Canada: All Inventors Must Be Developers, But Not All Developers Are Inventors

Last Updated: September 27 2015
Article by Ken Bousfield and Kevin Shipley

When several people contribute to the development of a new and potentially patentable product, the question may arise: "Who are the inventors?" This question of inventorship must be carefully addressed.

It is not always easy to distinguish the contribution that identifies an inventor from the contributions of others who may have been involved, but whose efforts do not rise to the level of inventorship for the purposes of patent law. The distinction may be especially hard to draw in a small business, or a start-up firm where individuals often perform many diverse duties.

The Federal Court decision in Drexan Energy Systems Inc1. is an example of a case in which the Court was required to assess inventorship in the face of conflicting testimony of uncertain contributions. In the end the Court held that although there was collaboration, not all of the collaborators were co-inventors; not all had made efforts rising to the level of inventorship.

In Drexan, four people had worked together to create a new type of heating cable. One patent application was filed that named two of the four as inventors. Another was filed in which three of the four were named. The relationship between the individuals subsequently deteriorated.

The application of the two named inventors subsequently issued to patent as CA 2,724,561. The two un-named individuals sought declaratory relief to have their names added as inventors. After a careful review of the evidence, the court held that the two additional claimants were not inventors within the meaning of the Patent Act. The two named inventors had invented a technical solution, whereas the other two had suggested desired features and communicated feedback from potential customers.2 While the contributions were helpful, they were not held sufficient to make them co-inventors of the subject-matter claimed in the patent.

The Significance of a Conclusion of Inventorship

Inventorship is the source of entitlement to the right to exclude granted in the patent. The right commercially to exploit an invention falling within the claims of a patent must be traced to that entitlement, either through ownership or through grant of a license. Willful misidentification of inventors in a patent application for the purpose of misleading the public may cause the patent3 to be invalidated. Merely making a mistake in identifying inventors is not necessarily a ground of invalidity, particularly where the mistake is not material to ultimate ownership of the patent. Where the error is material, it may have significant consequences.

Under both Canadian and US Patent law, invention requires both a creative element, or conception, and a practical element by which the creative element is realized or implemented. The creative element and the means of practicing the invention must be linked to form a coherent whole4. As noted by the Court in Drexan, the invention may tend not to lie in individual elements, but in the combination of the elements. The creative element may be "very slight"5. On occasion, it may be satisfied merely by identifying the problem – the solution may then be apparent to any person of ordinary skill in the art. At other times the conception may be quite simple, and the greater part of the invention may be found in determining how to implement the idea. The Court proceeded on the basis that all inventors had to have made some contribution to conception. Where there is inventorship by more than one individual, it must be shared.

Determination of inventorship is a conclusion of law based on an inquiry of fact. Unlike ownership, inventorship cannot be modified by agreement amongst the parties: an individual either is an inventor, or is not. One cannot contract into, or out of, inventorship. Inventorship and ownership can, of course be different. That is one of the purposes of the patent system. The patent system creates an allocation of rights. Those rights may then be transferred or licensed to others, typically where the buyer or licensee has greater ability commercially to exploit the claimed invention. This occurred in Drexan, for example, and appears to have precipitated the litigation.

Those seeking to be named as inventors bear the burden of proving that they were probably inventors (i.e., the test is one of a balance of probabilities). In Drexan, the Court held that merely identifying problems with existing products, or generating a list of desirable features based on customer feedback may not be sufficient (and was not sufficient on the specific facts of the case).

In both Canada and the US, absent explicit agreement to the contrary, each named inventor in a patent has an equal right of ownership to any other inventor6: they are tenants with equal rights. As such, they are entitled to make, use, and sell the invention, without permission of the other inventors, and are not liable to account to other inventors. Unlike the US, however, while a co-inventor of a Canadian patent can freely assign their entire right to another person, a mere licensee of one co-owner may be an infringer relative to other co-owners inventors7. In either case, where co-inventors are at odds, it can have significant commercial consequences, and may make it difficult, or impossible to exploit the invention effectively commercially: no prospective buyer or licensee wishes to buy trouble.

While inventorship cannot be dictated by contract, the parties involved in the development of a new product can, and frequently should, agree in advance on the ownership of rights in any invention that may be made. Contracts governing the ownership of patents (such as between an employer and employee to assign ownership of inventions made in the course of employment) tend to be enforceable when consideration has flowed to the employee.

While specific to the facts, Drexan provides guidance on how companies and co-developers can structure their contractual agreements for future collaboration to attribute inventorship properly while avoiding disputes over ownership of resulting inventions.

Footnotes

1 Drexan Energy Systems Inc. v. The commissioner of Patents and Thermon Manufacturing Co., 2014 FC 887.

2 Drexan at paragraphs 56-57.

3 671905 Alberta v. Q'Max Solutions (2001), 14 CPR (4th) 129 (FCTD), varied (2003), 27 CPR (4th) 385 (FCA) at 397 to 400

4 See Mayo Collaborative Services v Prometheus Laboratories, Inc, 132 S Ct 1289 (2012); see also Mackay Radio & Telegraph Co v Radio Corporation of America, 306 US 86 (1939) at 94; see also Klaber's Patent (1906), 23 RPC 461 (HL) at 469; see also: Wright v Brake Service Ltd, [1925] Ex CR 127 (Can Ex Ct) at 130; affirmed [1926] SCR 434 (SCC) in which McLean J., largely quotes US precedent from Robinson, WC, The Law of Patents for Useful Inventions, (Boston: Little Brown & Co, 1890), compare note 27, s. 155, p.216: "According to long established principles, a combination may be composed of elements wholly new or wholly old, or partly new and partly old. In each case the combination is a means distinct from the elements, whether new or old. It is an instrument or operation, formed by uniting two or more subordinate instruments or operations, in a new idea of means. It is the combination of individual functions, so as to constitute a common function. A combination in a mechanism must consist of distinct mechanical parts, having some relation to each other, and each having some function in the organism. When these elements are so united that by their reciprocal influence upon each other, and by the joint and co-operating action of all the elements with respect to the work to be done, or in furtherance thereof, new or additional results are obtained, the union is a true combination. Altogether the authorities seem to support the proposition, that if in a new combination, an arrangement of known elements produces a new combination, or if it forms a new machine of distinct character or formation due to the cooperative action of all the elements, or if the several elements produce a new and useful result or an old result in a cheaper or entirely advantageous way, this is evidence of invention and fit subject-matter for a patent." (Emphasis added).

5 "There must be a substantial exercise of the inventive power or inventive genius, though it may in cases be very slight. Slight alterations or improvements may produce important results and may disclose great ingenuity. . . . A new combination of well known devices, and the application thereof to a new and useful purpose may require invention to produce it, and may be good subject-matter for a patent."—Canadian General Electric Co v Fada Radio Ltd, [1930] 1 DLR 449 (Canada PC) per Lord Warrington at 451-452, quoting Maclean J with approval. See also Hickton's, supra note 38.

6 Drexan at paragraph 26, citing Gerrard Wire Tying Machines Co v. Cary Manufacturing Co., 1926 CarswellNat 22 at paragraph 32, [1926] Ex Cr 170, [1926] 3 DLR 374, and Wellcome at paragraph 99.

7 A co-owner of a patent is free to sell or license the entirety of his or her interest in the patent, but cannot dispose of anything less than his entire interest in the patent without first obtaining the consent of the other co-owners. A licensee of one co-owner may be an infringer vis-à-vis another co-owner: Forget v. Speciality Tools of Canada Inc. 1995 812 (BC CA).

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.

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