Canadian patent law has changed in significant respects as of October 30, 2019. These changes will be of most interest to our foreign associates, and to those of our clients who are responsible for managing deadlines associated with their patent portfolio.  Please read on for further details, and contact us if you have any questions.  We will continue to keep you apprised of all relevant changes affecting specific matters that we are already handling on your behalf.

Key changes under the new legislative regime include the following:

Late national phase entry as of right will not be available for PCT applications filed on or after 30 October 2019.  Applications that are subject to the new law must enter the Canadian national phase by thirty months from the earliest priority date, including provision of an English or French translation if required.  An exception is where the failure to enter the Canadian national phase was unintentional:  such an application can still enter the Canadian national phase up to 42 months from the earliest priority date, provided the applicant requests reinstatement of its rights in Canada, pays the applicable reinstatement fee (currently CA$200), and provides a statement that the failure to timely enter the Canadian national phase was unintentional.  Since this change only affects PCT applications with a filing date of 30 October 2019 or later, there will be a considerable grace period during which late Canadian national phase entry will continue to be available as of right.

A certified copy of the priority application must be filed.  While common in other jurisdictions, Canada did not previously require the filing of a certified copy of the priority application.  Going forward, a certified copy will be required by the later of sixteen months from the earliest priority date or four months from the Canadian filing date.  Further, if the applicant of the Canadian application and the priority application are not the same, CIPO will require evidence that the priority rights have been transferred to the Canadian applicant.  For PCT applications entering the national phase in Canada, a certified copy need not be provided if filed in the international phase.  However, in any PCT case where the certified copy was not filed in the international phase, it will be due at the time of national phase entry in Canada.

A Canadian filing date can be secured with a specification in a foreign language or by a reference filing.  Previously, a Canadian application had to be filed in English or French to receive a filing date.  Going forward a filing date can be secured by filing a specification in any language, although an English or French translation must be provided within two months of a Commissioner’s notice requiring such translation.  Filing by reference to a previously filed application is also possible, although a copy of such application must be filed within two months, and any translation must similarly be filed within two months of a Commissioner’s notice.  Note that there is no additional period beyond the thirty month national phase entry deadline to file an English or French translation of a PCT application, which places Canada in line with the United States in this regard.

Reinstatement as of right for failure to request examination or pay maintenance fees is curtailed or eliminated, although a late payment period is introduced.  Canadian practice has traditionally benefitted from the ability to abandon an application for any reason and reinstate the application as of right within one year of the date of abandonment.  For most actions during prosecution that ability to reinstate the application as of right for a one-year period has been preserved.  The exceptions are reinstatements in respect of a failure to request examination or pay maintenance fees.  While there are many complexities to the new regime, in most cases after a six-month period has passed from the original deadline, it will not be possible to reinstate an abandoned application or reverse the expiration of a patent unless the applicant or patentee can demonstrate that the deadline was missed despite all due care required by the circumstances having been taken.  Third party intervening rights have also been introduced, and are generally available while an application or patent is abandoned during a period in which due care must be demonstrated to reinstate the application.

Some deadlines during prosecution are shortened.  In an effort to decrease pendency, deadlines for responding to examiner’s requisitions or to pay the final fee when the application is in condition for allowance are shortened to four months.  A two-month extension of time is available if requested prior to expiration of the initial deadline, and the official fee for requesting such an extension is CA$200.  The deadline for responding to an examiner’s requisition for a case that has been accelerated via a request for special order status is increased to four months, for consistency across all types of cases.  Extensions of time of up to two months are also available for such cases, but they will lose their special order status if an extension of time is requested.

New procedural safeguards are introduced.  To implement the Patent Law Treaty, a number of new safeguards are introduced, including in appropriate circumstances restoration of the right of priority and the ability to incorporate missing parts from a priority application without losing the original Canadian filing date.  While filing a complete and correct application on time is always the best approach, in circumstances where something has gone wrong, there is now more opportunity to retain protection for Canadian rights.

File wrapper estoppel has been introduced into Canadian law.  While this change came into force late last year, we are only beginning to see the interpretation of the extent of file wrapper estoppel in Canadian law.  While the statute states that a written communication between the applicant or patentee and the Commissioner or an officer or employee of the CIPO may be admitted into evidence to rebut any representation made by the patentee as to the construction of a claim in the patent, in one recent case, the Federal Court considered the file wrapper of the corresponding US application, finding that the patentee had made the foreign prosecution history part of the Canadian file wrapper by stating that the claims had been amended to substantially correspond to the US claims.  This case is currently under appeal.

We anticipate that there will be many issues of interpretation to be worked through by the Canadian Intellectual Property Office as the new law is implemented, and that the application of certain provisions by the office will be clarified over time. We remain active in keeping abreast of changes in office practice as they may occur.

We invite you to contact us with any questions about the new legislative regime in Canada, either generally or with respect to specific cases that we are handling on your behalf.

A challenge faced by many international entities when entering the Chinese market is that their brands have already been registered as trademarks in China by speedy local filers. Some such local filers are professional squatters that have no real intent to use the trademark but instead, they aim to make money by holding the trademark registrations for ransom. Earlier this year, the Standing Committee of the National People’s Congress amended the Trademark Law to introduce an intent-to-use requirement to combat trademark squatting. The amendments will come into force next month, on 1 November 2019.

Current Bad Faith Squatting Environment

China has a first-to-file trademark system dating back to 1982. To obtain a trademark registration, an applicant is not required to have any intent to use the applied-for mark in a legitimate business. This often results in trademark registrations being awarded to first filers, regardless of whether genuine intent to use exists.

The first-to-file system and the lack of any intent-to-use requirement, along with other factors, have led to a flood of applications to the trademark register and allowed for the proliferation of trademark squatting. Between 16 December 2018 and 15 June 2019, the Trademark Office of the China National Intellectual Property Administration (“CNIPA”) received about 3.3 million new trademark applications. Contributing to the millions of applications are defensive filings by brand owners and trademark squatting filings. Trademark squatting filings account for a non-negligible percentage of all filings. For example, some squatters claim to be filing about 5,000 trademark applications a day.

Squatters can be a serious problem for brand owners. For example, squatters may initiate trademark infringement lawsuits requesting large damages. Squatters may file complaints with the Customs Office for seizure, confiscation and/or destruction of infringing import or export products of the true brand owner. Further still, under Article 62 of the Trademark Law, squatters may file complaints with the Administrative Department for Industry and Commerce to stop production and/or the sale of infringing products by the true brand owner.

Current Tools to Combat Bad Faith Squatting

Squatted trademark registrations may be challenged through opposition or invalidation proceedings. For example, Article 32 of the Trademark Law prohibits the registration of a trademark that is already in use by another person and enjoys a certain level of reputation.

Article 13 of the Trademark Law prohibits the registration of a prior well-known trademark of a third party.

However, opposition and invalidation proceedings can be costly, lengthy and complex.

New Intent-to-Use Requirement against Bad Faith Squatters

The Trademark Law has been amended to introduce an intent-to-use requirement so that bad faith applications without intent to use will be dismissed at the prosecution stage. This is significant as the Trademark Office of CNIPA is empowered to proactively dismiss bad faith applications during examination. Bad faith applications without intent to use may never proceed to registration so that brand owners do not need to resort to costly and lengthy opposition or invalidation proceedings to challenge such registrations.

Further, Articles 33 and 44 have been amended to add the intent-to-use requirement as a new ground for opposition and invalidation against trademark squatting.

Concluding Remarks

In addition to the intent-to-use requirement, the Trademark Law has also been amended to (i) instruct trademark agents not to represent applicants if the agents know or should know that the applicants are acting in bad faith and have no intent to use the marks; (ii) increase statutory damages awarded for trademark infringement from RMB 3 million (about CAD 0.6 million) to RMB 5 million (about CAD 1 million); and (iii) add a remedy in court proceedings to destroy counterfeit goods and molds. Although there are some uncertainties as to how the amendments will be implemented, the amendments are a positive change for brand owners looking to combat trademark squatting and strengthen their trademark protection in China.

If your company is potentially interested in the Chinese marketplace, our firm can work with Chinese counsel to help secure trademark protection for your brand in China. We can also initiate watches to notify you of the filing or publication of potentially conflicting trademark applications, so that appropriate remedial action can be taken to prevent registration of such trademarks.

In Aux Sable Liquid Products LP et al. v. JL Energy Transportation Inc., 2019 FC 581 [Aux Sable], the Federal Court eliminated the “reasonably diligent search” test as the applicable test for establishing the scope of citable prior art in an obviousness attack. This decision impacts what constitutes “the state of the art” for an obviousness attack in a Canadian patent impeachment proceeding and may increase the vulnerability of patents to impeachment proceedings.  However, we caution that this may not be the last word on the subject, as recently the Federal Court of Appeal in Tearlab Corporation v. I-MED Pharma Inc., 2019 FCA 179, appeared to accept that the reasonably diligent search test was applicable.

The “Reasonably Diligent Search” Test

The impeachment proceedings against the defendant’s patent raised the issue of whether the enactment of section 28.3, the obviousness provision of the Canadian Patent Act, displaced the common law “reasonably diligent search” test. Prior to the enactment of this provision, and until the decision in Aux Sable, a party alleging obviousness had to establish that a prior art reference had not only been publicly disclosed but was locatable by  a person of ordinary skill in the art through a reasonably diligent search, in order for the reference to form part of the state of the art. References the court did not consider locatable through a reasonably diligent search did not form part of the state of the art in an obviousness attack, though such references were citable in an anticipation attack.

The Aux Sable Decision

In Aux Sable, the plaintiffs successfully argued that section 28.3 eliminated the “reasonably diligent search” test and that previous jurisprudence had not caught up to the statutory change. This decision thus establishes that all references disclosed to the public prior to the applicable date prescribed by section 28.3, not only those locatable through a reasonably diligent search, form the state of the art in an obviousness attack. This effectively removes the distinction between the totality of available prior art and the state of the art in an obviousness attack.

This decision likely lowers the burden on a party alleging obviousness as the limitations imposed by the “reasonably diligent search” test no longer apply. All publicly disclosed prior art located by the challeging party will now form part of the state of the art in an obviousness attack. It may additionally result in a more streamlined obviousness analysis in patent impeachment proceedings because courts will not need to determine which references were reasonably locatable.

For patentees, the elimination of the “reasonably diligent search” test may make patents more vulnerable to obviousness allegations and impeachment proceedings. Patents in scientific or technical fields where information is presented and published regularly may be especially vulnerable. The elimination of the test means that even a presentation at a small conference or an article published in an obscure journal, for instance, would qualify as part of the state of the art for the purposes of an obviousness attack. In view of the broadened scope of citable prior art in an obviousness attack established by Aux Sable, patentees and legal practitioners will therefore likely need to search beyond diligently for prior art and be increasingly wary of obviousness allegations.

By: Leslie Chan and Dana Turner-Ryan