Introduction
Canada recently introduced the Budget Implementation Act 2, which brought about several changes to the Patent Act affecting the scope of protection available under Canadian patents. Included in the changes was the addition of a new provision, which provides an exception from infringement for experimental use of patented technologies.
The new Section 55.3 of the Patent Act, which came into force on 13 December 2018, provides that:
55.3 (1) An act committed for the purpose of experimentation relating to the subject-matter of a patent is not an infringement of the patent.
Regulations
(2) The Governor in Council may make regulations respecting
(a) factors that the court may consider, must consider or is not permitted to consider in determining whether an act is, or is not, committed for the purpose set out in subsection (1); and
(b) circumstances in which an act is, or is not, committed for the purpose set out in subsection (1).
The experimental use exception from infringement also extends to the infringement of a certificate of supplementary protection (CSP) issued for a patent.
The new provisions apply to any action or proceeding that has not been finally disposed of as of 13 December 2018.
Prior reference to experimental use in Patent Act
Although there was no codified experimental use exception before the new provisions were introduced, a Bolar exception from infringement for activities occurring during the regulatory approval process is found in Subsection 55.2(1), providing 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.
Notably, the previous Subsection 55.2(6) of the act stated that the Bolar exception affects no exception from infringement for certain non-commercial or experimental use that might exist "at law":
55.2(6) 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 and on a non-commercial scale or for a non-commercial purpose or in respect of any use, manufacture, construction or sale of the patented invention solely for the purpose of experiments that relate to the subject-matter of the patent. (Emphasis added.)
With the enactment of Section 55.3, Subsection 55.2(6) has been amended to remove the reference to experimental use, but the reference to non-commercial activity remains:
55.2(6) 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 and on a non-commercial scale or for a non-commercial purpose.
These related amendments may shed some light on the scope of the new Section 55.3, as they appear to emphasise a distinction between:
- "acts done privately and on a non-commercial scale or for a non-commercial purpose"; and
- use, manufacture, construction or sale of the patented invention solely for the purpose of experiments that relate to the patent's subject matter.
This may suggest that the new exception from infringement could extend to experimental use that occurs in the commercial sphere.
History of experimental use exception
The seminal decision on the experimental use exception is that of the Supreme Court of Canada in Micro Chemicals v Smith Kline & French.(1) This case involved Micro Chemicals performing a variety of experiments in preparation for obtaining a compulsory licence from the patentee and a product made using the patented process before the licence had been granted. The Supreme Court found Micro Chemicals' activities, with respect to their preparation of experimental batches, non-infringing and held that the trial judge had been incorrect to find otherwise, stating: "he was in error in holding as he did that an experimental user without a license in the course of bona fide experiments with a patented article is in law an infringer".(2) The court noted that the use was not for profit but to establish that Micro Chemicals could manufacture a quality product in accordance with the specification. The following factors were influential in the court's decision:
- The compound had been produced in a small amount.
- The compound had been kept by Micro Chemicals and had never entered into commerce.
- The patentee suffered no damage.
- Micro Chemicals had made no profits relating to the activities.
- The activities had been considered bona fide.
Canadian courts have also held that 'testing' per se is not an infringing use.(3)
While the situation in Micro Chemicals was related to experimentation in preparation for a compulsory licence, the principles therein are not limited to that situation. The experimental exception was revisited by the Federal Court of Appeal in Merck v Apotex, where it was held that all that is required is that the infringing product is made merely by way of bona fide experiment and not with the intention of selling and making use of the product in the commercial market.(4)
However, the court noted that once the user has proceeded beyond the experimental and testing phase and has taken steps to manufacture, promote and sell the product, the experimentation exception no longer applies.(5) In this case, the exception was held to apply to the use of the patented product in (among other things) ongoing research and development of alternate formulae and alternate techniques for tablet making.(6)
The limitation of the exception to non-commercial purposes was reinforced in Teva Canada Limited v Novartis AG, where it was held that the full inventory of the patented product that is made must be used for experimental or regulatory purposes and nothing is to be sold or used for commercial purposes.(7)
Thus, even in the absence of an experimental use exception in the Patent Act, Canadian courts have held that it is not an infringement to make or use a patented invention by way of experiment or testing only, without the intention of commercialisation.(8) Other cases that have been referenced by Canadian courts indicate that it is not an infringement to construct a patented article for the purpose of improving on it or ascertaining whether a certain addition, subtraction or improvement thereon is practical.(9)
Comment
The new Section 55.3 empowers the governor in council to make regulations respecting factors to be considered in determining whether a use is experimental use and circumstances in which an act is or is not experimental use. This regulation-making authority suggests that it is contemplated that there may be a need to clarify amendments in Canadian law as the courts start to interpret Section 55.3. As no regulations have yet been promulgated, it remains to be seen exactly what factors are open for consideration of the experimental use exception and in what circumstances it will be applied. Judicial interpretation of the new provision, as well as corresponding regulations, will be necessary in order to elucidate the full scope of protection provided by the experimental use exception under Section 55.3.
Endnotes
(1) Micro Chemicals Ltd v Smith Kline & French Inter-American Corp (1971), 1971 CarswellNat 388, 2 CPR (2d) 193 (SCC) (Micro Chemicals).
(3) Dableh v Ontario Hydro (1996), 1996 CarswellNat 2592, 68 CPR (3d) 129 (FCA) at Paragraph 44.
(4) Merck & Co v Apotex Inc, 2006 FCA 323, at Paragraph 109 (Merck 2006). See also Merck & Co Inc v Apotex Inc, 2010 CarswellNat 5009, 2010 FC 1265, 91 CPR (4th) 1(FC) at Paragraphs 625 to 637, affirmed 2011 CarswellNat 6152, 2011 FCA 363, 102 CPR (4th) 321 (FCA); Dableh supra note 3 at Paragraph 44.
(5) Micro Chemicals, supra note 1; Merck 2006, supra note 4 at Paragraph 113.
(6) Fox Canadian Law of Patents, edited by Donald H MacOdrum, Fifth Edition, Section 13:17 — (a) Experimental and Developmental Manufacture and Use and Non-Commercial Use (Fox); Merck & Co, Inc v Apotex Inc, 2006 CarswellNat 1119, 2006 FC 524, 53 CPR (4th) 1(FC) at 159 to 163, affirmed on this issue 2006 CarswellNat 3206, 2006 FCA 323, 55 CPR (4th) 1(FCA) at Paragraphs 99 to 113.
(7) Teva Canada Limited v Novartis AG, 2013 FC 141 at Paragraph 392.
(8) Micro Chemicals, supra note 1; Dableh, supra note 3.
(9) Jones v Pearce (1832), 1 WPC 121 at 125; Muntz v Foster (1844), 2 WPC 101; Frearson v Loe (1878), 9 Chapter D, 48; Proctor v Bayley & Son (1899), 6 RPC 107; Fox, supra note 6.
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