Canadian Patent Law 2023: A Year in Review

In our annual review of developments in Canadian patent law, we considered over 60 patent decisions reported last year. This article highlights statutory changes and a selection of interesting points addressed in the reported decisions. For a comprehensive review of Canadian pharmaceutical decisions and developments, please see the 2023 Highlights in Life Sciences IP and Regulatory Law in our Rx IP Update.

Contents

1. Increased Patent Office fees but a broadened small entity definition
2. Canada’s upcoming patent term adjustment system
3. Correcting missed maintenance fees under the “due care” regime
4. Patent-eligibility of computer-implemented inventions: déjà vu all over again
5. Claim construction: when should a court look to an expert for guidance?
6. Utility – the threshold for assessing whether a prediction is sound
7. Obviousness – when is a particular dosage of a pharmaceutical “obvious to try”?
8. A comprehensive examination of patent validity and infringement
9. Infringement – further guidance on the test for inducing infringement
10. Infringement – who should be the responsible party to an infringement action?
11. Potentially infringing intermediates and territorial confines of patent rights
12. Remedies in patent infringement
13. Developments in patent agent privilege
14. Staying impeachment proceedings on the basis of re-examination
15. Evolving landscape of summary proceedings in Canadian Patent Law
16. Successive allegations of non-infringement and invalidity may amount to an abuse of process

Increased Patent Office fees but a broadened small entity definition

As discussed in our June 21, 2023 article, the first comprehensive revision of the Patent Office fee schedule in 20 years saw amendments to the Patent Rules that came into force on January 1, 2024 and increased most Patent Office fees by 25%. In combination with other legislation that adjusts fees automatically to account for inflation, the increases were effectively as high as 36% in some instances. The increased fees were tempered by a change to the small entity definition, such that entities having fewer than 100 employees may now qualify as small entities. Previously, a small entity could have no more than 50 employees.

Canada’s upcoming patent term adjustment system

The Canada-United States-Mexico Agreement (CUSMA) requires Canada to provide patent term adjustment (PTA) to compensate the patentee for unreasonable Patent Office delay. The PTA provisions of CUSMA must come into force no later than January 1, 2025, and will apply to all Canadian patent applications filed on or after December 1, 2020. The required amendments to the Patent Act were enacted on June 22, 2023. However, PTA regimes may be more or less generous, largely depending on how “periods of time that are attributable to the patent applicant”—and which are deducted from accrued Patent Office delay—are calculated. This remains to be determined by regulation, and it is too soon to know whether PTA will have a meaningful impact.

Please see our article of May 1, 2023 for more details of the proposed PTA system.

Correcting missed maintenance fees under the “due care” regime

The requirement to satisfy the Patent Office that a maintenance fee payment was missed “in spite of the due care required by the circumstances having been taken” has been in place for four years. It took time to know how the Patent Office would apply the due care standard—very stringently as it turns out. We recently surveyed more than 230 Patent Office decisions that have now been issued under the due care standard and reported our findings together with recommendations for a successful due care submission in an article published December 7, 2023.

Patent-eligibility of computer-implemented inventions: déjà vu all over again

In the article Canadian Patent Law 2022: A Year in Review, we reported that the Federal Court had established a new three-part test to be used by the Patent Office in assessing the patent eligibility of computer-implemented inventions. However, on appeal in Benjamin Moore & Co v Canada (Attorney General), 2023 FCA 168, the Federal Court of Appeal held that the issue of a holistic framework for assessing patentability of computer-implemented inventions was not a matter that had properly been before the Federal Court. Rather than endorsing the new test set forth by the Federal Court, or altering it, the Court of Appeal set aside this aspect of the lower court’s judgment and directed the Patent Office to redetermine the patentability of the applications in question based on the Patent Office’s existing examination guidelines concerning computer-implemented inventions.

The Court of Appeal noted that there are open questions, including e.g. the role (if any) the concepts of novelty and ingenuity have in the assessment of subject-matter eligibility. The practical consequence appears to be that, until the Federal Court squarely addresses the manner in which subject-matter eligibility of a “pure” computer-implemented invention is to be assessed, the current Patent Office guidelines will be followed. 

Under the current guidelines, the Patent Office will first “purposively” construe the claims, typically finding that all stated claim elements are “essential.” However, the inclusion of a computer as an “essential” claim element will only impart patentability if “the computer cooperates together with other elements of the claimed invention and thus is part of a single ‘actual’ invention.”  

For now, the clearest path to patentability for a claim to a computer-implemented invention will be to:

1. Satisfy the Patent Office that the invention improves the functioning of the computer per se (e.g. increases processing speed or reduces power consumption); or
2. Include additional physical claim elements or steps (e.g. drilling a well based on the output of the computer). 

The Intellectual Property Institute of Canada (IPIC), which had intervened before the Federal Court of Appeal, has sought to appeal to the Supreme Court of Canada (Supreme Court file 41004).

Claim construction: when should a court look to an expert for guidance?

The claims of a patent must be construed in an informed and “purposive” way. This involves interpreting the language of the claims with reference to the patent as a whole and through the eyes of a person skilled in the art. Where the inventor defines a term as having a particular meaning, claims containing the defined term are to be construed accordingly (see, e.g., Biogen Canada Inc v Pharmascience Inc, 2022 FCA 143; and Google LLC v Sonos, Inc, 2022 FC 1116). Although courts often rely on expert opinions to construe undefined technical terms that are particular to the field of the invention, a question arises as to whether courts should rely on experts to construe non-technical terminology. 

In dTechs EPM Ltd v British Columbia Hydro and Power Authority, 2023 FCA 115, the Federal Court of Appeal stated that the Federal Court did not need the assistance of an expert to construe the words “further comprising”, noting that if “‘further comprising’ are terms of the art, it is in the art of claim drafting,” something the experts were not qualified to opine upon. 

dTechs has filed an application for leave to appeal to the Supreme Court of Canada (Supreme Court file 40869).

Utility – the threshold for assessing whether a prediction is sound

For the subject matter of a claim to be patentable, it must be useful, i.e. capable of a practical purpose. A single utility will suffice, and a scintilla of utility will do. The utility of the claimed invention must be established at the filing date either by demonstration or sound prediction. Sound prediction, as noted in Apotex Inc v Wellcome Foundation Ltd (“Wellcome”), 2002 SCC 77, requires:

1. A factual basis for the prediction;
2. An articulable and “sound” line of reasoning from which the desired result can be inferred from the factual basis; and
3. Proper disclosure.  

The Federal Court of Appeal has previously stated that “a sound prediction requires a prima facie reasonable inference of utility” (Eli Lilly Canada Inc v Novopharm Limited (“Eli Lilly”), 2010 FCA 197). Did Eli Lilly increase the threshold for sound prediction from Wellcome?

In Sandoz Canada Inc v Janssen Inc, 2023 FCA 221, the Federal Court of Appeal held that the Federal Court did not erroneously apply a lower threshold for sound prediction, in considering Wellcome, but not Eli Lilly. The “prima facie reasonable inference of utility” statement in Eli Lilly did not change the legal test for sound prediction set out in Wellcome. Instead, Eli Lilly merely gleaned an appropriate threshold for sound prediction from Wellcome. The Federal Court of Appeal further held that the threshold for sound prediction is not high and the terms “ prima facie” and “reasonable inference” leave considerable space for a fact-finding body in reaching its conclusion.  

For a further discussion of the Federal Court of Appeal’s decision, please see our November 23, 2023 article.

Obviousness – when is a particular dosage of a pharmaceutical “obvious to try”?

Since the Supreme Court of Canada’s decision in Apotex Inc v Sanofi-Synthelabo Canada, 2008 SCC 61, courts have employed the four-step approach to assessing obviousness first outlined in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd, [1985] RPC 59 (CA). In areas of endeavour where advances are often won by experimentation, the assessment often includes consideration of whether the claimed invention was “obvious to try.”

In Eli Lilly Canada Inc v Apotex Inc, 2023 FCA 125, Eli Lilly argued that the trial judge erred in identifying the inventive concept of certain claims as being the same as the essential elements of the claims—which included particular doses—and not considering an improved side effects profile of less flushing as part of the inventive concept. Even accepting, for the sake of argument, that the inventive concept included “the minimization or elimination of flushing as compared to larger doses of tadalafil”, the Federal Court of Appeal affirmed the trial judge’s finding that the claimed invention was obvious, noting that:

1. The aim of a skilled person would be the selection of a dose range that offers the best balance between efficacy, safety and tolerability, and the number of predictable solutions was not infinite.
2. The steps the person skilled in the art would take to identify the dose range were routine.
3. Having already identified a viable compound for the PDE5 inhibition and treatment of ED, there would be a motivation for the skilled person to identify the doses that offer the best balance between efficacy, safety and tolerability.

However, the Court was careful to clarify that the commentary regarding dosage selection was limited to the specific scenario before the Court, as “[t]here may be cases where dosage selection is not routine”.

For a further discussion of the Federal Court of Appeal’s decision, please see our June 13, 2023 article.

A comprehensive examination of patent validity and infringement

NCS Multistage Inc v Kobold Corporation, 2023 FC 1486 warrants mention, if only for the number of patents involved (six) and the length of the decision (451 pages; 527 pages with the appendices). This decision, concerning the validity and infringement of six patents relating to down-hole tools used in drilling multistage horizontal oil wells, provides an interesting discussion of a host of issues, including, inter alia:

• An extensive overview is provided of the legal principles concerning claim construction, anticipation, obviousness, overbreadth, ambiguity, sufficiency of disclosure, utility, double patenting, and infringement (paras 107-248).
• Finding that the term “comprising” has its ordinary meaning of “including but not limited to” the Court held that “‘[c]omprising’ must mean that the listed element [of a claim] would be an essential element but that other non-essential elements could be added. The presence of a non-essential element does not escape an inclusive claim, but the lack of an essential element cannot be rescued by an inclusive claim.” (para 337)
• Many claims of one patent were found invalid for “overbreadth” per se, on the basis that the claims omitted elements going to the “core of the invention,” without a corresponding finding of insufficiency of disclosure (description and enablement). Notably, for at least one claim, the omitted “essential” feature was found in a dependent claim, indicating its absence from the broader claim as a matter of claim differentiation (para 1493). This highlights the risk of including in dependent claims limitations or features that are necessary for the invention to work and which might otherwise be implied or inherent in a base claim.
• While no claims were found invalid for double patenting, the Court indicated that double patenting can still occur between a parent and divisional patent, despite the absence of term extension and the possibility of impermissible “evergreening” in the divisional patent. An extensive discussion is provided as to the distinction between a “forced” divisional (insulated from double patenting) and a “voluntary” divisional, which may be invalid for double patenting (paras 212-245).

Infringement – further guidance on the test for inducing infringement

As set out in section 42 of the Patent Act, a Canadian patent grants the patentee and the patentee’s legal representatives “the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used.” 

A patentee is not, however, limited to pursuing only those who directly infringe the claims and may instead or also pursue a party who induces another to infringe the claims. To be successful in an allegation of inducing infringement, the patentee must establish that:

1. The acts of infringement were completed by the direct infringer;
2. The completion of the acts of infringement was influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not have taken place; and
3. The influence was knowingly exercised by the inducer; in other words, the inducer knew that this influence would result in the completion of the acts of infringement.  

In Teva Canada Limited v Janssen Inc, 2023 FCA 68, the Federal Court of Appeal clarified that “but for” causation by the alleged inducer is not required in the second prong of the test. Specifically, recommending the impugned use in the product monograph can be sufficient to satisfy the second prong, and it does not matter that physicians use their own skill and judgment nor that they make an active choice to perform the infringing use.

In Apotex Inc v Janssen Inc, 2023 FCA 220, the Federal Court of Appeal held that neither explicit instructions in a product monograph nor the alleged infringer’s intention that direct infringement should result were required to satisfy the second prong of the test. The Court also confirmed that the Federal Court was entitled to draw inferences about the alleged infringer’s knowledge based on the evidence before it to satisfy the third prong of the test.

For a further discussion of the Federal Court of Appeal’s decisions, please see our April 27, 2023 and November 23, 2023 articles.

Infringement – who should be the responsible party to an infringement action?

A patent is infringed by any party that makes, constructs, or uses the claimed invention, or sells the invention to others to be used. For consumer products manufactured in Canada, there are therefore multiple parties who may be pursued in an infringement action. In practice, the patentee will often sue the manufacturer rather than the end-user (consumer) of the allegedly infringing product. However, where a patentee chooses to pursue users rather than the manufacturer, should the manufacturer nevertheless be made a party to the infringement action at its request?

In Seismotech IP Holdings Inc v John Doe, 2023 FC 1335, the Federal Court concluded that the patentee could not sue only end-user consumers of intelligent thermostats without joining the manufacturer (Ecobee) as a defendant. The Court reasoned that the outcome of the action would inevitably affect Ecobee—if Seismotech is successful on the action:

1. it will necessarily mean that Ecobee’s products are infringing Seismotech’s patents and that Ecobee has no right to manufacture them; and
2. users will likely sue Ecobee in warranty.

Seismotech has appealed the decision (Federal Court of Appeal file A-277-23). 

In a related decision, the Federal Court refused to grant a Norwich order Seismotech sought to force Apple to disclose the names and addresses of consumers who downloaded the apps controlling such devices from the App Store (2023 FC 1649). This decision has also been appealed (Federal Court of Appeal file A-352-23).

Potentially infringing intermediates and territorial confines of patent rights

The import of component parts that can be used to construct a patented product or that, when appropriately modified, can avoid infringement altogether, raises a number of issues. For example, is there infringement by a Canadian party who transships the component parts from a manufacturer in one country to a user in another? Does establishing that an infringing product may be formed as an intermediate in constructing a non-infringing product establish infringement?  

These issues were addressed in Deeproot Green Infrastructure LLC v Greenblue Urban North America Inc, 2023 FCA 185. The Federal Court previously rejected DeepRoot’s assertion that GreenBlue was in breach of an injunction not to infringe asserted claims from two patents through the sale of an allegedly non-infringing product made by modifying the product previously found to infringe the patents with an insert. 

In dismissing DeepRoot’s appeal, the Federal Court of Appeal held that the trial judge did not err in not finding infringement where the product previously found to infringe the patents could have been formed before adding the insert. DeepRoot had not shown beyond a reasonable doubt—the standard required for establishing contempt of court by violating an injunction—that GreenBlue had infringed or induced infringement of DeepRoot’s patents. Constructing the “design-around” product in the manner set out in the instructions provided by GreenBlue would avoid forming the infringing product as an intermediate.

The Court also found that the trial judge did not err in concluding that DeepRoot had not shown, beyond a reasonable doubt, that GreenBlue infringed at least one claim by importing the component parts of the infringing product into Canada, and then exporting the parts to customers in the United States. There was no evidence of the sale or assembly of the infringing product in Canada after the Federal Court issued its permanent injunction, and there was also no evidence that revenue from the sales to US customers accrued to GreenBlue’s benefit; GreenBlue transshipped the parts to US consumers after receiving them from GreenBlue Urban Limited (which was not a party to the action).

Remedies in patent infringement

The Patent Act provides several remedies for a patentee whose patent has been infringed, as well as for persons claiming under the patentee. Post-grant remedies include damages and an accounting of profits. Damages compensate the patentee for losses attributable to the infringement, while an accounting of profits requires the infringer to disgorge all profits causally attributable to infringement. Damages and an accounting of profits are available in the alternative, and choice of remedy could result in dramatically different monetary compensation being awarded to a successful patentee. It would therefore benefit a successful patentee to have the ability to elect between damages and an accounting of profits at a point in litigation where all relevant evidence is before them.

The Federal Court’s decision in Angelcare Canada Inc v Munchkin Inc, 2023 FC 1111 covered several issues, including entitlement to injunctive relief, entitlement to accounting of profits, entitlement to punitive damages, and who is entitled to a pecuniary remedy (damages or accounting of profits).

The Court concluded that the absence of a risk of imminent infringement did not weigh in favour of declining to grant a permanent injunction; that punitive damages were not available where the infringer sought to create a component—that the infringer failed to differentiate enough to avoid infringement—that would be compatible with the patented product; and that “persons claiming under the patentee” is to be given broad interpretation, with parties who were operating together towards a common goal and each granted the right to use patent(s) they did not own at the relevant time entitled to damages.

The Court also affirmed the right of the plaintiff to defer the decision to elect between an award of damages and an accounting of profits until after discovery has been completed, noting the patentee’s assertion that the financial information in order to make an enlightened choice between damages and an accounting of profits was lacking.

Developments in patent agent privilege

Section 16.1 of the Patent Act establishes privilege in a communication between a patent agent and their client where the communication is intended to be confidential and “is made for the purpose of seeking or giving advice with any matter relating to the protection of an invention.”

In Boehringer Ingelheim (Canada) Ltd v Pharmascience Inc, 2023 FC 584, the Federal Court rejected the proposition that an “invention” exists only when instructions have been given to file a patent application, an application is pending, or a patent has issued. Therefore, patent agent privilege is not limited to only these circumstances.

Staying impeachment proceedings on the basis of re-examination

Re-examination of a granted patent is intended to provide a relatively summary and inexpensive alternative to an impeachment process by litigation and a process by which a patentee may have the Patent Office reconsider the claims of an issued patent. However, what happens where a patentee seeks re-examination after an action to impeach the patent has been brought?

In Pfizer Canada ULC and Pfizer Inc v Uniqure Biopharma BV, 2023 FC 629, the Federal Court dismissed uniQure’s motion to stay Pfizer’s action to impeach uniQure’s patent pending the completion of uniQure’s request for re-examination of its own patent by the Patent Office. The Federal Court found that the decision of the re-examination board would not materially affect the scope of discovery, and that uniQure would not be unfairly prejudiced since it was uniQure’s choice to seek re-examination after commencement of the impeachment action despite having narrowed its claims in other jurisdictions before the action was brought. The Federal Court also found the potential stay of 12 months to be a long timeframe and noted that the Patent Act does not state that a patent cannot be impeached while it is under re-examination.

Evolving landscape of summary proceedings in Canadian Patent Law

As reported in our article Canadian Patent Law 2022: A Year in Review, 2022 saw a shift from the historical norm where motions for summary judgment or summary trial were rarely utilized in patent cases to an environment where summary judgment and summary trial appear to be viable options to resolve patent disputes. In 2023, the Federal Court continued to provide guidance regarding when summary proceedings are appropriate to resolve patent disputes.

For example, in Noco Company, Inc v Guangzhou Unique Electronics Co, Ltd, 2023 FC 208 a motion for summary trial was refused where inter alia:

• there were complex issues of claim construction and infringement that were not framed in a manner suitable for summary determination;
• there were serious issues with respect to the underlying factual basis for deciding infringement, deciding specific issues raised in the motion would amount to litigating in slices; and
• there was insufficient evidence to fairly and justly adjudicate the issues, including issues of credibility of witnesses.

In Meridian Manufacturing Inc v Concept Industries Ltd, 2023 FC 20, the Federal Court dismissed a motion for summary judgment because the questions of validity and infringement could not be determined without a trial or were better dealt with at trial. There was disagreement between the parties regarding: the essential elements of the claims; the construction of specific terms; and whether a potentially anticipatory product was in fact prior art, the resolution of which could turn on the credibility of various witnesses. 

2023 also provided the Federal Court with the opportunity to opine on an issue that arises when summary proceedings have been used, namely whether the use of summary proceedings necessarily changes how courts are to assess costs. 

In two decisions, the Federal Court rejected argument that motions for summary trials in patent proceedings warrant a reduced cost award (see, Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC, 2023 FC 780 and Eli Lilly Canada Inc v Pharmascience inc, (Tadalafil*), 2023 FC 779). The Federal Court held that case law has not created a “norm” in pharmaceutical patent-related summary trial proceedings to award costs under column III—“[t]he Court has full discretion to determine the appropriate column or level of costs in the circumstances”—and further that “the jurisprudence accepting column IV as being reasonable and appropriate in intellectual property actions cannot apply to patent litigations that proceeds by way of a motion for summary trial”.

Successive allegations of non-infringement and invalidity may amount to an abuse of process

Manufacturers of pharmaceutical products like small molecule and biologic drugs are required to obtain a Notice of Compliance (NOC) from Health Canada before they are allowed to sell the products in the Canadian marketplace. Where the product is a “generic" or “biosimilar” version of a patented drug with one or more patents listed on the Patent Register and the manufacturer does not have the consent of a “first person” (typically the patentee or a licensee) and wants the NOC to issue before expiry of the relevant patents, the manufacturer must serve on the first person a Notice of Allegation (NOA) alleging, for example, invalidity of the relevant patent(s), non-infringement or both. The process appears to leave open the possibility that the manufacturer of a generic or biosimilar product could “litigate by instalments”, first alleging that the product is non-infringing and, if unsuccessful, alleging that the relevant patent(s) is/are invalid. 

In Janssen Inc v Apotex Inc, 2023 FCA 253, the Federal Court of Appeal found that filing consecutive NOAs in respect of the same patent, the first alleging non-infringement and the second alleging invalidity, was an abuse of process. The Court opined that a generic manufacturer should raise all of its allegations in its first NOA and should not “keep some in reserve in the event that it is not initially successful”.     

For a discussion of the Federal Court’s decision that was under appeal, please see our July 27, 2023 article.

Stay tuned

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The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.