Canada: Competition Bureau Releases Draft Update Of Intellectual Property Enforcement Guidelines

Last Updated: April 9 2014
Article by Colin B. Ingram and Andrea Kroetch

On April 2, 2014, the Competition Bureau ("Bureau") released a draft update of its Intellectual Property Enforcement Guidelines ("IPEGs"), which sets out the Bureau's views concerning the manner in which the provisions of the Competition Act would be applied to conduct involving intellectual property rights. On the same day, the Bureau and the Canadian Intellectual Property Office announced that they have signed a Memorandum of Understanding (MOU) calling for closer cooperation between the two agencies.

The IPEGs were first released in 2000. The update includes revisions to reflect amendments made to the Competition Act in March 2009 and in March 2010 and to bring the IPEGs in line with other Bureau enforcement guidelines released since 2000. The update does not, however, represent a significant departure with respect to how the Bureau approaches the interface between competition policy and intellectual property rights, and the circumstances in which the Bureau may apply the Competition Act to conduct involving intellectual property rights remain substantially the same. Indeed, the only substantive changes to the IPEGs presented in the update address the amendments to the Competition Act made in March 2009 and in March 2010, including the restructuring of certain provisions of the Competition Act implemented by those amendments.

The circumstances in which the Bureau may apply the Competition Act continue to fall into two broad categories: (i) those involving something more than the mere exercise of an intellectual property right, which are addressed in the general provisions of the Act, and (ii) those involving the mere exercise of an intellectual property right and nothing more, which are addressed in a "special remedies" provision of the Act. For those readers who may be unfamiliar with the Bureau's approach, these two categories, and the respective provisions of the Act, are briefly reviewed below.

i. Something more than the mere exercise of an intellectual property right

According to the IPEGs, the mere exercise of an IP right is not cause for concern under the general provisions of the Competition Act. The Bureau defines the mere exercise of an intellectual property right as the exercise of the owner's right to unilaterally exclude others from using the intellectual property. The Bureau views an intellectual property owner's use of the intellectual property also as being the mere exercise of an intellectual property right.    

The Bureau considers that "something more" will occur when intellectual property rights form the basis of arrangements between independent entities, whether in the form of a transfer, licensing arrangement or agreement to use or enforce intellectual property rights, and when the alleged competitive harm stems from such an arrangement and not just from the mere exercise of an intellectual property right and nothing else. As an example, the Bureau describes the situation of a firm acquiring market power by systematically purchasing a controlling collection of intellectual property rights and then refuses to license the rights to others. In such a situation, the Bureau could view the acquisition of such rights as anti-competitive, since the refusal to license others would substantially lessen or prevent competition in markets associated with the intellectual property rights.  

In situations involving "something more" than the mere exercise of an intellectual property right, the Bureau will rely on the general provisions of the Competition Act to address the situation.   

The most relevant general provisions include those relating to criminal conspiracy, refusal to deal, resale price maintenance, exclusive dealing, market restriction and tied selling, abuse of dominant position, anti-competitive agreements or arrangements and mergers.      

ii. The mere exercise of an intellectual property right

Section 32 of the Competition Act provides special remedies specifically directed to the anti-competitive exercise of intellectual property rights. Such remedies are obtained on application to the Federal Court by the Attorney General (on recommendation from the Bureau), and include: declaring any agreement or licence relating to the challenged right void, ordering licensing of the right (except in the case of trade-marks), revoking a patent, expunging or amending a trade-mark, or directing that other such acts be done or omitted as deemed necessary to prevent the conduct at issue.

Section 32 applies where the mere exercise of an intellectual property right unduly limits or restrains trade or lessens competition. The Bureau indicates that conduct will meet this threshold where:

  1. the holder of the intellectual property is dominant in the relevant market;
  2. the intellectual property is an essential input or resource for firms participating in the relevant market - that is, the refusal to allow others to use the IP prevents other firms from effectively competing in the relevant market; and
  3. invoking a special remedy against the IP right holder would not adversely alter the incentives to invest in research and development in the economy, i.e. where the refusal to license the IP is stifling further innovation.

In the draft updated IPEGs, the Bureau states (as it had in the original IPEGs) that only in very rare circumstances would all three factors be satisfied. As an illustrative example, the Bureau notes that all three factors may be present where the intellectual property at issue has become an industry standard (i.e. the intellectual property at issue is indispensable input for competitor's products to be viable alternatives). In such a case, the refusal to grant competitors access to the industry standard, for example, by refusing to license the intellectual property rights to competitors, would prohibit others from making viable alternatives, lessening competition. 

Impact on the exercise of intellectual property rights

To date, intervention by the Bureau in intellectual property matters has been relatively rare. Indeed, the first release of the IPEGs in 2000 was not followed by increased enforcement activity by the Bureau in relation to intellectual property. The relatively modest amendments presented in the draft updated IPEGs might suggest that the updating of the IPEGs alone should not be taken as signaling greater interest on the part of the Bureau with respect to enforcement in this area.  However, this remains to be seen.

Furthermore, it should be noted that the Bureau acknowledges in the IPEGs that in some cases, "anti-competitive" conduct involving intellectual property rights is more aptly addressed by the appropriate intellectual property authority under the appropriate intellectual property statute, such as, for example, where a patent holder indiscriminately asserts the patent over products that do not all fall within the scope of the patent claims. To this end, it is notable that the Bureau and the Canadian Intellectual Property Office have announced that they have signed a Memorandum of Understanding (MOU) calling for closer cooperation between the two agencies.

The Bureau has invited interested parties to provide their views on the draft updated IPEGs by June 2, 2014. We will continue to monitor and report on this topic as it develops.

For further information, please contact Colin B. Ingram or a member of our firm's IP Management & Strategic Counselling practice group

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.

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

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

Authors
Colin B. Ingram
Andrea Kroetch
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.