IP Year in Review 2018 – A Milestone Year for IP Osgoode and Ground-breaking Changes in the Canadian IP landscape

As we settle into 2019, we look forward to topping the successes of the last year! Ten years ago IP Osgoode, Osgoode’s flagship Intellectual Property Law and Technology Program, was launched with the dream of creating a vibrant community to engage in balanced and objective research, and offer new and unexplored viewpoints to public policy discussions which are inclusive of the opinions and interests of a broad range of stakeholders. On the special occasion of IP Osgoode’s 10th anniversary we thank all those who had a hand in making our dream a reality and building IP Osgoode to be one of the top IP and technology programs in the world. A community is only as strong as its members. Thank you to all our members for supporting us, we could not have done it without you. Here’s to another 10 years for creativity and innovation!

2018 was also a celebratory year for Prof. David Vaver. To honour Prof. David’s Vaver’s double induction into the Order of Canada in 2017 and as a Fellow to the Royal Society of Canada in 2018, IP Osgoode released a special video. The video features many experts, colleagues and mentees and friends from around the world who participated in the symposium we organized in his honour to showcase his important contributions and leadership in intellectual property law. And to close the year, we edited a special issue of the Intellectual Property Journal in his honour! Some must read gems include contributions from The Hon. Marshall Rothstein, The Hon. Roger T. Hughes and Justice Michael Manson.

On the wider IP front, 2018 also marked the year the Government of Canada finally recognized the importance of IP legal clinics in the country’s innovation ecosystem in its National IP Strategy. The recognition of IP clinics that enable law students to learn more about IP, help businesses get a sense of their IP needs and facilitate access to the profession that can provide quality IP advice is very much in line with the objectives of the Innovation Clinic. Founded in 2010, the Innovation Clinic was the first IP legal clinic of its kind, operating in partnership with an established accelerator and an international law firm. Eight years later, the Innovation Clinic has become the largest IP legal clinic operating in Canada and provides important IP information, awareness, and assistance for our clients as well as crucial experiential learning experiences for Osgoode Hall Law School students.

To meet increasing demands for services, the Innovation Clinic has built on its successful partnership with Norton Rose Fulbright LLP, which began in 2016, and in 2018 also partnered with Bereskin & Parr LLP. Lawyers at both firms volunteer their valuable time to supervise our law student volunteers as they assist start-ups, entrepreneurs, and inventors across Southern Ontario.

At the end of 2018, I completed my research project on IP legal clinics in Canada, which was funded by the International Law Research Program at the Centre for International Governance Innovation (CIGI) and will soon be released. The report underscores the importance of supporting IP legal clinics operated by Canadian law schools. Universities, law schools, and law professors can play a pivotal role in addressing the IP education and innovation gaps in Canada. Crucially, IP legal clinics work to fill gaps in the broader innovation ecosystem while offering students practical, hands-on experience in IP and related business law matters. Underscoring some of these issues, I published an article on the CIGI website and the IPilogue, entitled “How the IP Strategy Could Transform Canadian Innovation.” We look forward to publishing the report and continuing further dialogue among law schools, industry, law societies, the Canadian Intellectual Property Office (CIPO), levels of government, and other relevant stakeholders regarding the creation of a network of IP law clinics across Canada.

Top Ten Most Read Blogs of 2018

As we look back to the three main areas of IP, there are some noteworthy highlights.

Patents

Canadian statutory amendments, patent rule changes, tense multinational trade negotiations, and sui generis cannabis legislation broke new ground in the patent law landscape.

C-86 and the Patent Act Updates

Bill C-86 was introduced in 2018 and clarified patent rights in court cases, experimentation with existing patented materials, compliance with technical standards, and prior use rights. Passed on October 29, 2018, the bill amends the Patent Act as a piece of omnibus legislation.

C-86 binds both original and subsequent standard essential patent (SEP) owners to licensing obligations. The provision (section 52.1) also extends to certificates of supplementary protection (CSPs), which offset the approval period for pharmaceutical products.

Regarding legal disputes, written communications can be used as evidence to counter assertions made by the patentee when construing patent claims. These communications pertain to the prosecution history of said patent (presupposing their relevance to legal claims). Furthermore, a legal authority now exists to set requirements for cease-and-desist-like letters sent to patent holders. The complaint is valid if the recipient is in Canada, meaning foreign patent holders can seek compensation. These claims are to be handled in the Federal Court.

Furthermore, to encourage innovation, experimental use of patented materials to further the craft is now generally permitted by statute (as opposed to the prior limited, common law exception). The experimental use analysis is conducted by the courts and includes an assessment of the intent in experimentation.

Prior user rights are also expanded. If before the priority filing date a person commits an act considered infringement and then commits the same act post-priority, it is no longer an infringement of the patent or CSP. Exceptions apply only in good faith situations, whereas intentional violation of the patent’s information counts as infringement.

Changes to Canadian Patent Rules

December saw the release of CIPO’s draft of updates to the Patent Rules, to align Canada’s patent regime with Patent Law Treaty (PLT) standards and fulfill the IP strategy announced by the Government earlier in the year. While the draft rules were still open for public comment throughout December 2018, the draft clarifies what the proposed changes are likely to be and how they will be implemented.

The new regulations overhaul many of the administrative rules surrounding patent applications, and include greater leniency with respect to payment of fees after the filing date (balanced by a new late fee), processes governing documents submitted in languages other than English or French, and allowing applicants to follow up with missing descriptions or drawings (though this mechanism cannot be used to change the scope of the invention). Photographs can now be used in limited circumstances where the invention does not otherwise lend itself to schematic drawings, and a single nucleotide or amino acid sequence can be the subject of any one application. Furthermore, patent applicants are now able to designate a “common representative” for joint applications, who will be allowed to represent the others in dealing with the Patent Office.

Requests for priority will be brought into compliance with PLT and Patent Cooperation Treaty (PCT) standards, and it will no longer be possible to prevent publication of an application by withdrawing the application when an applicant provides consent for early publication.

The time limit for examination will be decreased from five to four years after filing, with a four-month time limit (down from six) to respond to an examiner’s report, rejection, or notice of allowance. Amendments can still be made to an application after allowance, but the new rules will set up a more rational system where a notice of allowance can be withdrawn at the applicant’s request, followed by re-examination and amendment. The new rules will also allow correction of “obvious errors”, ostensibly a broader definition than the current “clerical error” standard (which is an attempt to bring patent law in line with trademarks and industrial designs).

The new rules also set up a ‘due care’ requirement for applications abandoned or patents deemed expired because of missed maintenance fees, or applications abandoned as a result of failure to request an examination. This, combined with more direct third-party rights protections for infringement, are meant to compensate for the longer time limits for correcting application deficiencies.

Finally, procedures surrounding divisional applications (those where inventions are split off from an original parent application) will be mostly unaffected, though the codification of guidelines currently contained in practice notices is likely to make the system easier to navigate.

The new Patent Rules present a much awaited and needed consolidation (Canada signed the PLT in 2001 but has yet to ratify it), and one which will hopefully bring some clarity to both applicants and CIPO. As with any regulatory framework, however, only time will tell if the changes achieve this goal.

CUSMA

While CETA was the international agreement that pre-occupied the IP world in 2017, one of the biggest stories this year was the tense, down-to-the-wire negotiation around the Canada-United States-Mexico Agreement (CUSMA). Out of a broad chapter on IP, the largest impact of CUSMA on Canadian patent law is likely to be changes to rules for biologics and for applicant-CIPO interactions.

Biologics are molecules produced by living organisms which have pharmaceutical applications. These drugs are at the cutting edge of both treatment (from diabetes and arthritis medications to botox injections) and diagnostic tools (like new applications of enzyme-linked immunosorbent assays [ELISA]). The fact that CUSMA will, over a five-year transition period (Article 20.90), increase the term of market exclusivity for biologics to 10 years from the current standard of eight (Article 20.49) has therefore caused some concern about what the new agreement may mean for the future of healthcare costs in Canada.

The second big change for patents in CUSMA affects how applicants interact with the CIPO. Those seeking a patent will now be able to expect compensation in the length of the patent grant for unreasonable delays in application processing, with the caveat that a delay can only be unreasonable if more than five years have passed since filing or three years have elapsed since a request for examination. (Article 20.44)

Cannabis

The Cannabis Act, which legalizes recreational use of cannabis for individuals of 18 years of age or older, came into force on October 17th, 2018. Allowing nationwide use of the drug and possession of up to 30 grams, this effectively ends the prohibition on cannabis in Canada (although provinces can approach legalization in their own way by restricting public use or sale).

The potential market for the drug is estimated at $4.9-$8.7 billion per year, with an anticipated market impact of up to $22.6 billion. Due to its lucrative market, IP protection is likely to be sought by manufacturers in all avenues of production of cannabis.

According to the Plant Breeders’ Rights Act, novel varieties of cannabis are eligible for patenting given they are novel, non-obvious and stable. Cannabis patents are not restricted to the whole plant under the Patent Act – patents can be filed for novel active ingredients incorporated in the plant, patches, gels, combinations of ingredients, cannabis extracts, methods for extracting active ingredients (eg. THC), and even devices used to ingest cannabis. When it comes to the plants themselves, for a variety to be considered “new” it can be sold for up to 1 year within Canadian borders and 4 years outside prior to its PBR application.

It is expected that the rate of patent applications will skyrocket with the new legislation passed. Prior to the Cannabis Act, only medical marijuana was available in Canada; with general legalization, it is likely that companies seeing this economic opportunity will enter the field at an expanding rate. By last count in June of 2018, there are at least 60 companies in the cannabis industry listed on the Toronto Stock Exchange.

Trademarks

While 2018 made its advancement new trademark legislation, we are still trekking through uncharted territory, as the effects of the new changes are far off into the future.

Progress for New Trademark Legislation

Finally, on November 2018, the government announced June 17, 2019 as the coming into force date of amendments to the Trade-marks Act. The amendments (see here, here and here), included key changes to several areas, such as trademark selection, opposition, and enforcement:

Trademark applications will no longer require a date of first use;
The definition of a trademark will expand in scope, giving protection to scents, sounds, colours, etc.;
Trademark applications will no longer need a Declaration of Use;
New registrations will have a 10-year renewal term;
Canada will join the Madrid Protocol;
Canada will adopt the Nice Classification of goods and services; and
There will be an associated fee-per-class for trademark applications.

Both academics and practitioners expressed concerns over the amendments. Much of this concern stems from the fear of trolls taking advantage of the elimination of the requirement to prove “use”. Indeed, since the announcement of the amendments, there has been a significant increase in the number of applications covering all Nice classes of goods and services, in anticipation of the amendment. However, the Government of Canada took steps in 2018 to address these concerns by announcing in the National IP Strategy a proposal for bad faith trademark opposition and invalidation grounds and a requirement for registrants to use their trademark within three years of registration for their enforcement rights to be valid.

Bill C-86, The Budget Implementation Act 2018, No.2 included not only the proposed opposition grounds and three-year limitation period announced in the National IP Strategy but also additional changes, such as:

Imposing statutory limits on published official marks;
Allowing the Registrar to order costs, case management, and confidentiality for documents filed during contested proceedings;
In cases where parties are appealing the Registrar’s decision, only allowing new evidence to be filed with leave from the Federal Court; and
Implementing a new Act to license and regulate trademark agents.

As the Bill has only been tabled recently, it still has a long way to go before its effects will be felt. Furthermore, there is uncertainty as to whether the new bill will adequately address the shortcomings of the 2014 amendments to the Trade-marks Act.

CUSMA’s Implications for TMs in Canada

Canada will be in compliance with many of the CUSMA provisions when the amendments come into force. The CUSMA encompasses several changes that are already expected to be implemented next year – such as ratifying the Madrid Protocol and allowing the registration of scent marks. The CUSMA also explicitly provides that in civil proceedings related to trademark counterfeiting claims, each party must establish a system that provides for any “pre-established damages”, or “additional damages” sufficient to deter infringements. Also, the nation in question must establish a means that will allow them to “fully” compensate the rights holder in question. The current provisions in the Trade-marks Act already allow for punitive damages for trademark infringement, however, these statutory damages can help to reduce litigation costs, and thus may be favorable for future court proceedings.

Reaffirming the Broadening of “Use” for TM Registration to Include Ancillary Use

The recent Canadian Federal Court decision in Hilton Worldwide Holding LLP v Miller Thomson LLP (Hilton Worldwide) – which is in line with the decision in Dollar General Corporation v 2900319 Canada Inc. – affirms that the physical establishment of a hotel in Canada is not necessary to constitute the “use” of a trademark in Canada. Consequently, in Hilton Worldwide, the Federal Court overturned the Registrar’s decision to remove the Hilton Hotel’s registration of the trademark WALDORF-ASTORIA in association with “hotel services”, where a so-called “bricks-and-mortar” hotel was not present in Canada. As part of the Hilton Hotel’s defence, it was stated that they offered several services which were accessible to Canadians, and that these services were associated with the trademark WALDORF-ASTORIA. These services included the operation of an interactive website, a worldwide registration service, and discounted offers to customers who pre-paid for rooms and loyalty programs.

This decision brings these “hotel” cases in line with decisions that pertain to retail store services, such as TSA Stores Inc. v Registrar of Trademarks. However, only time will tell how broadly this decision will be applied in the future, especially with the upcoming legislative changes to Canadian trademark law. Some cases may be consistent with this decision, by focusing on the interactivity of a website and the “benefit” given to Canadians. Nevertheless, other cases may instead focus on whether hotels offered pre-paid reservation services to Canadians, or perhaps even on when the registration was issued. However, it is clear that this decision has made an important impact that will have ripple effects on trademark law in the upcoming years.

Official Marks are not Absolute Defences to Infringement Claims

On October 4, 2018, the Federal Court ruled on a new trademark issue in Quality Program Services Inc. v Her Majesty the Queen in Right of Ontario as Represented by the Minister of Energy. In its decision, the Court held that official marks are not absolute defences for trademark infringement.

The case was based on Quality Program Services Inc. (QPS)’s registered trademark, “EMPOWER ME”, which was used in its energy awareness program. In 2013, the Ontario government created a website titled “emPOWERme” that also focused on energy use and generation. Despite receiving official mark status under section 9(1)(n)(iii) of the Trade-marks Act, the Court found that the Ontario government’s “emPOWERme” mark infringed on QPS’s registered trademark.

This decision clarified certain limitations on official marks, which are trademark rights that can be granted to public authorities. These marks are powerful tools, with features that place them well above typical registered trademarks. For example, official marks have several perks, such as they cover all goods and services, and they are not subject to opposition proceedings, renewal, or expungement.

Copyright

CUSMA

CUSMA emphasizes that “the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer of technology.” In furtherance of this objective, the CUSMA includes increased protection for material covered by the Canadian Copyright Act. Specifically, Canada has agreed to extend the term of copyright protection from “life plus 50 years” to “life plus 70 years” for works authored by natural persons. Works other than those by natural persons will be protected for no less than 75 years from the date of first publication.

Furthermore, under CUSMA, Canada has agreed to implement stronger border security measures to prevent counterfeiting. Canada will assign agents to oversee in-transit shipments and stop shipments to investigate the suspected presence of counterfeit products. This extends the government’s previous commitment to preventing counterfeiting of goods as part of the negotiations of the Trans Pacific Partnership (TPP) agreement, which included both the United States and Mexico but was abandoned by the Trump Administration. Additionally, under CUSMA, Canada will maintain its notice-and-notice system for copyright infringement claims. Finally, CUSMA outlines the criminal and civil remedies available for removing digital watermarks from works or interfering with digital locks.

Combating infringement

In March of 2018, the Federal Court of Canada released its decision in Odyssey Television Network Inc. v. Ellas TV Broadcasting Inc. Therein, the court granted the plaintiff’s motion for default judgement and awarded $5,000,000 in statutory damages against the defendant, who was found to have infringed the plaintiff’s copyright by streaming Greek television programming for which the plaintiff was the exclusive distributor in Canada.

Relatedly, in Bell v Lackman, the Federal Court of Appeal upheld an Anton Piller order granted against the defendant on the grounds that there was a strong prima facie case that the defendant had infringed the plaintiff’s copyright by operating a website offering “software add-ons” that allowed users to stream infringing television and movie content.

On October 2, 2018 the Canadian Radio-television and Telecommunications Commission (CRTC) released its decision on a website-blocking application filed by Fair Play Canada – a coalition of media companies including Bell, Rogers, Corus and CBC/Radio Canada. Fair Play applied to the CRTC to institute a website blocking regime to combat online piracy; a proposal that received significant public backlash as well as numerous interventions both for and against the proposal. Ultimately, the CRTC rejected Fair Play’s proposal on the grounds that the proposed regime is not within the CRTC’s jurisdiction.

The Budget Implementation Act (Bill C-86) includes a number of proposed changes to Canadian IP laws. One such proposal is a plan to deal with the use of the notice-and-notice regime to send settlement demand letters to internet users suspected of pirating copyright-protected works. This attempt to address abuse of the notice-and-notice system follows up on an initial flagging of the issue in the National IP Strategy, which was announced in Spring 2018.

Under the notice-and-notice system, a copyright holder who suspects that their protected work is being infringed by a party can send notice to that party via the party’s internet service provider (ISP). Bill C-86 adds additional wording to the Copyright Act stating that such notices cannot contain an offer to settle, nor a demand for payment or personal information, among other specifications. These amendments mean that an ISP could refuse to deliver notice to a user, if the notice at issue contains any prohibited demands.

Review of the Copyright Act

2018 saw the continued review of the Copyright Act. As part of the review, the Standing Committee on Canadian Heritage conducted a study on remuneration models for artists and creative industries, which drew briefs from Canadian music collective societies, book publishers, and film guilds – to name just a few.

Simultaneously, the Standing Committee on Industry, Science and Technology conducted its review of the Copyright Act. One area in which many stakeholders weighed in on was educational copying, in particular fair dealing and decreasing revenues from licensing of educational material. On the one hand, a joint brief submitted by Access Copyright on behalf of Canadian writers and publishers, recommended that fair dealing be limited so as not to cover educational copying of works that are commercially available. On the other hand, universities and libraries argued against circumscribing fair dealing, recommending that the government take different steps towards supporting Canadian authors and publishers.

In September 2018, the Supreme Court of Canada released its decision in Rogers Communications Inc. v. Voltage Pictures, LLC. At issue was whether the respondent film production companies should bear the costs borne by Rogers as an ISP in complying with a Norwich order to disclose the identities of its customers accused of infringement. Ultimately, the SCC sided with Rogers, reversing the Federal Court of Appeals’ previous decision. While the SCC remitted the issue to the motion’s judge for a determination of the quantum of Rogers’ entitlement to costs, the decision is an important precedent for ISPs who are compelled to disclose their customer’s personal information.

Written by Giuseppina D’Agostino, Founder & Director of IP Osgoode, the IP Intensive Program, and the Innovation Clinic, the Editor-in-Chief for the IPilogue and the Intellectual Property Journal, and an Associate Professor at Osgoode Hall Law School.

With contributions from IPilogue Editors: Summer Lewis, Lauren Chan, Imtiaz Karamat, Neda Foroughian, Peter Werhun and Rui Shen, and from IPilogue Senior Editors: Stephen Cooley, Sebastian Beck-Watt and Dominic Cerilli.