Summary
Canada has two main court systems: the Federal Court and the various Provincial Territorial Courts. All of these courts can, subject to certain legislated limits, handle IP-related proceedings. For example, proceedings to enforce IP rights against alleged infringers can be brought in either the Federal Court or one of the Provincial Courts. However, most proceedings to invalidate or expunge registered IP rights must be brought in the Federal Court, as do appeals from the Canadian Intellectual Property Office from refusals to grant a patent or register a trademark. On the other hand, proceedings relating to trade secrets or confidential information, or to enforce license agreements, are the exclusive purview of the Provincial Courts.
Discussion
When faced with a choice of venue for their dispute, IP litigants can choose between the Federal Court, a provincial superior court, a province’s Small Claims Court or arbitration depending on the circumstances.
Why consider the Federal Court?
Most IP litigation is conducted in the Federal Court. The Federal Court’s ability to issue binding decisions, including injunctions, that have effect across Canada provides litigants with comprehensive IP protection. Furthermore, many Federal Court judges have significant experience with IP disputes, which is helpful with technical matters such as patent claim construction. The Federal Court also provides case management by experienced Associate Judges for complex matters such as IP proceedings, which assists in getting matters to trial efficiently.
Another consideration is that the Federal Court is the only forum that can provide certain IP-related remedies. The Federal Court is a statutory court that draws jurisdiction from the Federal Courts Act (the “Act”). Section 20 of the Act outlines the exclusive jurisdiction of the Federal Court, and this jurisdiction includes all cases of conflicting IP applications or registrations and makes the Federal Court the only forum to impeach, invalidate, or expunge IP registrations. In all other cases, the Federal Court has concurrent jurisdiction with provincial courts concerning patents, copyrights, trademarks, industrial designs, and topography.
Why consider a Provincial Court?
A significant benefit of litigating an IP dispute in the provincial courts is that they provide a forum where a litigant can pursue a wide array of causes of action through a single proceeding. Provincial superior courts have inherent jurisdiction and can therefore hear cases in all areas, unless specifically barred by statute. Many causes of action that may not be pursued in the Federal Court are viable options for the provincial courts, including disputes that are contractual in nature (such as licensing agreements) or involve tortious activities (such as breach of confidence). The obvious downside of a Provincial Court is that the dispute and remedies are typically limited to the borders of that particular province.
How do the Courts Award Costs?
The general rule in Canadian litigation, including with respect to IP disputes, is that an award of costs is made against the losing party and in favour of the successful party. The cost award is intended to reimburse the successful party for a portion of the total legal costs it incurred in pursuing the matter. When an IP litigant has a choice between the Federal Court and a Provincial Court, one other factor to consider is that provincial courts often award greater costs than the Federal Court. The Federal Court can calculate fees according to tariffs in the Federal Courts Rules. This method provides a fixed cost or range for the various steps in litigation. Alternatively, the Federal Court can choose to award a lump sum cost award that represents a portion of a successful party’s actual legal fees. Meanwhile, provincial courts often award “partial indemnity costs” which are a portion of the total costs actually incurred. If a judge decides that the unsuccessful party unnecessarily lengthened the proceeding, for example refusing a reasonable settlement offer, then the cost award can be elevated to “substantial indemnity costs”, which exceed what partial indemnity costs would provide. With the awarding of costs as yet another consideration, it is crucial that an IP litigant examine all the circumstances available when choosing which forum to pursue the enforcement of its IP rights.