Canada: Intellectual Property Disputes: A Brief Overview

Last Updated: October 16 2003

Article by Andrew Shaughnessy and Conor McCourt

Reprinted with permission, Biotechnology Focus, September 2003

Consider this: you are the business development manager of a small biotech company with responsibility for commercializing your company’s technology. Your breakthrough product has recently emerged from successful Phase III clinical trials and has been protected since its infancy with patent applications across the world. You are at the crossroad of a number of critical decisions: Do you seek out capital to "go it alone" with the product? Do you feel out joint venture partners who will be compatible with your seed capital investors? Or do you locate and sell out to a third party who can take the product forward?

It is late Friday afternoon at the start of a long weekend and you are alone in your office; your key scientific staff has just departed for a technical conference overseas. A fax arrives from the lawyer of a competitor, alleging that your new product infringes a patent that the competitor has recently acquired from an obscure Australian university. (The inventor had the good sense and fortune to file for patent applications throughout the world, including Canada and the United States.) The writer kindly faxed a copy of the patent, but you cannot read it because of your depleted toner cartridge. The writer has suggested that you give her a friendly call by next Friday to explore licensing opportunities, failing which she will refer the matter to litigation counsel.

What Do You Do?

If your reaction is typical, you will:

1. try to obtain a better copy of the patent by visiting the Canadian and U.S. patent offices’ Web sites, (at "Licences, Legislation" and "Patent Database") and;

2. while visiting the patent databases, type in keywords from claim 1 of the patent indicated in the letter — such as "nucleic acid" and "transcription" — in searching how many other similar patents there might be, only to find a vast, unintelligible array of patents and patent applications;

3. contact your company’s patent agent or lawyer to ask what impact the competitor’s patent might have on your patent applications;

4. contact your internal or external counsel asking how to respond; and

5. think about your company’s business plan and a risk analysis model to determine the options you must avoid and those you can afford.

As you cope with your weekend being ruined, you crave certainty — good, accurate information and answers to the following questions.

1. Who is this threatening competitor? Can it afford litigation? Can it "afford" not to grant a licence? Is it looking for exclusivity or a cross-licence? Is it a potential purchaser of your company?

2. How strong is the patent?

3. What can you do to invalidate the patent?

4. If you get sued, how long will it take, where will you be sued and how much will it cost?

5. If you lose, what is your worst-case scenario on liability and exposure?

6. Can this be resolved quickly and quietly, without scaring away potential investors?

7. How will you handle this dispute internally (minimizing the disruption on employee morale) and externally (combating any potential bad press)?

As you study this list, you quickly realize that the key determinant is the strength of the patent right being asserted. A patent is granted to protect new and useful inventions. In exchange for full disclosure of the nature of an invention, including how to make it, a patentee is given a period of exclusivity to enjoy the reward for making the invention known. If a patent is strong and broad, its owner can use it to lawfully block market entry into the field that the patent covers. However, a patent that is narrow in scope will enjoy little exclusivity, and there may be grounds to invalidate it. For example, the subject matter of the patent may not be new: it may have been published, in use or on sale long before the patent application was initially filed. Or the invention may be obvious: a person skilled in the field of science to which the patent is directed would say, "Any fool could have done that." Understanding the scope and validity of a patent — especially in the field of life sciences — is not easy.

First, it is common in the area of biotechnology for a person of ordinary skill in the art to be a scientist with a PhD and a couple of years of relevant experience. That was the standard employed in a U.S. case, Enzo Biochem Inc. vs. Calgene Inc. As in that case, one often needs to consult with very skilled scientists to understand biotech patents.

Second, patent construction — what do the patent claims mean? — is a matter of law for judges to decide. As such, you need a capable lawyer to interpret the patent through the prism of an appropriate expert.

Third, the patent and the infringing product are rarely identical — were they, an infringement analysis could be readily done. If the product contains all the elements of the claimed invention, then the product literally infringes. However, most often, allegedly infringing products omit elements or use variants. In Canada, a patent is interpreted by a person skilled in the art to determine whether particular claim elements are essential or nonessential. If all essential elements are copied, there is infringement, even if non-essential elements are omitted or substituted with variants.

Fourth, in this age of biotechnological advancement, technical literature and patent filings for even simple technology are expanding exponentially, making the task of determining validity difficult. To perform a validity analysis, one must understand the state of common general knowledge in the particular field of science. This, again, will often require the assistance of experts, because of the magnitude of technical literature and patent sources, many of which are written for scientists with advanced degrees. This can be daunting — especially when performed in response to a pending cease-and-desist letter. It is also an expensive task, often costing many tens of thousands of dollars for a review of the validity of a single invention.

Your legal advisor will also tell you about your choices in litigation. You will be told that patent litigation is expensive in Canada — and even more so in the United States, where the discovery process can be disruptive and intrusive. Your legal advisor will also tell you that litigation should be a tool to be used as leverage to achieve a business purpose. Knowing that, you also know from past experience that litigation can take on a life of its own. You resolve that you will initiate litigation only if you are prepared and committed to see it through to trial, and if all settlement or negotiation options fail. You understand that you have an option to sue first to impeach the patent, although this is likely not an option of first resort.

At the end of this exercise, you will not find certainty. You will find that your legal advisor can only inform you of the likelihood of infringement or validity. Because of the uncertainty associated with litigation, very few lawyers will give you an opinion with absolute certainty. Even a strong case has to be presented to a judge with precision and clarity to ensure that important subtleties in the science and the evidence are understood. For example, in the erythropoietin litigation in the United States, Amgen Inc. vs. Hoechst Marion Roussel Inc. and Transkaryotic Therapies Inc., the chief justice of the United States district court for the district of Massachusetts, after presiding over a 23-day trial, wrote:

"As an aside, it is only just to note that this case has been presented with high integrity, and unswerving fidelity to court rules and procedures, and a consummate excellence in trial practice that makes it a model not only for the intellectual property bar, but for lawyers everywhere. Any failings in misunderstanding are mine, and mine alone."

Notwithstanding the advocates’ skill and Chief Judge Young’s willingness to understand, Judge Young’s decision is roughly 100 pages long and ends with an admonition:

" . . . it is appropriate to reiterate that it truly has been an honour to have presided over a case litigated with such skill, intelligence, and integrity. The attorneys have done an extraordinary job in teaching the Court many of the nuances of both this challenging area of law and the rather complicated realm of science. Litigation, however, is a rather rough-edged zerosum enterprise . . . " (emphasis added).

At best, then, the legal opinion (prior to litigation) will allow you to develop risk factors for your decision-making business model and manage a potentially rough-edged process.

Concomitant doubt and uncertainty compels most litigants to earnestly seek out settlement opportunities — such as structuring a deal to cover the attendant risks while still allowing the pursuit of a business objective. In many instances, the parties require some form of process to inform the debate and impose decision points. Sometimes, parties need to have a sense of whether they would win or lose a particular issue before compromising. With this in mind, parties are considering a number of alternatives:

1. Mediation: employing a flexible structure and process to facilitate discussion among the parties — popular among those who wish to maintain control over a purely consensual and voluntary process, which can also lead to creative solutions. The selection of the mediator is key. Some clients prefer mediators who are skilled in a particular field of science, while others prefer those who have tried cases. A truly effective mediator is one who can help the parties get beyond a mere exchange of positions so that they can reflect on their mutual interests and explore settlement opportunities.

2. Arbitration: using a neutral third party to make a decision — popular because it can be conducted confidentially, safely away from the prying eyes of competitors. The parties can also agree, in advance, to matters of procedure and substantive law. For example, one might say, "I’ll give you limited U.S.-style discovery if you give me a U.K. standard of obviousness." Moreover, the parties may agree to contest all issues (for example, disputes in Canada, the United States, the United Kingdom and Europe) for all time in one hearing. The naysayers will say that sophisticated arbitral proceedings — especially those relating to inventorship, validity, infringement and ownership of trade secrets — can be very expensive. Indeed, arbitration can be just as expensive as litigation; however, arbitration can be costeffective if the parties work at the outset to narrow the issues to be decided and resolve to live with the decision. For example, if a case stands or falls on a particular claim interpretation, putting that sole issue to the arbitrator can be cost-effective.

3. Hybrids: using some form of process to get an early determination of a critical issue. In many cases, the parties need some type of formal exchange of information to understand the relative merits of a dispute before they can consider settlement. This often requires the instigation of a lawsuit, but, as with the arbitration example, the parties agree that a critical decision will determine the outcome. For example, in the United States, the scope of patent claims is determined during a Markman hearing, before factual issues are put to a jury. If the Markman hearing is done early, important issues can be resolved before the parties’ intransigence develops. The Markman hearing is a recent addition to Canadian practice, although the decision that introduced it into our jurisprudence is currently under appeal. Some parties are opting for mini-trials and early neutral evaluation (both available under the Canadian Federal Court Rules revised in 1998). The obvious purpose of these exercises is to evaluate how the case would be decided, were the case to proceed to litigation, without the concomitant expense.

Before you respond to the threatening letter, it is hoped that your legal advisor, while unable to give you a sense of certainty on the merits of the dispute, has informed you of your options so you are confident in working through the business model that will help you decide the course that your company should follow. You will likely opt for the course that will allow you to control and manage your expectations and options — hoping for the best, while preparing for the worst. Once the dispute is under control in the sense that you understand the risks and can chart a course to a speedy outcome, the answers to all of your questions, scribbled down quickly on that frantic Friday evening, will be readily apparent.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions