- IP litigation in Canada is handled mostly by a federal court with national jurisdiction.
- Discovery is generally less invasive and less costly than in the United States.
- The winning party may recover a substantial portion of its legal fees.
- A ruling in Canada may lead to the implementation of a solution across North America.
It is common for disputes over intellectual property (IP) rights, including patent, trademark and copyright disputes, to be multijurisdictional in nature. As discussed below, there are a number of important litigation procedures that make Canada an attractive forum in which to litigate IP rights.
1. The Federal Court is a semi-specialized court of national jurisdiction
There is essentially no issue with “forum shopping” in Canada as most IP disputes of significance are brought before the Federal Court, a semi-specialized and bilingual Court of single, national jurisdiction across Canada. As a result, a number of judges (including a few who were IP litigators before their appointment) hear a significant number of IP cases, and have thus developed an in-depth knowledge of the subject matter.
The Federal Court is said to be an “itinerant court”. All judges are appointed and reside in Ottawa but travel across Canada to sit in all major business centers. As such, the particular Canadian city in which the proceedings are initiated has no influence on the selection of the trial judge or where the trial will be held. The same applies to the Federal Court of Appeal such that there are no districts or circuits where varying case law can develop.
Although the Superior Courts of the Canadian provinces have concurrent jurisdiction over IP infringement actions, the Federal Court is typically preferred for the reasons discussed above and below.
2. Court procedures are adapted for complex IP litigation
The fact that most IP cases are heard by the Federal Court has allowed the Court to work closely with the IP Bar to continuously adapt its procedural rules and practices to be better suited for complex IP litigation.
For instance, the Federal Court offers a very robust case management system that allows for added flexibility over the procedures and timing set out in the Federal Courts Rules, and ensures that cases will proceed to trial in a diligent fashion. In this regard, the Federal Court will endeavor to hear intellectual property cases within two years (or even sooner) of filing where the parties are determined to bring the matter to the Court expeditiously and request an early assignment of trial dates.
In recent years, the Federal Court has also been more open to granting interlocutory (pre-trial) relief in IP cases, including novel remedies in online copyright piracy cases such as so-called “site blocking” orders targeted at Internet service providers (for example, in Teksavvy Solutions Inc. v. Bell Media Inc., 2021 FCA 100). Further, while the Court has historically been hesitant to hear complex IP cases by way of summary judgment or summary trial, its position has evolved and parties have been successful recently in having IP disputes adjudicated summarily.
3. Discovery is less invasive and less expensive
While the Canadian legal system has a documentary and oral discovery process (unlike most European jurisdictions), it is usually much less invasive for the parties and therefore much less expensive than the discovery for IP cases in other jurisdictions, most notably the United States. In the case of documentary discovery, each party has a duty to disclose to the other party all relevant documents it intends to rely on at trial or that could be detrimental to its own case. In the authors’ experience, including in parallel cases taking place in Canada and the United States, the exchange of documents is usually more focused in Canadian IP cases.
Oral examinations for discovery (or depositions) are also much more limited in Canada than they are in the United States. The general rule is that a party is only entitled to depose one representative of the opposite party. Exceptionally, a defendant in a patent case is also allowed to depose the inventors of the patent(s) at issue, but cannot use the depositions at trial unless the inventors are called to testify. The rules also do not generally allow experts to be deposed as part of the discovery process in Canada. Finally, the Federal Court has issued practice notices in recent times to limit the duration of depositions and subsequent refusals motions seeking to compel parties to answer contested questions.
4. Confidential information will be protected
IP litigation often requires a party to provide confidential and highly sensitive financial, commercial, scientific and/or technical information to its opponent during the discovery process. Naturally, IP rightsholders will have concerns about the disclosure of their confidential information, especially where such information will be provided to a direct competitor. The confidentiality of such information is not specifically provided for by statute or procedural rules in Canada.
The Federal Court, however, has a long-established practice (reaffirmed recently by the Federal Court of Appeal in Canadian National Railway Company v. BNSF Railway Company, 2020 FCA 45) of issuing so-called protective orders, often on consent of both parties, to govern the confidential information that is to be exchanged by the parties in the course of the written and oral discovery process. A standard protective order template was developed by IP practitioners and the Court to make it easier for the parties to apply for, and for the Court to review and grant, such orders. As a result, IP litigants in Canada can take steps to ensure that their confidential information disclosed in the course of the litigation is protected.
5. No delay caused by Post Grant Reviews or Inter Partes Reviews
Since 2012, it has become very common for a defendant in a patent infringement lawsuit in the United States to initiate a Post Grant Review (PGR) or an inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB) to challenge the validity of the patent at issue. This is a cause of concern for patent owners contemplating litigation for many reasons.
For example, the burden on the petitioner to invalidate a patent is lower in the PTAB compared to the district courts, as there is no presumption of validity, and the claims of the patent invalidity are to be interpreted in the broadest reasonable sense without any consideration of infringement issues. In addition, district courts will oftentimes, but not always, stay the court proceedings pending resolution of the IPR, which takes between 12 and 18 months, resulting in increased costs, delays and uncertainties.
There are no similar PGR or IPR-type proceedings in Canada. The Canadian Patent Act does provide for re-examination proceedings before the Patent Office, but the scope of the procedure is very narrow compared to PGRs and IPRs. Such proceeding is therefore very seldom used in practice, especially not in the context of litigation. The most important difference is that re-examination in Canada is not inter partes - the requesting party is not involved in any way in the proceedings beyond filing the initial request for re-examination. It cannot respond to the arguments and/or amended claims submitted by the patentee to the Re-examination Board, and cannot appeal from the decision. A re-examination is also limited to a consideration of prior art - the Re-examination Board cannot rely on any factual or expert evidence, and will not consider invalidity attacks other than those based on prior art (i.e., anticipation and obviousness).
Lastly, a defendant in a pending patent infringement case cannot request re-examination in an attempt to delay ongoing court proceedings. To the contrary, the Federal Court can order a stay of the re-examination proceedings pending determination of the broader validity issues that are before the Court based on a full consideration of the factual and expert evidence.
6. No jury trials
In Canada, there are no jury trials for IP disputes. All factual and legal issues are decided by a single judge.
In United States patent litigation, claim construction (i.e., the interpretation of the meaning and scope of the patent claims) is usually carried out in a separate hearing (Markman hearing) prior to trial. In Canada, all issues relating to construction, infringement and validity are typically addressed only at trial (although the Federal Court can consider claim construction issues by way of summary judgment or summary trial in the appropriate circumstances).
Finally, bifurcation is common in IP disputes in Canada, whereby questions of monetary compensation are determined as part of a second proceeding only after a plaintiff has succeeded on the first trial relating to liability.
7. Permanent injunctions are almost always granted
Unlike courts in other jurisdictions (including the United States), which have taken a more restrictive approach to granting permanent injunctions in IP cases, the Federal Court of Canada will typically award a permanent injunction to an IP rightsholder who is successful at trial, except for rare and exceptional circumstances such as situations where a patent is almost expired and has never been practiced by the patentee.
8. Accounting of the infringer’s profits is an available remedy
Another important advantage in terms of remedies available in Canada for IP infringement is that a successful plaintiff in a patent, trademark or copyright infringement case can, in appropriate circumstances, elect for either a recovery of the damages it suffered (e.g., in the form of lost profits on lost sales if the latter can be established, or a reasonable royalty), or an accounting and payment of the infringer’s profits that are directly attributable to the infringement. The latter option can be particularly attractive in situations where it may be difficult for the plaintiff to establish its damages, and/or where the defendant has been particularly successful with its infringing product.
An accounting of an infringer’s profits can be a very powerful remedy for an IP rightsholder, depending on the circumstances, and has led to very significant monetary awards in Canada.
9. Substantial costs awards are often granted to the winning party
In the authors’ experience, IP litigation (and particularly patent litigation) is generally less expensive in Canada than other jurisdictions, such as the United States, in part because of the narrower scope of documentary and oral discovery.
In addition to spending less in Canada, a successful litigant can expect to recoup an important portion of its legal fees and disbursements. The rule in the Federal Court is that the successful party is usually entitled to get back a portion of its attorneys’ fees and all reasonable disbursements (expert fees, court fees, etc.).
Awards of attorneys’ fees were previously typically calculated pursuant to a Tariff in the Federal Courts Rules. However, a practice has developed in the Federal Court and Federal Court of Appeal, whereby the Court will award a lump-sum corresponding to a percentage (usually around 25% to 35%) of the actual legal fees incurred by the party. This approach can lead to significant costs awards in Canada.
Costs awards can also be increased in situations where the winning party made a formal offer to settle that meets the prescribed requirements, which was refused by the other party, and the winning party ultimately obtains a judgment that is at least as favorable. As such, IP litigants typically consider forwarding such offers to the opposite party at an appropriate stage of the litigation.
10. Litigation in Canada can lead to a North American resolution
In addition to the different advantages discussed above, where infringement is occurring both in Canada and other jurisdictions, IP litigation in Canada can oftentimes lead to a North American resolution, either through a favorable judgment in Canada or, more likely, in the context of a negotiated settlement.
The obvious example is where the defendant is manufacturing the infringing product in Canada for sale in Canada and abroad. In most trademark and patent cases, a successful plaintiff will be able to claim its damages or, as noted above, an accounting of the defendant’s profits for all products made in Canada, including those sold elsewhere.
Even in situations where the infringing products are not manufactured in Canada (or not manufactured exclusively in Canada), stopping infringement in Canada can often indirectly resolve the situation in the United States. Because of the proximity and integration between the two markets, if the defendant is required to develop a non-infringing alternative for the Canadian market it is likely to offer the same non-infringing product in the United States.
Various litigation procedures are available to an IP litigant in Canada that make the country an attractive forum in which to litigate IP rights. There have also been various recent initiatives taken by the Canadian Federal Court and the Canadian IP bar to further shorten the litigation process, and make IP litigation in Canada even more accessible and less costly. If faced with multijurisdictional disputes with a Canadian component, IP rightsholders should consider litigation in Canada when developing a strategy for enforcement.
Authors: Jeremy Want, Partner of Smart & Biggar LLP, Barrister and Solicitor, Patent and Trademark Agent; and Jean-Sébastien Dupont, Partner of Smart & Biggar LLP, Barrister and Solicitor, Patent and Trademark Agent