Voltage meets resistance from Federal Court: new safeguards imposed on disclosure order to combat copyright trolling

David Elder -

In a ground-breaking order, the Federal Court of Canada has for the first time included, in an order compelling third party disclosure of subscriber information, new conditions intended to better balance subscriber privacy rights and dissuade abuse of disclosure orders by copyright owners.

In the case of Voltage v. Doe, film production company Voltage Pictures LLC had sought from internet service provider TekSavvy Solutions Inc. the disclosure of the contact information of some 2,000 internet service customers that Voltage alleged had illegally downloaded movies in which it holds copyright.  TekSavvy refused to disclose the records in question, and Voltage brought a motion for an order requiring TekSavvy to disclose the information in question.

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Supreme Court of Canada addresses important issues in Canadian Copyright Law

Justine Whitehead and Gina Demczuk -

On December 23, 2013, a unanimous Supreme Court of Canada issued its decision in Cinar Corporation v Robinson. The decision provides clarification on a number of important issues in Canadian copyright law, including (but not limited to): (i) the appropriate test for determining if a substantial part of a copyrighted work has been reproduced; (ii) when expert evidence in respect of substantial taking should be adduced in copyright infringement cases; and (iii) several issues in respect of the calculation of damages and accounting of profits.

The Supreme Court decision is the last word in a case that has its genesis in actions undertaken decades ago. Claude Robinson began developing an idea for a children’s television show, The Adventures of Robinson Curiosity (Curiosity), in the early 1980’s. He spent more than a decade after that trying to get the project developed. During this time, Robinson shared his work (which included detailed sketches, storyboards, scripts and synopses), with several of the individual and corporate defendants (including Cinar Corporation).

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Bringing trademark infringement proceeding by application may have effect on damage award

On November 26, 2013, the Federal Court issued its decision in Trans-High Corporation v. Hightimes Smokeshop and Gifts Inc. The proceeding, which claimed trademark infringement, passing-off and depreciation of goodwill, was brought by the applicant, Trans-High Corporation (Trans-High) by way of a summary application to the Federal Court.  This option (which sees evidence confined to affidavit evidence, and no rights of discovery) was confirmed to be available by the Federal Court of Appeal in its 2011 decision in BBM Canada v. Research in Motion Limited. The respondent, Hightimes Smokeshop and Gifts Inc. (Hightimes Smokeshop), did not file any submissions in the proceeding or appear at the hearing.

In upholding the claims for trademark infringement and passing-off, the Court found that Hightimes Smokeshop had infringed Trans-High’s trademark “HIGH TIMES”, which has been registered in Canada since 1980 for use in association with magazines.  The Court found that Trans-High had tendered sufficient evidence to show a likelihood of confusion between its use of the mark in association with High Times magazine and website (with a focus on medical and recreational uses of marijuana) and Hightimes Smokeshop’s retail sale of marijuana-related paraphernalia and merchandise.  However, the Court declined to find depreciation of goodwill, citing insufficient evidence.   In particular, the Court noted that the evidence of volume of sales and depth of market penetration of magazines and related wares sold by Trans-High in Canada was limited, as was evidence in respect of the extent of advertising and publicity accorded to Trans-High’s HIGH TIMES trade-mark.  Further, there was little evidence of the degree of inherent or acquired distinctiveness of the HIGH TIMES trade-mark, and the products associated with the mark were confined to a specialized channel of trade.

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Ahoy Mateys! Judge scuppers suit against Pirate Joe's

On Oct 2, 2013, a Washington District Court judge dismissed a trademark infringement lawsuit against Vancouver businessman, Michael Hallatt. Powerful U.S. discount grocer Trader Joe’s had filed the suit, irked by Hallatt’s business of reselling its products in his cheekily-named Vancouver shop, Pirate Joe’s. Trader Joe’s has no Canadian locations, so Hallatt made frequent buying trips to its U.S. outlets. There he paid retail prices, then declared the goods at the border, marked them up and sold them in his store.

In its complaint, Trader Joe’s made numerous allegations under the Lanham Act (the U.S. federal trademark legislation), including trademark infringement, false endorsement, unfair competition, trademark dilution and false advertising. It also alleged deceptive business practices and trademark dilution under state law. Trader Joe’s contended that Pirate Joe’s intentionally copied the appearance of its stores and used its product images in order to confuse customers and pass as an authorized Trader Joe’s retailer. This, it argued, would damage the Trader Joe’s brand and dilute the source-designating ability of its trademarks, as well as deter Canadian customers from traveling to the United States to purchase its products.

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Intellectual property issues in the online world

Justine Whitehead -

The online world is a much different place today than it was just a few years ago. While the emergence of social media websites such as Facebook and YouTube has made it easier for people to network and share content, it has also opened the door to a number of unique IP issues that must be considered in the regular course of business.

Recently, my colleagues Ryan Sheahan, Alexandra Stockwell, and Nick McHaffie and I hosted a seminar that considered some of these issues, including the availability of business method patents in Canada, fair use under Canadian copyright law and IP issues raised by social media assets and user generated content. Below is a video of the seminar, and the associated materials are also available for download.

Court of Appeal clarifies - for utility the promise of the patent must be "clear and unambiguous"

Ryan Sheahan -

On July 24, 2013, the Federal Court of Appeal (FCA) issued its decision in Apotex Inc. v. Sanofi-Aventis, overturning a Federal Court decision invalidating Canadian Patent No. 1,336,777 (’777 Patent) - a patent owned by Sanofi claiming the active ingredient of the drug Plavix (clopidogrel bisulfate). This decision is the latest step in a lengthy history of proceedings between the parties, including an appeal to the Supreme Court of Canada (SCC), which held that the ’777 patent was valid. As that SCC decision was in the context of the Patented Medicines Notice of Compliance (PM(NOC)) proceeding, the finding was not (strictly speaking) binding on the Federal Court. It was still surprising that the Federal Court subsequently decided to invalidate the patent. The FCA decision points out the errors of the Federal Court and clarifies the law on the promise of the patent.

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White House pushes for innovation in U.S. patent system

On June 4, 2013, the President of the United States announced seven legislative recommendations to Congress and five executive actions designed to protect innovators from frivolous litigation and to better the quality of patents issued by the United States Patent and Trademarks Office. (The informal Executive Actions differ from Executive Orders in that they are not legally binding and are seen more as a way to signal a policy shift.)

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Proposed amendment to Copyright Act seeks to establish artists' resale rights

Justine Whitehead -

On May 29, 2013, Bill C-516 was introduced as a private member’s bill in the House of Commons. The bill seeks to amend the Copyright Act to provide creators of certain works with royalties payable upon resale of their work.

The proposed legislation sets the resale royalty at 5% of the sale price of any work that is re-sold for $500 or more after the first transfer of ownership by the artist.  The resale right would apply to “an artistic work, including a painting, sculpture, collage, print, lithograph, tapestry and a ceramic or glassware item”, but would not include maps, charts, plans, photographs or architectural works, or a copy of an artistic work, unless the copy is one of a limited number that had been made by the author or with the artist’s authorization.  Therefore, the scope of work which would attract the resale right is narrower than the scope of “artistic work” as currently defined in the Copyright Act.

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Applicants face significant hurdles in registering flavour and scent trademarks in the U.S.

Justine Whitehead  -

In a recent blog post, we noted that the new Bill C-56 would significantly expand the scope of a registrable trade-mark in Canada.  If passed, the list of items that could potentially be registered a trade-mark would include “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign.”

However, the nature of the evidence required to prove registrability is deliberately left vague in the proposed revisions, and a revised s. 32 would allow the Registrar to ask for any evidence deemed necessary to establish that a trade-mark is distinctive at the date of the filing of the application for registration. While Canadian standards would, of course, have to be developed, a recent precedential decision of the United States Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) is of interest, as an illustration of the difficulties in proving the requisite acquired distinctiveness to register a scent or flavour trademark.

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An overview of Bill C-56: Combatting Counterfeit Products Act

Justine Whitehead -

On March 1, 2013, Bill C-56 was introduced in the House of Commons. The majority of Bill C-56 is directed to amendments to the Copyright Act (CA) and the Trade-marks Act (TMA) to add new tools to fight commercial counterfeiting and piracy activities. An overview of these proposed tools, which include new civil and criminal remedies, and new powers for customs officers in respect of counterfeit and pirated goods, is set out below.

New Criminal Offences

Bill C-56 would expand the criminal provisions of the CA and introduce criminal offenses under the TMA. For the CA, Bill C-56 would make it an offence to possess an infringing copy of a work for the purposes of sale, rental, and/or distribution for the purpose of trade or exhibition in public by way of trade. It would also make it an offence to export (or attempt to export) an infringing copy of a copyrighted work for the purpose of sale or rental. (The CA currently already prohibits import in Canada of any infringing copies of a copyrighted work for sale or rental.)

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Bill C-56 Tacks on significant amendments to Trade-Marks Act

Justine Whitehead -

On March 1, 2013, Bill C-56 was introduced in the House of Commons. As might be expected from the short title of the proposed act (Combatting Counterfeit Products Act), the majority of Bill C-56 is directed to amendments to the Copyright Act and the Trade-marks Act to add new civil and criminal remedies to curtail commercial counterfeiting activities. Update: The details of these new provisions are reviewed here.

 While the essence of Bill C-56 is clearly directed to counterfeiting, the legislation also proposes significant amendments to the Trade-marks Act (the TMA) that are unrelated to counterfeiting activities. The most significant of these other changes are highlighted below.

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Most of Copyright Modernization Act provisions now in force

Alexandra Stockwell -

As we noted in our post on July 3, the Copyright Modernization Act  had received royal assent, but would not come into force until an Order-in-Council was issued. This has now happened: on November 7, 2012, most of the new provisions of, and amendments to, the Canadian Copyright Act came into force as a result of the publication in the Canada Gazette of Order SI/2012-85. The Order also specified that certain provisions, which relate to the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty, will come into force when those treaties are ratified by Canada.

A notable exclusion from the Order is the “Notice-and-Notice” regime (the future sections 41.25, 41.26 and 41.27(3) of the Copyright Act), which will only come into force after a consultation process and the establishment of regulations that will be needed to implement the regime. The Canadian “Notice-and-Notice” regime, which differs from the “Notice-and-Take-Down” rules in the United States, will oblige Internet Service Providers (ISPs), after being notified of infringement allegations by a rights holder, to notify the relevant subscriber of the allegations received.  ISPs will also be required to retain records that would enable the identification of the subscriber allegedly engaged in the infringing activity for a period of six months (or one year, if infringement proceedings are commenced in respect of the claimed infringement within six months of the initial notice from the rights holder). Once the regulations are ready, the date when the “Notice-and-Notice” provisions come into force will be published in a separate Order-in-Council.

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Supreme Court issues clear warning of need to respect the "Patent Bargain"

Ian P. Goodman -

On Thursday, November 8, 2012, a unanimous Supreme Court of Canada issued a decision with significant implications for those wishing to obtain or enforce Canadian patent rights.  Owners of issued patents seeking to enforce such rights should carefully scrutinize the disclosure and claims of their issued patents in light of this decision, and patent applicants should consider this decision when drafting the specifications of new applications.

The case of Teva Canada Ltd. v. Pfizer Canada Inc.  arose out of a Patented Medicines (Notice of Compliance) [PMNOC] proceeding in which Novopharm Limited (now, Teva Pharmaceuticals Limited) sought approval from Health Canada to market and sell a generic version of Pfizer’s Viagra-branded sildenafil tablets.  To obtain such approval, the decision-maker had to be convinced that Pfizer’s patent (the ‘466 Patent) was invalid. However, Teva was unsuccessful at both the Federal Court of Canada and the Federal Court of Appeal, each of which held that Teva’s allegations of invalidity were not justified.

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It's not over yet - Patent lapse due to clerical error may yet be saved

On July 27, 2012, the Federal Court of Canada - for the second time - quashed a decision of the Commissioner of Patents to refuse to correct a clerical error relating to Repligen Corporation’s Canadian Patent # 1,341,486.

In 2008, Repligen’s patent lapsed due to the inadvertent non-payment of its maintenance fees. Although the fees were sent to the Patent Office under Repligen’s name, they were sent with the wrong patent number. When Repligen’s new patent agents caught the mistake, they requested a correction under section 8 of the Patent Act. Section 8 gives the Commissioner the discretion to correct clerical errors in “any instrument of record in the Patent Office”. Although the Commissioner acknowledged that the error was clerical in nature, she refused to correct it. In 2010, Repligen succeeded in an application for judicial review of the Commissioner’s decision but their request for correction was again refused upon redetermination by the Patent Office.

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Previews of musical works do not infringe copyright

As we've discussed in a number of recent blog posts, the Supreme Court of Canada this week released a number of major copyright-related decisions. In one of these cases, Society of Composers, Authors and Music Publishers of Canada v. Bell Canada (SOCAN), the Supreme Court considered whether there would be a tariff for the communication of previews of musical works over the internet.

Online music previews are short extracts of musical works and assist a consumer in deciding musical purchases. The Copyright Board concluded that those who make previews available, and the users that listen to previews, were entitled to avail themselves of the fair dealing exception under section 29 of the Copyright Act, as listening to the previews constituted research of a purchasing decision (see our previous post). The Federal Court of Appeal upheld the Copyright Board’s decision and SOCAN sought leave to appeal to the Supreme Court of Canada.

In upholding the decisions below, the Supreme Court concluded that the previews constituted fair dealing, applying the test articulated by the Court in CCH Canadian Ltd v. Law Society of Canada (CCH).

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Performers and makers of film soundtracks not entitled to broadcast royalties

In a ruling issued July 12, 2012, the Supreme Court upheld the decisions of the Federal Court of Appeal and the Copyright Board in Re: Sound v. Motion Picture Theatre Associations of Canada, concluding that performers and makers of sound recordings are not entitled to royalties for the broadcast of their recordings in film or on television as part of a movie soundtrack.

Under section 19 of the Copyright Act, performers and makers of sound recordings are entitled to remuneration when their recordings are performed or telecommunicated to the public. However, the section 2 definition of “sound recording” excludes a “soundtrack of a cinematographic work where it accompanies the cinematographic work.” “Soundtrack” is not defined, but the appellants had argued that it means the whole aggregate of sounds accompanying the film, and not the individual pre-existing sound recordings incorporated into the soundtrack. They contended, therefore, that royalties should be collected when those recordings are broadcast as part of a film’s soundtrack.

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Supreme Court clarifies scope of fair dealing

On July 12, 2012, the Supreme Court of Canada clarified the scope of the “fair dealing” exception to copyright infringement, found in section 29 of the Copyright Act (the Act), which allows copies to be made for research, private study, criticism and review. 

Facts and Judicial History

As stated in a previous blog post, the case of Alberta (Education) v Canadian Copyright Licensing Agency surrounds the contention over whether elementary and secondary schools can claim the benefit of “fair dealing” exception for copies of works made at the teacher’s initiative for the student’s use.

The Copyright Board (the Board) distinguished between copies made by the teacher at the request of a student and copies made by the teacher without prior request from a student. It concluded that copies made by teachers for student use were made for the allowable purpose of “research or private study”, but found, applying the CCH fairness factors articulated in CCH Canadian Ltd v Law Society of Upper Canada, that the copies did not constitute fair dealing and were therefore subject to a royalty. The Federal Court of Appeal upheld the Board’s conclusion.

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Free delivery! Supreme Court rules no copyright royalties for internet transmission of downloads

David Elder -

In a major, but slim, victory for proponents of electronic commerce, a majority of the Supreme Court of Canada has ruled that online sellers of music and video game downloads are not required to pay more copyright royalties than their “bricks and mortar” counterparts, solely because the products from the virtual stores are delivered via the internet.

In addition, although not considered by the Court, these rulings would also suggest that another copyright tariff, for the delivery of ringtones to mobile phones, may be invalid.

In two decisions that form part of the unprecedented “copyright pentalogy” of copyright tariff appeals heard by the top court last year, the Supreme Court considered whether a download of a recording of a musical work, either on its own or when incorporated into a video game, constituted a “communication to the public by telecommunication,” such that a download could attract a distinct copyright royalty, in addition to the royalty payable to the copyright holder for the reproduction of the work on the buyer’s computer or device. 

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Copyright Bill C-11 Passes Third Reading and Receives Royal Assent

On June 29, 2012, Bill C-11 passed third reading in the Senate and received royal assent. Although the Bill moved quickly through the Senate after clearing the House of Commons less than two weeks ago, copyright reform in Canada has been a long time coming. Bill C-11 is the third copyright bill tabled by the current government - the first two bills as well as several others introduced by previous governments died on the order table. The current Bill, which was re-introduced last Fall was described in an earlier post. At the report stage, eight amendments to the Bill were passed. Further amendments to the Bill proposed at the report stage and in the Senate were voted down. Following royal assent, the Bill officially became S.C. 2012 c.20.  It will come into force following an order-in-council process, which is expected to take several months, as the regulations relating to several of the provisions have yet to be established.

ICANN publishes applications for new generic top-level domain names

Justine Whitehead and Anne MacIsaac -

On June 13, 2012, the Internet Corporation for Assigned Names and Numbers (ICANN) published a list of the 1,930 applications for new generic Top-Level Domain Names (gTLDs) it had received during its recent January to May 2012 application period. The influx of applications was due to new rules approved in June 2011 by ICANN, the body which oversees the registration and coordination of the Internet’s system of unique domain names. The rules transform naming conventions for Internet Web sites by removing restrictions on allowable suffixes for domain names. Currently, Web site domain names end in either a country code (such as .ca or .uk) or in one of only twenty-two gTLDs, such as “.com” or “.org”.  Now organizations can apply to register any character string as a gTLD. This will allow companies to register their brands as gTLDs or to select other unique domain names for marketing purposes, drastically increasing the number of available domains. Applications were received from sixty countries, including sixty-six requests to register geographic names as gTLDs, and 116 requests for strings in non-Roman characters (called Internationalized Domain Names, or IDNs), such as Chinese, Arabic, and Cyrillic.

ICANN will consider a number of factors when reviewing the applications. For example, they will evaluate whether a proposed gTLD is confusingly similar to an existing gTLD, to a reserved character string or to another proposed gTLD; whether it is a geographic name requiring government support; and whether it contributes to domain name system (DNS) instability. They will also look at whether the applicant possesses adequate technical, operational and financial resources with respect to the registry services they will be required to provide.

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Canada's own controversy over copyright legislation

Last month, the Stop Online Piracy Act (SOPA) and PROTECT IP Act (PIPA) became household names in the United States, as internet and technology giants like Wikipedia and Google engaged in a widely publicised day of protest and persuaded many Americans to petition their congressional representatives. Now, Canada’s own proposed Copyright Act amendments in Bill C-11 are garnering some comparisons to SOPA. “Can Canada’s version of SOPA be stopped?” asked journalist Peter Nowak in a recent Globe and Mail opinion piece.

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Wikipedia, Google and many others protest proposed U.S. Stop Online Piracy Act

The proposed Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA) discussed in a prior blog post is garnering some very negative reactions from internet and technology companies, culminating in a day of protest by many websites to draw attention to the bills, which are making their way through the U.S. House of Representatives and Senate. Today, Wikipedia has blocked all of its English-language pages and Google has blacked out its U.S. home page logo (see sopastrike.com for a full list of the SOPA protest participants). Late last year, a group of nine technology companies (AOL, Ebay, Facebook, Google, Linkedin, Mozilla, Twitter, Yahoo and Zynga) took out a full-page ad in the New York Times voicing their concern that “the bills as drafted would expose law-abiding U.S. Internet and technology companies to new and uncertain liabilities, private rights of action, and technology mandates that would require monitoring of websites.” Both bills have been the subject of controversy because of the severe measures that can be invoked relatively quickly and easily to block access to, or financially cripple, allegedly infringing websites.

2011 in Review - Top 10 Technology & IP Law Developments

The arrival of 2012 marked the end of a year filled with numerous developments in technology and IP law. Taking a cue from the Canadian Communications Law blog, we’ve decided that this would be an excellent time to reflect on the past year and review some of its more notable developments. To that end, we’ve put together a list of the top 10 technology and IP law developments from the past year.

Without further ado, here are our picks for the top 10:

  1. Court of Appeal recognizes reasonable expectation of privacy in contents of work computer - In R. v. Cole, a teacher discovered with nude images of a student on his work laptop was found by the Ontario Court of Appeal to have a reasonable expectation of privacy with respect to his personal files on that laptop.
     
  2. No liability for defamation for basic hyperlinks, says Supreme Court - In a decision that came as a relief to bloggers, tweeters, webpage owners and other providers and hosts of internet content, the Supreme Court of Canada clarified in Crookes v. Newton that merely providing hyperlinks to defamatory content will not lead to liability for defamation.
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US considers tough legislation to cripple foreign sites that infringe US IP

Stuart McCormack and Lindsay Gwyer -

Recently, a controversial new bill was introduced in the United States House of Representatives. The new bill, entitled the Stop Online Piracy Act, aims to undercut the business model of websites who sell or distribute pirated American products or works by imposing obligations on third parties who deal with the sites. Its purpose is to indirectly target foreign websites that may be outside the direct reach of American law. 

One of the main components of the Stop Online Piracy Act is section 103, which provides IP owners with a tool to enforce their rights against sites “dedicated to theft of U.S. property.” Under this section, an IP rights-holder can notify a payment network provider (defined as an entity that directly or indirectly provides the proprietary services, infrastructure, and software to effect or facilitate a debit, credit, or other payment transaction) or company that provides internet advertising services of IP infringement by a particular site. Providing that the notification meets the requirements set out in the section, the recipient must respond with “technically feasible and reasonable measures” within 5 days to essentially cutting off the infringing site from its services. For payment network providers this would generally entail preventing the completion of transactions involving American customers and the infringing website, and for advertisers it would mean ceasing to advertise the website or provide advertisements to the website.

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Lady Gaga and fansite caught in a bad romance

Stuart McCormack and Lindsay Gwyer -

A string of number one hits and worldwide notoriety weren’t enough to bring Lady Gaga success in a domain name dispute over the use of her stage name. Earlier this fall Lady Gaga, whose real name is Stefani Germanotta, failed to convince an arbitration panel that the domain name ladygaga.org was being used illegitimately by one of the singer’s fan sites.

Domain names are allocated through accredited registries that use a central registry system overseen by the Internet Corporation for Assigned Names and Numbers (ICANN). Disputes over domain names are resolved in accordance with ICANN’s Uniform Domain Name Dispute Resolution Policy (the Policy). In order for a domain name to be cancelled or ordered to be transferred under the Policy a complainant must show that: the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; the respondent has no rights or legitimate interests in respect of the domain name; and the domain name has been registered and is being used in bad faith.

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No liability for defamation for basic hyperlinks, says Supreme Court

David Elder and Lindsay Gwyer -

Bloggers, tweeters, webpage owners and other providers and hosts of internet content can breathe a little easier today following a decision of the Supreme Court of Canada that ruled that merely providing hyperlinks to defamatory content cannot make them liable for defamation.

That said, while the decision provides clear support from the highest court in the land for both free expression and the preservation of the nature and benefits of the internet as whole, it stops short of giving hyperlinkers a “Get Out of Jail Free” card for all uses and presentations of links to defamatory material. 

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Fourth time lucky? Government introduces copyright reform bill -- again.

Alexandra Stockwell and Robert Mysicka -

The Canadian Government is giving copyright reform another try, reintroducing what is essentially the same copyright bill that died last spring with the dissolution of Parliament. 

But while the text may be the same, one thing has clearly changed: this time, the ruling Conservatives have a legislative majority, significantly increasing the likelihood that the new bill will actually become law, either in its current form or with amendments introduced at Committee.

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Where does copyright law end and broadcasting regulation begin? Supreme Court to hear appeal on "Value for Signal"

David Elder and Lindsay Gwyer -

The long road for local broadcasters wanting to charge fees to cable and satellite companies for rebroadcasting their signals just got a little longer, as the Supreme Court of Canada has granted leave to hear an appeal a Federal Court of Appeal decision that upheld the ability of the Canadian Radio-television and Telecommunications Commission (CRTC) to establish such a regime.

The “Value for Signal” (VFS) regime was authorized by the CRTC in its 2010 group licensing framework decision, and was intended “to remove unnecessary barriers to the continued viability of private broadcasters and to ensure that broadcasters are able to obtain, through market-based negotiations, fair value of the programming they broadcast.”

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That's a wrap: BC Supreme Court enforces website terms of use and validates "browse wrap" agreements in Century 21 v Zoocasa

Amy Hu and Michael D. Smith -

In Century 21 Canada Limited Partnership v Rogers Communications Inc., the BC Supreme Court upheld the validity of the so-called “browse wrap” agreements and awarded damages against Zoocasa and its parent Rogers for Zoocasa’s breach of the Century 21 website terms of use when it pulled listings from the Century 21 website for use on its own real estate listing search engine. The BC court confirmed that industry standard browse wrap agreements (i.e. a website’s posted terms of service) can form valid contracts without being brought to the attention of users or requiring any review/acknowledgement by the user before accessing the website.

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Supreme Court to hear five appeals concerning copyright tariffs

David Elder & Robert Mysicka

In an unprecedented cluster of cases focusing on copyright, the Supreme Court of Canada has recently granted leave to appeal in five separate cases involving tariffs approved by the Copyright Board. 

The cases, at least four of which will be heard on December 6 and 7, 2011, will consider tariffs dealing with online music, photocopying by teachers for instructional purposes and music in movie soundtracks.

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Federal Court prevents Minister of Health from allowing sale of generic version of immunosuppressive drug MMF

Geoffrey North & Lindsay Gwyer -

In an application pursuant to the Patented Medicines (Notice of Compliance) Regulations, Hoffman-La Roche sought an order preventing the Minister of Health from issuing a notice of compliance to Apotex for the drug mycophenolate mofetil (MMF), an immunosuppressive drug used primarily in organ transplants, until after the expiry of Canadian Patent No. 1,333,285. Seeking early market entry, Apotex on the other hand alleged that the ‘285 patent was invalid on the grounds of lack of utility and obviousness.

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Protecting Trademarks from Registration on the ".XXX" Domain

The Internet Corporation for Assigned Names and Numbers (ICANN), the international non-profit organization charged with creating policies for use of the internet, recently approved the internet domain “.xxx” for use specifically by the adult entertainment industry. Companies outside the adult entertainment industry that are concerned about their trade names/trademarks being used in connection with a “.xxx” adult entertainment domain name can apply to opt-out of “.xxx”.

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Missing the Bull's-Eye - TARGET fails to get interlocutory injunction against use of registered trade-mark

Geoffrey North and Solene Murphy -

Target Brands Inc. v. Fairweather Ltd. 2011 FC 758

A recent decision by the Federal Court showed once again that there is a high threshold for the granting of interlocutory injunctions.

Pending final disposition of this action, Target sought an interlocutory injunction to restrain the Defendants (Fairweather) from operating a retail store in association with a trade-mark or trade name comprising TARGET or a bull’s-eye design, and from displaying, advertising or using the word TARGET or a bull’s-eye design to direct public attention to Fairweather’s business so as to cause confusion with Target’s business.  

Target, however, failed to convince the Court both that it would suffer irreparable harm if the injunction was not granted and that the balance of convenience favoured the granting of an injunction, and the motion was accordingly dismissed.

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Federal Court of Appeal confirms that Eli Lilly's patent to atomoxetine is invalid for lack of utility

Geoffrey North and Edwin Mok

The Federal Court of Appeal recently released its decision in Eli Lilly and Company v Teva Canada Ltd, confirming the trial court’s finding that Canadian Patent No. 2,209,735 (the 735 patent), which claims a new use for an old medicine that has long been in the public domain (the use of atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups), is invalid. We reported the lower Court’s ruling in a previous blog.

This appeal raised three principle legal issues. Namely, did the Judge err by: (i) misconstruing the patent’s promise by finding an implicit promise that atomoxetine “will work in the longer term”; (ii) requiring too high a standard of proof for utility; and (iii) deciding that Lilly could not rely on the sound prediction of the utility of the invention because Lilly had not disclosed the factual foundation for that prediction in the 735 patent?

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Ontario Court of Appeal holds that domain names constitute personal property

The Ontario Court of Appeal issued a landmark decision in Tucows.Com Co. v. Lojas Renner S.A. (2011 ONCA 548), finding for the first time that internet domain names constitute personal property. The Court ruled in favour of Tucows, a Canadian company, holding that it could bring a claim in Ontario for declaratory relief against a Brazilian company on the basis that a domain name registered to Tucows constituted intangible personal property located in Ontario.

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Commissioner of Patents provides revised examination guidance to patent examiners in view of Amazon.com decision

As a result of the Federal Court’s decision in the infamous Amazon.com case, released October 14, 2010, the Commissioner of Patents has provided revised practice guidelines to Canadian patent examiners in relation to general approaches to examination.

Unfortunately, given that we are currently awaiting a decision on appeal from the Federal Court’s decision, the question begs whether these new guidelines will remain relevant for long.

Federal Court of Appeal refuses to set aside prohibition order even though untrue material allegations had been made in the invalid patent at issue

A recent decision of the Federal Court of Appeal represents a blow to generic pharmaceutical companies in their quest to seek compensation for the period of time that they were precluded from entering the market with a generic version of a drug as a result of an invalid patent and lengthy proceedings under the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations).

In this case, although Pfizer was successful in thwarting ratiopharm’s initial attempt to invalidate Canadian Patent No. 1,321,393 (the ‘393 Patent) under the regime of the NOC Regulations, ratiopharm was subsequently successful in a second “kick at the can” by invalidating the ‘393 Patent in an impeachment action (as reported in a previous post), which allowed ratiopharm to market its generic version of Pfizer’s drug NORVASC (amlodipine besylate).

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SCC clarifies confusion analysis in Trade-mark law

Last week, the Supreme Court of Canada (SCC) released its decision in Masterpiece Inc. v. Alavida Lifestyles Inc., clarifying the application of confusion analysis under the Trademarks Act. The issue in the case was whether the trade-mark “Masterpiece Living”, proposed in 2005 and subsequently registered by Alavida Lifestyles Inc., a company in the retirement residence industry in Ontario, was confusing with similar unregistered trade-marks used by Masterpiece Inc. in the retirement residence industry in Alberta since 2001.

Applying the test for confusion outlined in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, the SCC stated:

the question is whether, as a matter of first impression, the ‘casual consumer somewhat in a hurry’ who sees the Alavida trade-mark, when that person has no more than an imperfect recollection of any one of the Masterpiece Inc. trade-marks or trade-name, would be likely to be confused; that is, that this consumer would be likely to think that Alavida was the same source of retirement residence services as Masterpiece Inc.

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Federal Court grants rare motion to re-open patent infringement trial

Parties to a patent action often wonder after trial what the outcome would have been if they had just been able to locate that key piece of evidence they know is out there … somewhere …  What if, however, that evidence is actually located after the trial has concluded, but before judgment has been rendered?  That was the situation in Varco Canada Limited v. Pason Systems Corp., 2011 FC 467 and the question on motion before the Court was whether the trial should be re-opened in light of evidence that had been subsequently located.

Although there is a paucity of law in this regard, the Court stated that reopening a trial was a matter of broad discretion but one which must be exercised sparingly and cautiously.  As such, key factors which should be considered on such a motion include: 1) could the evidence, if it had been presented at trial, have had any influence on the result? (an inquiry as to materiality/relevance); 2) could the evidence have been obtained before trial by the exercise of reasonable diligence?; and 3) are there exceptional circumstances that would justify setting aside the “due diligence” test or at least reduce its overall importance in the exercise of discretion.

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Federal Court of Appeal says broadcasting policy trumps copyright law: CRTC has power to allow local broadcasters to demand fee for carriage

David Elder -

“Free-to-air” local television signals may no longer be free to cable and satellite subscribers, following a recent court decision affirming the scope of the powers of the Canadian Radio-television and Telecommunications Commission (CRTC) under the Broadcasting Act.

In an important ruling that addresses the intersection of broadcasting and copyright law and policy, a majority of the Federal Court of Appeal found, in the case of Reference re the Canadian Radio-television and Telecommunications Commission’s Broadcasting Regulatory Policy CRTC 2010-167 and Broadcasting Order CRTC 2010-168, 2011 FCA 64, that the Copyright Act permits the CRTC to limit the statutory retransmission rights of broadcasting distribution undertakings (BDUs), such as cable companies, by imposing any regulatory or licensing condition that is consistent with the Commission’s statutory authority under the Broadcasting Act. In fact, the majority went so far as to state that Parliament has ranked the objectives of Canada’s broadcasting policy ahead of the statutory retransmission rights granted to BDUs under the Copyright Act.

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Hacker faces prison sentence for theft of online poker chips

The BBC recently reported that an IT professional is facing a lengthy jail sentence after pleading guilty to stealing millions of dollars worth of online currency. The defendant was apparently able to hack into the system of popular online gaming firm Zynga, and take about $12 million worth of poker chips. The case is notable in that the court appears to have recognized the value, as property, of virtual currency. Undoubtedly, this will be a developing area of law as more companies begin transacting in similar forms of virtual currency.

Apotex denied damages for the delay it experienced in bringing its generic version of the medicine lovastatin to market

In a recent decision in Apotex Inc. v. Merck & Co., Inc., 2010 FC 1264, the Federal Court denied Apotex damages resulting from the delay it experienced in bringing its generic version of the drug lovastatin to market as a result of Merck’s prohibition application.  This is an important decision which resolves an action commenced nearly 10 years ago and will provide other pharmaceutical companies involved in similarly long-lasting litigation with insight into the scope of section 8 in the 1993 version of the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations).

Both current and past versions of section 8 of the NOC Regulations purport to permit a company whose product has been kept off of the market due to a prohibition application to recover damages from the applicant for any loss resulting from the delay. Although Apotex’s statement of claim was filed in 2001, subsequent to significant amendments in 1998, the Court determined that the 1993 version of the NOC Regulations would apply. Section 8 was amended again in 2006 and 2010 and, as a result, will remain ripe for further litigation as to its interpretation. In any future disputes, it will be useful to note the preference demonstrated by the Court in this case for textual interpretations of the NOC Regulations’ technical provisions.

This case was heard contemporaneously with another case which we have discussed here

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Federal Court finds Apotex infringed Merck's product-by-process patent for Lovastatin

In Merck & Co. Inc. v. Apotex Inc., the Federal Court found Apotex to have infringed Merck’s Canadian Patent No. 1,161,380 (‘380 Patent), a product-by-process patent for the medicine lovastatin.

In arriving at its decision, the Court addressed key questions regarding standing, infringement and patent validity. The decision provides an interesting example of a plaintiff’s successful use of DNA and circumstantial evidence in establishing two separate sources of infringement. In addition, readers should take note of the Court’s finding that a pre-existing process will invalidate a product-by-process patent only where it necessarily produces the relevant product.  

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Federal Court refuses to award summary judgment for alleged infringement of copyright in builder's plans and design

The Federal Courts Rules provide a summary judgment procedure that allows a party to prevent claims or defences that have no chance of success from proceeding to trial. Although the summary judgment procedures were amended a year ago, a recent decision of the Federal Court demonstrates that summary judgment is still only granted in the most appropriate cases.

In Concept Developments Ltd. v. Webb, the plaintiff (Concept), a designer and builder of homes, brought a motion for summary judgment against the defendants, Mr. and Mrs. Webb, alleging infringement of its registered copyright in the plans and design of one of its model homes. The Webbs had apparently viewed Concept’s model home, but disliked Concept’s quoted price to build the house, so they subsequently took their business to another home building company (High Grade). According to the facts (which had not been fully established), the Webbs showed Concept’s model home design to High Grade and requested something similar for their house, albeit with some modifications. The Webbs then drew up what they wanted, gave that drawing to High Grade, and the house was subsequently built as desired. Concept claimed $124,000 for its direct loss from not building the home, as well as $40,000 for intangible loss. 

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Supreme Court of Canada finds Patented Medicine Prices Review Board has jurisdiction over price of Thalomid in Canada

Geoffrey North & Catherine Newnham

The Supreme Court of Canada released a decision on January 20, 2011 in Celgene Corp. v. Canada (Attorney General), 2011 SCC 1 that may have a chilling effect on the availability of medicines under Health Canada’s Special Access Program (SAP).

The SAP

Most medicines are sold in Canada after Health Canada has satisfied itself as to the medicine’s safety and effectiveness, and has issued a notice of compliance (NOC) to the drug’s manufacturer. However, where Health Canada has not granted a NOC for a medicine, or where a manufacturer has not yet applied for one, medicines may in certain cases be sold to medical practitioners through an alternate route – the SAP – a program that allows access to drugs for the treatment of “serious or life-threatening conditions where conventional therapies have failed, are unsuitable, or are unavailable either as marketed products or through enrolment in clinical trials”.There is no limit on the period of time that a manufacturer may supply a medicine under the SAP, nor is there a limit on the volume of sales that can be made pursuant to the SAP.The manufacturer is simply authorized to sell the medicine for use by the specific patient or clinical trial identified in a special request, if Health Canada approves the request for sales pursuant to the SAP.

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Federal Court of Appeal upholds the Data Protection Regulations and its guaranteed eight-year period of market exclusivity for "innovative drugs"

The Federal Court of Appeal has upheld the validity of section 30(3) of the Food and Drugs Act and section C.08.004.1 of the Food and Drug Regulations (known as the Data Protection Regulations) in its decision in Apotex Inc. v. The Minister of Health, 2010 FCA 334

The Data Protection Regulations (DPR) were designed to clarify and implement Canada’s obligations under the data protection provisions of the North American Free Trade Agreement (NAFTA) and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). The DPR introduced a guaranteed period of market exclusivity of at least eight years for manufacturers of “innovative drug[s]”.  More particularly, the DPR prohibits a generic manufacturer seeking a notice of compliance (NOC) for a new drug “on the basis of a direct or indirect comparison  between the new drug and an innovative drug” from filing a New Drug Submission (NDS) “before the end of a period of six years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug”.  In addition, the DPR prohibits the Minister of Health from issuing a NOC to a generic drug manufacturer “before the end of a period of eight years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug”. Thus, generic drug manufacturers cannot obtain approval for their generic drug until the period of market exclusivity of the innovative drug has expired, even where there is no patent protection for that drug.

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Federal Court confirms that it will not set aside default judgment lightly

A recent decision of the Federal Court emphasizes that defendants bear a significant burden in setting aside default judgments that arise because the  defendant has simply failed to file a statement of defence within the allotted period of time.

In Molson Canada 2005 (An Ontario General Partnership) and Coors Brewing Company v. Drake J. Beachamp, the defendant was the owner and operator of a leather retail business, selling purses, belts, belt buckles and wallets from kiosks at shopping malls and special events.  Molson commenced an action against the defendant, claiming that he sold counterfeit product bearing its unauthorized trademark.  The defendant failed to file a statement of defence, and default judgment was accordingly granted against him.  The judgment ordered the defendant to deliver up all counterfeit goods, and also ordered that general damages, punitive damages, and costs be paid to Molson.

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Health Canada has released its statistical report for 2009 on the Patented Medicines (Notice of Compliance) Regulations and Data Protection provisions of the Food and Drug Regulations

Geoffrey North

Health Canada has released its statistical report for 2009 in respect of the administration of the Patented Medicines (Notice of Compliance) Regulations (the PM(NOC) Regulations) and data protection provisions of the Food and Drug Regulations. These statistics provide interested parties and policy makers alike with information concerning the effects of Canada’s IP regime on therapeutic medicines.

The PM(NOC) Regulations are designed to balance the competing interests of effective patent enforcement over new and innovative medicinal drugs against the timely entry of lower priced generic competitors. The Food and Drug Regulations prescribe that innovative drugs are to receive an eight year guaranteed minimum period of market exclusivity (data protection provisions). Together, these measures ensure a minimum period of protection for medicinal drugs while maintaining a reasonable ceiling on the maximum protection available.

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How "the public" can equal one person

In early September 2010, the Federal Court of Appeal concurred with an earlier decision of the Canadian Copyright Board "(Board)" holding that the download by a single user of a music file from an online music service is a communication of the musical work to the public by telecommunication.

In Bell Canada, et. al. v. SOCAN the Court of Appeal was asked to determine whether the transmission of a musical work to an individual by an on-line music service should be considered to be a communication of that work to the public by telecommunications within the meaning of paragraph 3(1)(f) of the Copyright Act. The question of whether the download was in and of itself a communication was not at issue, as it had been previously held by the Supreme Court of Canada in SOCAN v. Canadian Association of Internet Providers that a music file is communicated when it is recreated on the recipient computer. Such a communication was also held to qualify as a communication by telecommunication.

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Federal Court of Appeal refuses a patent to a compound already the subject matter of product-by-process patent

On October 20, the Federal Court of Appeal put an end to the disparity in the jurisprudence surrounding whether a patentee could obtain a patent to a medicine subsequent to obtaining a patent to a process for producing the medicine by dismissing Bayer’s appeal in the case of Bayer Schering Pharma Aktiengesellschaft v. The Attorney General of Canada. The case stems from May 2008, when the Commissioner of Patents refused to grant Bayer a patent to a pharmaceutical compound per se because a previous patent had already been issued to it for the same compound when made by a particular process (product-by-process patent).  After Bayer’s appeal to the Federal Court was dismissed, it appealed to the Federal Court of Appeal.

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Dedication of Merck Patent Insufficient to Defeat Allegation of Double Patenting

A recent decision of the Federal Court expounded on the harm that can occur if two patents issue for the same invention.  The Honourable Mr. Justice O'Reilly effectively quashed any suggestion in prior case law that patentees could use public dedications to overcome the effects of double patenting, which would otherwise allow them to extend their monopoly.

In Merck & Co. Inc. v. Canada (Health), Merck brought an application under the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (the NOC Regulations) seeking an order prohibiting the Minister of Health (the Minister) from issuing a notice of compliance (NOC) to Apotex Inc. (Apotex) for the medicine dorzolamide, used in the treatment of glaucoma, until after the expiry of Canadian Patent No. 1,329,211 (the ‘211 Patent). 

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Apotex succeeds in getting a NOC despite itself

Geoffrey North

A recent Federal Court decision highlighted the differences in prohibition proceedings under the Patented Medicines (Notice of Compliance) Regulations (the NOC Regulations) and impeachment actions under the Patent Act.  It is yet another example of how every case is to be determined on the specific evidence adduced before the Court.

In Eli Lilly Canada Inc. v. Apotex Inc, the Court dismissed Eli Lilly’s application under the NOC Regulations for an order prohibiting the Minister of Health (the Minister) from issuing a notice of compliance (NOC) to Apotex in respect of the medicine atomoxetine until after the expiry of the ‘735 Patent.  However, the dismissal was based on mootness alone, as the Court would have allowed the application had it not invalidated the ‘735 Patent entirely in a related impeachment action brought by Novopharm.

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UK ruling - internet jurisdiction based on server location?

Recently, a court in the UK (Football Dataco Ltd et al. v. Sportradar GmbH) found that the location of a server determined the appropriate jurisdiction to regulate internet content. This is not entirely consistent with the Canadian approach.

Sportradar tried to argue that the court did not have jurisdiction to hear the claim that Football Dataco’s copyright and database rights had been infringed by Sportradar’s alleged reproduction of Football Dataco’s live scores and statistics. The content from Sportradar was stored on webservers in Germany and Austria, but was made available to users in the UK by Sportradar’s online betting sites. To determine what law should apply, the court focused on where the act of “making available” occurred. The court held that such an act occurs where the transmission takes place, and more specifically, where the server is located. Since Sportradar’s servers were located outside of the UK, the court found that it could not assert jurisdiction over certain of the claims.

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Talking about your case on your blog? You may have just waived privilege

On October 22, 2010, an American magistrate judge ruled that a plaintiff suing Universal Music Corp. for improperly sending a takedown notice under the Digital Millennium Copyright Act (DMCA) waived a number of heads of attorney-client privilege by discussing the details of her legal case by email and on a blog.

In Lenz. v. Universal Music Corp, the plaintiff claimed damages and attorneys' fees as a result of Universal Music Corp.'s filing of an allegedly fraudulent DMCA take-down notice seeking to have a home video of the plaintiff's child dancing to a copyrighted song removed from YouTube.

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Theft, Pie and the Public Domain

The power of social media was on full display this past week, as the unauthorized publication of a recipe for apple pie drew a quick and virulent online response. The story begins on November 3, when blogger Monica Gaudio announced on her blog that Cooks Source, a small New England magazine, had republished an article on the history of apple pie (she had previously written it for another publication) without permission. While Gaudio was credited for her work, she never consented to, nor was she compensated for, the use of the article. After emailing the magazine’s editor, Gaudio received a response informing her that the internet is “public domain”. The email, which Gaudio published on her blog, sparked a fierce response from an online community that quickly coalesced on Facebook to disparage the magazine’s conduct.

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CEPLENEĀ® not an "innovative drug" under the Data Protection Provisions of the Food and Drug Regulations

Epicept Corporation v. The Minister of Health and Canadian Generic Pharmaceutical Association (Intervener)

The Federal Court recently dismissed Epicept Corporation’s (Epicept) application for judicial review of a decision of the Minister of Health (the Minister).  The Minister had decided that Epicept’s drug product CEPLENE® (histamine dihydrochloride), which is used for remission maintenance therapy in the treatment of acute myeloid leukemia, was not an “innovative drug” pursuant to subsection C.08.004.1(1) of the Food and Drug Regulations (the Regulations).  This meant that the drug was therefore not able to receive the benefit of a period of market exclusivity under the data protection provisions of the Regulations.  Epicept’s application sought to reverse the Minister’s decision.

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Artists push for resale right on works of art

This past weekend’s Globe and Mail included an interesting article regarding the principle of droit de suite, which provides artists with a right to a percentage of the sale price on the resale of their works of art. The article counts 59 countries, including most of Europe as providing such a right and discusses the lobbying efforts of Canadian Arts Representation, which has argued for a 5% resale right in Canada. On a related note, Bill C-32, Canada’s Copyright Modernization Act (which includes no such right) is expected to receive second reading today.
 

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Federal Court holds "business methods" patentable in Canada in decision over Amazon.com "one click" patent

Geoffrey North

In a decision reminiscent of the recent In re Bilski decision in the U.S., the Federal Court of Canada has found that patents relating to “business methods” can constitute patentable subject matter in the highly anticipated decision of Amazon.com v. The Commissioner of Patents.  In his decision dated October 14, 2010, the Honourable Mr. Justice Michael Phelan discusses differing laws and disparate judicial decisions respecting the patentability of “business method” patents across the globe, and is a necessary read for those wishing to implement a cogent global IP strategy.

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Eli Lilly patent for atomoxetine for use in treating ADHD invalid for lack of utility

Novopharm Ltd. v. Eli Lilly and Company 2010 FC 915

Novopharm Limited (now known as Teva Canada Limited but hereafter referred to as Novopharm) sought a declaration under s. 60(1) of the Patent Act, R.S.C. 1985, c. P-4 that Eli Lilly and Company’s (Lilly’s) Canadian Patent No. 2,209,735 (the ‘735 Patent) was invalid and void. The ‘735 Patent claimed the use of the medicine atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups (children, adolescents and adults). The ‘735 Patent did not claim the compound atomoxetine but only its use to treat ADHD.

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Court holds business methods patentable in Canada

Amazon.com, Inc. v. The Attorney General of Canada, and The Commissioner of Patents   2010 FC 1011

Canada’s Federal Court has released its long awaited decision in the patentability of Amazon.com’s one-click order process.  This was an appeal from the decision of the Commissioner of Patents denying Amazon's patent for a "business method", having found that it was not patentable subject matter under s. 2 of the Patent Act.

The case concerned Amazon.com's simplified "one-step" ordering method and system which uses stored information and "cookies" to enable customers to order items over the internet simply by "clicking on them".   The Court found that the system claims clearly disclose a machine which is used to implement Amazon.com's one-click ordering system and a machine is patentable under s. 2 of the Patent Act.   The Court also found the method, when viewed as a whole, to be patentable as an "art" and a "process" because:


[The method is] not simply a scheme, plan or disembodied idea; it is a practical application of the one-click concept, put into action through the use of cookies, computers, the internet and the customer's own action.   Tangibility is not an issue.   The 'physical effect', transformation or change of character resides in the customer manipulating their computer and creating an order.   It matters not that the 'goods' ordered are not physically changed.

The Court concluded that there is no exclusion for "business methods" in Canada.   Business methods are to be assessed for patentability like any other method.

Edit: a more substantial analysis has been completed.  Please view it here

"Intellectual Property Law of Canada" text published

Juris Publishing recently released the second edition of "Intellectual Property Law of Canada", a treatise on Canadian IP law edited by Stikeman Elliott's Stuart McCormack (Managing Partner of the Ottawa office). The text, which provides analysis and commentary on major subjects in intellectual property law, was published in September.

Quia timet counterclaim allowed in the context of an action for a declaration of non-infringement

Apotex Inc. v. H. Lundbeck A/S, 2010 FC 807

The generic pharmaceutical manufacturer Apotex Inc. (Apotex) commenced an action seeking declarations of invalidity and non-infringement with respect to Canadian patent no. 1,339,452 (the ‘452 patent), owned by H. Lundbeck A/S (Lundbeck),  relating to the medicine escitalopram.  During the course of these proceedings, Apotex brought a motion for an order striking Lundbeck’s counterclaim, or, in the alternative, requiring that Lundbeck provide security for costs.

Lundbeck’s counterclaim was in the nature of a quia timet action on infringement (essentially an injunction to restrain threatened and imminent patent infringement that has not yet commenced). While Lundbeck admitted that such action would be improper and subject to being struck if brought as an independent action, it argued that its counterclaim should be saved and allowed to proceed on the basis that it was brought in response to an action seeking a declaration of non-infringement. If the counterclaim was permitted to proceed, Lundbeck further argued that it should not be required to post security for costs or, in the alternative, that the amount requested by Apotex was unreasonable.

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"Grave consequences" defence may be asserted against a generic in a section 8 action under the PM(NOC) Regulations

Apotex Inc. v. Shire Canada Inc., 2010 FC 828

In an action brought by Apotex Inc. (Apotex) to recover damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (Regulations) in respect of the medicine modafinil, Shire Canada Inc. (Shire) brought this motion for leave to amend its statement of defence, alleging two new defences. Apotex opposed Shire’s motion, arguing that the proposed amendments did not disclose a reasonable defence and ought not to be permitted. The prothonotary struck out the first proposed amendment, finding that a defence based on the outcome of a separate infringement action to which Shire was not a party would be speculative and hypothetical, but permitted the second proposed amendment which alleged a “grave consequences” defence.

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"Frozen Register" concept renders Janssen's disclaimer irrelevant

Janssen-Ortho Inc. v. Apotex Inc. , 2009 FC 650

This was a motion brought by Apotex pursuant to section 6(5)(b) of the Patented Medicines (Notice of Compliance) Regulations (Regulations) to dismiss Janssen’s prohibition application on the basis that it was “redundant, scandalous, frivolous, or vexatious or otherwise an abuse of process”.   The motion raised a unique issue which appears not to have been decided in any prior proceeding under the Regulations.   In particular, the issue was whether a generic manufacturer was required to respond to claims in a patent which changed as a result of a disclaimer filed by the innovator subsequent to service of the generic’s notice of allegation (NOA) and prior to the commencement of an application to prohibit the issuance of a notice of compliance (NOC).  Or, in the words of the prothonotary hearing the motion, “using a football analogy, does the field goal count if the goalposts are moved after the ball is in the air?”

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Court finds AstraZeneca patent to esomeprazole (NEXIUM) invalid for lack of sound prediction and obviousness

AstraZeneca Canada Inc. v. Apotex Inc., 2010 FC 714

This was an application brought by AstraZeneca under the provisions of the Patented Medicines (Notice of Compliance) Regulations for an order prohibiting the Minister of Health from issuing a notice of compliance to Apotex for 20 and 40 mg esomeprazole magnesium tablets until after the expiry of Canadian Patent No. 2,139,653 (the ‘653 patent).  If successful on the application, this would have prevented Apotex from marketing a generic version of NEXIUM in Canada for treating conditions wherein a reduction of gastric acid secretion is required until May 27, 2014.  Apotex, on the other hand, sought early market entry by arguing that the ‘653 patent was invalid for lack of sound prediction, anticipation (or lack of novelty), and obviousness.

The ‘653 patent relates to an improved process for preparing highly optically pure esomeprazole, one of the enantiomers of the racemate omeprazole, that is stable against racemisation (i.e. recombination).  Claim 8 was the claim at issue and could be read as claiming a salt (e.g. magnesium) of esomeprazole having an optical purity of 99.8% or greater.  There was no provision as to utility (or use of the invention) in claim 8.  This was an important fact, as the Court noted that where the invention relates to a new compound, utility does not need to be included in the claim, so long as it is described in the description portion of the patent.  On the other hand, when the patent relates to a new use for an old, known compound, that new use must be set out in the claims.  In this case, claim 8 was not directed to a new compound; it was directed to a previously known compound having a particular purity.

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Court of Appeal rejects Pfizer's alleged factual and legal errors and upholds invalidity of Pfizer's patent to NORVASC

Pfizer Limited V. Ratiopharm Inc. (2010 FCA 204)

Pfizer appealed from a decision of the Federal Court declaring Pfizer’s Canadian Patent No. 1,321,393 ( ‘393 Patent) relating to the medicine amlodipine besylate (NORVASC) invalid for obviousness. 

Amlodipine is a calcium channel blocker and anti-hypertensive compound, but had originally been formulated in the form of the maleate salt.  However, when problems with stability and processability arose during the regulatory approval process, Pfizer began to search for a different salt through an accepted process known as salt screening.  During this process, Pfizer tested seven other salts, and decided to proceed with the besylate salt.  Pfizer then filed a patent application directed to the besylate salt of amlodipine based on its alleged unique combination of properties that made it particularly suitable for preparing formulations of amlodipine.  This application subsequently issued as the ‘393 Patent. 

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Conditions for a valid selection patent does not constitute an independent basis for attacking validity

Eli Lilly Canada Inc., Eli Lilly and Company, Eli Lilly and Company Limited and Eli Lilly SA v. Novopharm Limited (2010 FCA 197)

Eli Lilly, the plaintiff in a patent infringement action, was successful in appealing a decision of the Federal Court which had found Eli Lilly’s Canadian Letters Patent No. 2,041,113 (the ‘113 Patent) relating to the medicine olanzapine (Zyprexa) invalid on the basis that it was not a proper selection patent.  The core issue on appeal raised a single question: do the conditions for a valid selection patent constitute an independent basis upon which to attack the validity of a patent?

Eli Lilly had previously received a patent (the ‘687 Patent) in 1980 covering approximately 15 trillion thienobenzodiazapine compounds, the properties of which were said to be useful for treating mild anxiety and certain psychotic conditions.  Although olanzapine was encompassed within the scope of the ‘687 Patent, it was not specifically disclosed.  Following the issuance of the ‘687 Patent, Eli Lilly eventually ceased its studies on the compounds specifically identified in that patent, but began to synthesize seven new compounds, of which olanzapine was the most promising.
 

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Court finds that invalid disclaimers invalidates the claims.

Shmuel Hershkovitz, Paradox Security Systems Ltd. and Pinhas Shpater v. Tyco Safety Products Canada Ltd.

This decision underscores the importance of filing proper disclaimers to patent claims.  Disclaimers may be filed with the patent office by a patentee after the issuance of a patent to unilaterally renounce or disclaim those portions of the claimed invention that were inadvertently included within the scope of the claims as a result of mistake, accident or inadvertence.  Disclaimers therefore have the effect of narrowing the scope of the claims (i.e. the area where competitors may not tread).  Disclaimers that attempt to broaden the scope of a claim are invalid.

In the present case, soon after the issuance on October 5, 1999 of Canadian patent number 2,169,670 (the ‘670 patent) relating to telephone line couplers used to connect electronic equipment to phone lines while providing electrical isolation, the appellant patentee Paradox Security Systems Ltd. (Paradox) sent a demand letter to the respondent Tyco Safety Products Canada Ltd. (Tyco) alleging  patent infringement.  Tyco denied all allegations of infringement and asserted that the ‘670 patent was invalid.  On October 6, 2003, Paradox filed a disclaimer to certain claims.

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Patent abstracts must be made available in both official languages

Picard v. The Commissioner of Patents and the Canadian Intellectual Property Office, 2010 FC 86

Frédéric Picard brought an application in the Federal Court under subsection 77(1) of the Official Languages Act (Act) against the Canadian Intellectual Property Office and the Commissioner of Patents claiming that patents and patent applications must be bilingual to meet the requirements of the legislation.  He sought an order requiring the Patent Office to make certain parts of patents and patent applications available in both official languages and a declaration of invalidity of all patents available in one official language only, to be suspended to allow the Patent Office to make the invalidated patent applications and patents available in both languages.  Justice Tremblay-Lamer found that the Patent Office had not met the requirements under section 44 of the Act relating to the duty of all federal institutions to take positive measures to foster “the full recognition and use of both English and French in Canadian society.”  She concluded that “the fact that patents exist only in one official language deprives Canadian who do not speak that language of information that is important in both legal and scientific terms.”  In considering the appropriate remedy for this violation, she acknowledged the cost associated with translating all patents and applications.  The Federal Court therefore ordered that the Commissioner must at least “make available an unofficial translation of the abstract of all patents he issues” to be in compliance with the Act.  While the Court was not prepared to require that all aspects of the patent be translated, abstracts will have to be prepared in both official languages.

Federal Court of Appeal upholds narrow claim construction but overturns decision re obviousness for combination patent

Bridgeview Manufacturing Inc. v. Duratech Industries International, Inc., 2010 FCA 188

Bridgeview Manufacturing Inc. (Bridgeview) and Highline Manufacturing Ltd. (Highline) brought an action against Duratech Industries International, Inc. (Duratech) et al. for infringement of claims 1, 2 and 4 of Canadian Patent No. 2,282,334 (the 334 patent) relating to bale processors, machines designed to disintegrate or break up large bales of straw, hay or other crop material.  Duratech denied infringement and counterclaimed alleging invalidity of the 334 patent.  The judge dismissed Bridgeview’s claim and allowed Duratech’s counterclaim, finding that the 334 patent was invalid for obviousness.  This was an appeal of that decision.

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CSI proposes tariffs for non-commercial radio stations (2011), online music (2011), and satellite radio (2011-2013)

On July 17, 2010, CSI, the company formed as a royalty-collection vehicle by the Canadian Musical Reproduction Rights Agency (CMRRA)  and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) , proposed three new tariffs which would apply to the reproduction of music (which can include broadcasting, streaming and downloading) by non-commercial radio stations, online music providers, and satellite radio providers.

In the proposed CMRRA-SODRAC Inc. Non-Commercial Radio Tariff, 2011, CSI is requesting that the Copyright Board of Canada  certify a tariff of 0.63% of the annual gross operating costs of radio stations that are either owned or operated by not-for-profit corporations, excluding the Canadian Broadcasting Corporation.  In the case of such a non-commercial radio station that is a “low use station” (generally, a station that plays music for less than 20% of its broadcast time), the tariff would be lower, at 0.23% of its annual gross operating costs.  In exchange for the payment of the tariff, the non-commercial radio stations would receive a license to broadcast music contained in CSI’s repertoire as often as desired, including the streaming of the broadcast over the Internet.

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Federal court confirms requirement of patent specificity for listing patents on the patent register

Purdue Pharma v. The Minister of Health, 2010 FC 738

Purdue Pharma sought judicial review of a decision of the Office of Patented Medicines and Liaison (OPML) in which the OPML determined that one of Purdue’s patents (the 738 Patent) was not eligible for listing on the Patent Register maintained in accordance with the Patented Medicines (Notice of Compliance) Regulations (Regulations) in respect of the drug TARGIN.  TARGIN is a controlled-release drug in tablet form that contains two medicinal ingredients: oxycodone hydrochloride (a painkiller), and naloxone hydrochloride, which counteracts certain side effects of oxycodone.  The 738 Patent contemplates a controlled-release technology for delivering oxycodone, and contains 28 claims, none of which mention naloxone.  Claim 5 was particularly at issue, and claims, “A solid controlled release oral dosage form, comprising oxycodone or a salt thereof … an effective amount of a controlled release matrix … and … a suitable amount of a suitable pharmaceutical diluent …”

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Federal court confirms decision to withhold designating notice of allegation as a confidential document

Pfizer Canada Inc. et al. v. Novopharm Limited et al., 2010 FC 668

Even though generic pharmaceutical companies invest significant time and funds into the preparation of notices of allegations (“NOA”s), the Federal Court has confirmed that such documents should remain available to the public and not be designated as confidential information under the terms of a protective order.

In an application under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) in relation to the drug pregabalin, the Honourable Mr. Justice Crampton dismissed an appeal from a decision of Madam Prothonotary Milczynski dismissing a motion by Novopharm Limited (“Novopharm”), which sought a protective order designating, among other things, its NOA as confidential pursuant to Rule 151 of the Federal Courts Rules.

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Double patenting issue must be considered at time of Hearing of Application under the PM(NOC) Regulations

Sandoz Canada Inc. v. Abbott Laboratories, 2010 FCA 168

The Federal Court of Appeal rendered a decision that will have important implications on the litigation strategy of pharmaceutical companies.

Although the Federal Court issued an order under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) prohibiting the Minister of Health from issuing a notice of compliance (“NOC”) to Sandoz for its clarithromycin extended release 500 mg tablets until after expiry of the 266 patent (a decision appealed by Sandoz), Abbott also cross-appealed from this decision.  The court found that Abbott had failed to adequately respond to Sandoz’ allegation of invalidity with respect to double patenting of claim 22 of the 395 patent over the 541 patent.  Accordingly, Abbott sought that the court’s decision dismissing an order of prohibition in relation to the 395 patent be set aside.

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Prothonotary dismisses Motion to Strike Res Judicita Pleadings from Statement of Defence in Impeachment Action

Apotex Inc. v. Pfizer Ireland Pharmaceuticals, 2010 FC 633

In an action commenced by Apotex to impeach Pfizer’s ‘446 patent relating to the drug Viagra (medicinal ingredient sildenafil citrate), Apotex brought a motion seeking to strike those portions of Pfizer’s statement of defence pleading res judicata and abuse of process.  The motion was surprisingly dismissed by the court.

Background

Apotex had previously sought to invalidate Pfizer’s ‘446 patent in proceedings commenced by Pfizer under the Patented Medicines (Notice of Compliance) Regulations (“Regulations”).  On September 27, 2007, however, Mr. Justice Mosley upheld the ‘446 patent, and granted an order prohibiting the Minister of Health from issuing a notice of compliance to Apotex.  This decision was upheld by the Federal Court of Appeal on January 16, 2009, and leave to appeal to the Supreme Court of Canada was not sought.

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Revatio patent ruled invalid for lack of sound prediction and obviousness

Pfizer Canada Inc.  v. Ratiopharm Inc. and The Minister Of Health, 2010 FC 612

In an application under the Patented Medicines (Notice of Compliance) Regulations (“Regulations”), Pfizer sought an order prohibiting the Minister of Health (“Minister”) from issuing a notice of compliance (“NOC”) to Ratiopharm for a generic version of the drug REVATIO (containing the medicine sildenafil citrate (“sildenafil”) – the same medicinal ingredient contained in VIAGRA) until after the expiry of the 324 patent.  Ratiopharm alleged that the 324 patent was invalid for lack of soundly predicted utility, obviousness, and anticipation, and therefore that a generic version of REVATIO should immediately be allowed on the Canadian market for use in the treatment of pulmonary hypertension.  Ratiopharm was ultimately successful on the first two grounds.

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Section 8 Damages under the PM(NOC) Regulations not available when patent subsequently invalidated in Impeachment Action

Apotex Inc. v. Syntex Pharmaceuticals International Inc. and Hoffman LaRoche Limited, 2010 FCA 155

Apotex was unsuccessful in its attempt to recover damages under section 8 of the 1993 version of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) in relation to its naproxen slow release tablets. 

Background

In 1996, Syntex Pharmaceuticals International Inc. (“Syntex”) and Hoffman LaRoche Limited (“Roche”) were successful in obtaining an order under the Regulations prohibiting the Minister of Health (“Minister”) from issuing a notice of compliance (“NOC”) to Apotex with respect its naproxen slow release tablets until after the expiration of the 671 patent.  Apotex did not challenge the validity of the 671 patent at that time.  An appeal and cross-appeal from this decision was dismissed.  Apotex subsequently commenced an action seeking to impeach (invalidate) the 671 patent, and on April 19, 1999, the court found that Apotex’s formulation was non-infringing and that the 671 patent was invalid.  No appeal was taken from that judgment.

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Confidentiality Order Appropriate to Conceal Subject-Matter of Novopharm's Abbreviated New Drug Submission

Novopharm Limited v. The Minister of Health, 2010 FC 566

Novopharm filed an abbreviated new drug submission (ANDS) for a generic version of a drug, and represented to the Minister of Health that the ANDS did not attract the application of the Patented Medicines (Notice of Compliance) Regulations (and therefore the requirement to address patents listed on the patent register thereunder), since the patents were added after Novopharm had purchased the Canadian Reference Products and completed its clinical studies.  The Minister disagreed however, and required Novopharm to address a specific patent listed on the patent register before it would issue a notice of compliance (NOC) allowing Novopharm to commence marketing its drug.  Novopharm took issue with this decision, and accordingly commenced an application for judicial review of the Minister’s decision.  The application identifies the patents and drugs at issue by letter (i.e. Drugs A and B and Patents X and Y) in order to maintain confidentiality over the drug submission.

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Court questions expert's credibility in patent infringement finding

Weatherford Canada Ltd. et al. v. Corlac Inc. et al., 2010 FC 602

Justice Phelan of the Federal Court of Canada released a 119-page judgment in respect of Canadian Patent No. 2,095,937 (the “’937 Patent”) relating to a seal assembly combination designed to fix the problem of leaking stuffing boxes on rotary progressive cavity pumps – a problem that has troubled all the heavy oil producers since the early 1980’s.

The plaintiffs alleged that the defendants had been directly infringing the ‘937 Patent since at least 1999 as a result of manufacturing and selling drive systems for rotary oil well pumps that included the patented assembly for restraining oil leakage.  They also alleged the Defendants had induced and procured others including their customers to infringe the '937 Patent.

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Bifurcation Order not appropriate in action involving patent infringement and breach of Competition Act

Garford Pty Ltd. v. Dywidag Systems International, Canada, Ltd., et al., 2010 FC 581.

The plaintiff, Garford, appealed from an order of a prothonotary allowing bifurcation (separate trials) of the issue of liability from the issues of damages or accounting of profits in an action alleging patent infringement and breach of the Competition Act.

Bifurcation orders are only allowed where the Court is “satisfied, on a balance of probabilities, that bifurcation is more likely than not to result in the just, most expeditious and cost-effective determination of the proceeding.” Factors taken into account when determining whether bifurcation is appropriate include:

(i) The nature of the action and whether issues for the first trial are relatively straightforward

(ii) the extent to which the issues proposed for the first trial are interwoven with those remaining for the second;

(iii) whether a decision from the first trial regarding liability is likely to put an end to the action altogether;

(iv) the extent to which the parties have already devoted resources to all of the issues;

(v) the possibility of delay;

(vi) any advantage or prejudice the parties are likely to experience; and

(vii) whether the motion is brought on consent or over the objection of one or more of the parties.

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Drug-related patent held invalid for double patenting and anticipation, but not obviousness

Merck v. Pharmascience, 2010 FC 510 (Federal Court).

In a decision rendered May 11, 2010 under the Patented Medicines (Notice of Compliance) Regulations, Justice Hughes of the Federal Court of Canada found Canadian Patent No. 2,173,457 (the ’457 Patent) to be invalid, and accordingly dismissed an application by Merck which sought to prohibit the Minister of Health from issuing a notice of compliance to Pharmascience, allowing Pharmascience to market its generic version of the medicine finasteride for treating male pattern baldness.

Claim 5, a “Swiss-type” claim, was the only claim at issue and was construed by the court as claiming “the use of finasteride for the preparation of a medicament adapted for oral administration useful for the treatment of male pattern baldness in a person and wherein the daily dosage is about 1.0mg.”Although this claim in the corresponding European patent had been upheld by the UK Court of Appeal, counsel for Pharmascience, Stikeman Elliott LLP, was successful in invalidating claim 5 on two grounds: double patenting and anticipation.

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Canadian Government again proposes amendments to the Copyright Act

Craig Collins-Williams

On June 2, 2010, Industry Minister Tony Clement tabled Bill C-32 entitled An Act to Amend the Copyright Act, which may also be referred to as the Copyright Modernization Act. Bill C-32 represents the Conservative government’s latest attempt to implement revisions to the Copyright Act. Potential changes to the Copyright Act have been the focus of intensive discussion and debate between stakeholders for a number of years. The Conservative government’s previous reform attempt, Bill C-61, was introduced in the summer of 2008, but it died on the order paper (before being passed into law) when a federal election was called in the fall of 2008. The previous Liberal government’s June 2005 attempt, Bill C-60, also died on the order paper when Parliament was dissolved in November 2005.

Growing pressure from the European Union and the United States, which view the Canadian Copyright Act as inadequate to protect copyrighted material, appears to have prompted the federal government to propose amendments to the Act once again.

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Court disallows expert disbursements in patent case

Counsel should be prudent in determining when it is appropriate to retain experts and have them incur costs on your client’s behalf.

In a decision determining allowable costs of the respondent Pharmascience in a proceeding discontinued by the applicant Sanofi-Aventis under the Patented Medicines (Notice of Compliance) Regulations, an assessment officer sought to determine whether expert witness disbursements totalling $17,000 could be claimed in the circumstances.

The three part test for the allowance of expert disbursements requires that:

(1) The disbursement for an expert must be prudent and reasonable in the circumstances existing at the time it was incurred;

(2) The terms of engagement must not constitute a blank cheque; and

(3) The extent of reliance on the expert by the trial judge should be a factor.

As per the third part of the test, disbursements cannot be disallowed based solely on the fact that a matter is discontinued (and thus never heard by a judge), as this would require hindsight. However, they must be reasonably incurred in the circumstances.In this case, a majority of the experts’ fees were incurred prior to the initial case management conference to set a schedule for the exchange of evidence, and were not even alleged to have been incurred in support of an early motion to dismiss. As a result, given that the ultimate burden of proof rested with the applicant Sanofi, the experts’ fees were found to be premature and therefore not allowed.

Three things you (and your attorney) should know about DMCA notifications

The Digital Millennium Copyright Act (DMCA) is an American statute that provides for the automatic takedown of counterfeiting materials posted on the Internet simply by sending a notification (a “DMCA Notification”) from the copyright holder to the website hosting the counterfeiting materials. While drafting and sending a DMCA Notification is easy as shooting fish in a barrel, this articles presents three important tips to avoid problems later in the DMCA-driven process.

  1. Don’t overreach: Avoid liability and “bad press” by making a serious effort to determine if the materials really are infringing… And that implies that you consider the possibility that the materials qualify under “fair use” before sending the DMCA Notification;
     
  2. Properly save a copy of the infringing materials prior to sending the DMCA Notification;
     
  3. Consider search engine optimization: Limit the impact of future infringements by creating legitimate content and making sure that your content is optimized in search engines.
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Federal Court examines "good faith" in patent prosecution

In Lundbeck Canada Inc.  v. Ratiopharm Inc., 2009 FC 1102 (F.C. Nov. 23, 2009), the Federal Court provided guidance on the requirement to deal in good faith with the Patent Office during patent prosecution. Since 1996, s. 73(1)(c) of the Patent Act has required that applicants reply in “good faith” to any request by a patent examiner. However, until now the scope of that requirement had been somewhat uncertain.

Justice Mactavish took this opportunity to clarify that an applicant must not provide information that could mislead the Patent Office. The case involved a patent for a combination of drugs used in treating dementia. To meet the requirement of non-obviousness, it was necessary to show that this combination of drugs led to a result that was new and unexpected in light of the state of knowledge of researchers at the time. Lundbeck, in support of the patent, indicated to the patent agent that prior articles taught that this combination was ineffective. However, Lundbeck did not point out that one significant study (of which they were aware) stated that only certain subsets of the combinations in question were ineffective, but that others could be. Mactavish J. held that the omission of this information was misleading and thus a breach of the duty of good faith. In addition, Mactavish J. equated this obligation to the Patent Office with obligations to the court in an ex parte proceeding.

The Genetic Information Nondiscrimination Act (GINA) Comes into Force in the U.S.

In 2008, the U.S. enacted the Genetic Information Nondiscrimination Act of 2008 (GINA) to prohibit discrimination in health coverage and employment based on genetic information. While many states have already enacted legislation that prohibitions discrimination based on genetic information, the degree of protection provided by state laws varies widely and the federal act provides a minimum baseline of protection. GINA prohibits health insurers or administrators from requesting or requiring genetic information from an individual or an individual’s family members. GINA also prohibits employers from using genetic information on any decisions regarding employment.

Federal Court Upholds Constitutionality of Drug Data Protection Rules

In Canadian Generic Pharmaceutical Association v. The Minister of Health et al., (2009) FC 725, Justice Mandamin of the Federal Court upheld the constitutional validity of the data exclusivity protection rules found in the Food and Drug Regulations (Data Protection Rules). The Data Protection Rules were enacted pursuant to subsection 30(3) of the Food and Drugs Act in 2006 and provide new drugs with a guaranteed minimum period of market exclusivity of eight years. The Data Protection Rules also provide that a generic manufacturer, seeking to copy an innovative drug, will not be permitted to file a new drug for a period of six years. The Federal Court found the enactment of the Data Protection Rules to be a valid exercise of the federal power to regulate trade and commerce in that the Data Protection Regulations are “adjunct” to the federal regulatory scheme for marketing drugs in Canada and bring the approval of generic drugs into conformity with Canada’s data protection obligations in NAFTA and the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

New bankruptcy law amendments will help IP licensees

On September 18, 2009, many long-awaited amendments to Canada's Bankruptcy and Insolvency Act (BIA) and Companies' Creditors Arrangement Act (CCAA) came into force. One of these new provisions will help protect intellectual property (IP) licensees in the event of the bankruptcy of their licensors.

Under current Canadian common law, it is generally accepted that a trustee in bankruptcy can disclaim some kinds of contracts entered into by the bankrupt debtor, in order to promote the successful restructuring of the debtor's business. It has been unclear, however, whether or not IP license agreements are among such contracts. The issue has been raised, but never settled, in a number of Canadian cases. A discussion of these cases can be found in Stikeman Elliott's February 2009 Intellectual Property Update.

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Amazon appeals rejection of its "One Click" patent

On September 3, 2009, Amazon.com filed an appeal to the Federal Court in respect of the decision of the Commissioner of Patents to refuse to grant a patent pursuant to Canadian Patent Application No. 2,246,933 (the '933 Application).

The '933 Application involved the use of "cookies" (which save an IP address and personal information) to allow an Internet shopper to click just once to purchase an item of interest. Amazon.com claimed that their cookies were a new and non-obvious method to hasten and simplify online ordering. The Examiner had initially rejected the application on the grounds that the claimed invention was obvious (and therefore not inventive) and also that the application sought to patent unpatentable subject matter.

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Door still open for Competition Act challenges to patent settlement agreements

In June 2009, the Federal Court of Appeal (FCA) upheld the Federal Court of Canada's decision in the patent infringement case of Laboratoires Servier v. Apotex Inc., ([2008] F.C.J. No. 1094, aff'd [2009] FCA 222). In its decision, the Court dismissed a counterclaim by the defendant, Apotex, alleging that the settlement agreement leading to the relevant patent's issuance constituted a conspiracy to lessen competition and an offence under Canada's Competition Act. Although in this case the Court held that the defendant had failed to support its allegations with sufficient evidence, it specifically contemplated that under the right circumstances, a patent settlement agreement might amount to a conspiracy under the Competition Act.

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CIPO announces three new Patent Prosecution Highway programs

The Canadian Intellectual Property Office (CIPO) has entered into agreements with the Japan Patent Office(JPO), the Danish Patent and Trademark Office(DKPTO) and the Korean Intellectual Property Office (KIPO) to launch two-year pilot Patent Prosecution Highway (PPH) programs, each commencing October 1, 2009.

These pilot programs can be compared to the PPH pilot program between CIPO and the United States Patent and Trademark Office initiated on January 28, 2008 and extended for a period of two years ending on January 28, 2011.

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Ontario Superior Court of Justice addresses copyright in context of wrongful dismissal

In March 2009, the Ontario Superior Court of Justice had occasion to consider the scope of the presumption under the Copyright Act of an employer's ownership of copyright in works created by an employee in the course of his employment.

The case of Corso v. NEBS Business Products Limited [(2009) 176 A.C.W.S. (3d)] involved a claim for wrongful dismissal by Mr. Corso, and a counterclaim by the employer NEBS Business Products Limited (NEBS), for a declaration that it was the owner of copyright in certain materials created by Mr. Corso, largely on his own time.

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CIPO issues new Practice Notice for section 45 (summary cancellation) proceedings

On July 7, 2009, the Canadian Intellectual Property Office (CIPO) issued a new Practice Notice for section 45 (summary cancellation) proceedings, which will come into effect on September 14, 2009.  Summary cancellation proceedings are intended to clear the Trade-marks Register of "dead wood":  that is, trademarks that are no longer being used by their owners. The Practice Notice emphasizes that section 45 proceedings are not intended to replace inter partes expungement proceedings under section 57 of the Trade-marks Act, where issues such as ownership, distinctiveness or abandonment of a registered trademark may be raised before the Federal Court of Canada.

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Quebec civil code provides additional support in intellectual property dispute

The Superior Court of Quebec recently granted an interim injunction preventing the continued sale of Husqvarna Corp. (Husqvarna) outdoor power tools by a former authorized dealer whose authorization had been revoked. Although the manufacturer's motion for the injunction included grounds based on the federal Trade-marks Act, the Court granted the injunction on the sole basis of Quebec principles of civil responsibility, namely article 1457 of the Civil Code of Quebec (CCQ), which article acts as a functional equivalent to the common-law tort of passing off.

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Federal Court of Appeal decision clarifies effects of partial waiver of privilege

On January 30, 2009, the Federal Court of Appeal (FCA) clarified the circumstances under which a partial waiver of privileged material can result in an implied complete waiver of privilege. The FCA's decision in Merck & Co. Inc. et al. v. Apotex Inc. et al. (2009 FCA 27) was an interlocutory decision in a patent infringement case.

The issue arose in the context of examination for discovery in respect of the patent dispute, which relates to the manufacture of a drug called lovastatin. This drug is produced by certain micro-organisms, and the production of lovastatin from the Aspergillus terreus micro-organism is covered by a Canadian patent owned by the plaintiff, Merck & Co. Inc. (Merck). Merck had apparently carried out some tests, for the purpose of the litigation, to improve its understanding of the process used by the defendants. As the tests were conducted for the purpose of the litigation, information about the tests qualified for protection under the litigation privilege. The purpose of the litigation privilege is to create a zone of privacy in relation to pending or apprehended litigation, to facilitate investigation and preparation of a case for trial by the adversarial advocate.

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Ontario Court refuses jurisdiction over non-resident trademark licensor

In October 2008, the Ontario Superior Court of Justice confirmed that a foreign entity that merely licenses its Canadian trademarks in Ontario is not sufficiently connected to Ontario for an Ontario court to assume jurisdiction over the licensor.

The case of Charron v. Bel Air Travel Group Ltd. [(2008) 92 O.R. (3d) 608] arises from the unfortunate death of an Ontario man, which occurred while he was scuba diving at an all-inclusive vacation resort in Cuba.  His wife and children brought the claim in Ontario against numerous defendants, including the travel agent and tour operator, which were based in Ontario (the Canadian defendants); the owner of the Cuban resort and several employees of the resort (the Cuban defendants); the operator of the Cuban resort, which arranged to market the resort in Canada (Operator Defendant); and the licensor of the trademarks under which the resort operated (Licensor Defendant). Both  the Operator Defendant and the Licensor Defendant  are companies incorporated in the Cayman Islands.

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Quebec Court of Appeal denies injunction against former directors accused of misappropriating process for aluminum reuse

The Quebec Court of Appeal's decision in Gotar Technologies Inc. v. Arseneault emphasizes that a non-compete clause and assignment of intellectual property to an employer cannot be interpreted so broadly that a person is prevented from earning a living in a similar field once the relationship with the employer is over. Moreover, a business opportunity that is rejected or not developed by an employer may be fair game for development by former employees.

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New TMOB Practice Notice comes into effect March 31, 2009

The Canadian Trade-marks Opposition Board (TMOB) has announced that as of March 31, 2009, it will be implementing new guidelines for practice in trademark opposition proceedings (the Practice Notice). The new Practice Notice introduces the availability of a nine-month cooling-off period to allow parties to pursue settlement or mediation, as well as changes to maximum benchmarks for extensions of time during the opposition process. The Practice Notice also  allows parties to expedite the hearing of their case by requesting  that it be scheduled and heard on short notice (approximately two days) in the event of a cancellation of a previously scheduled hearing.

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Canada's Federal Court refuses to adopt American doctrine of "fraud on the trademarks office"

On January 8, 2009, the Federal Court of Canada issued its decision in Parfums de Coeur, Ltd. v. Christopher Asta (2009 FC 21). The Court refused to expunge a trademark registration obtained through a Declaration of Use that contained false information. This outcome highlights a significant difference in the consequences arising from misstatements on a Declaration of Use under Canadian and American law.

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Canada-U.S. Patent Prosecution Highway pilot program extended

The Canadian Intellectual Property Office (CIPO) and the United States Patent and Trademark Office (USPTO) have extended the pilot Patent Prosecution Highway (PPH) program for another two years until January 28, 2011. The PPH program, begun on January 28, 2008, provides for significantly accelerated examination of patent applications by CIPO if examination work has already been conducted at the USPTO.

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Bankruptcy risks for intellectual property licensing in Canada

The recent economic turmoil has brought to the forefront concerns by licensees as to what happens to their rights to licensed intellectual property upon the bankruptcy of a licensor.  Unfortunately, under Canadian law, the answer to that question is not clear.

Background

In Canada, it is generally accepted that a bankruptcy trustee has the right to disclaim certain types of contracts, in order to promote a viable restructuring of a bankrupt business.  However, it is not clear whether an IP license agreement can be disclaimed as an executory contract (which are contracts with ongoing obligations on both sides) by a bankrupt licensor's trustee in bankruptcy.

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Bilski applied: The start of the ripple effect

As reported in our April 2008 IP Update, the United States Court of Appeals for the Federal Circuit issued an en banc Order in the spring of 2008 that required the full Court to rehear the appeal of In Re Bernard L. Bilski and Rand A. Warsaw.

In U.S. Court of Appeals practice, an en banc rehearing is typically granted only where a case is considered unusually important.  The U.S. Court of Appeals for the Federal Circuit had expressly raised the possibility of overruling its own prior decisions on business-method patents, namely State Street Bank & Trust Co. v. Signature Financial Group Inc., 149 F.3d 1368 (Fed. Cir. 1998) and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999).

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The impact of new material contract filing requirements on existing licenses to use patents or trade name

As a consequence of the new amendments to National Instrument 51-102 Continuous Disclosure Obligations coming into force on March 17, 2008, a reporting issuer will have to disclose on SEDAR any new or existing “franchise or licence or other agreement to use a patent, formula, trade secret, process or trade name” not entered into in the ordinary course of business. Further information about this amendment can be found in Stikeman Elliott LLP’s article on “New material contract filing requirements in force March 17, 2008 and impact on existing material contracts”.