Developments in Patent Law in 2020

The Courts were busy in 2020 with some significant decisions in patent law addressing several substantive issues affecting the enforceability of patent rights in Canada. The following summary focuses on some of these decisions that may be of interest beyond those practicing patent law.

Computer-implemented Inventions – An area of significant an ongoing uncertainty has been the degree to which patents can be granted for software and ‘business method’ inventions. In Choueifaty v. Canada (Attorney General), 2020 FC 837, the Federal Court rejected the approach used by the Canadian Patent Office in reviewing these types of inventions to identify the essential elements. This decision, and the subsequent guidance issued by the Canadian Patent Office in response to the decision, will likely make it easier for inventors to obtain patents for these types of inventions. The patent at issue, a computer-implemented method for providing an anti-benchmark securities portfolio, was allowed in early 2021. This court decision will also be significant for medical diagnostic inventions.

Accounting of Profits – In most patent proceedings, the patentee seeks financial remedies in the form of either its damages, such as lost sales due to the infringement, or an accounting of the defendant’s profits from the infringing activity. In, Nova Chemicals Corporation v. Dow Chemicals Company, 2020 FCA 141, the Federal Court of Appeal changed the default approach to calculating the costs, and therefore the profits, in an accounting of profits remedy. Instead of looking at incremental profits, the court said the proper approach was to consider the ‘full costs’, including the fixed costs of the defendant. This approach leads to a lower quantum for the accounting of profits remedy, particularly for defendants with significant fixed or overhead costs.

Summary judgment/trial – In 2020, the courts showed an increasing appetite to consider deciding substantive patent issues on a summary motion rather than proceeding to trial – see my earlier column Summary Determination of Claim Construction discussing ViiV Healthcare Company v. Gilead Sciences Canada, Inc., 2020 FC 486. In a decision issued in the first days of 2021, the Federal Court of Appeal joined in, saying in Canmar Foods Ltd. v. TA Foods Ltd., 2021 FCA 7, that a motion for summary determination brought at the close of pleadings, even before discoveries, was appropriate. Summary determination in appropriate circumstances can significantly reduce the typically high costs of patent litigation where there are issues of non-infringement or validity that can be readily determined without a full trial.

Contractual ownership – In a couple of decisions in 2020, the Federal Court concluded that it does have jurisdiction to hear ownership contractual and licensing issues that relate to patents. In Salt Canada Inc. v. Baker, 2020 FCA 127, the Federal Court of Appeal said the court can “determine who should be reflected on the records of the Patent Office as the owner of a patent—even if that involves interpreting agreements and other instruments.” As a statutory court under the Federal Courts Act, there was sometimes uncertainty as to the court’s jurisdiction over issues not directly under Federal jurisdiction, such as contract law, and as said in Mud Engineering Inc. v. Secure Energy Services Inc., 2020 FC 1049, “Salt Canada has definitively and, one hopes, finally put this issue to rest once and for all.”

Patent Demand Letters – Remedies for potential false and misleading “cease & desist” or patent infringement demand letters continue to be the subject of litigation in 2020. In Fluid Energy Group Ltd. v. Exaltexx Inc., 2020 FC 81, the defendant in a patent infringement proceeding obtained an interim injunction against the plaintiff/patentee for writing to the defendant’s suppliers. See my earlier column that expands on this issue, Caution With Patent Demand Letters. It is contemplated that regulation of patent demand letters will become part of the Patent Act through section 76.2, but at this time, no regulations have been implemented.

This summary only touches on some of the many decisions of 2020 and excludes some significant developments on particular aspects of substantive patent law including obviousness, anticipation, and claim construction and remedies. So far 2021 has brought more significant patent decisions – stay tuned!

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