Canada's Trajectory as an Innovation Hub

Canada's innovation and tech sectors have flourished in recent years, attracting leading entrepreneurs and major investments from around the world to Canada. Along with this rapid sector growth has come a corresponding flurry of interest in innovation and, by extension, intellectual property – particularly in Canada's finance and tech sectors.

According to the World Economic Forum, Montréal, Toronto and Vancouver — Canada's three most populous cities — are among the top 25 high-tech cities in the world.[1] Patent activity in Canada has responded in kind. According to the World Intellectual Property Organization, the Canadian Intellectual Property Office is currently one of the top ten patent filing offices in the world in terms of the number of patent applications filed in 2017.[2]

Indeed, Canada has become an attractive jurisdiction for innovative companies to commercialize their technology and protect their IP.  The upcoming modernization of Canada's patent regime, availability of unique remedies that allow for potentially large monetary awards against patent infringers – along with recent case law developments making it more difficult to invalidate a patent – have only increased the value of owning a Canadian patent.

As we have enumerated below, there are many procedural and cost advantages to filing patent applications and enforcing patent rights in Canada.

Patent Filing and Prosecution in Canada

1. Implementation of thePatent Law Treaty

On October 30, 2019, amendments to the Canadian Patent Rules and Patent Act come into force, officially bringing Canada under the Patent Law Treaty and helping to harmonize Canadian patent practice with jurisdictions like the United States that have similarly implemented the Treaty.[3] The amendments to the Act and Rules provide for a variety of applicant-friendly procedures, including the ability:

  1. to secure a filing date for a non-PCT application without paying the filing fee;
  2. to re-open prosecution following allowance by paying a fee as opposed to having to abandon and then reinstate the application;
  3. to restore priority in the event a deadline to claim priority is unintentionally missed;
  4. and, in certain circumstances, to add subject matter to an application after filing (e.g., in response to a notice indicting the as-filed application was missing parts).

2. Business Methods are Patentable Subject Matter 

The decisions by the Federal Court[4] and Federal Court of Appeal[5] in Amazon.com, Inc v Canada clarified that business methods are patentable in Canada when a computer is construed as essential to performing the method. This makes Canada an attractive jurisdiction for filing and prosecuting software, fintech and business method patents.

3. Lower Fees

The government cost of filing a patent application in Canada is lower than in either the US or Europe. The government fee for filing a patent application in Canada is only $400 (CAD) for large entities. This is significantly less than the combined filing, search, and examination fees typically paid at filing in the US for utility patents, which is $1,720 (USD) for large entities.

4. Flexible Examination

The examination of a patent application in Canada can currently be delayed up to five years after the filing date of the application (or up to four years under the upcoming amendments to the Patent Rules). The potential delay of examination can be used strategically to spread out the costs associated with concurrent prosecution across multiple jurisdictions.

5. Patent Prosecution Highway (PPH)

The PPH program is intended to accelerate the patent examination process without incurring additional governmental fees and to streamline the patent process. Patent applications under the PPH fare better than their non-PPH counterparts. Specifically PPH applications have lower wait times to the first office action, a higher likelihood of allowance without office actions and increased grant rates. Notably, in 2018, 37 percent of PCT-PPH applications and 26 percent of PPH applications were allowed in Canada without a first office action, in comparison to a mere 3 per cent for non-PPH national applications.[6]

7. No Excess Claim Fees

Unlike the US and Europe, in Canada there are no excess claim fees and no restrictions on the number of claims that can be included in a patent application. As a result, Canadian patents typically include a breadth of claims, which in turn may offer more extensive protection than their US or EP counterparts.

7. One-Year Grace Period

Prior disclosure of an invention can act as bar to filing a patent in many jurisdictions. However, in Canada, an applicant has the benefit of a one-year grace period from the date an invention is publicly disclosed to file a patent application.

Enforcing Patent Rights in Canada

Canada is also an excellent jurisdiction for patentees to enforce their patent rights. Canadian patent litigation can be an especially useful tool where infringing products manufactured in Canada are sold in foreign jurisdictions.

Moreover, patent litigation in Canada can be leveraged to resolve corresponding or parallel patent disputes in the US and similar foreign jurisdictions. Generally, patent litigation in Canada can save litigants time and money and tends to favour patentees when compared to neighbouring jurisdictions such as the US.

8. No Forum Shopping

Provincial courts have concurrent jurisdiction with the Federal Court for most patent matters in Canada. However, as the decision of a provincial court is only binding in its respective province and between the parties to the dispute, nearly all patent infringement actions are heard in the Federal Court. As such, there is virtually no forum shopping in Canada.

9. Limited Discovery

The discovery procedure in Canada is less probing than the deposition procedure in the US. Unlike the US, there is no ability to discover any relevant individual. Instead, examination for discovery is restricted to a single representative of each party and the inventor(s) of the impugned patent. Furthermore, experts are not deposed. Instead, expert reports in affidavit format are exchanged prior to trial and the experts are cross-examined during trial. This results in the discovery process in Canada being more time and cost efficient.

10. No Inter Partes Review, Post Grant Review, or Covered Business Method

Proceeding Canada has limited means for administratively challenging a patent's validity. There is no Canadian equivalent to the US Inter Partes review, Post Grant review, or Covered Business Method proceeding. Although a patent owner or third party may commence re-examination proceedings, re-examination is rarely used by third parties because (i) it tends to favour patentees, and (ii) an action with discovery and expert evidence provides a more complete means to assess patent validity.

11. Punitive Damages

While there are no treble damages or damages for willful infringement in Canada, Canadian courts instead award punitive and exemplary damages in certain cases where there has been egregious conduct or a blatant disregard for the patentee's rights.

12. Loser Pays Costs

Successful litigants are entitled to a portion of the legal costs incurred during litigation in Canada. The typical costs award will result in the recovery of approximately a quarter of legal costs.

13. Remedies

With respect to monetary compensation in the US, damages are only available for the infringement of utility patents. In Canada, a patentee who is successful in an infringement action is generally entitled to elect between damages or an accounting of the infringer's profits. The accounting of profits remedy allows the patentee to recover all of the infringer's profits resulting from the infringement. In the recent Federal Court decision, Dow Chemical Company v Nova Chemicals Corporation, the accounting of profits remedy resulted in the largest monetary award for patent infringement in Canadian history - $644.6 million to the patentee.[7] Additionally, in Canada, an injunction is generally available following a finding of patent infringement at trial.

A Final Word

As Canada transforms into a global innovation hub, international companies should seriously consider including or expanding their patent protection in Canada. 

Growth in the Canadian technology sector, as well as the favourable patent filing statistics and legislative landscape in Canada, make Canada a significant and beneficial jurisdiction for innovators looking to file or enforce patents. These benefits are further complemented by the relatively low costs associated with filing, prosecuting and enforcing patents in Canada.  Additionally, from a business perspective, a Canadian patent portfolio can be a useful bargaining chip to improve licensing, cross licensing and collaboration opportunities with competitors.