Where is the protection of patents in Canada?

Mark Henderson
June 14, 2017

There is a big problem with how Canada deals with goods infringing on patents being imported in Canada. In a nutshell, Canada doesn't. Canada can seize goods at the border that infringe on a copyright or a trademark. But there is no general mechanism for goods infringing on a Canadian patent. Sure, my legal advisors tell me that in exceptional circumstances a court injunction could be obtained. But this is very rare.

Now to the situation with our company, Solara Remote Data Delivery Incorporated. Offshore competitors are shipping product into Canada that we believe infringe on our patents. When I consulted my IP lawyer on what actions we can take, I was surprised to hear that the only practical actions are to either work out agreements directly with infringers or take civil legal action. A civil lawsuit, then, is really the only fallback for Canadian patent holders.

The imports are putting a big dent in our sales in the Canadian marketplace. Speaking for ourselves, we just do not have the funds to take court action and still continue inventing and commercializing new products. Legal action would mean we stop spending on R&D and anything else not directly needed to keep the company running, and direct funds and time to supporting the legal action. There is a high opportunity cost to this. And I suspect our infringers know this and take advantage of this.

Canada gets a "D" from the Conference Board of Canada in a much-cited reference comparing the number of patents we file for our population.  If you haven’t read it, we are 14th out of 16 OECD countries when it comes to our per capita patent volume. What is odd, though, that with all the discussion and funding dedicated to Canadian industry to file Canadian patents, this number has not changed significantly since the year 2000. Speaking as a business owner who is holding patents, I feel like no one in government is addressing the elephant in the room — protecting a patent is so expensive, most companies don't bother with them.

How can we protect our patents in other countries? For our US patents, we can appeal to the US International Trade Commission to have infringing goods embargoed from import by US Customs. There is a formal system in place that permits comment of all stakeholders to ensure the process does not hurt the public interest. Once an appeal to bar an infringing product from entry is successful, a federal judge directs US Customs to seize and destroy the identified infringing product whenever it is imported.

In the European Union, there are also provisions for seizure by customs authorities, although it is not yet harmonized across all countries.

In Canada, we have the Canadian International Trade Tribunal. In speaking with them, they were sympathetic but indicated that patent protection is outside their mandate. Speaking with personnel at the Canadian Intellectual Property Office (CIPO) and even personnel within the office of the Canada Gazette and House of Commons Industry Committee, there was no indication that protection at the border against goods infringing a Canadian patent was in the works.

The result is that even after a great amount of effort and funds to create new innovations, we really have no cost-effective way to protect our position in the Canadian market the way patentees in other countries can. This puts us at a disadvantage in our own country.

In seizing goods for copyright and trademark infringement, the rights owner still has to initiate legal action. But at least they are doing it while the infringer is paying a price – their goods are being held. The rights owner would definitely have the attention of the infringer, who would want to have the matter resolved as soon as possible. In the event of a successful civil action against a patent infringer, even if successful, it may take a long time to receive compensation. The goods may even continue entering the country. That, after taking many months, perhaps years, for the action to wind its way through the courts.

So where does this leave us, owners of high tech firms holding Canadian patents? Well, governments at all levels are spending billions, with much fanfare, to stimulate "innovation". This is all very welcome, and a big help, in getting our inventions perfected and patented.

Commercializing our patented inventions to marketable innovations means creating value for customers. When customers begin demanding the innovation, infringing imports often arrive to scoop up a part of the market. At that point, a company unable to protect its market from the infringer sees a big hole appear in its "innovation bucket", with revenues pouring out. Unfortunately, no-one seems willing to provide Canadian patent holders with the tools to fix it.

Tom Tessier is President of Solara Remote Data Delivery Inc, Manitoba, a global leader in providing GPS tracking and two-way messaging via satellite and cellular networks  ttessier@solaradata.com)


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