Canada recently introduced new legislation (The Budget Implementation Act, 2018, No. 2) which brought about several changes to the Patent Act affecting the scope of protection available under Canadian patents. Included in the changes was the addition of a new provision providing an exception from infringement for experimental use of patented technologies.
New section 55.3 of the Patent Act, which came into force on December 13, 2018, provides:
55.3 (1) An act committed for the purpose of experimentation relating to the subject-matter of a patent is not an infringement of the patent.
(2) The Governor in Council may make regulations respecting
(a) factors that the court may consider, must consider or is not permitted to consider in determining whether an act is, or is not, committed for the purpose set out in subsection (1); and
(b) circumstances in which an act is, or is not, committed for the purpose set out in subsection (1).
The experimental use exception from infringement also extends to infringement of a Certificate of Supplementary Protection (CSP) issued for a patent.
The new provisions apply in respect of any action or proceeding that has not been finally disposed of as of December 13, 2018.
Prior Reference to Experimental Use in the Patent Act
Although there was no codified experimental use exception prior to these new provisions of the Act, a “Bolar” exception from infringement for activities occurring during the regulatory approval process is found in subsection 55.2(1), providing:
55.2(1) It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product.
Notably, previous subsection 55.2(6) of the Act stated that the Bolar exception does not affect any exception from infringement for certain non-commercial or experimental use that might exist “at law”:
55.2(6) For greater certainty, subsection (1) does not affect any exception to the exclusive property or privilege granted by a patent that exists at law in respect of acts done privately and on a non-commercial scale or for a non-commercial purpose or in respect of any use, manufacture, construction or sale of the patented invention solely for the purpose of experiments that relate to the subject-matter of the patent. (emphasis added)
With the enactment of section 55.3, subsection 55.2(6) has been amended to remove reference to experimental use, but the reference to non-commercial activity remains:
55.2(6) For greater certainty, subsection (1) does not affect any exception to the exclusive property or privilege granted by a patent that exists at law in respect of acts done privately and on a non-commercial scale or for a non-commercial purpose.
These related amendments may shed some light on the scope of new section 55.3, as they appear to emphasize a distinction between: (1) acts done privately and on a non-commercial scale or for a non-commercial purpose; and (2) use, manufacture, construction or sale of the patented invention solely for the purpose of experiments that relate to the subject-matter of the patent. This may suggest that the new exception from infringement could extend to experimental use that occurs in the commercial sphere.
History of the Experimental Use Exception in Canada
The seminal decision on the experimental use exception is that of the Supreme Court of Canada in Micro Chemicals v Smith Kline & French. This case involved Micro Chemicals performing a variety of experiments in preparation for obtaining a compulsory license from the patentee and a product made using the patented process before the grant of the license. The Supreme Court found Micro Chemicals’ activities with respect to their preparation of experimental batches non-infringing, and held that the Trial Judge was incorrect to find otherwise, stating: “he was in error in holding as he did that an experimental user without a license in the course of bona fide experiments with a patented article is in law an infringer.” The Court noted that the use was not for profit but to establish that Micro Chemicals could manufacture a quality product in accordance with the specification. Several factors were influential in the Court’s decision:
- The compound was produced in a small amount;
- The compound was kept by Micro Chemicals and never entered into commerce;
- No damage was suffered by the patentee;
- No profits were made by Micro Chemicals relating to the activities; and
- The activities were considered bona fide.
Canadian courts have also held that “testing” per se is not an infringing use.
While the situation in Micro Chemicals was related to experimentation in preparation for a compulsory license, the principles therein are not limited to that situation. The experimental exception was revisited by the Federal Court of Appeal in Merck v Apotex, where it was held all that is required is that the infringing product was made merely by way of bona fide experiment, and not with the intention of selling and making use of the product in the commercial market. However, the Court did note that once the user has proceeded beyond the experimental and testing phase and has taken steps to manufacture, promote and sell the product, the experimentation exception no longer applies. In this case, the exception was held to be applicable to use of the patented product in ongoing research and development of alternate formulae, alternate techniques for tablet making, and the like.
The limitation of the exception to non-commercial purposes was reinforced in Teva Canada Limited v Novartis AG, where it was held that the full inventory of the patented product that is made must be used for experimental or regulatory purposes and nothing is to be sold or used for commercial purposes.
Thus, even in the absence of an experimental use exception in the Patent Act, Canadian courts have held that it is not an infringement to make or use a patented invention by way of experiment or testing only, without the intention of commercialization. Other cases that have been referenced by our courts indicate nor is it infringement to construct a patented article for the purpose of improving upon it or ascertaining whether a certain addition, subtraction, or improvement thereon is workable.,
Corresponding International Exceptions
Canada is not alone in enacting an exception from infringement for experimental use of a patented invention.
The national patent acts of many European Union (EU) member states contain research and experimental use exceptions from patent infringement, designed to allow for the promulgation of research activities to promote innovation. In Germany, a research privilege exists under §11 No.2 of the German Patent Act, whereby the effects of a patent shall not extend to “acts done for experimental purposes relating to the subject matter of the patented invention”. Decisions of the German Federal Court of Justice have determined the scope and limitations of the experimental use exception, which is not only applicable to clinical trials, but also generally applicable to nonclinical research. The United Kingdom also has an experimental use provision/exception in §60(5)(b) of the United Kingdom Patent Act, which states that an act that would constitute an infringement of a patent for an invention shall not do so if it is done for experimental purposes relating to the subject matter of the invention. The UK courts have held that the experimental use exception covers activities that seek to generate genuinely new information but not those that seek to verify existing knowledge. Other EU member states with experimental use exceptions include France, Italy and the Netherlands.
An experimental use exception has also existed in the United States common law for nearly two centuries. The doctrine is primarily invoked as protection against the “public use” bar under 35 USC §102 and against claims of patent infringement under 35 USC §271(a). To be used as an exception to infringement, the courts have defined experimental use as any actions performed “for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry”. The actions cannot be in the “guise of ‘scientific inquiry’, when that inquiry has definite, cognizable and not insubstantial commercial purposes.” Case law emphasizing the inability of the experimental use exception to immunize use that is in any way commercial in nature has been argued to make the common law exception “essentially useless to research universities”. However, there are other alternatives that researchers can rely on to provide some protection for experimental use, including state sovereign immunity under the Eleventh Amendment and the Hatch Waxman Act.
New section 55.3 empowers the Governor in Council to make regulations respecting factors to be considered in determining whether a use is experimental use and circumstances in which an act is or is not experimental use. This regulation-making authority suggests that it is contemplated that there may be a need for clarifying amendments in our law as the courts start to interpret section 55.3. As no regulations have yet been made promulgated, it remains to be seen exactly what factors are open for consideration of the experimental use exception, and in what circumstances it will be applied. Judicial interpretation of the new provision, as well as corresponding regulations, will be necessary in order to elucidate the full scope of protection provided by the experimental use exception under section 55.3.