Canada: Omnibus budget bill changes exceptions to patent infringement

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04 February 2019

In the omnibus budget bill passed by the Canadian parliament on December 3 2018 were numerous amendments to Canada's IP statutes, including to sections of the Patent Act that provide exceptions to infringement.

Exception for experimental use

The changes to the Patent Act include moving the exception for experimental use under subsection 55.2(6) to its own section, 55.3, and potentially altering its scope. Section 55.3 also allows the government to enact regulations setting out factors that the court may consider, must consider or cannot consider in determining whether an act is committed for experimental purposes. The changes also provide for regulations that set out circumstances under which an act is, or is not, committed for experimental purposes.

The government has yet to announce plans for such regulations. Until then, the nature and scope of the existing exception for experimental use remains unchanged.

Exception for acts committed prior to the claim date

The changes also include replacing Section 56 of the Patent Act, expanding the scope of the infringement defence arising from acts committed prior to the asserted patent's claim date. Previously, a person purchasing, constructing or acquiring the subject matter of a claim before the claim date had the right to use or sell what had been purchased, constructed or acquired without being liable for infringement. A defence to infringement now arises when a person in good faith before the claim date, commits, or makes serious and effective preparations to commit, an act that would otherwise be infringing. This must have been done without obtaining knowledge of the claim's subject matter from the patent applicant.

The exemption to infringement also extends to future third parties. When the act includes a service, users of the service are also covered by the exemption. If committing the act resulted in an article, users or buyers of such an article are also exempted from infringement.

If the act giving rise to the exception was committed, or the preparations to commit the act were made, in the course of a business and this portion of the business is then sold, the exception to infringement is transferred and does not remain with the seller.

These changes introduce uncertainty into determining whether an allegation of infringement is justified, even though the requirement for good faith and the extension to preparatory acts are found in similar provisions in other jurisdictions. It is unclear whether the Canadian courts will look to or follow foreign jurisprudence when they are called to provide guidance regarding the meaning and scope of "serious and effective preparations" to commit an otherwise infringing act and when an act is done in good faith.