Exceptions to Infringement

1. Exceptions to Infringement Intentional & Non-Intentional Acts

2. Statutory Exceptions • There are certain acts which may interfere with the property rights of patentees but are for statutory exemptions, removed from censure under law. • The main exceptions to infringement are found in the patent act. • However, it must be noted at the outset that case law from other jurisdictions are of limited assistance as most states have different legislative provisions on exemptions from infringement. • The category of infringing acts exempted from damnation include:

3. Category of Exempted Acts • 1. Private Use; • 2. Information required by government; • 3. Experimental Purposes; • 4. Exemptions for Trials on Generic Medicinal Products; • 5. Medical Preparations; • 6. Public Safety Use under the WTO/TRIPS; • 7. Visiting Aircrafts, Ships, and other vehicles • 8. Farmer’s Privileges • 9. Use begun before priority date.

4. Private Use • Generally speaking, the use of a patented device in private and for non-commercial purposes is not actionable. • The crucial elements are: • 1. “private” use and; • 2. “non-commercial” purpose. • Privacy in this context is not coterminous with “secrecy”. A private use has been judicially defined as that type of use carried out solely for the individual’s personal or use or possibly for “friends or family but not for the benefit of the public at large.” Ashely Roughton, et al, at 41. • Non-commercial use is defined as use devoid of economic benefit for the user. The non-commercial purpose must be the only purpose.

5. Information Required by Govt • S. 55 (2) (1) of the Patent Act provides that: • “it is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product”. • See also s. 55 (2) (4)

6. Experimental Use • The Canadian Patent Act does not contain any provisions which specifically exempt general experimentation and research from infringement. • As already noted, s. 55.2(1) is limited to those cases where the would-be infringer is required to submit the information for purposes of regulatory approval. • S. 55. 2(1) cannot be a basis for shielding activities that have the additional purpose of experimentation of new uses or to make improvements.

7. Experimental Use • S. 55. 2 (6) of the Patent Act raises a measure of uncertainty as to the existence or otherwise of a statutory basis for a defence in experimentation with patented subject-matter. The provision reads thus: • “for greater certainty, subsection (1) does not affect any exception to the exclusive property or privilege granted by a patent that exists at law in respect of acts done privately or in respect of any use, manufacture, construction, or sale of the patented invention solely for the purpose of experiments that related to the subject-matter of the patent.” • It has been argued by Stephen Ferance that if there is a defence of experimentation at common law, the effect of s. 55.2 (6) is to leave matters the way they are. See S. Ferrance, “The Experimental Use Defence to Patent Infringement.” (2003) 20 C.I.P.R. 1.

8. Experimental Use • The defence of experimental use is well-established in common law. Micro Chemicals Ltd v. Smith Kline; Cochlear Copr v. Cosem; Dableh . Ontario Hydro. • At common law, the experimental use exemption was available where, • “a man makes things merely by way of bona fide experiment, and not with the intention of selling and making use of the thing so made for the purpose of which a patent has been granted but with the view of improving upon the invention the subject of the patent or with the view of seeing whether the improvement can be made or not, that is not an invasion of the exclusive rights granted by the patent.” Frearson v. Loe (1878) 9 Ch. D 48. • The common law position suggests that experimental use defence applies where is no COMMERCIAL intent.

9. Experimental Use • However, in Micro Chemicals v, Smith Kilne & French, the Supreme Court of Canada expanded the experimental use defence by holding that the defence was not limited merely to improvements. • In the opinion of the SC, activities which were for the purpose of enabling the defendant to produce the invention commercially were held to be bona fide experimentation because it was “not for profit”. • In other words, the making of a patented substance to ensure that a quality product could be produced using the specifications in the patent was held to constitute experimental use.

10. Rationes of Micro Chemicals • It seems that the rationes decidendi of the Micro Chemicals case is that the law does not regard testing to be an infringing use. See Dableh v. Ontario Hydro. • In Cochlear Corp, it was held that the experimental use defence will apply until the defendant “at some stage of its product development decides to give a fic to the particular model and take steps to manufacture, promote and sell it.” • On its face, activities in the testing phase are “not for profit” and therefore are exempted use of patented subject-matter.

11. Crossing the Line: For Profit • It seems from decided cases that whether a particular experimental use is bona fide testing or for profit would depend on the technical complexity of the experimentation at hand and the predictability of the results. • For example, in Micro Chemicals, the defence applied because the experimentation was geared towards determining how the active ingredient in the drug would be produced and whether production would be economical. • On the other hand, in Wellcome v. Apotex, because Apotex and Novopharm were importing the active ingredient rather than attempting to produce it, the court rejected the defendant’s argument that the purpose of creating the imported tablets from the imported bulk was to experiment with the safety and stability of the tablets. • Where a patented product is relatively simple, the defence of experimentation would likely fail. • In sum, as the SCC warned in Harvard College, the status of the common law experimental use defence is currently unclear.

12. Experimental Use • Despite the absence of or ambiguity in the existence of the defence of experimental use in Canadian patent law, all members of the EU, except Austria have introduced experimental use provision to exempt experiments with the patented subject-matter. • The limits of this right vary from one state to the other. • In the US, there is a relatively broad right to experimental use anchored on the US Patent law. The US applies a test of whether the experiment is geared towards gaining information.

13. Bolar and Bolar-type Exceptions • In the Bolar case, the US Federal Circuit limited the experimental use exception, implying that it does not apply to commercial uses and is restricted to uses “for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry.” • Under the TRIPs Agreement and Doha Declarations, experimental use exemption has been significantly relaxed.

14. Trials on Generic Medicinal Products • Under NOC regulations, allowance is made in Canada for certain trials and tests for the regulation of generic drugs. The regulatory approval is largely designed to obtain infromation about tests, clinical trials, etc. see s. 55 (1) • There are also cases where the products are not “generic” but are similar/derivatives. In such cases, appropriate regulatory agencies may require test results showing that they are safe and efficacious.

15. Visiting Ships and Aircrafts • S. 23 provides that “no patent shall extend to prevent the use of any invention in any ship, vessel, aircraft or land vehicle of any country entering Canada temporarily or accidentally if the invention is employed exclusively for the needs of the ship, vessel, aircraft or land vehicle, and not so used for the manufacture of any goods to be sold or exported from Canada.”

16. Use Prior to Patent • Persons who have prior to the priority date done an act or purchased patented inventions are at liberty to continue the use of such inventions. • Questions may arise whether such a person is permitted to expand his/her operation. It would seem to follow that as long as the production is continued by the same person for the same business s/he can do so.

17. Farmer’s Rights • It is now settled that a farmer’s in many jurisdictions retain the farmer’s right over patented seeds. This is a fairly contentious issue. • A Farmer’s right is the “right” to replant or use second-generation seeds for subsequent farming seasons. • Note that this “right” is increasingly been curtailed by the use of different types of licensing agreements.

18. Doha Exceptions • Pursuant to the Declaration of Doha, s. 21 of the Patent Act was amended to permit the Minister of Health to authorize the manufacture and export of generic drugs to HIV-AIDS stricken parts of the world. • Note the detailed provisions of s. 21.02 of the Patent Act.

19. Use by Government • See s. 19 of the Patent Act.

20. Mens Rea • Patent law does not countenance intent in ascertaining determining infringement. • However, the emergence of genetic patents challenges the implicit assumptions of patent law on the factual characteristics of actions which infringe patented inventions. • For example, the dispersal of patented genes by forces of nature does not quite fit with the imagery of an infringer as a methodical thief of intellectual property.

21. Mens Rea in Infringement • In particular, is a person who by no individual fault comes into possession of adventitious patented genetic material (e.g, through the accidental, or adventitious appearance of a genetically modified organism) be liable to the patentee in infringement? • This question arises because of the unique ability of certain biotechnological inventions to escape the control of their lawful owners. • Biotechnological products, particularly, transgenic products, are unique at least in one respect: they can, and do replicate themselves in a manner outside the control of either the patent holder or the alleged infringer

22. Biotechnology and Mens Rea in Infringement • Although the element of intent in infringement of patents has largely been dealt with by the courts for decades largely in relation to the assessment of damages, traditional patent law doctrine has long been of the view that in most cases, intent is irrelevant when considering the issue of infringement. • However, none of the old cases have dealt with the issue in relation to the specific question of whether the old doctrine sits well with new technologies. • Two recent cases from Canada--Monsanto Canada Inc. v. Schmeiser; Hoffman v. Monsanto Canada Inc. (currently under appeal)- somewhat broached the issue. • In Monsanto v. Schmeiser, Monsanto successfully argued that ownership of a patent for a molecularly engineered plant patent gene and transgenic plant seed entitled it to full control over stray plants and progeny containing the gene.

23. Schmeiser • The suit alleged that Schmeiser planted glyphosate-resistant canola for harvest, without a license from Monsanto. • This is the first suit anywhere in the world on the question of (innocent?) infringement of a genetic patent. • The central question for determination is whether a person can be said to have infringed the patented invention without as much as intentionally planting the patented crop in question?

24. Schmeiser • Schmeiser’s farm was not licensed to plant the patented canola seeds but such plants were found to be growing on his farm. Evidence from a witness, Dr. Downey clearly demonstrated that “the canola plants growing there (on Schmeiser’s farm) were not the result of pollen movement into those fields…[but] from commercial Roundup Ready canola seed” [pg. 11-14 of law report] • Query: Whodunit? • An astonishing legal proposition made by Mackay J., is that a person may be liable for infringing a genetic patent EVEN IN CASES where genetic pollution or promiscuity was in fact an act of forces or factors beyond the control of the alleged infringer. Given the novelty of the issue, this is a problematic proposition of law.

25. Mens Rea • One may also wonder whether it is really necessary in cases of infringement of genetic patents that a court should consider the element of intent. • This doubt arises because a general survey of court decisions in either the US or Canada on infringement yields the impression that infringement is unquestionably a strict liability tort. • Indeed, ignorance of the law is an ambiguous point of law in infringement cases. • To resolve the ambiguity, a distinction must be drawn between ignorance of the legal consequences of the act in question on the one hand and the absence of intent on the part of the alleged infringer on the other hand. Like in most cases, ignorance of the law, and thus of the legal consequences of an act is no excuse.

26. Mens Rea • Thus a person who consciously conducts certain activities incompatible with the rights of a patentee, although s/he was oblivious of the legal consequences of such an act cannot escape liability on infringement by pleading his ignorance of the legal consequences of acts of infringement. • It is therefore natural that in the reasoning of both Canadian and American courts in cases of infringement of patents, little or scant regard has been paid to the ignorance of the infringer of the legal consequences of the infringing. • Generally speaking, liability in patent infringement is strict.

27. Mens Rea • However, this characterization is only partially correct. To the extent that a defendant may be held liable without having any notice, prior to the filing of an infringement action, that his/her conduct was infringing, the tort of infringement may be described as one of strict liability. • On the face of it thus, unintentional or inadvertent infringement is not a defense to a patent infringement. • Thus, generally speaking, a court may enjoin a defendant even if the only notice the defendant had about the patent in issue was the actual writ commencing the infringement action.

28. Mens Rea • In some cases, however, there are both statutory and judicial bases in some jurisdictions such as the US and England for the view that infringement is an objective as opposed to an unforgiving regime of strict liability. • First, in the US, while assessing damages for infringement, courts take into account the element of intent. Indeed, in such cases, courts subscribe to the test of “whether the infringer, acting in good faith and upon due inquiry, has sound reason to believe that it had the right to act in the manner found to be infringing” (SRI Int. v. Advanced Technology Lab/1997). • Second, and with specific regard to the finding of liability in infringement, courts in England have held that in cases pertaining to the use of a process, intent is required to show that the putative infringer knows or it is obvious to a reasonable person in the circumstances that the use of the process is infringing.

29. Mens Rea • Third, in cases pertaining to supplying means of putting a patented invention into practice, intent is equally required to prove that the putative infringer knows or it is obvious to a reasonable person in the circumstances that the supply of the means in question is suitable for putting the invention into use and thus infringing. • Thus, with respect to acts of infringement consisting of the unauthorized importation, use, sale, or offer to sell of unpatented products of a patented process, a defendant in jurisdictions such as the UK may be liable for damages if s/he has actual knowledge or constructive notice prior to the infringement. • Fourth, in English patent law, intent is a crucial element in infringement cases where the patent at bar claims a product of which is to be used in a particular way. • Generally known to UK patent lawyers as “Swiss-type claims”, such claims are of the form of “compound XYZ for use as ABC”.

30. Summary • Therefore, where the nature and characteristics of the invention are such as to raise grave questions on the intent of the alleged infringer, it is submitted that a court should adopt and apply the totality of circumstances test. • This approach, already applied with respect to the issue of assessment of damages in “wilful infringement” cases is already well developed in United States patent law.