COVID-19: Impact on Canadian patent owners‎

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Intellectual Property and Technology Alert

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Canadian patentees should be aware of recent amendments to the Patent Act in light of the COVID-19 health emergency. Most current medical technology is protected by patents.  However, during emergencies, patent rights must take a back seat to the manufacture and distribution of essential equipment – ventilators, masks, valves, etc. Bill C-13, dubbed the Covid-19 Emergency Response Act, received royal assent on March 25, 2020, and covers, among other things, amendments to Canada’s Patent Act to authorize the use of patented inventions necessary to respond to a public health emergency of national concern.

Key takeaways

The emergency response to the COVID-19 pandemic in Canada includes changes to the patent system:

  • To supply goods to respond to a “health emergency” a special authorization can be obtained to permit use of a patent;
  • To permit the Federal Minister of Health to apply for and, if confirmed by the Chief Public Health Officer, obtain an authorization to permit patent infringement if it enables a response to a public health emergency.

What notice is given to the patent owner?

  • The patentee must be notified by the Patent Office of any authorization, and is entitled to “adequate remuneration” from the government and the authorized person.

How is the payment to the patent owner calculated?

  • Compensation is based on the “economic value of the authorization and the extent to which they [the authorized person] make, construct, use and sell the patented invention”.

Can the patent owner object?

  • The patentee can make an application to the Federal Court to require the government or any authorized person to cease making, constructing, using or selling the patented invention.

Existing law governing use of inventions by Government

The Patent Act has long included a section that permitted the use of inventions by Canadian Governments. As of 1994, a procedure was in place (in sections 19 to 19.3 of the Patent Act) whereby the Commissioner of Patents was empowered with reviewing and authorizing the Government of Canada, or any Provincial Government, to use a patented invention under certain prescribed terms and for a certain duration. The use was authorized predominantly to supply the domestic market. The authorized user of the invention would have to pay the patentee such amount as the Commissioner considered to be adequate remuneration in the circumstances.

However, no guidance was provided in the Patent Act as to how the Commissioner was to determine what constitutes “adequate remuneration” to the patent owner, apart from the fact that “economic value” was to be taken into account. In jurisprudence considering these issues, Courts have determined that the value of the invention covered by the patent can be arrived at by reference to a percentage of the sale price of the articles manufactured, the cost of manufacturing itself, or a lump sum award. In other words, as long as the compensation to the patentee appears adequate, it may be considered appropriate. It should be noted that s. 55(2) uses the “reasonable compensation” standard, and may provide some guidance as to how reasonableness (and similarly adequacy) may be assessed by Canadian courts.

The recent amendments

The Covid-19 Emergency Response Act added a broad new provision to the Patent Act (section 19.4), which allows the Government of Canada, by way of an application by the Minster of Health, to specify a person who is then authorized to make, construct, use and sell a patented invention necessary to respond to a health emergency. The application must set out:

  • particulars of the patentee;
  • patent number;
  • a confirmation that the Chief Public Health Officer believes that there is a public health emergency that is a matter of national concern;
  • a description of the emergency, and
  • the person that is authorized to use the patented invention for responding to the emergency.

This authorization is not transferable and any use thereunder is not considered to be an infringement of that patent. The authorization remains in effect for the earlier of one year from the grant of the authorization or until it is no longer necessary to respond to the public health emergency. Moreover, no authorizations under section 19.4 can be made after September 30, 2020.

The patentee must be notified by the Commissioner of any authorization, and is entitled to “adequate remuneration” from the government and the authorized person. The calculus of this compensation takes into account the “economic value of the authorization and the extent to which they [the authorized person] make, construct, use and sell the patented invention”. In addition, if an authorization under this provision is not proper or inconsistent with this new section, the patentee can make an application to the Federal Court to require the government or any authorized person to cease making, constructing, using or selling the patented invention.

Conclusion

If any parties are, or think that they may become, subject to a request by the Government to use their patented invention and need assistance in navigating the process and determining “adequate remuneration” under the scheme, or believe any such authorization is improper, the patent team at DLA Piper Canada can assist.

This article provides only general information about legal issues and developments, and is not intended to provide specific legal advice. Please see our disclaimer for more details.