Patent Ownership in Canada

By Colleen Spring Zimmerman¹ and Ziad J. Katul²

Inventors, Applicants and Owners

This article deals solely with the Canadian Patent Act and laws on this topic.

All patent rights in Canada derive from the rights of the inventor(s). The term "inventor", however, is not defined in the Patent Act. An inventor must be: (i) the person who first conceives of a new idea or discovers a new thing that is the invention; and (ii) the person that sets the conception or discovery into a practical shape. Where a person is directed to engage in a purely mechanical act for the purpose of testing whether an invention will work, in circumstances where "[t]he whole train of ideas put into motion . . . were those of others", the person is not to be treated as an inventor. If a person merely verifies another’s previous predictions, the person is not an inventor.

Only the inventor or the inventor’s legal representative (e.g., assignee) can apply for a patent. Where there is more than one inventor, every inventor is entitled to be named in the patent application.

Canadian courts have been reluctant to declare a patent invalid where the mistake in naming or missing an inventor was made in good faith and without an intention to mislead. Similarly, failure to name a co-inventor in an application may not constitute a material representation that results in the patent’s invalidity. Also, a patent may still be issued even if a co-inventor refuses to join in applying or has disappeared.

While an invention, an application or a patent can be assigned, inventorship cannot. In other words, the inventor will always be listed as such on a patent irrespective of who the ultimate owner is. An assignee should always promptly register its assignment with the Patent Office because, until an assignment is registered, it can be defeated by a subsequent assignment that is actually registered.

In Canada, co-owners can independently use a patented invention. However, any form of disposition of a partial interest in a patent, which has the effect of diluting the interest of the other co-owners, must be subject to their control, which can be exercised by their right to withhold their consent to that partial disposition. In other words, while a co-owner can assign his entire right in a patent, consent is required for a partial disposition (or complete disposition but to multiple assignees) of a patent interest. The grant of a licence by a co-owner disposes of something less than the entirety of that co-owner’s interest and is, therefore, subject to the control of the other co-owner.

A prospective licensee should ensure that its license is consented to by all co-owners. For prospective assignees, who may wish to license their rights, due diligence on the other co-owner(s) is important. Co-ownership can also be negotiated so that, e.g., one party cannot commercialize the invention independently or without the other’s consent (relevant particularly when the parties’ respective production, marketing or distribution abilities differ significantly), or each co-owner can practice the invention and/or license it in a separate field of use or geographic area.

Where an employee is hired to and does create an invention in the course of his employment, the employer will own the invention. However, this exception is not statutory, but developed by the courts. Absent an assignment in writing, the Patent Office is unlikely to recognize such ownership. Therefore, it is always advisable to ensure that employment contracts specifically address the topic of invention ownership and the requirement to execute assignments in writing. That said, not every invention conceived or made on the job belongs to the employer. If not hired or paid to invent, or if the invention does not directly arise out of the work assigned to the employee, the employee may own the invention. Furthermore, an employment contract can always be drafted so as to address such issues according to the agreement between the parties.

"A" files a patent application and obtains a patent without informing his co-inventor, "B". A then licenses the patent to "C" exclusively. At no point did C recognize that it was dealing with a patent that should have been co-owned. C relies on its exclusive license to sue "D" for patent infringement. D, however, locates co-inventor B and obtains a retroactive license from her and succeeds in adding B as a co-inventor to and thereby co-owner of the patent.

In Canada, neither C nor D would have a valid license and each could be sued for infringement by the other co-owner (B or A, respectively). What A could have done instead was assign its entire right to C. In such a case, unless B also assigns its entire right to D, C would be able to sue D for patent infringement.

The concept of invention, who is the inventor, the right to own the patent and the rights of co-owners can be fraught with pitfalls for the unwary. These pitfalls can affect the rights that can be exercised or enforced against third parties, as well as the rights available for licensing.