Frequently asked questions: Legislative Amendments to the Patent Act

What is the purpose of these legislative amendments?

These amendments support the Government’s budget commitment to develop an Intellectual Property Strategy and the broader Innovation and Skills Plan. They would make targeted changes to Canada’s intellectual property (IP) laws and other related laws to discourage certain behaviours that hinder innovation and to enhance clarity in the IP regime, thereby ensuring a more level playing field for all market participants.

Why is the Government proposing this change now?

The amendments are being proposed as part of Canada’s new Intellectual Property Strategy, announced in Budget 2017 and allocated $85.3 million over five years in Budget 2018. The IP Strategy, which was launched on World IP Day in April 2018, will strengthen Canada’s innovation ecosystem to help Canadian companies grow to scale.

What legislative amendments would be made to the Patent Act?

The Patent Act will be amended to:

  • establish minimum requirements for patent demand letters
  • allow prior statements made to CIPO about a patent to be considered in court
  • clarify that infringement does not arise from solely research on a patented invention
  • strengthen a prior user’s right to use a subsequently patented invention
  • ensure new owners of standard essential patents honor licensing agreements made by previous owners
  • provide greater certainty for IP licensees in bankruptcy proceedings
Why is it necessary to establish minimum requirements for demand letters?

This amendment seeks to address bad faith allegations of patent infringement that do not provide sufficient information to determine the merits of the allegation. This amendment requires all demand letters to contain basic information that will allow recipients to more easily evaluate the merits of any allegation, thereby placing them in a better position to decide how to respond.

Why is it necessary to allow the courts to admit prior statements made to CIPO by a patent applicant about a patent?

Currently, positions taken by patent applicants during the patent application process before CIPO are not admissible as evidence in court during patent litigation. This amendment allows the court to consider those statements to prevent patent holders from taking a position during patent litigation that differs from the position they took before the patent office in order to obtain their patent, thereby promoting fairness, certainty and predictability in the patent system.

Why is it necessary to clarify that infringement does not arise from research on a patented invention?

Currently, an exemption from infringement for the purposes of research on the subject matter of a patent exists in the common law. This amendment codifies that exemption, providing greater certainty to users of the patent wishing to make use of one of the key aspects of the patent system; the dissemination of knowledge. It retains important safeguards, however, notably that it is research and not any further commercialization, that is free from infringement.

Why is it necessary to strengthen a prior user’s right to use a subsequently patented invention?

Currently, prior user rights in Canada are limited; they require a business to cease its operations when faced with a subsequently patented invention that reads on their existing operations. This amendment will modernize prior user rights to respond to the needs of Canadian businesses by allowing them to continue to perform those would be infringing actions. This amendment also harmonizes Canadian law with other jurisdictions.

Why is it important to ensure that subsequent owners of standard essential patents honor licensing commitments?

There is uncertainty about the enforceability of licensing commitments made to standard setting organizations by patent owners seeking to have their technology incorporated into a standard when those patents change hands. This amendment clarifies that the standard setting organization and those that utilize the standard can rely on those licensing commitments regardless of a change in ownership. This promotes fairness and certainty in the patent system.

What do the proposed legislative amendments aim to achieve overall?

The proposed amendments will strengthen Canada’s patent system by clarifying acceptable IP business activities and preventing abuse of the patent system. Some proposed amendments clarify existing exceptions and limitations to IP rights and are aimed at ensuring that the threat of infringement allegations does not stifle new innovation. Other proposed amendments will help prevent abuse of the IP system by people who threaten or pursue litigation in bad faith (e.g. so-called “patent trolls”).

What consultations were held to inform these changes?

In February 2017, ISED conducted stakeholder consultations on possible changes to the IP regime. Furthermore, a workshop was held to facilitate in-depth discussions with key stakeholders on the effectiveness of the patent system in March 2017. In total, over 200 stakeholders in more than 15 locations were engaged in roundtables and a written submission process on elements of the proposed IP Strategy.

In addition, IP regimes in other jurisdictions were studied and the applicability of their policy choices to the Canadian context was considered.