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Patent Infringement and Prior Use Rights

In 2018, the Patent Act was amended to expand the scope of the “Prior Use” exception to patent infringement. This exception declares acts not to be an infringement of a patent if a person had done the same act prior to the claim date of a patent. Basically, if someone is doing something prior to the filing of a patent, they can continue to do what they were doing. In the recent Federal Court decision, Kobold Corporation v. NCS Multistage Inc., 2021 FC 1437, the Court had the first opportunity to consider the amended prior use exception.

Prior to the amendments, only “specific articles” made prior to the claim date could be used or sold without being liable to the patentee.

The prior use exception may arise where a party has been developing or using technology privately prior to the claim date of the patentee. If the party has been using the technology publicly such as by selling, licensing or operating it in a public way, then the party would typically rely on their own disclosures as prior art to invalidate the patent. Sections 28.2 and 28.3 of the Patent Act provide that a patent is only valid if claims subject-matter this is both new and obvious over anything disclosed publicly prior to the claim date (subject to a one-year grace period for disclosures by the patent applicant). In addition, if a patent application has been filed, it may be cited as an earlier co-pending application even if not yet published under section 28.2(d). Some companies have been known to pre-emptively or defensively publish details of their technology explicitly to block someone later trying to obtain a patent on the technology (see Defensive Publication).

If a party has been keeping technology as a trade secret, or technology has not yet been commercialized, then it would likely not be citable as prior art. Therefore there may be a reliance on this prior use exception.

The current version of Section 56 of the Patent Act reads:

56 (1) Subject to subsection (2), if — before the claim date of a claim in a patent — a person, in good faith, committed an act that would otherwise constitute an infringement of the patent in respect of that claim, or made serious and effective preparations to commit such an act, it is not an infringement of the patent or any certificate of supplementary protection that sets out the patent, in respect of that claim, if the person commits the same act on or after that claim date. (emphasis added)

The Federal Court recently considered how “same” the acts before the patent were to the acts after. If the defendant had only made an infringing article prior to the claim date, could they make more of the articles? Could they make improved articles? Could they sell these articles? In other words, does the “act” before the claim date have to be the same as the “act” after? The Court in Kobold Corporation v. NCS Multistage Inc., 2021 FC 1437, found a middle ground by clarifying as follows:

[97] As noted above, the pre- and post-patent acts must be identical in the sense that one can only perform those acts set out in section 42 of the Patent Act which were actually performed pre-patent, or those acts for which substantial preparations to perform were made.

[98] On this interpretation, if the person claiming the protection of subsection 56(1) had, for example, previously only manufactured and used its device, then they can continue to manufacture and use it, but they cannot now sell the device to others to use, as selling is not an act done prior to the issuance of the patent.

In other words, if a party is entitled to a prior use exception, this is not a free pass to infringe the patent in any way it wishes. Similarly, the Court also addressed what modifications could be made to the original article or method and still be included in the prior use exception.

[111] Subsection 56(1) provides a defence to one who makes, constructs, or uses an invention or sells it to others to use, that infringes a claim of the patent, if prior to the issuance of the patent that person did the same act of making, constructing, using, or selling, and the relevant (i.e. relating to the inventive concept) part of the invention is identical. While the prior user may add to or alter the invention in other respects that do not further infringe the patent, the prior user cannot change or alter the relevant (i.e. relating to the inventive concept) part of the invention, even if those modifications infringe the inventive concept in the same manner. (emphasis in original)

Based on the facts and evidence of the underlying case, the Court held that there were material changes to the articles of the defendant from the versions prior to the claim date, and those post-grant activities alleged to infringe, but there was insufficient evidence on the summary judgment motion to grant summary judgment on the issue of whether these changes related to the inventive concept of the patent.

The Court noted that, “[o]nly in the clearest of cases, where the acts before the claim date are identical to those after the claim date, is there no need to construe the claims of the patent or conduct an infringement analysis. Such cases would be particularly well suited for summary judgment.”

Although not at issue in this case, the prior use exception is transferable on the sale of the business under subsections (2), (7) and (10), may be used by the purchaser of an article or the user of a service under subsections (3), (4), (6) and (9). The Patent Act also provides for “Third party rights”, which provide an exception to infringement for acts, or preparations for an act were done while a patent was abandoned pursuant to section 55.11.

In more complex cases, where there have been changes to the acts, more complicated evidence, include expert evidence on claim construction, will likely be necessary to establish the prior use exception under Section 56 of the Patent Act. With this additional clarity provided by the Federal Court, defendants facing patent infringement allegations should explore whether their actions may fall within the prior use exception.

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