Michael Crichton of Gowlings discusses Canada’s patent litigation landscape

How litigious is Canada compared to the US?

In 2015, there were just under 90 patent cases that were commenced in Canada. I dug deeper to understand whether there is a specific reason why 2015 did not show any upward movement in commencement of new patent cases. To note, there was a big drop in the number of pharmaceutical cases litigated in Canada. I can only speculate, but this drop may be due to fewer blockbuster drugs being tested by generic companies, and so patents are not being challenged as much, and as a result, there is not as much litigation in that area.

But generally, if you step back and look at Canada as a whole, the trend of litigation is flat.

Is Canada playing ‘catch up’ with the US?

I think Canada is always, to a degree, going to be playing ‘catch up’, because Canada is a much smaller market than the US. The US has 10 times the population of Canada, so it is always going to be a major draw for a patentee that wants to maximise its potential damages recovery.

While patentees are going to continue to look to the US, I am seeing more interest from non-practicing entities (NPEs) in Canada. They are taking a global approach with their enforcement strategies, especially since they have run into some pretty significant hurdles in the US when it comes to inter partes review (IPR), Alice Corp v CLS Bank disputes, recovery of attorneys’ fees and injunctions. There is a long list of reasons why it could be difficult for NPEs to litigate in the US.

As a result they are looking outside the US and they’re really interested in places like Germany. I think they’re going to keep their options open, and keep places like Canada in mind.

But every case is different, and it depends on the particulars of the suit at hand. Sometimes, patentees will obtain a patent in Canada and it’s different or broader than how it reads in the US, so that may be a reason to litigate in Canada. Likewise, a patentee may have a stronger patent in Europe or elsewhere, and prefer to litigate there.

I’d be surprised, however, if Canada stayed flat for a long time. There are a number of conditions that make Canada generally favourable for patentees. Those, combined with the fact that patentees are going global with their enforcement efforts, mean that litigation is going to, at a minimum, likely keep going at its current level, and slowly start to increase over time.

What’s the win rate like in Canada for patentees?

There is a strong win rate in Canada. Around 46 percent, per patent. If you have a roughly 50 percent statistical chance of winning the case, that’s actually pretty good. To win a case. a patentee has to win on everything; infringement, all the different validity arguments that the defendant brings up, and sometimes there are other issues that are raised that can cause a plaintiff to lose a case.

And so, a 50-50 win-rate is pretty good. There was a time in the UK when the win rate was only 20 percent for plaintiffs and if you contrast that with a 50-50 win rate, that’s pretty good. There are not many jurisdictions with a much higher win rate than that, except in the case of certain US districts such as the Eastern District of Texas.

That’s why so many patentees want to go to the Eastern District of Texas—they have a high win rate and a number of other conditions that make it favourable for patentees, and that’s why we’ve seen such a significant influx of patentees in that district.

In Canada, it’s predictable, and it has a well-established common law system. Our courts are pushing cases to trial pretty quickly and we have a wide range of remedies available, including significant damages awards, some of which have recently been in the hundreds of millions of dollars.

Permanent injunctions are also available in Canada. For NPEs, the 2006 eBay v MercExchange decision closed the door for permanent injunctions in the US.

In addition, Canada does not have an IPR system or similar process. This may be due to the fact there has not been a need or a political desire or will, like there was in the US, to introduce a new measure for challenging patents. Canada already has an ex parte re-examination system, which has worked for years.

Will the Canadian litigation landscape change?

I can’t predict what might happen in the future, but there is a lot of talk about biologics and how, as they get going, they will lead to more disputes and patent litigation.

So we may be in a bit of a lull period right now, between the more traditional blockbuster drugs and the biologics that are on the horizon. Pharma may solidify itself in the top position of being the most common industry type for patent cases in Canada, or we may see a surge in NPE cases, which are typically high-tech in nature. Either of those possibilities might come true.

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