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Canada's Bill C-86: Impact on Canadian Patent Law

January 24, 2019

Canada’s Bill C-86, the Budget Implementation Act, 2018, No. 2 (the “Bill”), received Royal Assent on December 13, 2018. The Bill, which implements the federal government’s 2018 budget, brings a wide array of changes to Canada’s intellectual property regime. In particular, a number of noteworthy amendments are made to Canada’s patent statute. The amended Patent Act:

• Provides a regulation-making authority for establishing requirements for written demands relating to patents;
• Codifies an “experimental use” exception to patent infringement;
• Establishes that licensing commitments of owners of standard-essential patents bind any subsequent owners;
• Expands the rights of “prior users”; and
• Ensures that patent prosecution histories are admissible into evidence for certain purposes.

 

Written Demands

New section 76.2 of the Act requires that any written demand (e.g. cease and desist letters) relating to a patented invention must comply with certain prescribed requirements. Section 76.3 gives the Governor in Council authority to make regulations respecting what constitutes a written demand and the requirements with which a written demand must comply. If a written demand does not comply with the prescribed requirements, the Federal Court may grant relief (e.g. recovery of damages, injunction, etc.) to any person who receives such a non-compliant demand or who is aggrieved as a result of the receipt by another person of such a demand. The Governor in Council may make regulations relating to factors that the Federal Court may consider, must consider, or is not permitted to consider when making an order to grant such relief (section 76.2(3)).

 

Exception to infringement for “experimentation”

Two of the exemptions from patent infringement that are available in Canada are the statutory “research” exemption (section 55.2 of the Patent Act), which exempts acts that are “reasonably related” to development and submission of information for regulatory approval of a product, and the judicial “experimental use” exemption. The latter is based in common law and protects acts that are performed in the course of bona fide experiments with a patented article. The leading decision on this exemption is Micro Chemicals v. Smith Kline & French Inter-American Corp., in which the Supreme Court of Canada held that use of a patented article/substance to establish that a quality product could be manufactured in accordance with the specification of a patent did not constitute infringement. New section 55.3 of the Patent Act codifies a broader “experimental use” exemption, establishing that an act committed for the purpose of experimentation relating to the subject matter of a patent is not infringing.

 

Standard-essential patents

New section 52.1 imposes an obligation to license on subsequent patentees of standard-essential patents. More specifically, a licensing commitment in respect of a standard-essential patent that binds a patentee will bind any subsequent patentee and any holder of any certificate of supplementary protection that sets out that patent. The extent of the obligation to license mandated by section 52.1 is unclear, as regulations respecting what constitutes a licensing commitment or a standard-essential patent are yet to be formed.

 

Prior user rights

The Patent Act previously established that any person who purchased, constructed or acquired the subject matter of a patent claim prior to its claim date has the right to use and sell the specific article, machine, etc. patented without being liable for infringement (section 56(1)). The scope of rights of prior users has been expanded. Amended section 56 of the Patent Act carves out an exemption from infringement for any person who, before the claim date of a patent claim, committed, in good faith, an act that would other constitute infringement of the claim. If the person commits the same act on or after the claim date, it is still not deemed to be an infringement of the patent. The exemption does not apply, however, if the person committed the act by virtue of having obtained knowledge of the subject matter of the claim from the patent applicant and the person knew that the applicant was the source of the knowledge.

 

Patent prosecution history

The Bill introduces file wrapper estoppel in Canada. Specifically, representations made by the applicant during prosecution of a patent can now be introduced as evidence in litigation. Previously, the conventional view in Canada was that the prosecution history of a patent (and extrinsic evidence more generally) is irrelevant for the purposes of claim construction. This changes with the amended Patent Act. The new section 53.1 establishes that any written communication between the applicant/patentee and the Patent Office during prosecution of a patent application may be admitted into evidence to rebut any representation made by the patentee as to the construction of a patent claim.