Originally published Spring 2005. The information contained within this article is only current at the time of writing.
Strategies for International Patent Protection
The Patent Cooperation Treaty (PCT) is an ever more useful tool for clients who want patent protection in a number of countries. Its principal features are that it allows essentially 2-1/2 years from the first filing in relation to the invention (the "priority date") to decide which countries are worth pursuing and it offers the opportunity to resolve objections or potential objections in a single forum instead of country by country. Both of these features have important cost deferral and cash flow advantages for applicants as well as potential for actual cost savings.
There have been a number of important changes to the PCT over the past year or so, too numerous to recite fully here. For example, it is no longer necessary to specifically designate PCT member countries (virtually all countries of "normal" interest – Taiwan is the most important non-member.) All 120+ member countries are now automatically designated.
One of the most important changes is that the deadline for "national phase entry" is now automatically 30 months (31 months in some countries) after the priority date, for virtually all countries. Formerly, one had to elect International Preliminary Examination by the 19th month to defer national phase entry to 30 months. Thus the decision as to whether or not to elect International Preliminary Examination now properly turns on whether or not examination would be advantageous, not on whether or not further cost deferral is desired. Clients should now request International Preliminary Examination in any case where: (a) an early objective indication of the likelihood of a patent being granted is important; e.g., to potential investors; (b) the International Search Report or other factors indicate that there are likely to be significant objections to granting a patent, and there is a reasonable chance that those can be resolved in the international forum instead of country by country later.
Another important change, for Canadian applicants, is that the Canadian Intellectual Property Office is now a designated International Searching Authority, so international applications are no longer just filed in Canada, but also processed in Canada.
Patent Fees – One Strike, Your Patent’s Out
On May 5, 2005, Bill C-29 was passed; it is intended to remedy some of the effects of the strict application of patent fee payment laws. A recent series of decisions highlighted the need for strict compliance with the Canadian requirements for patent fee payments. For example, the Federal Court had most recently held a patent invalid where the patentee had incorrectly paid the filing fee applicable to a small entity, but was allowed by the Commissioner to top up the filing fee to that of a large entity outside the reinstatement period (Johnson & Johnson et al. v. Boston Scientific  FC 1672). Bill C 29, was introduced into Parliament on December 3, 2004 and provides a one year window in which to correct an incorrectly paid small entity fee, irrespective of when the incorrect fee was paid and of any pending actions or other proceedings in relation to the patent or patent application affected. However, it does not provide any continuing relief for incorrectly paid fees of any kind and, therefore, does not address the continued onerous effect of Canadian patent fee payment laws. Bill C-29 has not yet come into force and it is speculated that it will not do so until 2006.
$458 Million Damages Award for Spinning Off Patent Liability
Weyerhaeuser Co. has been ordered to pay $458 million in damages (plus attorney’s fees and interest) to the bankruptcy estate of Paragon Trade Brands, a spin-off company to which Weyerhaeuser sold assets, including diapers, in 1993 at the time Paragon went public. Weyerhaeuser received more than $200 million in proceeds from the IPO. The bankruptcy estate argued that Weyerhaeuser knew its diapers infringed third party patents, but had warranted otherwise. Weyerhaeuser’s diapers featured a patented inner leg cuff that the company did not have license to use. Paragon’s use of the patented technology resulted in two patent infringement lawsuits against Paragon by Procter & Gamble and Kimberly-Clark Corporation, respectively. The $279 million damages award, in favour of P&G, and the injunction issued against Paragon in late 1997 set in motion Paragon’s bankruptcy filing in late 1997. "The gravamen of Weyerhaeuser’s liability is that, in addition to the funds Weyerhaeuser received in connection with the IPO the primary benefit of the bargain to Weyerhaeuser was divorcing itself from what it knew to be an enormous potential patent infringement liability that was substantially certain to occur," the judge wrote in her ruling. Instead of paying the royalties in 1992, Weyerhaeuser’s strategy was to postpone the inevitable. In her opinion, Judge Murphy warned that rewarding Weyerhaeuser’s strategic divestment by limiting damages would encourage other large corporations to evade liabilities by transferring assets to a subsidiary and divesting themselves of their liability-laden subsidiaries.
Government of Canada Announces Upcoming Amendments to Copyright Act
On March 24, 2005, the Government of Canada released a Statement outlining proposed amendments to the Copyright Act that will address the challenges and opportunities of the Internet. The Government intends to introduce legislation later this spring that will implement the provisions of the 1996 World Intellectual Property Organization (WIPO) Treaties, clarify liability for Internet service providers, facilitate the use of the Internet for educational and research purposes, and harmonize the treatment of photographers with that of other creators. Soon after tabling of the bill, the
Government will open consultations for additional public input and consideration. The proposed amendments represent a significant step in updating copyright laws. Consultations on additional issues of concern are expected to take place as soon as possible after the bill is tabled. A copy of the government’s Statement, as well as a series of frequently asked questions, is available at http://strategis.ic.gc.ca/epic/internet/incrp-prda.nsf/en/HOME, http://strategis.ic.gc.ca/epic/internet/inippd-dppi.nsf/en/home, and http://pch.gc.ca.
Private Copying Levy Re-affirmed in Canada
The Federal Court of Appeal recently ruled that Canada’s private copying levy is not a tax and is, therefore, constitutional (Canadian Private Copying Collective v. Canadian Storage Media Alliance et al.,  FCA 424). The Court also upheld the Canadian Copyright Board’s decision to declare the Canadian Private Copying Collective’s (CPPC) zero-rating system illegal.
The Federal Court of Appeal recently ruled that Canada’s private copying levy is not a tax and is, therefore, constitutional (Canadian Private Copying Collective v. Canadian Storage Media Alliance et al.,  FCA 424). The Court also upheld the Canadian Copyright Board’s decision to declare the Canadian Private Copying Collective’s (CPPC) zero-rating system illegal. It also struck down the application of a levy to digital audio recorders, like the Apple iPod, because the levy was improperly applied to a device rather than a medium. At the time of the initial implementation of the private copying levy, CPCC introduced a zero-rating program permitting manufacturers and importers to sell blank audio recording media to certain categories of users without having to pay the levy. These included religious organizations, broadcasters, law enforcement agencies, courts, tribunals, court reporters, provincial ministers of education and members of the Association of Universities and Colleges of Canada, music and advertising industries. CPCC’s initial zero-rating program applied to audio cassettes tapes, CD-R Audio, CD-RW Audio and MiniDiscs.
Jewellery Designs May Be Entitled to Copyright Protection
Section 64 of the Copyright Act exempts the reproduction of a design that is applied to a useful article from copyright infringement where more than fifty articles are produced. In an appeal of a decision granting summary judgment against a plaintiff claiming copyright infringement of its jewellery designs, the Federal Court of Appeal held that it was not clear that there was no genuine issue to be tried in this case and ordered a trial (Pyrrha Design Inc. v. 623735 Saskatchewan Ltd. (c.o.b. SpareParts),  FCA 423). The Appeal Court held that the issue of whether jewellery was "useful" (for the purposes of the Copyright Act) had not been litigated in Canada and that significant consequences would flow from that determination. In order to make such a decision, more evidence of the "usefulness" of specific items of jewellery was required, including evidence from the artistic and cultural milieu. The Court indicated that some jewellery might be functional (and protectable only under the Industrial Design Act) while other jewellery might be purely ornamental (and subject to copyright protection).
Clearly Descriptive When Sounded
In a recent Practice Notice, the Trade-marks Office stated that it will object to a design mark as being clearly descriptive when sounded if the word elements are clearly descriptive and the word elements are considered to be the dominant feature of the mark. The interpretation of this test has changed since the initial draft was presented in November 2004 in that the Trade-marks Office will now consider the inherent distinctiveness of the design element. For example, a crest may be considered more inherently distinctive and, therefore, the words may be considered less dominant, than a design component comprised merely of underlining. The Trade-marks Office also stated that in order to rely on section 14 to overcome the "clearly descriptive" objection, the mark as registered and used abroad must be the same as the one for which registration is being sought in Canada; i.e., the foreign registration of a word mark will not support an application for a design mark in Canada.
Fair Use Does Not have to Negate Likelihood of Confusion
The U.S. Supreme Court has recently held that a party raising the affirmative defence of fair use to a claim of trade-mark infringement does not have to negate any likelihood of consumer confusion about the origin of the goods or services affected. While the Court stated that the statute is silent on the likelihood of confusion in laying out the elements of the statutory fair use defence, it also held that confusion may be relevant in assessing fair use. KP Permanent Make Up Inc. v. Lasting Impression I Inc., SupCt, No. 03-409, December 8, 2004.
The Fate of Famous Marks in Canada
The Supreme Court of Canada (SCC) has granted leave to hear an appeal of the Federal Court of Appeal’s decision in Veuve Clicquot Ponsardin v. Les Boutiques Cliquot Ltee. (2004 FCA 164). The well-known manufacturer of champagne in suing the owner of six women’s retail clothing stores that operate under the names CLIQUOT and LES BOUTIQUES CLIQUOT for trade-mark infringement, passing off and depreciation of goodwill. both lower Courts had found that there was no likelihood of confusion between the parties’ wares and services and referred to the Federal Court of Appeal’s 1998 decision in Pink Panther Beauty Corp. v. United Artists Cort. ( 3 F.C. 534), in which no likelihood of confusion was found between the famous THE PINK PANTHER movies and PINK PANTHER hair and beauty care supplies and services. While the SCC had granted leave to hear an appeal in the Pink Panther case, the parties settled and owners of famous trade-marks have been awaiting the SCC’s pronouncement on famous marks since.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.