Beware Patent Trolls – Companies Operating in Canada Have Low Cost Options to Invalidate Unworthy Patents

In Canada, there are two relatively inexpensive options to invalidate a Canadian patent, one being a Federal Court adjudication and the other an administrative proceeding, in addition to the normal “full blown” court action which may be seen to be costly notwithstanding that litigation costs in Canada are only a small fraction of that in the U.S.A..

Federal Court Options:

A company can commence a Federal Court proceeding to impeach a patent, that is, have it declared void and unenforceable under Section 59 of the Patent Act.  In doing so the company can rely on any ground of invalidity available under the law including lack of novelty, insufficient disclosure, double patenting, claim ambiguity and obviousness.

The cost of a court proceeding is variable and depends on a number of factors including the nature of the process that is chosen.  There are two different types of processes in the Federal Court which may be used.  One is an application, and the other is an action.  The application process is much simpler compared to the action process and, therefore, may be much less costly.  It is also a quicker process than an action, but will require more than a year to complete so longer thanthe the re-examination administrative process available from the Patent Office (see below).  The application process is simple because it is based only on affidavit evidence and, therefore, substantially limits the scope of pre-hearing discovery, whereas an action includes pre-hearing discovery of documents as well as examination of representatives of the parties, and it relies upon testimony of witnesses at a hearing.  The availability or suitability of the application process will depend on the facts of the particular case; it is generally best suited to cases where the only critical issue between the company and the patent owner is the enforceability (i.e. validity) of the patent and is generally unsuitable for cases requiring resolution of complex factual issues. 

Administrative Option within the Patent Office – Re-Examination:

Section 48.1 of the Patent Act provides that any person can request re-examination of one or more claims of an issued patent by filing in the Patent Office prior art that is pertinent to the patentability of such claims together with an explanation of why the claim is considered to be unpatentable in view of such prior art and payment of a fee. If, upon re-examination, the Patent Office finds a patent claim(s) in issue to be non-novel or obvious, the patent will be rendered invalid.  A possible advantage of this type of proceeding, apart from the obvious cost advantage, is its speed because the Patent Act requires that it be completed within one year.  However, an important limitation is that the patent can only be challenged on the basis of prior publications and patents meaning that some of the other grounds available in a court proceeding, such as insufficiency of disclosure or ambiguity of claims, cannot be asserted.  Further, the patentee may respond to such challenge by proposing amendment of the claims.  It is also important to bear in mind that s. 48.1 provides a right of appeal to the patent owner only.  However, an adverse decision will not prevent the company from then pursuing a court application or action to seek invalidity of the patent.