Contrasts and Distinctions: Canadian Patent Law Developments in 2018
January 23, 2019

by: David Schwartz and Walter Chan

2018 served up a smorgasbord of disparate patent law developments in Canada. Most notably, ratification of a new trade agreement negotiated amongst Canada, the United States and Mexico would require introduction of a patent term extension system and lengthening of data protection for biologics. Entirely separate from this, the second federal budget bill for the year introduced a series of amendments to the Patent Act, dealing with diverse matters such as licensing commitments on standard-essential patents and the role of the prosecution history in claim construction. Late in the year, a wholly revised version of the Patent Rules was published for public consultation, largely geared toward implementing the Patent Law Treaty in Canada, an initiative having its genesis in the second federal budget bill of 2014.

This article provides our readers with a summary of highlights from 2018, including links to our previous articles. In addition we have prepared a separate summary of notable patent decisions from the Canadian courts from last year, which you can read here

 

“NAFTA 2.0”

The renegotiation of the North American Free Trade Agreement last year received a great deal of press in Canada.  While originally described domestically by the US-driven abbreviation “USMCA,” the Canadian government has since adopted the more mellifluous acronym “CUSMA.”

Patent Term Adjustment - If ratified, CUSMA would require amendment of the Canadian Patent Act to provide patent term adjustment to account for Patent Office delay in issuing patents.

Data Protection for Biologics - Although not a patent issue per se, a closely related expansion of IP rights is the requirement for extension of the data protection term for biologics from the current eight years to ten.

While agreement on CUSMA has been reached in principle, it must still be ratified by all three countries.

In Canada, the steps required for ratification and implementation of CUSMA include tabling of the treaty in Parliament for 21 sitting days; preparing an Order in Council by Cabinet authorizing  the Minister of Foreign Affairs to sign an Instrument of Ratification; and passing of a bill implementing the treaty by Parliament.

The United States administration must submit a list of changes to US law needed to accommodate passage of CUSMA within 60 days of signing it, or by January 30. It then must submit to Congress the final text of the implementing legislation and a Statement of Administrative Action 30 days before the bill is formally introduced.  Meanwhile, the International Trade Commission must report to the President and Congress on the economic impact of the trade agreement within 105 days of the signing of the agreement. Progress on this has been delayed by the ongoing US government shutdown.  Once the implementing legislation is introduced in Congress, the House and the Senate will have 90 days to approve it by simple majority vote.

In Mexico, CUSMA is subject to ratification by simple majority vote in the Senate.  In addition, Annex 23-A to CUSMA imposes obligations on Mexico to implement reforms to its labour laws.  Such reforms have been tabled in Mexico’s Congress, but Congress is not expected to consider them until February.

Until then, the current NAFTA remains in force.  Any party may withdraw from NAFTA upon giving six months' notice, which President Trump has suggested he may do in order to put pressure on Congress to implement CUSMA more quickly.

More on CUSMA is provided in our article USMCA v NAFTA: What's changed and what it means for IP in Canada.

 

Budget Implementation Act, 2018, No. 2

Each year, the federal government typically enacts one or two omnibus acts, implementing provisions of the federal budget tabled in Parliament in the spring. The second budget bill of 2018, enacted as the Budget Implementation Act, 2018, No. 2, made a number of significant changes to the Patent Act:

  • Standard Essential Patents - Licensing commitments on standard-essential patents now bind subsequent patent owners.
  • Prosecution Histories - Prosecution histories are now admissible in evidence to construe patent claims.
  • Experimental Use - An experimental use exception to infringement has been codified.
  • Prior User Rights - The scope of prior user rights has been expanded.
  • Demand Letters - Regulation-making authority concerning the requirements for “demand” (cease and desist) letters has been established.

These are particularly interesting changes in that they seem to be driven by the domestic agenda, as they are not required for compliance with a trade agreement or in connection with ratification of an international IP treaty.

See our articles Five important changes to the Canadian Patent Act and New Bill C-86 introduces many more changes to IP laws for more details.

 

New Patent Rules

A draft of entirely revised Patent Rules was published for public consultation in December. Many of the changes concern compliance with requirements of the Patent Law Treaty, which is to be ratified by Canada.  We anticipate that the new Patent Rules might be in force later in 2019, although this is not known with certainty.

Particularly notable changes in the proposed Rules include the following:

  • Late Entry into PCT National Phase - A Patent Cooperation Treaty (PCT) application may enter the Canadian national phase up to 42 months from the earliest priority date. But under the new system, in order to enter the national phase more than 30 months from the priority date, it will be necessary to submit a statement that failure to meet the 30-month deadline was unintentional.
  • Maintenance Fees - The maintenance fee regime will become more complex. Anyone will be able to pay maintenance fees on pending applications. The Patent Office will be required to issue a late notice if a maintenance fee is missed. But reinstatement of an abandoned application will be available only on a “due care” standard, and “third party rights” to practice the invention may arise if maintenance fees are missed. Similar changes will be made to the examination request requirement.
  • Restoration of Priority - Restoration of the right of priority will be available in Canada for the first time. It will be possible to claim priority to an application filed up to 14 months before the Canadian filing date if the failure to meet the 12-month Convention deadline was unintentional.
  • Delayed Requirement for Translation - Submission of an English or French language translation of a foreign language specification and payment of the filing fee will no longer be prerequisites to obtaining a filing date. However, these relaxed rules will not apply to PCT national phase applications.
  • Certified Copy of Priority Document - It will be necessary to submit a certified copy of the priority document, unless made available through a specified digital library, or submitted during the international phase of a PCT application.
  • 24/7/365 Filing - Under the new Rules, it will be possible to obtain a filing date on weekends, holidays and other days the Patent Office is closed for business, by filing electronically.
  • Shortened Prosecution Timelines - The term for requesting examination will be shortened to four years, from five. Examiner’s Reports will require a response within four months rather than six. The final fee will be due four months rather than six months from the notice of allowance.

Our article Canada's new Patent Rules: twelve notable changes and tips expands on these and other points.

 

Conclusion

Further developments in many of these matters can be expected in 2019 and perhaps beyond. The necessary legislative amendments to provide for patent term adjustment and extended data protection for biologics presumably will not advance without ratification of CUSMA. The new Patent Rules appear to be in close to final form, but require final publication in the Canada Gazette Part II before coming into force, so additional changes remain possible. With respect to the Budget Implementation Act, 2018, No. 2, the provisions concerning standard essential patents, experimental use, and demand letters all are subject to further elaboration through regulations, yet to be made.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.


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