Top 10 differences in patent litigation in Canada and the U.S.

22 January 2018

Patent owners are increasingly looking outside the United States in order to enforce their patent rights. Many would argue that the Inter Partes Review process and various US Supreme Court decisions have made enforcement of patent rights in the United States more challenging over at least the past five years. When looking abroad, patent owners often look to Europe – particularly Germany – as an alternate venue. In other cases, Japan may be a venue of choice, or even China as its IP enforcement regime continues to undergo development and improvement.

In addition, Canada is often considered as a possible venue given its proximity to the United States and well-established common law court system. For those unfamiliar with patent litigation in Canada, below are the top 10 ways in which patent litigation in Canada differs from the United States:

1. Single court system

The Federal Court of Canada is the forum where almost all patent infringement actions are brought in Canada.  Unlike district court litigation in the United States, there is virtually no forum shopping in Canada. Rather, the Federal Court is a single nation-wide Court with offices and courtrooms in all major Canadian cities, and with a headquarters in the capital city of Ottawa. The Federal Court has numerous judges that are experienced with respect to patent infringement matters. Decisions of the Federal Court are appealable to a three-judge panel of the Federal Court of Appeal as of right. Decisions of the Federal Court of Appeal are appealable to the Supreme Court of Canada with leave of the Supreme Court. While it is possible to bring patent infringement actions in provincial courts, the provincial court judges are not experienced in patent matters, and any provincial injunction would not be national in scope. This is in contrast to the Federal Court, which can and does grant nation-wide permanent injunctions – and which does not have the same constraints against granting permanent injunctions as there are in the US as a result of the eBay decision. Furthermore, there is no equivalent to the International Trade Commission in Canada for addressing trade-related patent disputes.

2. No jury trials

In Canada, there are no jury trials in the Federal Court.  All Federal Court patent infringement actions are heard by a single judge.

3. Discovery is narrower and more focused

Document discovery is not as deep or probing in Canada as it typically is in the United States. In addition, examinations for discovery in Canada (depositions in the United States) are limited to one representative per party (similar to a Rule 30(b)(6) witness in the United States), plus in some cases the inventor(s) of the patent in suit. Rarely are third parties or other fact witnesses examined/deposed. Furthermore, experts are not deposed in Canada. Rather, expert reports are exchanged just prior to trial, and experts are cross-examined at trial.

4. Options for non-court patent validity challenges are limited

In Canada, there is no equivalent to the Inter Partes Review process. While in Canada there is a post-grant re-examination procedure, it is not popular because statistically and procedurally (at least in part due to its ex parte nature) it tends to favour patentees. Moreover, the Federal Court will likely stay any re-examination in favour of a parallel patent litigation action proceeding. The basis for such a stay of the re-examination is that a full action with discovery and ultimately cross-examination at trial is considered to be the preferred means for assessing the validity of a patent.

5. Costs consequences

Canada is a loser pays jurisdiction. In this regard, it is almost automatic that a loser will have to pay a winner’s costs, though not 100% of the winner’s actual costs. Typically, the amount to be paid is approximately 20-30% of actual fees, plus reasonable disbursements. In addition, a plaintiff with no assets in Canada must post security for costs. The amount of security for costs can vary significantly depending on the particular circumstances of a case. In any event, a plaintiff will be permitted to post security in instalments. Where a plaintiff is truly impecunious and cannot afford to post security, it may be relieved of the requirement to post security, but only if it can demonstrate to the Court up front that its case has merit.

6. Accounting of profits

An accounting of an infringer’s profits is an available remedy, subject to equitable considerations, such as the requirement that the plaintiff come to the Court with clean hands. The availability of this remedy in Canada is different than in the United States where only damages are available in cases of utility patent infringement. Recently, the accounting of profits remedy resulted in the highest monetary award for patent infringement in Canadian history: $644 million plus interest, as discussed in more detail in our article$644 million patent infringement judgment is largest in Canadian history.

7. No treble damages, but punitive damages possible

In Canada, treble damages are not available. Nevertheless, punitive damages may be available, but only in limited cases. In order for punitive damages to be awarded, there must be a finding of egregious or high-handed conduct, or callous disregard for a plaintiff’s patent rights.  Willful or knowing infringement alone is not sufficient to satisfy the threshold for punitive damages.

8. No notice requirement for damages liability

In Canada, there is no requirement that a patentee provide actual or constructive notice of infringement in order for damages liability to accrue. Rather, liability may begin accruing the moment a patent application is published. In this regard, a patentee may recover reasonable compensation (i.e., a reasonable royalty) for all laid open period acts of infringement, and may elect either damages (i.e., royalty or lost profits) or an accounting of profits for all post-grant acts of infringement. Like in the United States, there is a 6-year limitation period for patent infringement claims.

9. No Markman hearings, and summary judgment is rare

There are no Markman hearings in Canada. Rather, claim construction is decided by the trial judge at or after the trial, together with infringement and validity. In addition, unlike in the United States where summary judgment is relatively common, summary judgment motions in Canada are rare. This is because the Federal Court will prefer to send a case to trial where there are competing expert opinions (as is often the case in patent litigation).

10. Pre-grant behaviour

Unlike in the United States where patentees will potentially face inequitable conduct allegations in litigation should they fail to live up to their ongoing duty to disclose to the USPTO all relevant prior art, there is no mechanism in Canada for invalidating a patent based on a failure to disclose relevant prior art to the patent office (CIPO).  Notwithstanding the foregoing, where an applicant does make a material misrepresentation to CIPO for the purpose of misleading, a granted patent can be held invalid in litigation.

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