Canada: Litigation — Year In Review

Last Updated: March 2 2016
Article by Amrita V. Singh and Michael Burgess

In 2015, Canadian courts issued decisions and practice advisories to the profession that affected the landscape of intellectual property litigation pre-trial practice, expert evidentiary requirements, the standard of review for patent construction, and jail time for violating court orders.

Below are our summaries of key decisions and advisories that will impact intellectual property litigation in Canada.

Proportionality in Discovery

In June 2015, the Federal Court issued a Notice to parties and the profession entitled "Case Management: Increased Proportionality in Complex Litigation before the Federal Court". The Notice outlines ten considerations for lawyers to integrate into their practice before the Federal Court to ensure improved case management, earlier trial judge involvement, streamlining of discovery, limited motions and appeals, and earlier settlement discussions:

  1. Earlier trial judgment management to ensure faster resolution of interlocutory matters and so parties are ready for trial at the fixed trial date.
  2. Short notice wait list for earlier trial dates for parties seeking an early trial.
  3. No demonstrative evidence will be permitted at trial unless the parties have exchanged it 60 days before trial, and made any objections 45 days prior to trial.
  4. Limits on documentary discovery to improve proportionality including the use of discovery plans and identifying who will be examined and what documents will reviewed.
  5. Limits on oral discovery will entitle the parties to one day of discovery each per week of trial; follow up examinations are to be restricted to one day per party.
  6. Refusals motions will not be heard until discovery is complete, and will be limited to one hour per day of discovery. Unsuccessful or unreasonable parties will be subject to significant cost sanctions. Questions may not be taken under advisement and should be answered unless "clearly improper or prejudicial".
  7. Consideration is being given to limiting appeals of interlocutory orders of Prothonotaries.
  8. Enforcement of the limit on the number of experts per party (no more than 5).
  9. Science and technology primers prior to trial may be required to assist the Court to better understand complex science and technology.
  10. Early consideration of mediation of all actions.

These objectives of the Notice are also addressed by the Court in the following Federal Court decisions:

Hospira Healthcare Corporation v Kennedy Institute of Rheumatology, 2015 FC 1292 at 59-60, 67-68; Bard Peripheral Vascular, Inc v WL Gore & Associates, Inc, 2015 FC 1176 at paras 21-22; MediaTube Corp et al v Bell Canada et al, 2015 FC 391 at paras 20 and 22.

Instructing Experts and Expert Evidence

In Moore v Getahun, 2015 ONCA 55, the Court held that lawyers and experts may consult with one another and noted that, "banning undocumented discussions between counsel and expert witnesses or mandating disclosure of all written communications is unsupported by and contrary to existing authority". The Court referred to Medimmune Ltd v Novartis Pharmaceuticals UK Ltd & Anor, [2011] EWHC 1669 (Pat), and noted that "in some highly technical areas such as patent law, expert witnesses 'require a high level of instruction by the lawyers' which may necessitate 'a high degree of consultation' involving 'an iterative process through a number of drafts.'" This does not, however, negate the expert's overriding obligation to assist the Court and maintain impartiality.

In Astrazeneca Canada Inc v Apotex Inc, 2015 FC 322 the Court held that experts should conduct their own prior art search. The Court noted "an expert who carries out an obviousness analysis largely or solely on the strength of prior art references selected by retaining counsel runs a real risk of offering a hindsight opinion. A thorough prior art review necessarily includes a search for all of the available relevant literature whether it supports inventiveness or not. It requires consideration of relevant art in the larger context of other possible pathways to the patent solution or to ideas that point away from that solution." It therefore seems that in patent cases, experts should undertake their own independent prior art searches in addition to being provided prior art references by counsel.

Standard of Review

In recent decisions by the Federal Court of Appeal, there has been discussion regarding the standard of review applicable to trial judges' construction of patents. While historically the standard of review has been that of correctness given the legal nature of construction, some justices, including Justice Stratas, have been advocating a new standard: palpable and overriding error.

In Abb Technology AG, ABB Inc v Hyundai Industries Co, Ltd, 2015 FCA 181, Stratas JA, writing on behalf of the Court, observed that where expert evidence is relied upon by the trial judge to construe a patent, the standard of review ought to be palpable and overriding error. Citing Stratas JA's own prior decision in Cobalt Pharmaceuticals Company v Bayer Inc, 2015 FCA 116 and Whirlpool, the Court noted that patents are to be read through the eyes of the skilled reader, who has an appreciation of the common general knowledge in the art of the patent. This is generally not within the purview of the judge, and therefore requires expert evidence to be adduced regarding many factual questions. The Court suggested that, where there is a heavy reliance on expert evidence for patent construction, the standard of review should be that of a palpable and overriding error. Despite this discussion, the Court ultimately used the correctness standard for its review.

In contrast, the Court in Alcon Canada Inc v Actavis Pharma Company, 2015 FCA 191 applied the long-standing correctness standard of review of patent construction. The Court noted that construing the promise of a patent is a question of law and therefore must be reviewed to the standard of correctness.

These contrasting interpretations of the applicable standard of review to patent construction by the Federal Court of Appeal appear to be setting the stage for the Supreme Court of Canada to consider the issue.

Contempt Can Land You in Jail

In a rare, but not unexpected case, the Federal Court ordered that the officer and director of a party who failed to comply with a contempt order be imprisoned until all amounts owing under the Court's orders were paid. In Trans-High Corporation v Hightimes Smokeshop and Gifts Inc, 2015 FC 1104, after affording the party several opportunities to comply with Court orders to pay damages and costs, the Court ordered enforcement of the contempt order, imprisoning the officer and director until he complied and paid the funds required.

Observing the Dickensian nature of imprisoning someone for an inability to pay a debt, the Court noted that the Supreme Court of Canada has held that a person may be imprisoned where a person demonstrates an intention to dodge his commitments, such as where he has the ability to pay the debt but refuses to do so. The Court made clear that the imprisonment was not as a result of the unpaid debt, but because of the deliberate refusal to comply with the court orders despite being able to do so.

Jail sentences for breaches of intellectual property, while rare, have previously been ordered and upheld by the Federal Courts (see Telewizja Polsat SA v Radiopol Inc; Canadian Copyright Licensing Agency v U-Compute; Microsoft Corp v 9038-3746 Quebec Inc).

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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Amrita V. Singh
Michael Burgess
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