As 2012 draws to a close, let’s gather some important developments in Canadian intellectual property law over the last year or so. These developments are:
1. In July, the Supreme Court of Canada decided five important copyright cases. The Court was faced with a number of questions and decided as follows:
- K-12 schools can make free copies of excerpts of textbooks and other materials for class use, considered to be “fair dealing” for the purpose of “research or private study”. This was a split decision, with a 4-member minority dissenting that the Board’s decision was reasonable and that private study should not encompass classroom instruction. (Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37).
- Listening to music previews is considered to be “fair dealing” and not subject to tariffs because this activity is “research or private study” that is “fair” from the perspective of consumers (Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36).
- Film and TV soundtracks are not subject to “sound recording” tariffs. (Re:Sound v. Motion Picture Theatre Associations of Canada, 2012 SCC 38).
- Downloading a video game containing background music is not a “communication to the public” and subject to additional “communication” tariffs beyond reproduction royalties. Again, this was a split decision, with a 4-member minority dissenting that it is not for Courts to apply limits on “communication” rights for policy reasons. (Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34).
- The Court considered whether downloading a song is a “communication to the public” and subject to “communication” tariffs. Here, the Court drew a distinction between downloading and streaming. Downloads engage “reproduction” rights and not “communication” rights, while streams engage “communication” rights (but presumably not “reproduction” rights) even though streams are point-to-point transmissions. (Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35).
Following these decisions, Rogers and other ISPS have commenced an action against SOCAN for a return of amounts paid under “communication” tariffs since 2004.
2. In June, Bill C-11, the Copyright Modernization Act received royal assent, and came into force in November. Among the changes, the “fair dealing” exceptions were expanded to include education, parody, and satire. New rights for IP owners include making-available rights, distribution rights, moral rights for performers, presumptive ownership for photographers, support for digital locks, and tools to pursue online pirate sites. Statutory damages were fixed between $100 and $5,000 for all non-commercial infringements in a single proceeding for all works. One of the clauses includes a mandatory five-year review (s. 92).
On the heels of the new copyright law, a Hollywood studio, Voltage Pictures, filed an infringement suit against a number of unknown file sharers. In December, Voltage brought a motion for third-party discovery from TekSavvy, an Ontario-based internet service provider. The motion seeks disclosure, from the ISP, of contact information for some 2000 account holders whose IP addresses were identified to be illegally reproducing/distributing Voltage’s films. The hearing of the motion was delayed until January 2013. The case is novel because of its scale - the studio seeks the identities of thousands of account holders; an earlier case from 2011 regarding the “Hurt Locker” film by the same studio went after a handful of ISP account holders (that case was discontinued in March after Bell, Videotron, and Cogeco were ordered to Voltage with the sought-after contact information).
3. In November, the Supreme Court of Canada invalidated Pfizer’s patent covering the Viagra medicine. The unanimous Court stated that Pfizer had not sufficiently disclosed the invention in its patent specification, violating the patent bargain of full disclosure (as of the filing date) in return for exclusive rights. Viewed as a whole (and not claim by claim), according to the Court, the patent specification did not teach that sildenafil (brand name Viagra) was the effective compound tested. Pfizer’s patent included cascading claims to chemical compounds of increasingly narrower scope where claim 6 and claim 7 identified specific compounds. Claim 7 was sildenafil but there was no description that claim 7 was the effective compound. The Court said:
"There was no basis for a skilled person to determine which of Claim 6 and Claim 7 contained the useful compound, further testing would have been required to determine which of those two compounds was actually effective in treating ED."
From the decision, it is not entirely clear if claim 6 (non-sildenafil) worked or not. In any case, the case provides a cautionary tale to those drafting and prosecuting patents to indicate the known “best mode” in Canadian patent applications.
There are two curious footnotes to note in the wake of the Viagra patent decision:
- The Supreme Court decided that Pfizer’s patent was invalid and void. Some practitioners view this remedy as being outside the Court’s jurisdiction, as the appeal arose from a decision granting a prohibition order (i.e., withholding marketing approval to the generic) under the Patented Medicines (Notice of Compliance) Regulations, which does not provide such in rem remedies.As a result of the Supreme Court’s odd decision, Pfizer has brought a motion for reconsideration or amendment, itself a highly unusual procedure. The point may well be moot - in a parallel impeachment action involving another generic manufacturer, the Federal Court has, in any case, invalidated the patent.
- In December, Eli Lilly, another pharmaceutical brand manufacturer, gave notice of its intent to challenge the precedent set by the Viagra decision under free trade laws, suggesting that an added utility requirement (the so-called “promise doctrine”) does not comply with Canada’s obligations under NAFTA and TRIPS.
The case is Teva Canada Ltd. v. Pfizer Canada Inc., 2012 SCC 60.
4. Amazon is granted one-click patent, and Canadian PTO polishing new subject-matter guidance. Following last year’s Federal Court of Appeal decision, the Canadian PTO granted Amazon’s one-click patent and promised new guidance to help Examiners and Applicants interpret the decision. After a round of consultations, and some delays, the new guidance is expected imminently.
5. Industrial design litigation is rare in Canada. In September, the Federal Court released its decision in Bodum USA, Inc. v. Trudeau Corporation (1889) Inc., 2012 FC 1128. Justice Boivin decided that Bodum’s designs covering double-walled glasses were invalid and not infringed by Trudeau. The Court said:
- infringement is analyzed from the point of view of the “informed consumer” (synonymous with the “aware consumer”);
- “the Court finds that the Trudeau glasses do not have the features attributed to them by the plaintiffs and that the Trudeau glasses are not infringing products” (oddly, the Court refers extensively to the prior art during its infringement analysis);
- “by comparing the prior art submitted into evidence and the industrial designs in question, by focussing on lines and by ignoring the manufacturing processes, materials used and colours, the Court finds that the designs do not vary substantially.”
The Court dismissed Bodum’s infringement action and allowed Trudeau’s counterclaim of invalidity. Bodum has filed an appeal of the trial decision.