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Insights on Canadian Technology and Intellectual Property Law

Availability of non-infringing product is relevant in determining profit recovery for infringing activities

Posted in Intellectual Property, Patents
Kaitlin SoyeDavid Tait

In a recent decision (Apotex Inc. v. ADIR, 2017 FCA 23), the Federal Court of Appeal determined that the Federal Court erred in law by rejecting the relevance at law of any available non-infringing product and failed to adequately consider the evidence adduced as to the ability and willingness of three suppliers to provide non-infringing product. According to the Court of Appeal:

  • To the extent the Federal Court rejected the relevance of non-infringing perindopril because the defendant sold perindopril, this conclusion was inconsistent with Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 where the Roundup Ready Canola sold by the defendant Schmeiser consisted entirely of the patented genes and the differential profit approach was nonetheless applied.
  • While Apotex Inc. v. Merck & Co. Inc., 2015 FCA 171 considered a claim for compensatory damages for patent infringement, the comments had equal application to an accounting for profits. In any event, the policy reasons noted by the Federal Court could not trump the requirement that an infringer’s disgorged profit must be only the profit which is causally attributable to the invention.
  • The Federal Court’s rejection of arguments advanced in Wellcome Foundation Ltd v. Apotex Inc., (1998) 151 FTR 250 could not stand for the reason that it is contrary to the application of the differential profit approach applied by the Supreme Court in Schmeiser.

In light of the factually complex evidentiary record before the Federal Court and the need to assess the credibility of the evidence, this issue was remitted to the Federal Court.

This decisions follows an original finding, in 2008, that Canadian Patent No. 1,341,196 (the “196 Patent”), which claims the drug perindopril, was valid and infringed by the defendant, Apotex (2008 FC 825, aff’d 2009 FCA 222). This liability judgment permitted the patentee to elect to claim either an accounting of the defendants’ profits or all of the damages sustained as a result of the defendants’ activities which infringed the 196 Patent. The patentee elected to recover the profits earned by reason of the infringing activities. After a long trial, the Federal Court determined the amount of the defendant’s profits which were attributable to the infringing activity (2015 FC 721).

Canadian Securities Administrators Fintech Initiatives: Regulatory Sandbox and Co-Operation

Posted in Fintech, Regulatory Compliance
Ana BadourLaure Fouin

On February 23, 2017, the Canadian Securities Administrators (CSA) announced the launch of a regulatory sandbox. A regulatory sandbox aims at supporting Fintech businesses by allowing them to apply to the regulator to benefit from a more tailored approach to regulation that balances the need to facilitate the use of innovative products, services and applications all across Canada with appropriate investor protection.

As a result, the CSA will assess the merits of each business model, on a case-by-case basis, and allow innovative businesses to register or grant them relief from certain requirements to permit them to test their products and services throughout the Canadian market. Continue Reading

Partnerships between Banks and Fintech Companies: A Continuing Trend for 2017

Posted in Fintech
Ana BadourD.J. LyndeJessica Firestone

Fintech companies are offering game-changing products and services in the financial services sector, responding to customer demand for frictionless technology. Canadian banks are likewise increasingly seeking to offer innovative products and services. In addition to developing such products and services in-house, banks have been partnering with Fintech companies, seeking to leverage their technological know-how and cost-effective offerings.  Fintech companies in turn seek to leverage banks’ customer relationships, their reach and experience and their expertise in compliance and risk management.  Partnerships between Canadian banks and Fintech companies increased in late 2015 and 2016, and this trend is expected to continue. Some recent examples include: Continue Reading

CRTC Extends Direct Regulation to Resellers of Telecommunications Services

Posted in Regulatory Compliance, Telecommunications
Keith Rose

With relatively little fanfare, on January 17, 2017, the Canadian Radio-television and Telecommunications Commission (CRTC) issued a regulatory policy imposing new direct regulatory obligations on Telecommunications Service Providers (TSPs) in Canada.

Historically, the CRTC’s direct regulatory powers have applied to “Canadian carriers”, who are the owners (or operators) of the physical telecommunications infrastructure in Canada.

The CRTC’s authority over non-carrier TSPs, who do not own that infrastructure was, until recently, more tenuous. In the absence of a direct statutory authority to impose conditions on non-carrier TSPs, the CRTC instead required Canadian carriers to impose certain requirements (such as the obligation to register with the CRTC and to comply with various consumer safeguards) on their TSP customers through their Tariffs and service contracts.

In 2014, as part of the federal budget omnibus bill, the Telecommunications Act was amended to give the CRTC express authority to impose conditions directly on TSPs. (See the new section 24.1.)  Contraventions can be subject to substantial Administrative Monetary Penalties.

Obligations on TSPs

Telecom Regulatory Policy CRTC 2017-11 directs all TSPs, as a condition of offering or providing telecommunications services, to:

  • Register with the CRTC (if they have not already done so);
  • Abide by the regulatory obligations listed in an Appendix to the policy (dealing with accessibility, privacy, customer transfers, Internet traffic management practices, compliance with the Wireless Code, service cancellation, and enforcement of compliance with the Unsolicited Telecommunications Rules), as applicable; and
  • Include flow-down obligations in their service contracts, requiring any downstream resellers to register with the CRTC before receiving telecommunications services.

The first two of these bullets are not substantially new obligations. They reflect long-standing regulatory policies, although the change in the means by which they have been imposed could also have consequences for how (and by whom) they are enforced.

However, the shift of responsibility for policing downstream compliance is new. TSPs are now expected both to impose downstream compliance obligations in their service contracts and to “actively monitor and enforce” these obligations. As a consequence, TSPs could, in principle, face regulatory consequences for non-compliant behaviour by their downstream customers.

The Canadian carriers had asked to be entirely relieved of the obligation to police downstream compliance. The CRTC declined to do this, in part because it was concerned that “a large number” of existing non-carrier TSPs are not currently registered and may not understand their obligations. So, for the time-being, this responsibility is shared: Canadian carriers will be required to actively police the registration obligation, but are only required to report other known or suspected non-compliances to the CRTC.

Take-aways

The statutory definition of TSP is broad, and the CRTC has signaled that it expects all TSPs to register and to comply with some basic obligations.

Not all of these obligations will apply to every TSP. Many are functional, and will depend on the scope of the TSP’s business.  Moreover, not every business that involves telecommunication will be classified as a TSP.  However, it is important for each business that provides telecommunications services in Canada to understand whether it will be classified as a TSP and the consequences of that classification.

The CRTC offers guidance about both the registration process and the responsibilities and regulatory obligations of TSPs. However, interpreting and applying that guidance is not always simple.  McCarthy Tetrault’s top-rated communications law group can help.

Copyright Infringement Class Action Over University Course Packs Certified in Quebec: Copibec c. Université Laval

Posted in Copyright, Intellectual Property, Litigation
Keith Rose

On February 8, 2017, the Quebec Court of Appeal certified a class action by Copibec against Université Laval, for copyright infringement.

This decision overturns a Superior Court ruling from 2016, which would have dismissed the claim on the basis that Copibec did not satisfy the eligibility requirements under the province’s Code of Civil Procedure for an association to bring a class action on behalf of its members.

Copibec is a collective management organization representing book publishers, visual artists, and newspaper and periodical authors and publishers in Quebec.

Copibec alleges that, in 2014, Université Laval declined to renew its license agreement with the collective and stopped paying royalties for the reproduction of its members’ works, including for use in course packs. The University instead sought to rely on a fair usage policy.  Copibec asserts both copyright and moral rights infringements.

The decisions to date have been essentially procedural and have not considered the merits of the claims. The case will now proceed to trial in the Quebec Superior Court.

NPEs Beware: Contorted Construction of a Patent Will Attract Elevated Costs

Posted in Intellectual Property, Patents, Telecommunications
Andrew ReddonSteve MasonFiona LegereBart Nowak

On January 4, 2017, the Honourable Justice Locke of the Federal Court of Canada released his decision in Mediatube Corp. et al. v. Bell Canada, 2017 FC 6. This was a patent infringement action in respect of Canadian Patent No. 2,339,477 (the “‘477 Patent”) by the plaintiffs, NorthVu Inc. (patent owner) and MediaTube Corp. (licensee) against Bell Canada  (including former Bell Aliant Regional Communications, Limited Partnership, together “Bell”). The plaintiffs alleged that Bell infringed the ‘477 Patent through the delivery of its digital Internet Protocol Television (“IPTV”) services called Fibe TV and FibreOp TV. The Plaintiffs sought damages in excess of $350 million as well as a significant punitive damages award.

Continue Reading

Fintech Regulatory Developments: 2016 Year in Review

Posted in Fintech, Regulatory Compliance
Kirsten ThompsonAna BadourHeidi GordonLaure FouinJessica Firestone

This year was a tremendously active year for Fintech in Canada and internationally, and 2017 promises to be even more so.  In the Fall of 2016, we co-authored a comprehensive report together with the Digital Finance Institute, “FinTech in Canada: British Columbia Edition” on the state of the Canadian Fintech ecosystem, highlighting a number of the then-current industry and regulatory developments.  As we head into 2017, we provide a brief summary of some of last year’s Fintech regulatory developments in Canada and globally, and some developments to watch for in the upcoming year. Continue Reading

Update: CETA Ratification to Implement Changes to the Patent Act, PM(NOC) Regime and Trade-marks Act Moving Swiftly in Canada

Posted in Uncategorized
Sanjaya MendisRobert Glasgow

Canada’s sweeping trade deal with the European Union is expected to be implemented early next year. As reported previously, the government of Canada has tabled Bill C-30 to ratify CETA, which proposes significant changes to the Patent Act and the PM(NOC) regime, as well as  geographic indications under the Trade-marks Act.

Bill C-30 will receive Royal Assent, and become law in Canada, once it passes through both the House of Commons and the Senate.

On December 13, 2013, Bill C-30 passed a second reading in the House of Commons by a comfortable margin of 266 to 39. Bill C-30 was subsequently referred to the Standing Committee on International Trade.  The committee members are reviewing the bill clause by clause, and holding hearings with government officials, and experts to gather information.  The committee can then propose amendments or changes to the bill.

Once the committee has finished its review, the House of Commons will complete a third reading to debate and vote on the bill. Bill C-30 will then moves to the Senate chamber, where members of the Senate follow a similar process as the House of Commons.

At this current pace, it is expected that Bill C-30 will receive Royal Assent by the end of Q1 2017, signifying CETA’s formal ratification in Canada. Once Royal Assent is received, the proposed amendments to the Patent Act  and Trade-marks Act bringing Canada into compliance with its CETA obligations will be in place.  It is expected that draft amendments to the PM(NOC) Regulations will be released shortly thereafter.

Ontario Enacts Ban on the Expiry of Rewards Points

Posted in Fintech, Regulatory Compliance
Ana BadourJames ArcherClaire GowdyLara Nathans

On December 6, 2016, Bill 47 – Protecting Rewards Points Act (the “Act”), amending Ontario’s Consumer Protection Act, 2002 (the “CPA”), received Royal Assent.  The Act was first introduced on October 20 as a private member’s bill.

The primary effect – and stated purpose – of the Act is to prohibit the expiry of rewards points under consumer agreement due to the passage of time. Any provision to the contrary in any consumer agreement will be rendered void, with retroactive effect to October 1, 2016, such that all points purporting to expire after October 1, 2016, will need to be reinstated. However, subject to what may be provided in the regulations – yet to be issued – a rewards program may still be terminated and accumulated rewards may expire if the agreement so provides. Continue Reading

US Exploring Special Purpose National Bank Charters for Fintech Entities

Posted in Fintech
Ana BadourLaure Fouin

On December 2, 2016, the United States’ Office of the Comptroller of the Currency (OCC) announced that it would move forward with considering applications from Fintech companies to become special purpose national banks. The OCC also published a paper discussing the issues and conditions that it will consider in granting special purpose national bank charters (the “OCC Paper”). Continue Reading