should be put to a jury?

The Federal Court does not hold jury trials in patent cases.

What role can and do expert witnesses play in proceedings?

Since the facts at issue are often technical in nature (Pfizer Canada Inc v Canada, 2006 FC 1471 at Paragraph 16), the Federal Court relies on experts to provide opinion evidence on matters outside the experience and knowledge of the court (R v Abbey [1982] 2 SCR 9). Expert evidence is used to establish questions of fact and to inform the court of how the invention works.

Expert evidence can help a judge to interpret the meaning of certain terms or distinguish whether an element of an invention is essential or non-essential. Expert evidence is almost always relied on when obviousness is at issue, to establish the depth of knowledge a person skilled in the art would have possessed at the time. Where novelty or infringement is at issue, expert evidence can also assist when comparing the elements of a piece of prior art or an infringing invention.

Infringement and validity issues are questions of law and experts are not permitted to provide their opinions on these matters. The court must construe the patent and make findings of liability or invalidity.

Does your jurisdiction apply a doctrine of equivalents and, if so, how?

The doctrine of equivalents may be applied in an infringement action. Infringement occurs when a non-essential step, part of the process or combination is omitted or substituted. The doctrine applies where the substituted ingredient or device "performs substantially the same function, in substantially the same way, to obtain the same result". Therefore, omitting or substituting an unessential part or step can still be infringing even though the combination or process has been altered.

The construction of the claim will determine whether an element of an invention is essential and whether the varied or substituted element is non-essential (Free World Trust v Électro Santé Inc 2000 SCC 66). The Federal Court will construe a patent's claims purposively in making this determination (Donald H MacOdrum, Fox on the Canadian Law of Patents (Carswell: Toronto, 2013), (looseleaf 2015 supplement) ch 13:7).

Where a claim specifically requires a particular substance to be used, using a different substance will not infringe the patent even though the result may be the same (Biovail Corp v Canada, 2006 FC 784 at Paragraphs 9-36). However, the alternative substance must not be an obvious equivalent.

Is it possible to obtain preliminary injunctions? If so, under what circumstances?

An interlocutory injunction may be granted to a patentee before an action goes to trial. To obtain interlocutory relief, the plaintiff must establish that the balance of convenience favours granting the injunction and that it would suffer irreparable harm if the injunction is withheld.

Interlocutory relief may not be available if damages can be calculated and compensated through a monetary award. It may also be denied in circumstances where the defendant discontinues the activity in question before trial or gives an undertaking to discontinue its conduct until the patent expires (RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311).

In patent cases, the process for obtaining interlocutory relief is more involved and the Federal Court may be reluctant to grant an injunction before evidence is heard (Risi Stone Ltd v Groupe Permacon Inc [1990] 30 CPR (3d) 148 (FC)). An injunction may also be revoked if the circumstances change before trial and the harm is no longer deemed irreparable (FP Bourgault Industries Cultivator Division Ltd v Nichols Tillage Tools Inc [1989] SJ 776 (QB)).

How are issues around infringement and validity treated in your jurisdiction?

An infringement or impeachment action may be commenced in Federal Court once a patent has been granted. A defendant can file a defence or counterclaim to either of these actions.

Individuals may also seek declarations of non-infringement or validity. These declarations can be sought by way of free-standing proceedings, although they are typically sought in the form of a counterclaim. Seeking a declaration of non-infringement or validity can be an effective tactic where a person believes that an infringement action may soon be brought against them. This pre-emptive move provides the individual with more control as the plaintiff, rather than the defendant.

Will courts consider decisions in cases involving similar issues from other jurisdictions?

The Federal Court may consult decisions from other jurisdictions. For instance, UK case law is authoritative when interpreting Canadian patent law. US case law may be persuasive on certain issues, but it is not binding. If the court wishes to rely on foreign cases, the relevant statutory provisions must be similar in both jurisdictions.

Damages and remedies

Can the successful party obtain costs from the losing party?

The Federal Court has full discretion to assess and award costs (Federal Court Rules, Section 400). Given the long duration and high cost of patent litigation, the successful party is often awarded costs from the losing party. Allocating costs can be less straightforward where success is partially divided. In this case, the court may:

  • reduce the amount awarded to the most successful party;
  • award one or both parties a portion of their costs; or
  • choose not to award costs to either party.

The court may also consider other factors when calculating a costs award, including:

  • the complexity of the issues;
  • the parties' conduct;
  • the apportionment of liability; or
  • public interest.

They are also adjusted to reflect the current rate of inflation, as well as additional fees and disbursements.

What are the typical remedies granted to a successful plaintiff?

In Canada, a patentee may choose between damages or an account of profits. Damages are intended to compensate a patentee for losses incurred due to infringement, while an account of profits aims to disgorge the profits earned by an infringing party by using the patent without permission (Jay-Lor International Inc v Penta Farm Systems Ltd 2007 FC 358 at Paragraph 114).

An account of profits is an equitable remedy that entails a lengthy and complicated calculation process. This remedy is less common, and is granted at the court's discretion in exceptional circumstances, where it is equitable to do so (Beloit Canada Ltee/Ltd v Valmet Oy [1992] FCJ 825).

A party may choose the remedy that they believe will produce the largest award. If a high margin business is damaged due to lower priced infringing products, an award for damages may be higher than an account of profits. However, if the defendant's profits are much higher than the plaintiff's, an account of profits may yield a larger award (Biovail Corp v Canada, 2006 FC 784 at ch 14:3).

How are damages awards calculated? Are punitive damages available?

Damages for infringement are measured by what the patentee lost as a result of the infringement. In many cases, it can be difficult to calculate damages with absolute certainty.

If a patent holder's usual course of business is to grant licenses, the measure of damages is the loss of royalties that would have been made on licensed sales or manufactures (Colonial Fastener Co Ltd v Lighting Fastener Co Ltd (1936), [1937] SCR 36). If not, the measure of damages is the actual loss suffered by the plaintiff resulting from the infringement. This may include lost profits or market disruption caused by the infringement.

An apportionment of damages may be granted where a patentee can establish that the defendant accrued profits through the sale of a partially infringing product. Damages would then be based on lost sales that can be attributed to the invention.

An account of profits is measured by the profits made by the infringer, rather than the amount the plaintiff has lost. The defendant is treated as if it has conducted business and made profits on behalf of the plaintiff.

A patentee can also collect pre and post-judgment interest on damages. The courts have discretion to set interest rates as they see fit.

Punitive damages are uncommon in Canada but may be awarded in circumstances where the infringer's conduct is "malicious, oppressive and high-handed" as to offend the court's sense of decency (Hill v Church of Scientology of Toronto [1995] 2 SCR 1130 at Paragraph 196). Compared to other jurisdictions, punitive damages awards are modest in Canada.

How common is it for courts to grant permanent injunctions to successful plaintiffs and under what circumstances will they do this?

After trial, successful plaintiffs are usually granted permanent injunctions in order to restrain further use, manufacture or sale of the patented subject matter. The courts rarely deny permanent injunctions where infringement has been found and the relevant patent is valid and in force.

However, the courts have discretion to withhold injunctive relief if they believe that the defendant will not continue to infringe the patent. Injunctive relief may also be withheld when the plaintiff has acted egregiously and the court believes that an injunction is inequitable.

The court may set a grace period before the injunction is enforceable. This gives the defendant time to appeal the decision and seek to stay the injunction. A permanent injunction is normally upheld until the patent expires.

Timescale and costs

How long does it take to obtain a decision at first instance and is it possible to expedite this process?

It takes an average of two to four years to proceed to trial after commencing an action. The length of the process will depend on the complexity of the issues in question. Through case management, the Federal Court has attempted to expedite the trial process, with the goal of completing most actions within three years of commencement.

The parties may attempt to expedite the process through summary judgment, summary trial or simplified actions in cases where the issues are less complex. In some instances - particularly if damages are not at issue - the party may bring an application in lieu of an action.

How much should a litigant plan to pay to take a case through to a first-instance decision?

The cost of bringing a case through to a first-instance decision will depend on the issues in question, the complexity of those issues and the amount of expert evidence required. While costs may be awarded at the end of the trial, such awards rarely cover the entire cost of the proceeding.

Parties may be able to reduce costs by expediting the process or by engaging in alternative dispute resolution.

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