To the uninitiated, patent litigation may seem daunting — its procedures complex, its costs prohibitive and its duration interminable. As this article shall seek to demonstrate, however, these concerns may be misguided. In fact, in many cases patent litigation in Canada can be a relatively straightforward, cost-effective and expeditious way of securing and defending hard-fought patent rights and advancing business objectives.
Preliminary considerations. The fundamental right granted by a patent is the right to exclude others from practicing (e.g., making, using and selling) the invention covered by the patent. A patent infringement action is the mechanism by which a patent owner enforces this right against infringers — i.e. by seeking an injunction, or an order of the court preventing infringement. Through the action the patent owner may also seek other remedies, the most important of which would be compensation for infringement that has already occurred in the form of damages (the plaintiff's lost profits or a reasonable royalty) or the infringer's profits.
A patent owner considering an action for patent infringement must decide if it is worth the effort and expense. Generally speaking the decision of whether or not to proceed with an action requires what essentially amounts to a cost/benefit assessment that takes into account uncertainties. Some questions to consider before initiating a legal action include:
- Why are we considering initiating a legal action? What amount is in issue, and will litigation advance other important business objectives, such as safeguarding profits or market share?
- What are the chances that our action will succeed?
- What would be the downsides of losing (which might include the cost of litigation, payment of litigation costs of a defendant, or even loss of patent rights due to a finding of invalidity)?
- What are the anticipated costs?
- What other business or legal options are available (e.g., a licence)?
Discussions with an experienced patent litigation lawyer can provide helpful guidance for answering such questions.
The patent litigation process in brief. If based on the results of a cost/benefit assessment, a patent owner decides to proceed and initiate an action, the next step is to decide upon the court in which to bring the action. Unlike some other jurisdictions, Canada does not have a specialized patent court. Rather, a patentee in Canada must commence an infringement action in either the Federal Court or the appropriate provincial court. In practice, however, most patent infringement actions are filed with the Federal Court, which has jurisdiction throughout Canada and exclusive jurisdiction to expunge patents from the government registry.
The patent infringement action itself is commenced by issuing and serving a "Statement of Claim," which sets out the plaintiff's allegations and defines the issues in dispute. A defendant must then respond by serving and filing a "Statement of Defence," which admits or denies the plaintiff's allegations. The defendant may also make a counterclaim that challenges the validity of the patent at issue, to which the plaintiff may reply.
The action then proceeds to the "discovery" stage, which includes "documentary" discovery, or an exchange by the parties of all relevant documents, and "oral" discovery, which involves the questioning of a representative of each adverse party. Following discovery, the court conducts a "pre-trial conference" with the parties, primarily to determine the issues for trial, and to assess whether there is any reasonable possibility of settlement.
If there is no prospect of settlement, the action proceeds to trial. Evidence at trial is typically submitted by oral testimony of witnesses, by the admission of documents or by the reading-in of testimony given on discovery of adverse parties. The judge will issue a written judgment and reasons after the trial concludes.
Duration and cost. The cost of patent litigation is affected by many factors, including the complexity of the issues, the conduct of the adverse parties and their counsel and the type and extent of expert evidence required, yielding a wide range in cost.
As a further consideration, it is common for monetary remedies to be considered in a separate, later proceeding, if necessary, once patent infringement and validity have been decided (referred to as "bifurcation"). Bifurcation will often permit more efficient and less costly discovery and trial due to the absence of complex damages issues. Moreover, once a patent is found to be valid and infringed, the parties are typically able to settle monetary issues without the need for further litigation.
A bifurcated infringement action will typically cost at least $400-600,000 for the infringement and validity phase. Although these costs are not insignificant, it is noteworthy that the cost of patent litigation in Canada will usually be significantly less than in the United States. Actions will typically require at least two years from commencement to trial.
It should be noted that the vast majority of patent infringement actions settle without the need for a trial, and often at a very early phase of the litigation. If an action settles before discovery, costs may be modest (e.g., $10-20,000).
Patent litigation in Canada: More efficient than ever. An important consideration for a patent owner is often the speed with which a judgment may be obtained. Faced with the prospect of a lengthy and expensive action, patent owners are often reluctant to enforce their rights. Historically in Canada (as in other jurisdictions) it could take three or four years, or more, for a patent action to reach trial. In recent years, the Federal Court has implemented a number of procedures directed to ensuring that patent litigation is concluded as quickly and efficiently as possible. For example, since 2009, the Court has permitted (and encouraged) parties in case-managed proceedings to seek a detailed schedule, including a trial date, at the outset of an action (e.g., once pleadings are completed). Where a party requests a trial date early in the action (rather than waiting for the pre-trial conference), the Court will endeavour to have the action tried within two years of its commencement.
Patent actions may also be concluded before trial through using the Federal Court's summary judgment and summary trial procedures. In either case, judgment is sought on the basis of a motion without a full trial. Judgment may be obtained on summary judgment where there is no genuine issue for trial, where the only genuine issue is a question of law or where, on the whole of the evidence, the Court is able to find the facts necessary to decide the questions of fact and law. For summary trial, the Court may grant judgment if it is satisfied that there is sufficient evidence for adjudication, regardless of the amount of damages or profits claimed, the complexities of the issues or the existence of conflicting evidence (including expert evidence). A summary trial may include some witnesses testifying in person before the Court.
Appropriate use of these procedures may shorten the litigation process significantly, thereby reducing associated costs. Patent litigation in Canada is thus becoming more accessible to patent owners seeking to enforce their valuable intellectual property rights.
People often are apprehensive about the unknown. In the case of patent litigation, the proper information and expert guidance can alleviate some concerns and allow informed decisions to be made that are consistent with a company's business objectives.
Colin B. Ingram and Cameron P. Weir, Ottawa
The assistance of Dan Whalen, Ottawa Summer Student, is gratefully acknowledged.
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.