CANADA’S BUDGET 2021
On April 19, 2021, Canada tabled its first Budget in two years. The budget titled A Recovery Plan for Jobs, Growth, and Resilience is clearly responding to the economic impacts of the pandemic on many sectors across the country. The Budget includes new IP related programs, the details of which are to be worked out over the next several months as the government seeks to create action plans to implement the strategy.
The following is a brief summary of the IP related programs that were announced in Budget 2021.
IMMEDIATE EXPENSING OF IP
Allow immediate expensing of up to $1.5 million of eligible investments by Canadian-controlled private corporations made on or after Budget Day and before 2024. Eligible investments will cover over 60 per cent of capital investments typically made by Canadian-controlled private corporations.
This incentive targets short- and medium-term capital investments that can accelerate our recovery. This includes investments in a broad range of assets, including, helping to further incentivize businesses to transition to a more productive, knowledge-intensive economy and will include digital assets and intellectual property.
These larger deductions will help businesses—particularly small and medium sized businesses—by making it more attractive to invest in assets that drive growth. Larger deductions will also free up capital that businesses can use to create more good middle class jobs.
SUPPORT USE OF IP BY SMALL BUSINESSES
To make sure small business and independent entrepreneurs can access the capital they need to recover, innovate, and grow in the long-term Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses. They include:
- expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses
- increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
- Expanding borrower eligibility to include non-profit and charitable social enterprises.
- Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.
PROMOTING CANADIAN IP SERVICES
To further support Canadian innovators, start-ups, and technology-intensive businesses, Budge 2021 proposes
- Spending $90 million, over two years, starting in 2022-23, to create ElevateIP, a program to help accelerators and incubators provide start-ups with access to expert intellectual property services.
- Spending $75 million over three years, starting in 2021-22, for the National Research Council’s Industrial Research Assistance Program to provide high-growth client firms with access to expert intellectual property services.
These direct investments will be complemented by a Strategic Intellectual Property Program Review that will be launched by the Government. It is intended as a broad assessment of intellectual property provisions in Canada’s innovation and science programming, from basic research to near-commercial projects. This work will make sure Canada and Canadians fully benefit from innovations and intellectual property.
Moffat & Co. will stay involved in the process and continue to keep you updated on the developments. Please contact us should you have questions or want to learn more.
SAINTA T-shirt Challenge – we challenge you to submit photos of you (or your significant other) wearing a Moffat & Co. SAINTA t-shirt. To get you started, click here to view a few of our colleagues wearing their selected attire. Please submit your photos to Andy Jarzyna at email@example.com. All photos will be posted on the SAINTA T-Shirt Challenge page, so please bookmark and check back often to experience the joy.
“No challenge” clauses called into question in Canada –
Ontario Superior Court finds such clauses are not in the public interest, and should not be enforced
An interlocutory decision from the Ontario Superior Court could have far-reaching implications for IP licensing and the settlement of IP disputes in Canada.
Earlier this year, the Ontario Superior Court declined to issue an interlocutory injunction in Loops, LLC v. Maxill Inc., 2020 ONSC 971. The Court’s reasons for doing so could have a substantial impact in the area of “no challenge” clauses, contractual clauses often included in IP license agreements and in settlements of IP disputes.
“No challenge” clauses purport to bind one party to an agreement not to challenge the validity of the other party’s intellectual property rights. The clauses appear routinely in IP license agreements, (preventing the licensee from challenging the validity of the rights they are licensing), trademark co-existence agreements (preventing each party from challenging the validity of the other’s trademark registrations), and in many other contexts within the IP world. These clauses have received judicial consideration in other jurisdictions, particularly the United States, but to date the issue of whether “no challenge” clauses are enforceable has not been considered by the courts in Canada.
The history between the parties in this case is long, and rather complex. The parties, who are both in the business of toothbrushes, had previously settled a patent infringement dispute between them. As part of that settlement, Maxill agreed to a “no challenge” clause, namely, that it would not directly or indirectly assist any person in attacking the validity of Loops’ patents for the relevant invention, in any country.
After finalizing the agreement, Maxill set out to “design around” Loops’ patent, and released a new toothbrush product that it believed did not infringe. Loops disagreed, and commenced an action to enforce its settlement agreement with Maxill before the Ontario Superior Court. Loops also sued Maxill in the United States for infringement of its equivalent patent in that country.
In response to the US infringement action, Maxill denied that it infringes Loops’ US patent, and denied the patent’s validity. Importantly, Maxill did not seek an order cancelling Loops’ patent because of the alleged invalidity. It simply denied that it was infringing Loops’ patent, and denied that the patent was valid in any event. However, since Maxill had agreed to a “no challenge” clause in its settlement agreement with Loops, Loops sought an injunction from the Ontario Superior Court to prevent Maxill from denying the patent’s validity before the American courts.
The Court declined to issue the injunction for several reasons. The most significant of these was the Court’s finding that the “no challenge” clause in the Loops / Maxill settlement agreement is not reasonable in the public interest, and is not enforceable. The Court found that, to preclude a defence to patent infringement for the personal gain, profit or protection of one party to an agreement would run counter to the proper administration of justice, regardless of the consent of the other party to that agreement. In contracts that contain “no challenge” clauses, the price paid by one party is access to a potentially valid legal position that has potential to affect the public at large, since the patent claims can be enforced against any infringer so long as they are deemed valid. The Court found that this price was simply too high if public trust and confidence in the administration of justice are to be maintained.
Accordingly, the Court’s view appears to be that “no challenge” clauses should not be enforceable as a matter of law. This is a significant development in Canadian contract law, as no Canadian court had previously found such provisions to be unenforceable, and in practice, IP-related agreements such as settlements and licenses routinely include such clauses.
It is significant that Maxill only asserted invalidity as a “shield”, in defence of an infringement action, and not as a “sword”, seeking an order that the patent be cancelled. It means that the door may still be open for “no challenge” clauses that prohibit the use of validity challenges as a “sword”.
But for the moment, the view of Ontario’s primary trial court is clear. Contractual provisions limiting a party’s ability to assert invalidity as a defence to IP infringement are not in the public interest, and should not be enforceable.
Written by Jaimie M. Bordman
Changes to Late National Phase Entry
When filing a National Phase of a PCT application in Canada, you need to be aware of the following changes to the Patent Regulations for late entry:
- If the International Filing Date is before October 30, 2019, the deadline for national entry is 30 months from the earliest priority date – or 42 months from the earliest priority date with payment of a $200 late entry fee (no change from current practice).
- If the International Filing Date is after October 30, 2019, the deadline is still 30 months from the earliest priority date. However, there are new restrictions for late entry after the 30-month deadline and up to 42 months from the earliest priority date. The applicant must now:
- explicitly request reinstatement of rights
- provide a statement that the reason for failure to enter the national phase by the 30-month deadline was unintentional
- pay the $200 late fee
Our understanding is that the Canadian Patent Office will not require anything more than a statement that the failure to meet the 30-month deadline was unintentional – that is – no detailed reasons will be required. Nevertheless, we recommend that if you have clients that wish to enter the national phase in Canada, you inform them that the 42-month late entry deadline should NOT be relied on or used to purposely extend the 30-month deadline.
Restoration of Priority
With the changes that came into effect on October 30, 2019 applicants may now restore the right of priority within 2 months of the filing date in Canada. However, if the right of priority is restored during the International Phase, it will not be deemed restored in Canada unless the international filing date is on or after October 30, 2019.
Canadian Patent Law – Adjusting to New Practice.
Janice G. Kelland explains recent developments in Canadian Patent Law.
The 30th of October 2019 was a red-letter day for Canadian patent law. Amendments made to the Canadian Patent Act in 2014 and 2015, and the completely re-drafted Canadian Patent Rules registered in July 2019, came into force on that day, bringing substantial change to Canadian patent practice …
We are pleased to confirm that on February 8, 2019, Bill Morneau, Minister of Finance, announced the appointment of Susan Beaubien as a Permanent Member of the Canadian International Trade Tribunal (CITT), for a 5 year term commencing March 4, 2019. The CITT is recognized in Canada and around the world as a centre of excellence in the fair and timely adjudication of trade law matters.
The appointment was made on February 5, 2019 by Order in Council.
The CITT is an independent quasi-judicial adjudicative body reporting to Parliament through the Minister of Finance.
It conducts injury inquiries into dumping and subsidy complaints; hears appeals of decisions of the Canada Border Services Agency and the Canada Revenue Agency; inquires into complaints by potential suppliers concerning procurement by the federal government covered under various trade agreements; conducts safeguard inquiries; and provides advice to the Government and/or to the Minister of Finance on economic, trade and tariff issues.
Susan will be retiring from private practice and leaving Moffat & Co., effective March 1, 2019. We wish her all the best in her new career.
Update on Blacklock’s Mega Motion of December 12, 2018.
The hearing of Blacklock’s 3000 page mega motion in its copyright infringement action against the Attorney General took place on December 12, 2018. Howard Knopf attended . Click here for Howard’s overall impression.
Plant Breeders’ Rights for Cannabis in Canada.
On October 17, 2018, recreational marijuana became legal across Canada, joining the already legal medicinal marijuana. As a result, many individuals and companies are keen to create new varieties of Cannabis for sale and are interested in protecting these new varieties.
However, there are still no definite rules for the examination and evaluation of these varieties, and many questions surrounding how this can be done, considering that cannabis is still prohibited in most countries. Even in Canada there are numerous restrictions. In fact, since marijuana has its circulation or transportation banned, many breeders are choosing to do asexual reproduction rather than seed propagation. In light of that, Ashley Chu and Eduardo Fonseca have prepared an article addressing important information about the current scenario of protection and problems and possible solutions for current and future breeders.
The article has been published by the CIOPORA, the International Community of Breeders of Asexually Reproduced Ornamental and Fruit Plants, on its website. CIOPORA is the most important Plant Breeders’ Rights (PBR) / Plant variety protection (PVP) association bringing together 125 plant breeders, national breeder associations, patent attorneys and Intellectual Property consultants from 25 countries. The article will also be included into the next newsletter issue for all members.
You can read and download the publication here: https://www.ciopora.org/single-post/2018/12/12/Canada-Road-to-Plant-Breeders%E2%80%99-Rights-for-Cannabis
Moffat & Co. are happy to participate in the Elgin Street Courthouse Angel Program again in 2018! The gifts are for needy children in our community.
Moffat & Co. was honoured to co-host a dinner reception with the Consul General of Canada, Mrs. Evelyne Coulombe, at her Official Residence in Rio de Janeiro, Brazil, on November 30, 2018.
The reception took place a few days after the Inter American Intellectual Property Association (ASIPI) annual meeting, also held in Rio, which was attended by our partners Eduardo Fonseca and James Palmer. The dinner was a great opportunity to celebrate with the firms and companies from Rio who have entrusted their business to our firm. It was also a chance for all the participants to discuss future cooperation and partnerships. The Canadian Consulate in Rio is very active in the development of business relations between Canadian and Brazilian entrepreneurs. Moffat & Co. is pleased and proud to successfully assist these entrepreneurs and we hope that these partnerships endure.
Follow Up on Bill C-86 – The Omnibus Bill that Amends Canadian IP Law.
Bill C-86 has already been given second reading and is at the Finance Committee of the House of Commons. Yesterday, November 7, 2018, in the Finance Committee, there were about 10 minutes in total testimony by Grant Lynds, past President of the Intellectual Property Institute of Canada …
Massive Canadian IP Law Reform in a Budget Bill – Throwing Parliamentary Scrutiny Under the Omnibus Bus with Bill C-86.
Bill C-86, which was given first reading on October 29, 2018, is 884 pages long. It is an omnibus budget implementation bill that touches innumerable unrelated issues and amends dozens of acts …
On September 14, 2018 the Supreme Court of Canada held that An ISP can recover its costs of compliance with a Norwich order, but it is not entitled to be compensated for every cost that it incurs in complying with such an order. Recoverable costs must be reasonable and must arise from compliance with the Norwich order. Where costs should have been borne by an ISP in performing its statutory obligations under the notice and notice regime, these costs cannot be characterized as either reasonable or as arising from compliance with a Norwich order, and cannot be recovered.
Two New Copyright Board Appointments: Nathalie Théberge and Adriane Porcin.
More from Howard Knopf On Mass Copyright Litigation in Canada – Part II.
American NAFTA Inconsistency Re Copyright Term Extension – And Why This Issue Matters Bigly & Involves Billions.
More from Howard Knopf On Mass Copyright Litigation in Canada – Part I.
James Palmer has prepared a discussion paper on how upcoming changes to the Trademarks Act may impact dealings with the Canadian Intellectual Property Office (CIPO), titled A Modernized Trademark Regime for Canada. The following is brief excerpt from the introduction:
In 1954 Canada brought into force the current Trademarks Act that broke with many of Canada’s longstanding traditions concerning the registration of trademarks. One of the more controversial changes was the acceptance of applications based on proposed use! After more than 60 years of loyal service to Canadians the venerable ‘54 Act is about to be retired and replaced with an Act that will again shake up the trademark community.
After years of extensive consultations with industry, trademark owners and trademark practitioners, a new Trademarks Act was adopted in 2014 thereby completing the first stage of modernizing the Canadian trademark system.
Stage two of this process was completed earlier this year with the release of a draft of a new Trademarks Regulations. The goal is to complete final revisions this summer and have a final version ready for adoption in the fall of 2018.
The final stage of this transition will be an upgrade of the Trademarks Office IT system which is required to handle the very significant changes that the modernized trademark system will introduce. CIPO has recently made it known that the new Act and Regulations are to be implemented in early 2019 however, the specific date will remain a mystery until CIPO completes the update of the IT System.
In addition to the implementation of a new Trademarks Act and Regulations, Canada will implement the Madrid Protocol, adopt the NICE Classification System and adhere to the Singapore Treaty.
The full paper is available here.
EXCESS COPYRIGHT: Some Notes from Howard Knopf About Recent Developments at the Copyright Board of Canada – click Learn More
Macera & Jarzyna LLP Celebrates 40 Years in Business.
It was July 1978 when Andy Jarzyna and John Macera got together and opened shop in Canada’s capital city, Ottawa. Since then, Macera & Jarzyna LLP has become known internationally and at home for its excellence and specialization in Intellectual Property.
Andy Jarzyna (1978) John Macera
Macera & Jarzyna, LLP is a firm of barristers and solicitors, specializing in Intellectual Property disputes and litigation. The firm works side by side with Moffat & Co., a firm of patent and trademark agents, specializing in the preparation, filing and prosecution of Patent, Trademark, Industrial Design, Copyright and Plant Breeders Rights applications in Canada and around the world. Macera & Jarzyna, LLP has developed a reputation as one of the country’s leading intellectual property boutiques. Congratulations Macera & Jarzyna LLP. Job well done.
Mediatube Corp. v. Bell Canada – Federal Court of Appeal – A company called Media Tube sued Bell Canada for patent infringement with respect to technology pertaining to Bell Fibe TV. Bereskin & Parr acted for Media Tube. Media Tube lost at trial (decision dated January 4, 2017) and appealed.
On its appeal, Media Tube (now represented by Aitken Klee) tried to amend its notice of appeal to add “ineffective assistance by trial counsel” as a ground of appeal. According to Media Tube, Bereskin was concurrently acting for Microsoft whose software was used in the allegedly infringing system used by Bell. This apparent conflict caused Bereskin to “pull its punches” in its representation of Media Tube in order to avoid harming the business interests of Microsoft and advance those of Bereskin (keeping Microsoft happy as a client). Or so Media Tube claims.
Media Tube also sought discovery of Bereskin & Parr in order to ascertain the full extent of the conflict.
The Court of Appeal (Justice Stratas), on June 26, 2018, dismissed Media Tube’s motion. Ineffective assistance of counsel is sometimes used in a criminal context – it is exceptionally rare to be found in civil cases. Media Tube needed to show:(1) the existence of an actual (not “apparent”) conflict and (2) and that the conflict adversely affected counsel’s performance at trial – it is not necessary to show that the outcome would have been different.
Here, Bereskin had filed trademark applications for Microsoft. Justice Stratas was not satisfied that trial counsel knew of this work or that it would have been enough to constitute an actual conflict.
In answer to Media Tube’s complaint that it needed to discover Bereskin in order to get all of the details, the judge observed (not surprisingly) that there is no provision for discovery before an appellate court. He went on to say that Media Tube still had the option of suing Bereskin “for negligence, breach of fiduciary duty, or both in the provincial superior court” where full discovery would be available. If Media Tube succeeded, it could recover from Bereskin (or its insurers) any amounts awarded against Media Tube in the Federal Court action and/or seek to have the Federal Court judgment set aside.
The judgment is here:
Review prepared by – Susan Beaubien
From May 28 to June 1, 2018, Howard Knopf attended the 36th World Intellectual Property Organization (WIPO) Standing Committee on Copyright and Related Rights held in Geneva, Switzerland on behalf of the Civil Society Coalition. Howard made the following submissions – one – two.
On June 19, 2018, Howard Knopf and Joe Ulvr attended Canada in International Law: At the Inflection Point, sponsored by The Centre for International Governance Innovation. The conference explored the challenges Canada faces in contributing to shaping global rule of law. The conference coincided with the launch of CIGI’s latest publication Reflections on Canada’s Past, Present and Future in International Law in which Howard Knopf contributed a chapter.