TAKING ADVANTAGE OF THE PATENT PROSECUTION HIGHWAY BETWEEN CIPO AND THE USPTO
BILL 96 – Impact on IP Practice
by Mark Butler
On June 1, 2022, the National Assembly of Quebec passed Bill 96, An Act respecting French, the official and common language of Quebec. The purpose of the Act, from the Explanatory Notes, is to affirm “that the only official language of Quebec is French” and “that French is the common language of the Quebec nation.” In line with this broad yet pointed purpose, the Act enacts a wide-ranging series of amendments to various provincial statutes.
At the centre of these amendments, and unsurprisingly given their purpose, are changes made to the Charter of the French Language. The Charter is not a new document, having been first adopted in 1977, and persons doing business in Quebec have long been accustomed to compliance with its various requirements. Importantly, certain amendments to the Charter have implications for the use of trademark rights in La belle province.
The Changes to the Law
Pre-amendment, under regulation made pursuant to the Charter, recognized trademarks within the meaning of the federal Trade Marks Act could be displayed in a language other than French if there was no French version of the mark that was registered. This meant that non-French marks did not need to be registered in order to be exempt from the requirement that they appear in French on products—it was sufficient that they be ‘recognized’. Because of this, common law trademarks and marks in the process of being registered qualified for the exemption.
Bill 96 changes this exemption, now limiting it to only ‘registered’ trademarks within the meaning of the Trademarks Act. Registration is, obviously, a higher threshold than recognition, and therefore many non-French marks which benefitted from the previous exemption will no longer be so exempted. Once this amendment comes into force, only registered trademarks under the federal Act without a registered French version will be able to be displayed on products in a language other than French. However, the requirement does not stop there.
Where a registered trademark with no French version does benefit from the new exception, generic and descriptive terms included in the trademark will still need to appear in French on products on which the trademark is displayed. This requirement is aimed at preventing trademark owners from tacking words on to their registered non-French trademarks in an attempt to obviate the need for translation. While debating the Bill, Simon Jolin-Barrette, then Minister Responsible for the French Language, gave the example of “Softsoap Brand, Lavender and Shea Butter, washes away bacteria, deeply moisturize to hydrate skin”. According to Minister Jolin-Barrette, only ‘Softsoap Brand’ would not need to be translated.
Additional changes impacting trademark use come in the form of new requirements surrounding public signage. Under the new amendments, registered trademarks without registered French versions may appear on public signs, posters and in commercial advertising without a French version. But, where public signs and posters are visible from outside premises, French must be ‘markedly predominant’. This means that non-French registered marks ‘visible from the outside of premises’ must be accompanied by ‘markedly predominant’ French text.
The amendments to trademark display on products and public signage discussed in this section will come into force on June 1, 2025.
What this Means for Trademark Owners and Users
Many owners of non-French marks that do not qualify as registered trademarks under federal law will need to take action to continue using their marks after the coming into force of the above amendments in June of 2025. Registration of non-French versions of marks is the surest way to be compliant under the new laws. Given the lengthy delays in examination with the federal Trademark Office, trademark owners should act immediately where they wish to obtain registrations for their non-French marks, and may consider means of expedited examination, where possible.
Where trademark owners own registered marks without French versions, they should still check their marks for generic or descriptive language, as the new law states that such language must be translated even where the mark is registered with no French version.
Finally, trademark owners should be cognizant of how their marks are displayed in public. Where non-French registered marks are legitimately displayed and visible from the outside of premises, they should be accompanied by French text that would appear to passersby to be ‘markedly predominant’.
Contracts in Licensing
The Changes to the Law
Bill 96 enacts important changes to the language requirements of contracts of adhesion (where the terms are dictated by one party). Henceforth, parties may enter into non-French contracts of adhesion, but only where they have first had the opportunity to inspect a French version of the contract. One type of contract to which this requirement does not apply is ‘a contract used in relations with persons outside Quebec’.
Where parties have agreed to enter into a contract exclusively in English, any other materials related to that contract may also be drawn up in English.
These changes come into force on June 1, 2023.
What this Means for Franchisors
In the context of trademark ownership, the above changes to the law of contracts in Quebec will likely have implications for franchisors. In licensing marks in Quebec, the new language requirements in the formation of contracts of adhesion will be important where such contracts are used. Unfortunately, at this time it is not clear just exactly how wide of a scope is contemplated by the phrase ‘in relations with persons outside Quebec’. As this phrase comes to be better defined by the legislature, the courts, and the administrative officials tasked with upholding the Charter of the French Language, franchisors will come to better understand whether and to what extent they can qualify for this exemption.
by Mark Butler
CLIENT ALERT – Changes to Patent Examination Procedure in Canada
Recent amendments to the Canadian Patent Rules which will affect the cost of examining patent applications in Canada have just been registered and will be in effect before the end of the year.
These requirements can be avoided if a request for examination is filed before October 3, 2022.
Excess claims fees will be required:
when examination is requested:
Effective October 3, 2022, if a patent application has more than 20 claims when examination is requested, an additional government fee of $100 CAD per additional claim must be paid. For example, if an application has 25 claims when examination is requested, the government examination fee will be increased by $500. A 50% reduction of this fee (to $50 CAD per additional claim) applies if small entity fees are paid for the application.
A voluntary amendment can be filed at the time examination is requested to reduce the number of claims for which excess claims fees must be paid.
when the final issuance fee is paid:
As well, if more claims than were paid for at the time examination was requested are added to the application at any time before the application is allowed, even if they are deleted before allowance, excess claims fees to pay for the further added claims will be included in the final fee which must be paid for grant of the patent. Fees are due for claims which add to the total number of claims on file at any one time, not for claims which simply replace deleted claims without increasing the total number.
Examples of calculations are summarized below:
|No. of claims in application when examination requested||Additional examination fee for excess claims||Max. no. of claims presented at any time during examination||No. of claims in application at allowance||Additional final fee for excess claims|
|20 or fewer||$0||20 + x||20 + x or fewer||$100x ($50x)|
|20 + x||$100x ($50x)||20 + x||20 + x or fewer||$0|
|20 + x||$100x ($50x)||20 + x + y||20 + x + y or fewer||$100y ($50y)|
Requests for continued examination will be required if more than two office actions are issued
A further new requirement coming into effect on October 3, 2022 is related to the number of examination reports issued by the Examiner during examination of the patent application.
If the examiner issues a third report identifying defects in the application that need to be addressed before the patent can be granted, a request for continued examination (RCE) will need to be submitted along with payment of a government fee of over $800 CAD. Again, a 50% reduction of this fee applies if small entity fees are paid for the application.
If a further two examiner’s reports are issued after a request for continued examination has been filed, a further RCE must be filed along with payment of an additional government fee. Issuance of examiner’s reports and filing of requests for continued examination can continue until the application is allowed, finally refused or abandoned.
If you wish to proactively file a request for examination for one or more applications before October 3, 2022 to prevent these additional government fees being applied, or if you have any questions or would like more information, please contact us – we are happy to help.
Rebecca Huang – Called to the Bar
The Partners, Associates and Staff at Macera & Jarzyna LLP wish to offer their congratulations to Rebecca Huang on her recent call to the Bar. Rebecca completed her articles with Macera & Jarzyna LLP this spring and is now a freshly minted Barrister & Solicitor and member of the Law Society of Ontario. Congratulations Rebecca !!
Federal Court Clarifies Test for Patent Subject Matter Eligibility
The Federal Court has recently issued a decision in the case of Benjamin Moore & Co. v. The Attorney General of Canada, 2022 FC 923. This case follows the Amazon decisions by the Federal Court and the Federal Court of Appeal, and the more recent Choueifaty decision, in articulating what the legal test for patent subject matter eligibility is in Canada.
At issue in the case were two patent applications by Benjamin Moore which were rejected by the Canadian Patent Office. The claims, directed to a computer-implemented colour selection method, were found by the Patent Office to not comply with section 2 of the Patent Act. In reaching this conclusion, the Patent Office analyzed the problem solved by the claims, found that the problem was not a computer-related problem, and therefore concluded that the computer was not a part of the solution.
Both the appellant (Benjamin Moore) and the respondent (the Attorney General), agreed that the Patent Office applied the “problem and solution approach”, which was previously rejected by the Federal Court. Moreover, the Federal Court noted that despite paying lip service to the purposive construction approach prescribed by earlier decisions, CIPO continued to apply the problem and solution approach.
As all parties agreed that the Patent Office had applied the wrong legal test, the only issue to be decided by the court was which legal test should CIPO apply. The respondent requested that the matter be remitted to the Patent Office with instructions to follow the Choueifaty decision as guidance. In contrast, the appellant sought an order instructing the Patent Office to follow a legal test proposed by the Intellectual Property Institute of Canada (IPIC), which was an intervener in the case.
The test proposed by IPIC is reminiscent of prong 2 of step 2A in the subject matter eligibility test used by the USPTO, as it asks whether the claimed subject matter comprises a practical application which uses an abstract idea or scientific theorem, or whether the claims are just directed to a mere abstract idea or scientific theorem.
In a victory for the appellant and the intervener, the court agreed to instruct CIPO to use the practical application test proposed by IPIC. The matter will be remitted to CIPO for evaluation in accordance with the court’s instructions.
However, it is too early to tell whether this victory will translate into CIPO adopting the approach prescribed by the courts or whether it will continue paying lip service to court decisions while still applying the “problem and solution approach”, as it has done following past decisions.
Canada’s Federal Court Issues Unprecedented Site Blocking Order to Stop Piracy of Stanley Cup Playoffs
As copyright pirates continue to develop ever more complex ways to evade copyright enforcement, content owners must continually devise new ways of stopping them. In a recent decision, Canada’s Federal Court has provided content owners a significant new tool to use in their efforts to stop piracy.
Known as a Dynamic Site Blocking Order, the Order compels third party internet service providers (ISPs) to block access to internet sites as identified by the content owners from time to time, sometimes on very short notice. This type of Order differs from Static Site Blocking Orders, where the sites to be blocked are specifically identified in the Order, and the addition of new sites to be blocked requires Court intervention to amend the Order.
While Static Site Blocking Orders have been issued by Canadian courts before, this is the first time that a Canadian court has issued a Dynamic Site Blocking Order.
The site blocking order was issued to the owners of the National Hockey League’s Stanley Cup Playoffs, to prevent unauthorized redistribution of the coverage by unidentified pirates. The unprecedented dynamic nature of the order was necessary because of the pirates’ advanced means of evading detection, which included frequently relocating the illegal feed to new internet sites, sometimes several times per game. Due to the nature of the copyright works as a live broadcast, the owners required the ability to quickly add new sites to the site blocking order; without this ability, they would effectively have no means of preventing unauthorized access to their content.
The Order was opposed by several of the ISPs that will be required to block the sites under the Order. Several concerns were raised, including the possibility of inadvertently blocking access to legal content, and the cost of compliance with the order. For some ISPs, core network equipment would have to be upgraded in order to block sites as required, which would substantially add to the cost of compliance.
The Court was sympathetic to many of these concerns, and issued the Dynamic Site Blocking Order subject to several conditions, including the following:
- The content owner is required to retain a third party expert to monitor the owner’s use of the Order, and ensure that blocked sites are properly identified;
- No ISP will be required to upgrade equipment to comply with the Order;
- ISPs will be entitled to full reimbursement of their costs incurred to implement the Order. Reimbursement is capped at a maximum amount, but reasonable costs to implement the Order are not expected to exceed that cap.
Despite these strict conditions, the Court’s Dynamic Site Blocking Order establishes precedent in Canada for a powerful new tool for copyright owners to enforce their legal rights against pirates who go to great lengths to infringe.
The Court’s lengthy reasons for issuing the Order can be seen in Rogers Media Inc. et al. v. Doe 1 et al., 20220 FC 775.
CANADA TO CHANGE COPYRIGHT TERM
The length of the term of copyright protection in Canada is going up.
Canada’s budget implementation bill contains amendments to the Copyright Act that will extend the term of copyright. The new term length will be the life of the author, plus 70 years. This is up from the current term which extends for the life of the author plus 50 years.
Under a term of the United States-Mexico-Canada trade agreement (the “USMCA”), each party must provide under its laws copyright having a term of 70 years from the death of the author. The amendments to Canada’s Copyright Act will bring Canada into compliance with this term of the USMCA.
This change will have potentially significant implications for both copyright owners and users of content. If you have questions or concerns over how you or your business may be impacted, Macera & Jarzyna, LLP would like to help. Please contact us to more information.
Jaimie Bordman is an associate and litigation specialist with Macera & Jarzyna LLP.
CIPO Publishes First Determinations Related to Due Care
By Ashley Chu
The Canadian Intellectual Property Office (CIPO) recently published its first determinations regarding due care.
Since the amendments to the Patent Act and Patent Rules came into force on October 30, 2019, applicants and patentees have been required to show due care when:
- requesting reinstatement of an abandoned application due to failure to pay a maintenance fee and the late fee;
- requesting reinstatement of an abandoned application due to failure to request examination within 6 months of the deadline to request and failure to pay the late fee; and
- requesting reversal of the deemed expiry of a patent due to failure to pay a maintenance fee and the late fee.
In determining whether the failure occurred in spite of the due care required by the circumstances having been taken, the Commissioner of Patents (the “Commissioner”) considers whether the applicant/patentee took all measures that a reasonably prudent applicant/patentee would have taken in the circumstances to avoid the failure.
CIPO had previously provided some general circumstances in which the due care standard may be met (e.g., force majeure, unexpected illness, facsimile or software submission failure, docketing system error or isolated human error by assistant). But until now, applicants and patentees did not have any concrete examples of situations where the Commissioner had found that due care had been taken.
Three determinations have been published, all of which relate to a failure to pay maintenance fees due to an isolated human error. In one case, the missed maintenance fee payment was a result of the client’s instructions being misclassified in a docketing system. In the other two cases, a mistake in identifying the correct patent number was inadvertently made.
While each case was decided on its particular set of facts, it appears that at minimum, what is needed to establish due care in cases of human error is a clear and detailed explanation of the circumstances, including:
- how the applicant, patentee or agent chooses, trains, instructs and monitors the work of a reliable, experienced, well trained and supervised employee;
- the number of years the employee has been entrusted with the particular task and whether the employee has performed all his/her duties diligently in the past;
- if an annuity service is used, how the annuity service possesses the technical skills required for the payment of maintenance fees and how the annuity service chooses, instructs and supervises the work of an experienced, well trained and supervised employee; and
- if a docketing system is involved, the measures taken to ensure client instructions are properly classified and how foreseeable limitations of the system are generally monitored and addressed.
Any additional reasons provided by the applicant/patentee should be clearly linked to the failure to pay the maintenance fees. It is also helpful to provide evidence in the form of affidavits by relevant persons, such as the employee and/or the employee’s supervisor.
These cases make it clear that CIPO requires a great level of detail in the reasons and evidence submitted by the applicant/patentee in order to meet the due care standard. However, the process of preparing such documentation is undoubtedly time-consuming and stressful, particularly since there is no guarantee that the Commissioner will make a finding of due care.
This underscores the importance of paying maintenance fees and requesting examination on time, to ensure that the rights of the applicant or patentee are preserved.
For more information on Canadian patent practice, please contact the professionals at Moffat & Co.
Ashley Chu – is an associate lawyer with Macera & Jarzyna and a registered Canadian Patent Agent
Ashley CHU – Qualifies as Registered Canadian Patent Agent – The Partners, Associates and Staff at Moffat & Co. wish to announce and congratulate Ashley CHU on her recent success in passing all four of the Patent Agent examinations thereby qualifying as a Registered Canadian Patent Agent. Notably, this was Ashley’s first attempt at the exams. Well done, Ashley. This is a rare accomplishment indeed.
Ashley joined the firm as an articling student in 2018 and was called to the Bar in June of 2019. She received an Honours Bachelor of Health Sciences degree from McMaster University in 2015 and a J.D. from the University of Western Ontario in 2018. During her undergraduate degree, Ashley spent her summers working as a clinical research assistant in the medical biophysics department at the Princess Margaret Cancer Centre.
She is currently a member of IPIC’s Public Awareness Committee, the Federation of Asian Canadian Lawyers (Ontario) and the International Association of Young Lawyers.
Ashley practices in the areas of Patents and Trademarks.
Canada’s Supreme Court Affirms that Tariffs Certified by the Copyright Board are Not Mandatory
Canada’s Supreme Court has recently affirmed that tariffs for dealing with copyright-protected works levied by copyright collective societies and certified by the Copyright Board, are optional. Users of copyright-protected material are free to opt out of said tariffs and obtain appropriate licenses by other means, if desired.
The underlying dispute involved York University; whose professors make huge volumes of copies from copyright protected works pursuant to instructing students. The University had obtained a license for such copying via Access Copyright, a collective society representing the owners of copyright in most (if not all) of the written works that York professors were reproducing in the course of teaching their students.
The parties were negotiating to renew York’s license for reproducing the written works. When negotiations broke down, Access Copyright sought certification of an interim tariff from the Copyright Board of Canada, which would have the effect of unilaterally setting the royalty rate for the license at the current rate until negotiations could be concluded. The Copyright Board granted the request for an interim tariff, but after some time York University declined to take license rights from Access Copyright altogether and stopped paying the tariff.
York’s refusal to take a license from Access Copyright and pay the interim tariff gave rise to the central question in this matter: when a tariff is certified by the Copyright Board, setting royalty rates for a license to use copyright works, is it mandatory that anyone using the works in the manner covered by the tariff pay the tariff rates to obtain a license? Access Copyright maintained that the tariff was indeed mandatory and sought to enforce the tariff in Federal Court. The Federal Court sided with Access Copyright, but the Federal Court of Appeal disagreed, finding that Copyright Board approved tariffs are voluntary for those using the copyright material covered by the tariff.
The Supreme Court held that the interim tariff from the Copyright Board was optional and was not enforceable against York University. The Copyright Act does not contain any language that clearly, distinctly establishes a duty to pay a copyright collective society for a license under copyright pursuant to a tariff certified by the Copyright Board. Accordingly, any user of copyright-protected material is free to obtain a license in whatever manner it desires. Users are also free to determine whether they believe a license is required at all, or whether their activities fall under the “fair dealing” exception to copyright infringement (subject to the risk of a copyright infringement suit from the copyright owner, of course).
The Supreme Court’s decision is York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32, and can be found at this link: https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/18972/index.do#
SUBWAY Wins Injunction Against BUDWAY Cannabis Shop
It has been said that imitation is the sincerest form of flattery. This provides little comfort to the owners of famous brands, however, since “imitation” can cause serious problems such as confused customers and erosion of the brand owner’s valuable reputation.
One such brand owner recently put a stop to the “imitation” of its brand by a cannabis retailer in Vancouver. SUBWAY, the world-famous chain of sandwich shops, obtained an injunction and damages against the retailer, which used the trademark BUDWAY, shown below, in an obvious attempt to imitate, or at least parody, the famous sandwich retailer.
In a decision of Canada’s Federal Court, it was determined that consumers were likely to be confused and infer that BUDWAY’s goods and services were connected with SUBWAY. It was also determined that BUDWAY’s unauthorized use of this mark depreciated the value of the extensive goodwill associated with SUBWAY’s registered trademarks in Canada. The Court ordered the cannabis retailer to stop all use of the BUDWAY trademark, and pay a modest damages and court costs (CDN$40,000 in total).
Interestingly, the decision was taken by the same judge of the Federal Court (Justice Nicolas McHaffie) that decided another case of a cannabis trader “paying homage” to the famous children’s retailer Toys ‘R Us, by using the trademark Herbs ‘R Us.
In the Herbs ‘R Us matter, the Court found that the goodwill in the Toys ‘R Us trademarks had been depreciated, but the trademark rights were not directly infringed because there was no reasonable likelihood of confusion. In Herbs ‘R Us, the goods and services of the parties were so unrelated, and indeed antithetical to one another – one side being intended for children, and the other clearly not so intended – that consumers would not likely infer that Toys ‘R Us was now in the cannabis business.
The Court found that this case was different, however, in that there was some relationship between some of the parties’ goods and services. BUDWAY sold edible products including cookies and other baked goods, which SUBWAY also sells. In this context, the Court found it reasonably likely that consumers could mistakenly infer that SUBWAY was the ultimate source of the BUDWAY goods and services.
Links to the Court’s decision, and the decision in Herbs ‘R Us, can be found below:
Federal Court of Appeal Upholds Site-Blocking Order
by Ashley Chu
The Federal Court of Appeal (FCA) has upheld an unprecedented site-blocking order issued by the Federal Court.
In 2019, the Federal Court issued an order requiring a number of Canadian Internet service providers (ISPs) to block access to certain websites that were alleged to infringe the plaintiffs’ copyright. In addition to being the first of its kind in Canada, this order was notable because the ISPs were not defendants in the underlying copyright action. Teksavvy Solutions Inc. (Teksavvy), one of the ISPs, appealed the order.
In dismissing the appeal, the FCA held that the Federal Court did indeed have the power to grant the site-blocking order, finding that it is one of the possible remedies contemplated in the Canadian Copyright Act. The FCA disagreed with Teksavvy’s contention that the Telecommunications Act displaces the Federal Court’s equitable powers of injunction, which includes the ability to impose a site-blocking order.
The FCA also declined to consider whether freedom of expression, as set out in the Canadian Charter of Rights and Freedoms, was engaged by the order. It noted that it was not necessary for the judge to engage in a detailed Charter rights analysis separate and distinct from the balance of convenience analysis that is already considered when determining whether an interlocutory injunction should be issued. With respect to the judge’s analysis of the legal test for interlocutory injunctions, the FCA found no error in his analysis.
Therefore, Teksavvy’s appeal was dismissed.
This decision is significant for copyright owners, who will now have available to them site-blocking orders as a remedy for copyright infringement.
The Federal Court of Appeal’s decision is published as Teksavvy Solutions Inc. v Bell Media Inc. et al., 2021 FCA 100 and can be accessed at this link: Teksavvy Solutions Inc. v. Bell Media Inc. et al.
For more information about copyright protection in Canada, please contact the professionals at Macera & Jarzyna, LLP.
Federal Court Provides Guidance on Fair Dealing in Copyright Law
The Federal Court has recently provided guidance on the issue of fair dealing with copyright works, dismissing a claim of copyright infringement brought by Canada’s national broadcaster against one of Canada’s major political parties.
During the federal election campaign of 2019, the Conservative Party of Canada (the “Conservative Party”) produced an “attack” ad criticizing the performance of the incumbent Prime Minister, whom the Conservative Party was trying to unseat. In its ad, the Conservative Party used relatively brief clips (a few seconds in length each) from the Canadian Broadcasting Corporation’s (the “CBC”) news broadcasts. The CBC claims copyright in its news broadcasts.
In dismissing the CBC’s copyright claim, the Federal Court found that the CBC did own copyright in the news broadcasts and that the clips that were used by the Conservative Party were sufficient in quality and quantity to qualify as a “substantial part” of those broadcasts. However, the Court found that the Party’s use of the clips constituted “fair dealing”, and was not an infringement of CBC’s copyright. The doctrine of fair dealing provides users of copyright protected material with a right to use the protected material in certain circumstances. Copying protected works in a manner that constitutes fair dealing does not infringe the owner’s copyright.
In order to constitute fair dealing, the copying of a protected work must be for one of several purposes identified in the Copyright Act, such as “research”, “private study”, and “criticism”. As well, the nature of the copying and use of the work must be “fair”, which is determined on a case by case basis, with reference to several criteria.
In this case, the Court found that the ad was made, and the news clips were used, for the purpose of “criticism”. The Court found that the fair dealing purposes listed in the Copyright Act should be interpreted broadly. Using the copyright protected clips to criticize a third party (the Prime Minister) was acceptable, even though the criticism did not relate to the works themselves, or the CBC.
With regard to whether the use of the clips was “fair”, the CBC argued that the Conservative Party’s use would create the appearance that the CBC was biased in favour of the Conservative Party, which would damage the CBC’s reputation as a politically neutral provider of news. The Court agreed that this concern could be valid, and could favour a finding that the use was not fair. However, the Court found that there was no evidence showing that the ad actually had this effect in this case.
The Federal Court’s decision illustrates that the doctrine of fair dealing, often referred to as a “user’s right”, is to be given a relatively large, liberal interpretation to permit the use of copyright works by all, for the enumerated purposes, and in a manner that is fair. The decision also serves as a reminder that the question of fairness is factual in nature. Factors to be considered in the analysis must be grounded in fact, and supported by evidence.
The Federal Court’s decision is published as Canadian Broadcasting Corporation v. Conservative Party of Canada, 2021 FC 425, and can be viewed at this link: Canadian Broadcasting Corporation v. Conservative Party of Canada – Federal Court (fct-cf.gc.ca)
Contact the professionals at Macera & Jarzyna, LLP for more information regarding copyright protection in Canada, and the doctrine of fair dealing.
CANADA’S BUDGET 2021
On April 19, 2021, Canada tabled its first Budget in two years. The budget titled A Recovery Plan for Jobs, Growth, and Resilience is clearly responding to the economic impacts of the pandemic on many sectors across the country. The Budget includes new IP related programs, the details of which are to be worked out over the next several months as the government seeks to create action plans to implement the strategy.
The following is a brief summary of the IP related programs that were announced in Budget 2021.
IMMEDIATE EXPENSING OF IP
Allow immediate expensing of up to $1.5 million of eligible investments by Canadian-controlled private corporations made on or after Budget Day and before 2024. Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations.
This incentive targets short- and medium-term capital investments that can accelerate our recovery. This includes investments in a broad range of assets, including, helping to further incentivize businesses to transition to a more productive, knowledge-intensive economy and will include digital assets and intellectual property.
These larger deductions will help businesses—particularly small and medium sized businesses—by making it more attractive to invest in assets that drive growth. Larger deductions will also free up capital that businesses can use to create more good middle class jobs.
SUPPORT USE OF IP BY SMALL BUSINESSES
To make sure small business and independent entrepreneurs can access the capital they need to recover, innovate, and grow in the long-term Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses. They include:
- expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses
- increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
- Expanding borrower eligibility to include non-profit and charitable social enterprises.
- Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.
PROMOTING CANADIAN IP SERVICES
To further support Canadian innovators, start-ups, and technology-intensive businesses, Budge 2021 proposes
- Spending $90 million, over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert intellectual property services.
- Spending $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert intellectual property services.
These direct investments will be complemented by a Strategic Intellectual Property Program Review that will be launched by the Government. It is intended as a broad assessment of intellectual property provisions in Canada’s innovation and science programming, from basic research to near-commercial projects. This work will make sure Canada and Canadians fully benefit from innovations and intellectual property.
Macera & Jarzyna will stay involved in the process and continue to keep you updated on the developments. Please contact us should you have questions or want to learn more.
“No challenge” clauses called into question in Canada –
Ontario Superior Court finds such clauses are not in the public interest, and should not be enforced
An interlocutory decision from the Ontario Superior Court could have far-reaching implications for IP licensing and the settlement of IP disputes in Canada.
Earlier this year, the Ontario Superior Court declined to issue an interlocutory injunction in Loops, LLC v. Maxill Inc., 2020 ONSC 971. The Court’s reasons for doing so could have a substantial impact in the area of “no challenge” clauses, contractual clauses often included in IP license agreements and in settlements of IP disputes.
“No challenge” clauses purport to bind one party to an agreement not to challenge the validity of the other party’s intellectual property rights. The clauses appear routinely in IP license agreements, (preventing the licensee from challenging the validity of the rights they are licensing), trademark co-existence agreements (preventing each party from challenging the validity of the other’s trademark registrations), and in many other contexts within the IP world. These clauses have received judicial consideration in other jurisdictions, particularly the United States, but to date the issue of whether “no challenge” clauses are enforceable has not been considered by the courts in Canada.
The history between the parties in this case is long, and rather complex. The parties, who are both in the business of toothbrushes, had previously settled a patent infringement dispute between them. As part of that settlement, Maxill agreed to a “no challenge” clause, namely, that it would not directly or indirectly assist any person in attacking the validity of Loops’ patents for the relevant invention, in any country.
After finalizing the agreement, Maxill set out to “design around” Loops’ patent, and released a new toothbrush product that it believed did not infringe. Loops disagreed, and commenced an action to enforce its settlement agreement with Maxill before the Ontario Superior Court. Loops also sued Maxill in the United States for infringement of its equivalent patent in that country.
In response to the US infringement action, Maxill denied that it infringes Loops’ US patent, and denied the patent’s validity. Importantly, Maxill did not seek an order cancelling Loops’ patent because of the alleged invalidity. It simply denied that it was infringing Loops’ patent, and denied that the patent was valid in any event. However, since Maxill had agreed to a “no challenge” clause in its settlement agreement with Loops, Loops sought an injunction from the Ontario Superior Court to prevent Maxill from denying the patent’s validity before the American courts.
The Court declined to issue the injunction for several reasons. The most significant of these was the Court’s finding that the “no challenge” clause in the Loops / Maxill settlement agreement is not reasonable in the public interest, and is not enforceable. The Court found that, to preclude a defence to patent infringement for the personal gain, profit or protection of one party to an agreement would run counter to the proper administration of justice, regardless of the consent of the other party to that agreement. In contracts that contain “no challenge” clauses, the price paid by one party is access to a potentially valid legal position that has potential to affect the public at large, since the patent claims can be enforced against any infringer so long as they are deemed valid. The Court found that this price was simply too high if public trust and confidence in the administration of justice are to be maintained.
Accordingly, the Court’s view appears to be that “no challenge” clauses should not be enforceable as a matter of law. This is a significant development in Canadian contract law, as no Canadian court had previously found such provisions to be unenforceable, and in practice, IP-related agreements such as settlements and licenses routinely include such clauses.
It is significant that Maxill only asserted invalidity as a “shield”, in defence of an infringement action, and not as a “sword”, seeking an order that the patent be cancelled. It means that the door may still be open for “no challenge” clauses that prohibit the use of validity challenges as a “sword”.
But for the moment, the view of Ontario’s primary trial court is clear. Contractual provisions limiting a party’s ability to assert invalidity as a defence to IP infringement are not in the public interest, and should not be enforceable.
Written by Jaimie M. Bordman
Changes to Late National Phase Entry
When filing a National Phase of a PCT application in Canada, you need to be aware of the following changes to the Patent Regulations for late entry:
- If the International Filing Date is before October 30, 2019, the deadline for national entry is 30 months from the earliest priority date – or 42 months from the earliest priority date with payment of a $200 late entry fee (no change from current practice).
- If the International Filing Date is after October 30, 2019, the deadline is still 30 months from the earliest priority date. However, there are new restrictions for late entry after the 30-month deadline and up to 42 months from the earliest priority date. The applicant must now:
- explicitly request reinstatement of rights
- provide a statement that the reason for failure to enter the national phase by the 30-month deadline was unintentional
- pay the $200 late fee
Our understanding is that the Canadian Patent Office will not require anything more than a statement that the failure to meet the 30-month deadline was unintentional – that is – no detailed reasons will be required. Nevertheless, we recommend that if you have clients that wish to enter the national phase in Canada, you inform them that the 42-month late entry deadline should NOT be relied on or used to purposely extend the 30-month deadline.
Restoration of Priority
With the changes that came into effect on October 30, 2019 applicants may now restore the right of priority within 2 months of the filing date in Canada. However, if the right of priority is restored during the International Phase, it will not be deemed restored in Canada unless the international filing date is on or after October 30, 2019.
Canadian Patent Law – Adjusting to New Practice.
Janice G. Kelland explains recent developments in Canadian Patent Law.
The 30th of October 2019 was a red-letter day for Canadian patent law. Amendments made to the Canadian Patent Act in 2014 and 2015, and the completely re-drafted Canadian Patent Rules registered in July 2019, came into force on that day, bringing substantial change to Canadian patent practice …
You can download the article by clicking HERE, or on our PUBLICATIONS page. Janice’s article has been published on pages 16-18 of The Patent Lawyer Annual 2020. The full publication can be accessed at this LINK.
New Patent Rules came into force in Canada effective October 30, 2019. Their purpose by and large is to more closely harmonize Canadian practice with international norms. Existing government fees remain unchanged, but some new ones have been added. There will continue to be no excess claims fees. Many of the changes will have a delayed effect, but others will be more immediate. Existing deadlines are not affected. Here are some of the more notable changes for you to consider:
1) Some Deadlines are now shorter
Requests for examination will now be due 4 years after the Canadian or international filing date instead of the current 5 years.
Responses to Office Actions will now be due 4 months after the Action date rather than the current 6 months. A 2-month extension will be available upon payment of a $200.00 fee. If no extension is requested, or if requested but no response is filed by the extended deadline, the current 12-month reinstatement period remains available as of right upon payment of a $200.00 fee. It is expected that most applicants wanting more time will elect to use the reinstatement period following the initial 4-month response deadline.
The Final Fee will be due 4 months from the date of the Notice of Allowance instead of the current 6 months. If the Final Fee is not paid by the due date, the 12-month period to reinstate as of right remains available on payment of a $200.00 reinstatement fee, but reinstatement will no longer return the application to examination.
2) Some Deadlines are now stricter
Under previous practice, maintenance and examination fees could be late paid within a 12-month reinstatement period as of right on payment of an additional reinstatement fee.
If a maintenance fee for a patent application is not paid by the due date, CIPO will now issue a notice requiring payment of the maintenance fee and a late fee before the later of 2 months from the date of the notice or 6 months from the missed due date. Importantly however, the application will not be deemed abandoned until the notice issues and the 2-month late period lapses, even if that occurs after the 6-month period has lapsed. Once an application is deemed abandoned, the applicant will have 12 months to petition for reinstatement on a showing that the circumstances leading to abandonment were unavoidable and clearly documented. It is expected that most petitions will fail.
In the case of an issued patent, if a maintenance fee is not paid by the due date, CIPO will issue a notice requiring payment of the maintenance fee and a late fee before the later of 2 months from the date of the notice or 6 months from the due date. If the fees are not paid, the patent will be deemed expired as of the missed due date. The patent owner will have 18 months from the missed due date to petition for reversal of the expiry on a showing that the circumstances leading to expiry were unavoidable and clearly documented. It is expected that most petitions will fail.
If the examination fee is not paid by the due date, CIPO will issue a notice requiring payment of the examination fee and a late fee by 2 months from the date of the notice. If the fees are not paid within the 2 months, the application will be deemed abandoned and will enter a 12-month reinstatement period. Reinstatement will be available as of right within 6 months from the missed due date upon payment of an additional $200.00 reinstatement fee. After the 6 months, the applicant must also petition for reinstatement on a showing that the circumstances leading to abandonment were unavoidable and clearly documented. It is expected that most petitions will fail.
Third parties now have rights that will allow them to infringe patents and patent applications when certain deadlines relating to requests for examination and maintenance fees are missed.
It is now more important to meet deadlines relating to maintenance fees and requests for examination.
3) Filing dates will be easier to obtain
Filing dates can now be obtained on weekends and holidays by filing applications electronically.
Paris and non-convention applications can be filed in languages other than English or French provided a translation is filed within 2 months of a request from CIPO for a translation. This does not apply to national phase entries, which must still be filed in English or French.
Paris and nonconvention applications can be filed without a filing fee provided the fee and a late fee are paid within 3 months of a filing fee notice.
4) Applications must be withdrawn from Allowance for amendment
Applications must now be withdrawn from allowance by payment of a $400.00 fee within 4 months from the date of the Notice of Allowance for amendments other than corrections to very obvious errors.
5) Annuity services may now pay maintenance fees on pending applications.
Previously, only the appointed agent could pay maintenance fees on pending applications. Under the new rules, any person authorized by the Applicant will be able to pay application maintenance fees, including an annuity service.
However, CIPO will continue to send late payment notices only to the appointed agent in the event the fee is not timely paid. Accordingly, we urge caution with respect to the use of alternative fee payment arrangements in light of the stricter deadlines and possible consequences for missed payments discussed above.
6) Recordal of transfers of rights easier
If a request to record a transfer of rights with respect to an application or patent is made by the applicant or patentee currently on of record at the Canadian Patent Office, documentation is no longer needed to support the request. A recordal certificate will be issued for the transfer and any documentation filed along with the request will be put on file at the Canadian Patent Office. However, as was the case under the former law, requests to record transfers of rights made by a transferee (the new owner of the rights) will require providing acceptable evidence of the transfer, such as a signed, witnessed assignment.
7) Certified copies of priority documents now required
Certified copies of priority documents must now be provided for Canadian direct filings and national entries of PCT applications. Failure to provide the copy within the required time will result in withdrawal of the priority request. Fortunately, if the priority document is available in the WIPO Digital Access Service (DAS), the Canadian Patent Office will be able to access the document electronically on provision of the access code. As well, if the priority document was filed in the Canadian Patent Office or was provided during the international phase of the corresponding PCT application, no further copy is needed.
If you have any questions about how the new Rules might affect your current or future patent applications, please do not hesitate to contact us.
We are pleased to confirm that on February 8, 2019, Bill Morneau, Minister of Finance, announced the appointment of Susan Beaubien as a Permanent Member of the Canadian International Trade Tribunal (CITT), for a 5 year term commencing March 4, 2019. The CITT is recognized in Canada and around the world as a centre of excellence in the fair and timely adjudication of trade law matters.
The appointment was made on February 5, 2019 by Order in Council.
The CITT is an independent quasi-judicial adjudicative body reporting to Parliament through the Minister of Finance.
It conducts injury inquiries into dumping and subsidy complaints; hears appeals of decisions of the Canada Border Services Agency and the Canada Revenue Agency; inquires into complaints by potential suppliers concerning procurement by the federal government covered under various trade agreements; conducts safeguard inquiries; and provides advice to the Government and/or to the Minister of Finance on economic, trade and tariff issues.
Susan will be retiring from private practice and leaving Macera & Jarzyna LLP, effective March 1, 2019. We wish her all the best in her new career.
Update on Blacklock’s Mega Motion of December 12, 2018.
The hearing of Blacklock’s 3000 page mega motion in its copyright infringement action against the Attorney General took place on December 12, 2018. Howard Knopf attended . Click here for Howard’s overall impression.
Plant Breeders’ Rights for Cannabis in Canada.
On October 17, 2018, recreational marijuana became legal across Canada, joining the already legal medicinal marijuana. As a result, many individuals and companies are keen to create new varieties of Cannabis for sale and are interested in protecting these new varieties.
However, there are still no definite rules for the examination and evaluation of these varieties, and many questions surrounding how this can be done, considering that cannabis is still prohibited in most countries. Even in Canada there are numerous restrictions. In fact, since marijuana has its circulation or transportation banned, many breeders are choosing to do asexual reproduction rather than seed propagation. In light of that, Ashley Chu and Eduardo Fonseca have prepared an article addressing important information about the current scenario of protection and problems and possible solutions for current and future breeders.
The article has been published by the CIOPORA, the International Community of Breeders of Asexually Reproduced Ornamental and Fruit Plants, on its website. CIOPORA is the most important Plant Breeders’ Rights (PBR) / Plant variety protection (PVP) association bringing together 125 plant breeders, national breeder associations, patent attorneys and Intellectual Property consultants from 25 countries. The article will also be included into the next newsletter issue for all members.
You can read and download the publication here: https://www.ciopora.org/single-post/2018/12/12/Canada-Road-to-Plant-Breeders%E2%80%99-Rights-for-Cannabis
Macera & Jarzyna LLP are happy to participate in the Elgin Street Courthouse Angel Program again in 2018! The gifts are for needy children in our community.
Macera & Jarzyna was honoured to co-host a dinner reception with the Consul General of Canada, Mrs. Evelyne Coulombe, at her Official Residence in Rio de Janeiro, Brazil, on November 30, 2018.
The reception took place a few days after the Inter American Intellectual Property Association (ASIPI) annual meeting, also held in Rio, which was attended by our partners Eduardo Fonseca and James Palmer. The dinner was a great opportunity to celebrate with the firms and companies from Rio who have entrusted their business to our firm. It was also a chance for all the participants to discuss future cooperation and partnerships. The Canadian Consulate in Rio is very active in the development of business relations between Canadian and Brazilian entrepreneurs. We are pleased and proud to successfully assist these entrepreneurs and we hope that these partnerships endure.
Follow Up on Bill C-86 – The Omnibus Bill that Amends Canadian IP Law.
Bill C-86 has already been given second reading and is at the Finance Committee of the House of Commons. Yesterday, November 7, 2018, in the Finance Committee, there were about 10 minutes in total testimony by Grant Lynds, past President of the Intellectual Property Institute of Canada …