IP monitor: Recent trends in tech & mech patent litigation

Canada Publication June 14, 2021

Patent litigation in the technology and mechanical innovation space continues to be dynamic, demonstrating the importance of IP protection and enforcement in spite of the COVID-19 pandemic. 

About as many cases concerning technological and mechanical patents have been commenced since the beginning of 2020 as were commenced in two of the three preceding years. Since the beginning of 2020, there have also been decisions in at least 17 different matters relating to tech & mech patents. These include several decisions on the merits, appeals, and important motions advancing the use of summary disposition as an alternative to full trials.1 In this article, we will profile some of the major themes from these tech & mech decisions from the last 18 months.


Significant new cases in digital technology

There are growing signs that we are emerging from a challenging period for digital technology patents in Canada. Historically, the Canadian Patent Office’s practice created difficulty claiming inventions of this kind, while low rates of litigation led to a lack of judicial guidance and a degree of uncertainty about how such inventions would fare in an infringement/impeachment action. However, recent Federal Court decisions seem to indicate that this approach is changing, opening the doors to a potential influx of tech cases. While it is still early days, these decisions show that the Federal Court understands the issues raised by digital technologies such as computer and Internet-related inventions. 

In Choueifaty v Canada (Attorney General), 2020 FC 837, the Federal Court rejected the Patent Office’s approach to assessing patentable subject matter for technology patents. Historically, the Patent Office would use a “problem and solution” approach to construe the essential elements of the claims, which tended to treat the computer hardware claim elements as non-essential. This practice was widely viewed as patentee unfriendly, with the Patent Office often denying such applications on the grounds that they were unpatentable subject matter akin to an abstract theorem or algorithm. In Choueifaty, the court held that it was incorrect to use the “problem and solution” approach instead of giving the claims a purposive construction. The Patent Office has since amended its patent examination guidelines regarding patent applications for digital technologies.  

Recently, the Federal Court also decided one of the first cases in Canada regarding a software/system invention: Guest Tek Interactive Entertainment Ltd. v Nomadix, Inc., 2021 FC 276. Despite Canada’s reputation for “unique” patent law issues (e.g. overbreadth and the now-defunct promise doctrine), the issues at trial concerned traditional infringement, anticipation, and obviousness arguments. The thorough and detailed trial decision provides a foundation for confidence for parties to bring more software cases to the Federal Courts.2 

Increased use of summary proceedings

Historically, the Federal Court has rarely decided patent actions on their merits without a trial. Beginning in 2019, we have seen increasing use of summary disposition as an alternative to a full trial. This trend could reduce the length and complexity of patent actions, making litigation more accessible for a wider range of parties, industries, and technologies – including tech & mech patents.

Recently, the Federal Court of Appeal affirmed the first of these summary dispositions in Canmar Foods Ltd. v TA Foods Ltd., 2021 FCA 7. The defendant moved for summary judgment in an infringement action and proved – without expert evidence and before discovery – that its flax seed roasting machine did not infringe the plaintiff’s patent. The main issue was claims construction, and the decision also touched on Canada’s new file-wrapper provision (s. 53.1). The time between filing the statement of claim to the Court of Appeal’s final decision was about 25 months, giving the parties certainty in a complex action in just over two years.

In Gemak Trust v Jempak Corporation, 2020 FC 644, the defendant brought a successful motion for summary judgment in an infringement action. The patent in issue concerned a dishwasher detergent invention; the main issue was claims construction. The defendant met its burden to show non-infringement, while the plaintiff failed to “put its best foot forward” and show that there was a genuine issue for trial. The time between filing the statement of claim to the court’s decision was about 26 months. 

The decision in Flatwork Technologies, LLC (Powerblanket) v Brierley, 2020 FC 997, concerned a motion for summary judgment by the plaintiff in a patent impeachment action against a self-represented patentee. The plaintiff brought this action in response to a patent infringement action filed by the patentee in Alberta. The patent in issue was for an equipment heating blanket; on summary judgment, the Federal Court received expert affidavits and found the claims to be invalid for obviousness. The time between filing the statement of claim to the court’s decision was about 25 months.

In addition to summary judgment, the Federal Court also has the power to grant default judgment against a party that fails to perform certain steps in the litigation. This occurred in Nuwave Industries Inc. v Trennen Industries Ltd., 2021 FC 250. The plaintiff in the action was awarded $234,506 in infringement damages against the defendant and its patent, which relates to reclaiming oil and gas wells, was declared valid. 

The Federal Court will also hear motions to decide isolated legal issues before trial, as it did in the decision under appeal in Google Canada Corporation v Paid Search Engine Tools, LLC, 2021 FCA 63. This action involves alleged infringement of a search engine patent; the motion was to determine the effect of the Patent Act’s limitation period in an action for “reasonable compensation.” In this case, the Federal Court denied the motion; this was affirmed by the Court of Appeal because determining the issue in advance would not actually save any time or expense. The trial is scheduled to start on June 14, 2021.

While cease-and-desist letters are often used as an alternative to patent enforcement through litigation, the Federal Court sounded a note of caution about this strategy. In Fluid Energy Group Ltd. v Exaltexx Inc., 2020 FC 81, the court confirmed that these letters may themselves be actionable through litigation. Here, the issue arose inside a patent infringement action. The Federal Court granted an interlocutory injunction to prohibit the plaintiff from sending cease-and-desist letters to the defendant’s suppliers until the conclusion of the action. The court agreed that these letters raised a serious issue to be tried under section 7(a) of the Trademarks Act, which prohibits making “a false or misleading statement tending to discredit the business, goods or services of a competitor.”

Damages

The issue of monetary relief for patent infringement is set to return to the Supreme Court of Canada following a successful leave application from the Federal Court of Appeal’s decision in Nova Chemicals Corporation v Dow Chemicals Company, 2020 FCA 141. This case concerns one of the largest awards of patent infringement damages in Canadian history. Supreme Court decisions on patent issues are relatively rare in Canada, making this a case to watch. 

Closing thoughts

Throughout the pandemic, the Federal Court has shown itself to be a flexible and user-friendly forum for resolving patent disputes, no matter the subject matter of the patents in issue. The court has placed a significant emphasis on increasing the efficiency of patent litigation, with new case management guidelines focussed on proportionality in complex actions, significant investments in digital technology and electronic hearings, and an increased emphasis on moving cases forward to trial and disposition quickly.3  

These recent changes in court practice and the increasing use of summary disposition lower access-to-justice barriers and increase the range of disputes that make sense to bring before the courts. If current trends continue, we can expect to see a steady flow of digital technology and mechanical patent litigation making its way through Canada’s Federal Courts in the future. Given the greater focus on innovation in the Canadian and global economies, tech & mech patents will continue to be increasingly commercialized and enforcement before the courts will follow.


Footnotes

1   The Federal Court also sees a large volume of pharmaceutical patent litigation. For updates on the latest developments in that space, visit our dedicated pharmaceutical and life sciences blog: Pharma in Brief.

2   We note that the trial decision is now under appeal in Court File No. A-112-21.

3   See our Pharma in Brief article, Federal Court Issues Consolidated IP Guidelines.



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