Implicit inducement of patent infringement – The Federal Court of Appeal hands down its ruling

January 8, 2024

Can a patent be infringed even if the patented product is not manufactured, assembled, or even used?

Indeed, such infringement is possible. In fact, this is known as the theory of inducement of infringement. Naturally, acts of “inducement” must meet certain conditions before inducement of infringement can be found. The Federal Court of Appeal recently clarified these conditions.

Inducing infringement and the applicable test

For example, if the patented invention is a solution containing components A, B, and C of a drink where component C is water, it is likely that if components A and B are sold to a consumer and said consumer is told to add a certain amount of water, mix well, and drink, the consumer can be said to have been induced to infringe the patent.

To determine whether inducement of infringement has occurred, the courts apply a three-prong test.

First, the acts of infringement must have been completed by the direct infringer. In the previous example, this would be the consumer. There can be no inducement of infringement if there has been no direct infringement.

Second, the completion of the acts of infringement must be influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place (for example, by selling the material and providing instructions).

Third, influence must be knowingly exercised by the inducer; in other words, the inducer knows that this influence will result in the completion of the acts of infringement.

The Federal Court case

Returning to the Court of Appeal’s decision: in this case, Janssen had sued Apotex for inducing infringement of a patent. An important point is that the patent on the drug had expired. However, Janssen claimed that Apotex was inducing physicians to prescribe the drug in combination with a specific inhibitor to treat a rare condition called pulmonary arterial hypertension (PAH). Janssen’s patent covers the combination of the drug and the inhibitor to treat PAH.

Apotex would have sold the drug alone, without including the inhibitor or the combination, had Health Canada authorized its drug.¹ Nowhere in the product monograph is it suggested that the drug be used in combination with the inhibitor in question. However, the drug was being prescribed to treat PAH.

The parties agreed that the first prong of the test had been met, namely that the drug was likely to be prescribed with the inhibitor to treat PAH. It was the second and third prongs that were actually at issue: Could Apotex be inducing infringement even though its product monograph contains no suggestion for use in combination with the inhibitor in question?

The Federal Court had concluded that the second and third prongs of the test for inducing infringement had been met. It ruled that the product monograph sufficiently influenced physicians to prescribe the drug in combination with the inhibitor, and that Apotex knew that marketing the drug along with the product monograph would influence physicians to prescribe it with the inhibitor. This reasoning is based primarily on a study cited in the product monograph, which showed that the drug, whether prescribed alone or with the inhibitor, was safe and effective.

The Federal Court of Appeal’s decision

The Court of Appeal upheld the Federal Court’s decision, adding that influence need not be explicit. The Court thus affirmed that the absence of explicit instruction and of intention that direct infringement should result does not mean that there is no influence sufficient to satisfy the second prong. Therefore, while explicit instruction and intention may be relevant to assessing influence, they are not required. The Court of Appeal stated that: “Even without explicit reference to combination treatment, the Federal Court was entitled to find that the Apo-Macitentan PM would influence use of macitentan in that way.”²

With respect to the third prong, the Court of Appeal reiterated that the inducer must know that their actions or influence will lead another party to engage in specific activity, but that it is not necessary to prove that the inducer knows that such activity will constitute patent infringement.

The Court of Appeal upheld the conclusion that, in the circumstances, Apotex knew or should have known that the product monograph for its drug would influence physicians to prescribe it in combination with the inhibitor to treat PAH.

Conclusion

Implicit influence can lead to findings of patent infringement when it can be said that the inducer should have been aware of the consequences of their actions. This decision confirms that Canadian courts have a flexible legal tool to protect inventions.

The text is in the conditional tense because the action was brought under the Patented Medicines (Notice of Compliance) Regulations, which establish specific rules regarding litigation in the pharmaceutical industry and prevent Health Canada from authorizing the sale of a generic version of a drug that would infringe certain patents in certain circumstances.
Apotex Inc. v. Janssen Inc., 2023 FCA 220 (CanLII), para. 17.

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Alain Y. Dussault
Partner, Lawyer and Trademark Agent

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April 15, 2024

Can artificial intelligence be designated as an inventor in a patent application?

Artificial intelligence (“AI”) is becoming increasingly sophisticated, and the fact that this human invention can now generate its own inventions opens the door to new ways of conceptualizing the notion of “inventor” in patent law. In a recent ruling, the Supreme Court of the United Kingdom (“UK Supreme Court”) however found that an artificial intelligence system cannot be the author of an invention within the meaning of the applicable regulations under which patents are granted. This position is consistent with that of several courts around the world that have already ruled on the issue. But what of Canada, where the courts have yet to address the matter? In this bulletin, we will take a look at the decisions handed down by the UK Supreme Court and its counterparts in other countries before considering Canada’s position on the issue. In Thaler (Appellant) v Comptroller-General of Patents, Designs and Trade Mark,1 the UK Supreme Court ruled that “an inventor must be a person”. Summary of the decision In 2018, Dr. Stephen Thaler filed patent applications for two inventions described as having been generated by an autonomous AI system. The machine in question, DABUS, was therefore designated as the inventor in the applications. Dr. Thaler claimed that, as the owner of DABUS, he was entitled to file patent applications for inventions generated by his machine. That being so, he alleged that he was not required to name a natural person as the inventor. Both the High Court of Justice and the Court of Appeal dismissed Dr. Thaler’s appeal from the decision of the Intellectual Property Office of the United Kingdom not to proceed with the patent applications, in particular because the designated inventor was not valid under the Patents Act 1977. The UK Supreme Court, the country’s final court of appeal, also dismissed Dr. Thaler’s appeal. In a unanimous decision, it concluded that the law is clear in that “an inventor within the meaning of the 1977 Act must be a natural person, and DABUS is not a person at all, let alone a natural person: it is a machine”.2 Although there was no doubt that DABUS had created the inventions in question, that did not mean that the courts could extend the notion of inventor, as defined by law, to include machines. An ongoing trend The UK Supreme Court is not the first to reject Dr. Thaler’s arguments. The United States,3 the European Union4 and Australia5 have adopted similar positions, concluding that only a natural person can qualify as an inventor within the meaning of the legislation applicable in their respective jurisdictions. The UK ruling is part of the Artificial Inventor Project’s cross-border attempt to ensure that the DABUS machine—and AI in general—is recognized as a generative tool capable of generating patent rights for the benefit of AI system owners. To date, only South Africa has issued a patent to Dr. Thaler, naming DABUS as the inventor.6 This country is the exception that proves the rule. It should however be noted that the Companies and Intellectual Property Commission of South Africa does not review applications on their merits. As such, no reason was given for considering AI as the inventor. More recently, in February of this year, the United States Patent and Trademark Office issued a guidance on AI-assisted inventions. The guidance confirms the judicial position and states in particular that “a natural person must have significantly contributed to each claim in a patent application or patent”.7 What about Canada? In 2020, Dr. Thaler also filed a Canadian patent application for inventions generated by DABUS.8 The Canadian Intellectual Property Office (“CIPO”) issued a notice of non-compliance in 2021, establishing its initial position as follows: Because for this application the inventor is a machine and it does not appear possible for a machine to have rights under Canadian law or to transfer those rights to a human, it does not appear this application is compliant with the Patent Act and Rules.9 However, CIPO specified that it was open to receiving the applicant’s arguments on the issue, as follows: Responsive to the compliance notice, the applicant may attempt to comply by submitting a statement on behalf of the Artificial Intelligence (AI) machine and identify, in said statement, himself as the legal representative of the machine.10 To date, CIPO has issued no notice of abandonment and the application remains active. Its status in Canada is therefore unclear. It will be interesting to see whether Dr. Thaler will try to sway the Canadian courts to rule in his favour after many failed attempts in other jurisdictions around the world, and most recently in the UK Supreme Court. At first glance, the Patent Act11 (the “Act”) does not prevent an AI system from being recognized as the inventor of a patentable invention. In fact, the term “inventor” is not defined in the Act. Furthermore, nowhere is it stated that an applicant must be a “person,” nor is there any indication to that effect in the provisions governing the granting of patents. The Patent Rules12 offer no clarification in that regard either. The requirement implied by the clear use of the term “person” in the wording of the relevant sections of the law is important: It was a key consideration that the UK Supreme Court analyzed in Thaler. Case law on the subject is still ambiguous. According to the Supreme Court of Canada, given that the inventor is the person who took part in conceiving the invention, the question to ask is “[W]ho is responsible for the inventive concept?”13 That said, however, we note that the conclusion reached was that a legal person—as opposed to a natural person—cannot be considered an inventor.14 The fact is that the Canadian courts have never had to rule on the specific issue of recognizing AI as an inventor, and until such time as the courts render a decision or the government takes a stance on the matter, the issue will remain unresolved. Conclusion Given that Canadian law is not clear on whether AI can be recognized as an inventor, now would be a good time for Canadian authorities to clarify the issue. As the UK Supreme Court has suggested, the place of AI in patent law is a current societal issue, one that the legislator will ultimately have to settle.15 As such, it is only a matter of time before the Act is amended or CIPO issues a directive. Moreover, in addition to having to decide whether AI legally qualifies as an inventor, Canadian authorities will have to determine whether a person can be granted rights to an invention that was actually created by AI. The question as to whether an AI system owner can hold a patent on an invention generated by their machine was raised in Thaler. Once again, unlike the UK’s patent act,16 our Patent Act does not close the door to such a possibility. Canadian legislation contains no comprehensive list of the categories of persons to whom a patent may be granted, for instance. If we were to rewrite the laws governing intellectual property, given that the main purpose such laws is to encourage innovation and creativity, perhaps a better approach would be to allow AI system owners to hold patent rights rather than recognizing the AI as an inventor. Patent rights are granted on the basis of an implicit understanding: A high level of protection is provided in exchange for sufficient disclosure to enable a person skilled in the art to reproduce an invention. This ensures that society benefits from such inventions and that inventors are rewarded. Needless to say, arguing that machines need such an incentive is difficult. Designating AI as an inventor and granting it rights in that respect is therefore at odds with the very purpose of patent protection. That said, an AI system owner who has invested time and energy in designing their system could be justified in claiming such protection for the inventions that it generates. In such a case and given the current state of the law, the legislator would likely have to intervene. Would this proposed change spur innovation in the field of generative AI? We are collectively investing a huge amount of “human” resources in developing increasingly powerful AI systems. Will there come a time when we can no longer consider that human resources were involved in making AI-generated technologies? Should it come to that, giving preference to AI system owners could become counterproductive. In any event, for the time being, a sensible approach would be to emphasize the role that humans play in AI-assisted inventions, making persons the inventors rather than AI. As concerns inventions conceived entirely by an AI system, trade secret protection may be a more suitable solution. The professionals on our intellectual property team are at your disposal to assist you with patent registration and provide you with a clearer understanding of the issues involved. [2023] UKSC 49 [Thaler]. Ibid., para. 56. See the decision of the United States Court of Appeals for the Federal Circuit in Thaler v Vidal, 43 F. 4th 1207 (2022), application for appeal to the Supreme Court of the United States dismissed. See the decision of the Boards of Appeal of the European Patent Office in J 0008/20 (Designation of inventor/DABUS) (2021), request to refer questions to the Enlarged Board of Appeal denied. See the decision of the Full Court of the Federal Court of Australia in Commissioner of Patents v Thaler, [2022] FCAFC 62, application for special leave to appeal to the High Court of Australia denied. ZA 2021/03242. Federal Register: Inventorship Guidance for AI-Assisted Inventions. CA 3137161. Notice from CIPO dated February 11, 2022, in Canadian patent application 3137161. Ibid. R.S.C., 1985, c. P-4. SOR/2019-251. Apotex Inc.v. Wellcome Foundation Ltd., 2002 SCC 77 at paras. 96–97. Sarnoff Corp. v. Canada (Attorney General), 2008 FC 712, para. 9. Thaler, paras. 48–49, 79. Ibid., para. 79.

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February 8, 2024

Official marks in Canada: The prospect of upcoming changes

Before delving into the topic, let’s begin with a definition. Official marks are statutory instruments specific to Canadian practice. They are not trademarks per se, but are treated similarly, because they are adopted and used by a limited group of organizations including universities, Canadian public authorities and Her Majesty’s Forces.1 In this article, we will be focusing on Canadian public authorities. There are several hundred marks in the Register belonging to public authorities, including the federal and provincial governments, government agencies and municipalities. Unlike traditional trademarks, official marks do not protect specific goods or services, but instead cover all classes of goods and services. They may even be descriptive, as they are not required to be distinctive. Moreover, they are not registered in the usual sense of the word. Instead, a notice of adoption is simply published in the Trademarks Journal. One unique feature of official marks is that they are not subject to a renewal process. They can therefore remain in the Register indefinitely. That being so, official marks may hinder the registration of a trademark filed subsequently, unless the public authority concerned voluntarily withdraws the notice of adoption of its official mark. Lastly, it is important to note that official marks are not subject to examination or opposition proceedings. In other words, the Registrar of Trademarks (the “Registrar”) makes no official verification as to their validity or compliance with the standard registration criteria. Thus, because of the extensive protection afforded to official marks, they appear to be virtually unassailable. But is that really the case? The Registrar considers that they have no discretion to refuse to give public notice of an official mark, unless it has not been registered by a Canadian public authority or such authority has not adopted or used its official mark at the time of filing its application. When the Trademarks Act (the “Act”) was amended in June 2019, trademark professionals were hoping that the criteria providing these marks with extensive protection would be revised. However, Parliament chose not to undertake an in-depth review of the laws governing official marks. That being said, the Office of the Registrar did provide some clarification in October 2020 as to its practice regarding official marks. First, since 2020, the Registrar requires evidence of public authority status. This change was made further to several comments on the questionable status of certain so-called “public authorities.” The decision in Ontario Association of Architects v. Association of Architectural Technologists of Ontario (C.A.), 2002 FCA 218, clearly states that for a body to qualify as a public authority, the government must exercise a significant degree of control over its activities, particularly as relates to its governance and decision-making, and such activities must benefit the public. Given that the laws governing public authorities have been in force for several decades, it is reasonable to assume that many published official marks are no longer held by public authorities or no longer meet the criteria defining a public authority. What is the proper way to respond to an opposition based on the resemblance between an official mark and a trademark? The options are limited. It is important to remember that subsection 9(1) of the Act states that no person shall adopt in connection with a business, as a trademark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for, an official mark. The test is not based on a likelihood of confusion, as is the case when examining the likelihood of confusion between two trademarks. Instead, it is based on resemblance. Trademark professionals may argue that the applied-for mark is not identical or so similar to the official mark as to be confused with it. Another option—mainly in cases where the applied-for trademark is identical or very similar to an official mark—is to seek the consent of the official mark’s owner to use and register the trademark. In some cases, however, contacting a public authority may prove difficult, either because it no longer exists, or because it simply will not respond to requests for consent. Some public authorities ask for financial compensation in exchange for their consent. Can an official mark be contested? For the time being, there is no simple mechanism for contesting an official mark. The process of publishing a public notice of an official mark is not subject to opposition proceedings. Third parties have the option of contesting an official mark by means of an appeal or an application for judicial review to the Federal Court. They may do so in cases where an official mark was not adopted and used before the public notice was issued, or the body in question is not considered a public authority, or the official mark infringes on another mark. However, it should be noted that such proceedings are costly and take time. So what does the future hold? While the laws governing official marks remain essentially intact, some amendments are expected. The Canadian legislative authorities intend to add two new sections to the Act, namely sections 9(3) and 9(4). The purpose of these amendments is to clarify that even where a public notice has been issued concerning an official mark, such notice does not apply if the entity that requested it is not a public authority or no longer exists. In such circumstances, the Registrar may, on their own initiative or at a person’s request, give public notice that section 9 does not apply. Our understanding is that the Registrar will have new powers, including that of requesting—either on their own initiative or at the request of a person who pays the prescribed fee—that a so-called official mark be invalidated should its owner fail to respond to the Registrar’s notice requiring evidence of public authority status. This amendment to the Act should be introduced shortly. On another note, there were some interesting decisions handed down in 2023. KASAP TURKISH STEAKHOUSE & Design: The decision in The Board of Regents of the University of Texas System and EDAM Ltd., 2023 TMOB 161, clearly establishes the limitations of official marks when it comes to assessing the likelihood of confusion between two marks. The Board of Regents of the University of Texas opposed the application for the trademark KASAP TURKISH STEAKHOUSE & Design (hereinafter “Kasap”): in particular, on the grounds that the Kasap mark bore such a resemblance to the official mark of the University of Texas that it could be confused with its official mark as shown below: However, as previously mentioned, when assessing the resemblance between a trademark and an official mark, particular attention is paid to the similarity between the marks. The Trademarks Opposition Board concluded that the applicant’s applied-for mark did not resemble the official mark as to be likely to be mistaken for it, despite the presence of an image of a longhorn cow’s head in both marks. The distinctiveness of the word “KASAP” in the applicant’s mark was deemed sufficient to distinguish the two marks. As such, the opposition was rejected. A mark that includes an official mark along with other elements does not “consist of” that official mark. Via Rail Canada Inc. and Via Transportation, Inc., 2023 TMOB 155 This decision concerns an opposition filed by Via Rail Canada Inc. (the Opponent and owner of an official mark) against a trademark application submitted by Via Transportation, Inc. (the Applicant). The application was for the mark “VIA & Design” as shown below: for use in association with the transportation of passengers and related mobile application software and telecommunication services. The Opponent opposed the application based on an allegation that the mark caused confusion with its trademarks, official marks and trade names containing the word “VIA” and used in association with its national railway services and related goods and services. Ultimately, the Applicant’s application was rejected in part because the Applicant’s mark was not registrable under section 12(1)(e), as it was deemed too similar to the Opponent’s official “VIA” mark, which was likely to cause confusion. The hearing officer summarized the resemblance test as follows in paragraph 106: The resemblance test under section 9(1)(n)(iii) of the Act differs from a standard confusion analysis in that it requires a likelihood that consumers will be mistaken as between the marks themselves rather than a likelihood that consumers will be confused as to the source of the goods or services. In short, the general consensus is that the laws governing official marks in Canada could certainly use a thorough revision, one that would help weed out any marks cluttering up the register of official marks that no longer fit the definition. Examples of university official marks: Université de Montréal (0910712), Universität Heidelberg (0923735), Louisiana State University (0923069). It should be noted that universities are not required to be Canadian to request publication of an official mark. The Armed Forces have adopted several marks on behalf of Her Majesty, including PORTE DAUPHINE (0903172) & Design, SKY HAWKS (0903269) and CORMORANT & Design (0903170). More specifically, we refer to sections 9 and following of the Trademarks Act.

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December 8, 2023

Publicity contests no longer regulated by the Régie des alcools, des courses et des jeux

On June 2, 2021, the Québec government reduced the administrative burden relating to international publicity contests by excluding them from the jurisdiction of the Régie des alcools, des courses et des jeux (the “Régie”). It has now followed suit with all types of publicity contests launched on or after October 27, 20231. In concrete terms, this means that businesses launching publicity contests aimed at Quebec participants after this date no longer have to meet reporting obligations or pay prescribed fees to the Régie. Businesses in all sectors of activity use the well-known marketing strategy of publicity contests to attract new customers and build customer loyalty. Quebec has long been sidelined because of the Régie’s distinct requirements in this respect. For businesses wishing to increase their visibility through such contests, the province’s situation is now equivalent to that prevailing in the rest of Canada. That said, contests launched before October 27, 2023, remain subject to previous requirements—namely the payment of prescribed fees, the posting of a security where required and the filing of a report with the Régie within 60 days of the date on which the winner(s) is (are) declared—if they offer prizes the total value of which exceeds $2,000. We advise you to be careful, however. Despite the eased burden we have mentioned, publicity contests in Quebec must still comply with the requirements of the Criminal Code,2 the Competition Act,3 the Consumer Protection Act4 and the Charter of the French Language,5 as well as applicable privacy, labelling and advertising laws. Bill 17, An Act to amend various provisions for the main purpose of reducing regulatory and administrative burden, S.Q. 2023, chapter 24, sections 75 and following. RSC 1985, c. C-46. RSC 1985, c. C-34. CQLR, c. P-40.1. CQLR, c. C-11.

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November 30, 2023

Advancing Patent Fee Payments in Canada to Avoid Significant 2024 Fee Increases

Canadian patent government fees will increase up to 36% on January 1, 2024. The main fee increases are presented in the table below. Applicants may therefore wish to take certain actions and pay the accompanying fees in Canada by the end of 2023 to benefit from the lower 2023 rates at least in the following circumstances: Early filing of divisional applications may be especially advantageous as they involve high government fees. Retroactive maintenance fees from the second anniversary onward of the parent case are payable when divisional applications are filed, along with the filing fee. Examination fees are also typically paid at divisional filing, as they generally need to be paid within three months of filing the divisional application.1 Applicants who intend to file the national phase of international patent applications in Canada can reduce filing cost by advancing national entry in 2023. Single or multiple future maintenance fees due in 2024 or later in each patent or patent application could be anticipated and paid in 2023. Finally, examination fees due in 2024 or later may also be anticipated in 2023 to benefit from the lower rate. CIPO Fee 2023* 2024* Filing fee $421.02 $555.00 Examination or request for continued examination (RCE) fee $816.00 $1,111.00 Excess claim fee for each claim over 20 $100.00 $110.00 Advanced examination fee $526.29 $694.00 Maintenance fee: 2nd to 4th anniversary $100.00 $125.00 Maintenance fee: 5th to 9th anniversary $210.51 $277.00 Maintenance fee: 10th to 14th anniversary $263.14 $347.00 Maintenance fee: 15th to 19th anniversary $473.65 $624.00 *Undiscounted fees applicable to applicants not eligible for small entity rate Divisional practice is very strict in Canada, in that divisional applications are generally only filed to pursue a non-elected invention that was identified in a lack of unity objection in the parent case.

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