Main Body

X. Actions and Remedies

Haley MacLean

A. Introduction

As important as it is to acquire intellectual property rights, it is equally as important that these rights be enforceable in practice. Without an effective enforcement regime in any intellectual property system, any effort put towards the creation of a work, trademark, or invention can be exploited by infringers to steal any actual or potential revenue from the rights holder or disparage their reputation in the process. With the proper mechanisms, rights holders can take action against infringers to recover the losses from actual infringement and prevent any further infringements from happening in the future. WIPO states, “[w]ithout a proper system for both enforcing rights and also enabling the grant of rights to others to be resisted, an intellectual property system will have no value.”

This chapter focuses on how the Canadian judicial system approaches and deals with both civil and criminal offenses related to the infringement of intellectual property rights, and the proper jurisdictions in which these claims can be heard. It also explores the different classifications of liability imposed by intellectual property law. Gaining a better understanding of the enforcement of intellectual property rights aids a broader comprehension of IP rights and their justifications

B. Jurisdiction of the Canadian Courts

Despite the federal courts hearing most intellectual property disputes, (some estimate approximately 95% of all IP cases in Canada are heard at the Federal Court) the Constitution Act, 1867 affirms jurisdiction is shared between both the provincial and federal courts with overlap existing in some areas.

Since Canada follows a federalism system wherein both a general government and regional government are fixed within one single political system, disputes relating to intellectual property law can be heard at the federal courts, the provincial courts, or potentially either depending on the nature of the issue.

Determining the appropriate jurisdiction to bring an intellectual property case can be done by consulting statute, or by following the precedent of past case law decisions. Exercising the proper jurisdiction for an IP issue is necessary to ensure the general and regional governments are not hearing the same problems and creating contradictory results with their decisions. It also ensures the breadth of the power and resources of the federal government is only used for IP issues where it is necessary, allowing more straightforward IP cases to be heard at the provincial level such as simple contractual disputes.

1. Exclusive jurisdiction of the Federal Court

As per the Constitution Act, 1867, patent and copyright law are under the exclusive jurisdiction of the federal government. Trademark law is not specifically mentioned under the Constitution Act, but it is generally accepted that granting federal jurisdiction to ‘the regulation of trade and commerce’ encapsulates trademarks under that definition as well. The purpose of s.91(2) is to allow the federal government to enact legislation that applies to nation-wide trade sectors, and this would naturally extend to trademarks via their inherent associations with trade and business.

The history of the Federal Court of Canada begins in 1971 when it succeeded the previous Exchequer Court of Canada. The Federal Court is governed by the Federal Courts Act and was originally comprised of a Trial Division and an Appeal division until 2003 when it was divided into two separate courts being the Federal Court and the Federal Court of Appeal. Since both divisions are guided by statute, they have jurisdiction conferred onto them pursuant to statutory provisions. In the case of IP law, the applicable statutory acts warranting federal jurisdiction include the Copyright Act, the Trademarks Act, and the Patent Act.

The federal courts would also have exclusive jurisdiction over IP related disputes relating to statutory provisions found in the Industrial Design Act, the Integrated Circuit Topography Act, and the Plant Breeders’ Rights Act.

Image from The Federal Court of Appeal.

S.20 of the Federal Courts Act addresses the exclusive jurisdiction of the federal courts, as well as the concurrent jurisdiction between both the federal and provincial courts. Developments in Canadian IP case law has also narrowed down certain examples of IP disputes that would naturally fall under the exclusive jurisdiction of the federal court. Examples include:

  • Changes to the register of trademarks
  • Expungement of registrations of intellectual property rights
  • Invalidation of patent
  • Intellectual property disputes where the Federal Crown is a party itself

They are commonly three main reasons why the Federal Government hears most intellectual property cases.

Firstly, is the concept of the differences between in rem versus in personam jurisdictions. Only the Federal Courts have the power to invalidate, expunge, or impeach intellectual property rights, and therefore have the ability to make decisions that are in rem (‘against the thing’) while the provincial courts can only make decisions in personam (‘against the person’). The Federal Government can make decisions affecting intellectual property itself, while the Provincial Government is aimed at making decisions towards that actual parties within the litigation. Therefore, the Federal Government will often be found to be the appropriate jurisdiction with IP matters since it offers a longer list of accessible remedies. However, if a plaintiff who is fearful that their rights might be invalidated if taken to court might opt to pursue a provincial jurisdiction instead, meaning potentially their ‘intellectual property lives to see another day’.

Secondly is the fact that traditionally the Federal Court has seen the majority of these cases in the past, so it makes sense to continue to see these cases within that jurisdiction because the federal judiciary already has experience dealing with these issues resulting in more efficient and predictable outcomes.

And the final reason why the Federal Courts hear most IP related cases is because it has a national jurisdiction that extends to all provinces. Specifically, this can be helpful in issuing injunctions because the Federal Courts have the power to enforce injunctions nationwide. For example, in the 2017 case of Google Inc. v Equustek Solutions Inc the Supreme Court of Canada successfully granted an interlocutory injunction against Google that extended not only to the entirety of Canada but globally as well. Google, who was a third-party to the dispute, was forced to de-index the defendant’s domain from all Google searches in order to prevent irreparable harm to the plaintiff’s intellectual property interests. Broad and encompassing injunctions of this nature can only be achieved at the federal court level.

2. Joint jurisdiction with common jurisdiction courts

Both the federal and provincial courts share jurisdiction for the application of intellectual property law. Specifically, the provincial superior courts have concurrent jurisdiction for the enforcement of these rights. The statutory basis for this shared jurisdiction is found in s.20(2) of the Federal Court Act which states, “…[t]he Federal Court has concurrent jurisdiction in all cases, other than those mentioned in subsection (1), in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention, copyright, trademark, industrial design or topography referred to in paragraph (1)(a).”

Concurrent jurisdiction simply means that two different courts have the authority to hear the same case, which applies to both civil and criminal trials. An example of concurrent jurisdiction in intellectual property law can be basic issues of determining infringement, which can be seen by either the federal or superior provincial courts. So, a trademark infringement proceeding under s. 19, 20, and 22 and passing-off and unfair competition proceedings under the Trademark Act could be seen by either the federal or provincial jurisdiction.

 

The existence of concurrent jurisdictions allows for the possibility of what lawyers call ‘forum shopping’. This is when litigants will choose to have their legal case heard in the court they believe will result in the most favourable judgement. While this is not as much of an issue in Canada, (as previously stated almost all IP related cases are taken to the federal courts), the US has seen more and more case law in the last few years trying to address this issue of forum shopping in American IP law.

US Forum Shopping

In 2017, the US Supreme Court case of TC Heartland LLC v Kraft Foods Group Brands LLC greatly affected the ways in which patent law jurisdiction was decided within the country. Prior to the decision, the Eastern District of Texas heard almost half of all patent cases for the whole country. Because that court was considered very patentee friendly, patent holders would opt to pursue their cases there in the hopes it would increase their chances of success. The US patent venue statute under 28 U.S.C. §1400(b) stated “[a]ny civil action for patent infringement may be brought [1] in the judicial district where the defendant resides…”, with ‘where the defendant resides’ given a very broad interpretation by the Federal circuit which essentially covered anywhere the business has made a sale throughout the country. TC Heartland narrowed that definition to define where a domestic corporation ‘resides’ as the state of its incorporation.

American publisher Law Journal Newsletters reports that only a few months after this decision, the Eastern District of Texas went from seeing 39.61% of all patent cases to 15.04%. Meanwhile, the District of Delaware where more than half of all publicly traded domestic companies are incorporated went from seeing 12.06% of patent infringement cases to 27.91% after the TC decision. A narrower definition of the jurisdiction in which litigants can bring IP-related disputes will ensure parties spend less time and resources challenging jurisdiction before the case has even seen a courtroom.

Discussion Question: Why do you think the US has issues with forum shopping for IP related disputes while Canada does not? What differences exist between the two IP regimes to explain this distinction?

 

Example: Salt Canada Inc. v. Baker, 2020 FCA 127

This is an appeal from the judgment of the Federal Court (per Boswell J): 2016 FC 830. The Federal Court dismissed an application brought by the appellant for an order directing the Commissioner of Patents to vary the records of the Patent Office to reflect it as owner of Canadian Patent No. 2,222,058. The question on appeal is whether the Federal Court had jurisdiction to hear the application, which required it to adjudicate a contractual dispute, a matter reserved exclusively to the provincial superior courts.
After a review of numerous decisions in matters of federal jurisdiction (tax, intellectual property, administrative law, maritime law, privacy and access to information), the Federal Court of Appeal ruled that when dealing with an application under section 52 of the Patent Act, the Federal Court remains free to carry out the task Parliament has given to it—to determine who should be reflected on the records of the Patent Office as the owner of a patent—even if that involves interpreting agreements and other instruments. In reaching its decision, the Federal Court of Appeal emphasized:
[31] The bounds of the Federal Court’s jurisdiction do not rest on the nebulous exercise of assessing whether something is “primarily a case in contract” or whether contractual interpretation will “dictate” the end result.
[44]  If the Federal Court does not have jurisdiction in this case—and by extension in any case where contractual interpretation is central to the disposition—the problem of divided proceedings will once again become a feature of the Federal Court system despite Parliament’s intention. If the Federal Courts always need the provincial courts as a crutch to determine a matter leaning on contractual considerations or other private rights, its very core and purpose, as encapsulated by John Turner, the architect of the first Federal Courts Act, would be eviscerated.

There are also a few instances in intellectual property law where the provincial courts have inherent jurisdiction. This includes when a dispute has no statutory act covering its governance and/or is centered on an issue in tort or contract law. For example, only the provincial courts have inherent jurisdiction to the interpretation of contracts related to intellectual property rights since contract law is governed by the common law courts.

 

Nova Scotia Provincial Court. Image by cphoffman42 on Flickr

The 2018 case of Farmobile, LLC v Farmers Edge Inc. further clarified when the provincial courts have jurisdiction to contractual disputes related to IP law. It decided that in order to determine jurisdiction for IP contractual disputes one must determine whether the contract issue at hand lies at the essential nature of the claim, or if that issue is ancillary to the claim. If the contractual issue is the center issue at trial, then the superior provincial courts will have jurisdiction. However, if the contractual issue is simply one aspect of a broader issue then the federal courts can (and often always will) have jurisdiction. In the Farmobile case, the defendant was trying to claim the issue was a contractual one and therefore the provincial courts had jurisdiction. However, the court reasoned instead the essential nature of the issue was that of patent infringement and it was not prima facie within the provincial court’s jurisdiction.

Exercise – Choosing the proper jurisdiction

Choosing between federal, provincial, or both, which do you think is the proper jurisdiction to hear the following IP-related disputes, and why?

  1. Patent infringement cases.
  2. Review of Copyright Board decisions.
  3. Misuse of a trade secret.

Answers.

3. Administrative standard of review

Within Canada, Parliament has delegated power to various administrative boards and agencies within the intellectual property regime to aid in the implementation and administration of law surrounding IP.

For trademarks, power has been delegated to:

  • The Registrar of Trademarks
  • The Trademarks Oppositions Board

The Registrar of Trademarks is the administrative body that reviews and approves of trademarks sent in by applicants who have followed the step-by-step process laid out by the Canadian Intellectual Property Office. It can render decisions but does not have the jurisdiction to award costs to a winning party. S.56 of the Trademarks Act allows for any decision given by the Registrar to be appealed to the federal courts within two months of the time the decision was dispatched to the parties by the Registrar, or for an extended time after that date if it is permitted by the courts.

The Registrar receives applications and gives them a filing date if they meet the preliminary requirements. The granting of a filing date is a crucial process to gaining a trademark, as this is the date which is used for future cases of confusion between co-pending trademarks. The Registrar publishes applications in the Trademark Journal which lists trademarks advertised under s.37(1) of the Trademarks Act. The Canadian Trademarks database also collects and compiles all active trademarks as well as all inactive marks that were cancelled, expunged, abandoned, or refused after 1979. Once an application is published in the Trademark Journal, any member of the public may then file an opposition to the trademark.

The Trademark Opposition Board acts on behalf of the registrar for two specific types of proceedings, basic opposition proceedings and s.45 proceedings under the Trademarks Act. Opposition proceedings allow a person to object to the registration of a trademark in Canada, which if successful would prevent a trademark application from issuing to registration. s.45 proceedings allow a person to send a request to remove (expunge) a trademark registration if the owner is unable to prove the use of the trademark within Canada during a three-year period, so long as there are no special circumstances that warrant the lack of use during that period. An easy way to remember the difference between the two is opposition proceedings are used before a trademark is registered, and s.45 proceedings are used after it is registered. However, they are both seen before the Registrar and governed by the Trademark Opposition Board.

The Trademark Opposition Board lists its responsibilities as:

  • Assessing initial opposition requests
  • Corresponding with both parties in the opposition
  • Ruling on various interlocutory matters (oppositions proceedings only)
  • Scheduling and conducting hearings; and
  • Rendering decisions.

The Government of Canada lists the standard stages for s.45 proceedings including (1) the issuance of the s.45 notice stage wherein any person or the registrar itself sends a request to remove a registered trademark of three or more years from the registrar. The notice can also be limited to only cover the particular goods or services set out in the registration. (2) The evidence stage, where the owner of the trademark in question files and serves evidence in the form of affidavits or statutory declarations to attempt to prove the use of their trademark during that period. And (3), the argument stage, where the trademark owner and the opposing party are given an opportunity to file written representations and make representations at an oral hearing. After these three stages, the Registrar gives a written decision which can be appealed to the Federal Court if need be.

In relation to opposition proceedings, the recent 2020 case of The Clorox Company of Canada, Ltd. v Chloretec, the Federal Court of appeal addressed a new standard of review in the hearing of trademark opposition appeals. It was decided that the finding in the previous 2019 SCC case of Canada (Minister of Citizenship and Immigration) v Vavilov (which clarified the standard of review analysis to be applied in administrative decisions) would have no effect to on the way in which the Federal Court of Appeal should apply the applicable standard of review when it reviews federal court decisions relating to the materiality of new evidence, as was the circumstance with the Clorox case. Put more simply, in more recent years case law has been acknowledging that applying normative administrative law standards to intellectual property law regimes doesn’t make sense, as the two systems differ too greatly to place them under the same legal umbrella.

Discussion Question

What inherent differences between the administrative and intellectual property legal regimes warrant differential treatment between them? Should major decisions affecting administrative law in general be automatically applied to intellectual property law? Why or why not?

For patents, power has been delegated to:

  • The Commissioner of Patents
  • The Patent Appeal Board

The Commissioner of Patents grants authorization of patent applications, with their decisions being quasi-judicial in nature. All the decisions made by The Commissioner of Patents are posted online on the CIPO website. S.4(1) of the Patent Act states the Government in Council appoints the Commissioner who then acts under the direction of the Minister. S.4(4) then lists the duties of the Commissioner stating, “The Commissioner shall receive all applications, fees, and documents relating to patents, shall perform and do all acts and things requisite for the granting and issuing of patents, shall have the charge and custody of the books, records and other things belonging to the Patent Office and shall have, for the purposes of this Act, all the powers that are or may be given by the Inquiries Act.” Part II of the Inquiries Act, which governs public and departmental inquiries, then lists the powers and departmental investigations granted to the Commissioner.

The Patent Appeal Board is an advisory body made up of senior Patent Office officials that have been mandated by the Commissioner since 1970. The Government of Canada lists the responsibilities of the Patent Appeal Board as:

  • Conducting independent reviews
  • Providing recommendations and advising the Commissioner during reviews of rejected patent applications
  • Reviewing rejected applications for the reissue of a patent
  • Determining first inventorship in patent conflict situations
  • And aiding the Commissioner in their more straightforward duties such as:
    • Patent re-examination procedures
    • Accessing the terms and conditions for use of patented inventions by governments
    • Granting authorizations under Canada’s Access to Medicines Regime (CAMR)
    • Administration of the procedures related to an alleged abuse of patent rights
    • Administration of the annual Patent Agent and Trademark Agent Examinations
    • Dealing with complaints of misconduct by patent agents.

For copyright, power has been delegated to:

  • The Copyright Board

Unlike patents and trademarks, there is no registrar or commissioner that approves of copyright protections because copyright exists in the work from the moment it is created. There is however an economic regulatory body called The Copyright Board which has several administrative responsibilities within Canada’s copyright regime delegated to it by the federal government. A list of The Copyright Board’s responsibilities can be found on its website, some of which include certifying tariffs, supervising agreements between users and licensing bodies, and establishing royalties to be paid for the use of copyrighted works for collective-administration societies.

The Copyright Board was created in 1989 as a replacement to the 1935 Copyright Appeal Board. Amendments to the Copyright Act then significantly expanded the Board’s mandate and responsibilities in 1997 via Bill C-32. The Copyright Modernization Act (Bill C-11) in 2012 then added new rights and exceptions to the Copyright Board’s authority. The Copyright Board states its duties are, “to render fair, equitable and timely decisions that require dealing with increasingly complex legal and economic issues. Its decisions must be based on solid legal and economic principles, reflect a solid understanding of constantly evolving business models and technologies, and be fair and equitable to both copyright owners and users.” Decisions of the board are not appealable but are subject to judicial review, and year-by-year both the Federal and Supreme courts add to the legal and policy issues the Board must address.

There are also several copyright collecting societies that administer the rights of collective copyright owners. The use of collecting societies is quite popular in Canada for industries relating to performance rights, reprography rights, and mechanical reproduction rights. Some examples of copyright collecting societies listed on the Copyright Board website include the Canadian Screenwriters Collection Society (CSCS), Access Copyright, the Canadian Copyright Licensing Agency, and Society of Composers, Authors and Music Publishers of Canada (SOCAN). Collecting societies essentially act as umbrellas for groups of copyright holders with similar types of works within the same industry to administer, grant permission for the use, and set the conditions for the use of the rights of their protected member’s copyrights.

The 2020 case of York University v The Canadian Copyright Licensing Agency (Access Copyright) saw a decade long battle between a major university and Access Copyright in determining the scope of enforcement for tariffs imposed by copyright collecting societies. York University decided to opt-out of a licence with Access Copyright, which included a tariff that permitted the use and copying of materials by faculty and students under certain circumstances.  Instead, York relied on the defence of fair dealing under s.29 of the Copyright Act for the purpose of research, private study, and/or education in relation to the use of copyright materials under Access Copyright’s protection. Access Copyright sued York, claiming the tariff was not optional and York should be held to the limitations proposed within the tariff. The main question at issue was whether these tariffs apply to any groups that use a copyrighted work protected by Access Copyright, or only to those that hold a licence with Access Copyright specifically.

The Federal Court of Appeal decided that tariffs proposed by Access Copyright and other copyright collecting agencies are not mandatory, stating in paragraph 205, “[a]cts of infringement do not turn infringers into licensees so as to make them liable for the payment of royalties. Infringers are subject to an action for infringement and liability for damages but only at the instance of the copyright owner.” Since York opted out of the licence with Access Copyright, it was not liable to the tariff and can only be sued for copyright infringement by the copyright holder themselves, not the broader collecting agency. This decision ultimately limits the inherent scope of enforcement held by copyright collecting agencies and has the potential to be appealed to the Supreme Court of Canada for further clarification.

C.  Civil Remedies

While criminal remedies for intellectual property infringement do exist (and will be explored later in this chapter), the vast majority of IP cases are civil are require owners of intellectual property to enforce their rights against infringers in private civil actions to utilize civil remedies. Examples of civil remedies for intellectual property enforcement include injunctions, award of costs, damages or an account of profits, delivery up, destruction of infringing items (and possibly the items used to make them), tracing orders, and Norwich orders.

1. Injunctions

Injunctions are very common in the world of IP law, and are legally defined as a warning or order by the courts that restrains or prevents a person from undergoing or continuing an action that would threaten or infringe upon the legal right of another person. They are often used as remedies when it’s determined monetary damages are insufficient to fully remedy the damage for the intellectual property holder. For example, if a person is infringing a trademark and disparaging the goodwill of a brand in the process, issuing monetary damages would only account for the harm that has already been committed. A prohibitive injunction would prevent continued infringement from causing irreparable harm to the company in the future. Prohibitive/permanent injunctions are extremely common in IP proceedings and help IP holders protect the monopoly of their works.

Injunctions are expressly permitted as a remedy to infringement in s.57 of the Patent Act, s.34(1)(2) of the Copyright Act, and s.53.2(1) of the Trademarks Act.

Interlocutory injunctions function similarly to prohibitive injunctions but differ in that they are court orders prohibiting or enforcing activities that are issued before the final determination of the case and remain in effect until trial. If there is a fear that damage will be caused even in the time before an interlocutory injunction can be awarded, a rights holder can seek an interim injunction which are very short injunctions that are obtained ex parte.  They are used strictly for the short interim time before both parties can attend court for the formal application of an interlocutory injunction. However, under federal law interim injunctions cannot be maintained for a period longer than 14 days and they are used for only extremely urgent matters.

Other ex parte injunctions that can be requested alongside interim injunctions include a Mareva injunction that prevents a defendant from liquidating or moving their assets in case the plaintiff might be entitled to those funds and an Anton Piller seizure order that prevents a defendant from destroying evidence before the trial.

The test for the granting of an interlocutory injunction comes from the 1994 case of R.J.R Macdonald Inc. v Canada (Attorney General) and requires a plaintiff to prove irreparable harm would occur if not for the application of an interlocutory injunction. The three-part tests asks (1) whether there is a serious issue to be tried, (2) will the applicant suffer irreparable harm if the injunction is not granted; and (3) often called the balance of conveniences, asks which of the two parties which would suffer the most harm from granting or receiving the remedy pending a decision on the merits?

The first step has a low threshold, with the court stating so long as an application is not ‘vexatious nor frivolous’ the judge will move onto step two even if the plaintiff seems unlikely to succeed at trial. The second step requiring proof of evidentiary harm is a much higher bar to meet and is the step where most applications fail. While there is no specific legal definition for irreparable harm under this test, an applicant must essentially show that harm cannot be compensated with monetary value and an interlocutory injunction is the only possible process to prevent the harm. The final balance of conveniences step is determined based on the facts of the case, with instances where there is a greater potential harm to be suffered by the plaintiff pointing towards the necessity for an interlocutory injunction.

Exercise: Applying the interlocutory injunction test from R.J.R. MacDonald

Using the test outlined in R.J.R. Macdonald, determine whether the courts granted an interlocutory injunction in the 2017 case of Sleep Country Canada v Sears based on the facts.

 

Imagine from Creative Commons within the public domain.

 

Facts: Sleep Country Canada is a mattress retailer that is quite well known in Canada for its trademarked slogan, “Why buy a mattress anywhere else?” complete with a commercial jingle. The defendant Sears, which also sells mattresses, began using a slogan “There is no reason to buy a mattress anywhere else” for its own marketing purposes. Sleep Country commenced a trademark infringement action, and sent in an application for an interlocutory injunction alleging the slogan will cause irreparable harm to its company by causing confusion for its customers, a depreciation the goodwill of brand of Sleep Country, and a loss of distinctiveness of its own trademark. A motion for an interim injunction was dismissed. Additional facts include:

  • At the time, Sleep Country had 234 stores and 17 distribution centres in Canada
  • Sleep Country had used the slogan for TV, radio, print, and online advertising
  • Sleep Country noted that its slogan, which is sometimes in a musical jingle, has national recognition and has reached iconic proportions
  • The jingle was ranked as one of Canada’s 25 catchiest jingles by the Huffington Post
  • Sears has sold mattresses for at least the past 40 years
  • Sears used its slogan in online flyers on Instagram and Facebook, in printed flyers for a period of two months, in radio advertisements, and in Black Friday advertisements in November 2016

2. Award of Costs

Litigation can be extremely expensive, so the Canadian courts have developed an award of costs system that seeks to compensate the winning party for costs incurred during the process. All provinces in Canada have adopted this system. Commercial litigation lawyer Grant Vogeli states in his blog that historically, successful litigants were awarded approximately 40-50% of their actual legal expenses under this English system. It is uncommon for a successful party to be awarded full indemnity or solicitor-client costs, which would cover all legal expenses, unless the losing parties’ actions were especially dishonest, scandalous, or outrageous.

As previously discussed, the federal courts hear most IP cases in Canada and Part 11 of the Federal Court Rules lays out the process of granting award of costs in the federal jurisdiction. If an IP related case were to be considered at a provincial level (for tort or contract related disputes for example), you would consider the processes laid out in the province’s respective Civil Procedure Rules. Specifically, in Nova Scotia, Rule 77 of the Nova Scotia Civil Procedure Rules dictates the appropriate calculations to determine cost awards for the winning party under Tariffs A-F.

3. Damages or an Account of Profits

Damages are awarded are compensation for the loss incurred by the rights holder caused by the infringement by the defendant’s actions. Since a rights holder has a monopoly on their work and the profits it may incur during a defined period of time allotted by the respective acts for each right (20 years for patents, 50 years after the death of an author for copyright, 10 years for trademarks with the option to renew), any infringement of that right within that time frame warrants monetary compensation for a loss of that monopoly. The onus to prove damages lies with the plaintiff and is assessed based on the facts of the case.

Damages are expressly permitted as a remedy to infringement in s.55 of the Patent Act, s.34, 35, 38 and 38.1 of the Copyright Act, and s.53.2 of the Trademarks Act.

IP holders can also be entitled to an account of profits based on the circumstances, which requires the infringer to hand over all profits made by the process of infringement. S.35(1) of the Copyright Act allows for an account of profits while s.35(2) lays out the shifting onus wherein the plaintiff must first prove the receipts or revenues derived from the infringement and then the defendant must prove every element of cost that the defendant claims. If a defendant refuses to be cooperative with the court and prove every element of cost, the plaintiff may still obtain the information elsewhere to all the court to make a fair judgement in the evaluation of total profits.

In trademark law, it is more difficult to make an evaluation of lost profits since the profits gained by infringement could arguably have gone to another competitor in the same market besides the trademark holder in question. However, an account of profits can still be granted if the circumstances allow for a fair assessment of net profits loss. For example, if the trademark which was infringed has a monopoly in the market or if the product it represents is unique in its appearance, quality, or price compared to all other competitors, then an evaluation of lost profits could be determinable.

For patent law, the timeline of when the right was granted to the patent holder plays a bigger role in the determination of an account for profits compared to trademark and copyright law. According to s.55(2) of the Patent Act if an infringement occurs in the period between the publication and granting of a patent, then the holder is only compensated for damages accounting for infringement and not any account of profits simply because the patented invention has not yet formally entered the market. However, after the granting of a patent a case of infringement can allow for an account of profits if the courts deem it appropriate. To determine the profits lost the court would consider the position of the patent holder if the defendant had not infringed their work.

In Colonial Fastener Co. Ltd. v Lightning Fastener Co. Ltd., the Supreme Court affirmed that only royalties can be awarded for patent infringement if the patent holder either does not manufacture or sell the patent-protected item, normally grants licences under the patent, or cannot prove the loss of a sale due to the activity of the infringer. In those instances, the patent holder would not be awarded lost profits and instead would receive a figurative royalty with the amount granted based on the price the infringer would have paid if they had taken the proper channels and entered into a licencing agreement with the patent holder.

4. Delivery Up and Destruction of Infringing Items

Delivery up is defined as the act of giving a piece of property back to its original owner. In intellectual property law, this often means with the intention of destroying the item if it was made as a result of the infringement of an IP right. The purpose of delivery up is to aid prohibitive injunctions in their application, with the effect allowing the rights holder to avoid continued infringement issues in the future. Delivery up and destruction of items are remedies that apply to all types of intellectual property including patents, trademarks, and copyright. An order for the destruction of goods is granted only after a finding of infringement has occurred.

Delivery up is expressly permitted as a remedy to infringement in s.34, 41.1(2), and 41.22(2) of the Copyright Act, and s.53.2(1) of the Trademarks Act. There is no specific provision in the Patent Act that references delivery up, but it is still often used as a remedy in the recognition of the exclusive rights granted to the patent holder under s.42.

The TRIPS Agreement has two provisions relating to this remedy under Article 46 and 59. Article 46 is a general application remedy that relates to the destruction of infringing goods in general. It also applies to items whose primary purpose was/is to make the infringing goods in question, stating the judicial authorities have the authority to, “…order that materials and implements the predominant use of which has been in the creation of the infringing goods be…disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements.” Whereas Article 59 specifically relates to the destruction of imported counterfeit goods in the possession of customs authorities under the same principles of Article 46. Article 59 also specifies that in regards to trademarks, “…the authorities shall not allow the re-exportation of the infringing goods in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances.”

5. Tracing and Norwich Orders

Tracing orders are used to force an infringer to tell the courts where they received their supplies of infringing goods in order to track further infringement cases. If an infringer were to refuse compliance with a tracing order, they can be found in contempt of court. Norwich orders have been granted in specific circumstances, including: (1) where the information sought is necessary to identify wrongdoers; (2) to find and preserve evidence that may substantiate an action or determine whether an action exists against known or unknown wrongdoers; and (3) to trace and preserve assets.

A Norwich order on the other hand if a pre-trial remedy that is commonly used in copyright infringement cases against intermediaries like internet service providers to force them to provide their private information in order to identify infringers online. Norwich orders are a very intrusive remedy and must be used only in certain circumstances. They are also commonly used in cases of online defamation, like in the 2009 case of York University v Bell Canada Enterprises wherein York was requesting an order requiring Bell and Rogers to disclose info necessary to obtain the identity of anonymous authors of allegedly defamatory emails. This case laid out the requirements for an allowance of a Norwich order including sufficient evidence to show a bona fide reasonable claim, the applicant must establish the third-party is somehow involved in the acts, the third-party is the only practical source of info, the third-party can be indemnified for costs, and the interests of justice favour obtaining the disclosure. In York University, the Norwich order was granted because the internet service providers offered the platform for the defamatory emails to be sent, there were little to no costs associated with providing the information, and there was no other practical source to determine the identifies of the defendants in this instance.

Prior to 2015, ISPs could charge a fee against the copyright holder for the work associated with the compliance of a Norwich order. The 2018 case of Rogers Communications Inc. v Voltage Pictures addressed the issue of whether fees should still be required (as per common law) or if ISPs should be exempt from charging fees for their services in identifying users on their platforms (as per the notice and notice provisions under s. 41.25 and s.41.26 in the Copyright Act). Film production company Voltage Pictures requested a Norwich order on ISP Rogers to disclose the identities (including personal and contact information) of unidentified Internet subscribers who were sharing their films online using peer to peer file-sharing networks. The order was allowed and the federal court decided for Rogers stating it was able to recover all costs associated with identifying the individuals. However, the Federal Court of Appeal disagreed and stated the Copyright Act already requires ISPs to collect user identification information regardless of the presence of a Norwich order, so there should be no fees associated with requirements already existing under the act. However, Rogers did take on additional steps when collecting information on its users that was not required under the act, and it could be compensated with fees for any additional steps taken to collect information that are not expressly required under the notice and notice regime. In this case, those additional steps included connecting the IP address to the person’s real-life identity and sharing that specific person’s identity with the copyright owner.

Another example of a request for a Norwich order during an intellectual property infringement case the 2019 case of ME2 Productions, Inc. v Doe, wherein the plaintiff companies were seeking a Norwich order against TekSavvy Solutions Inc. to obtain the names and addresses of some of TekSavvy’s users who were allegedly illegally downloading and sharing ME2’s films. TekSavvy questioned the motion stating ME2 had not produced sufficient evidence to warrant a Norwich order to obtain the identities of the alleged infringers. The courts decided there was not sufficient evidence to warrant a Norwich order calling it an “…equitable, discretionary and flexible remedy…an intrusive and extraordinary remedy that must be exercised with caution”, with Teksavvy being awarded partial costs. ME2 was still free to file a new Norwich order after this decision so long as it was filed with sufficient evidence to warrant its use.

6. Bifurcation Orders

It can sometimes be in the best interest of the IP holder to seek an order for a bifurcation, or splitting, of the issues at trial. If a defendant is found not liable, then there is no need to continue the trial in the assessment of damages, saving time and money not just for the parties but for the judicial system as well. This is permitted under Rule 107 of the Federal Court Rules, and in IP cases this would make the determination of liability and the determination of remedies/damages become separate issues at trial instead of being determined together as one issue. In 2011 the Federal Court also posted similar order solely for matters relating to intellectual property called the ‘model bifurcation order’.

The court will allow a bifurcation order if it satisfies the following factors from the 2003 case of Realsearch Inc. v Valone Kone Brunette Ltd listed in paragraph 10, including:

  • Whether issues for the trial are relatively straightforward;
  • The extent to which the issues proposed for the first trial are interwoven with those remaining for the second;
  • Whether a decision at the first trial is likely to put an end to the action altogether, significantly narrow the issue for the second trial or significantly increase the likelihood of settlement;
  • The extent to which the parties have already devoted resources to all of the issues;
  • The timing of the motion and the possibility of delay;
  • Any advantage or prejudice the parties are likely to experience; and
  • Whether the motion is brought on consent or over the objection of one or more of the parties.

While there are some notable benefits to model bifurcation orders, some have rightly critiqued the issues they can sometimes create for the plaintiff’s wishing for a speedy resolution to IP infringement. Splitting up the issues might save the parties’ costs and time if the defendant is found non-liable in the first issue, but if they are found liable the plaintiff does not have to engage in a second proceeding with its own time constraints.

Exercise – When should you use a bifurcation order?

Should you request a model bifurcation order for the following situations? Yes/no, and why?

  1. The order may affect the ability of a party to prove or defend liability.
  2. It is later in the proceedings and the affidavits of documents have already been exchanged.
  3. You are representing the defendant and they have expressed to you they hope to publicly release as little information regarding their financial situation as possible.
  4. You are representing the plaintiff who is suffering irreparable harm from infringement and is hoping to have a speedy trial to stop it from damaging their business as quickly as possible. However, they expressed interest in splitting the issues because they want to make sure they don’t waste legal costs on accessing damages if the defendant is found not liable. Could they ‘have their cake and eat it too’?

E. Criminal Sanctions

While civil remedies are available for all types of intellectual property infringement, only in certain circumstances can criminal sanctions be available for violating certain forms of IP. With criminal proceedings, the burden of proof is significantly higher than that of civil proceedings being beyond a reasonable doubt as opposed to on a balance of probabilities.

In Canada there are criminal sanctions for specific actions relating to trademarks and copyright, but there are no criminal sanctions for infringement of patents in any manner.

1. International Requirements

Article 61 of the TRIPS agreement states, “[m]embers shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale.” For deterrence purposes the penalties must include monetary fines and/or imprisonment “… consistent with the level of penalties applied for crimes of a corresponding gravity.”  The agreement then leaves it to the discretion of the members to decide whether criminal sanctions will be used for other forms of intellectual property infringement.

Trademark counterfeiting differs from trademark infringement under TRIPS as it requires, as Article 61 specifics, a ‘wilfulness’ to deceive or confuse the consumer with an identical or fairly indistinguishable trademark. For basic trademark infringement in Canada, a wilfulness to infringe a trademark is not a requirement for a plaintiff to collect the profits made by an infringer as an equitable remedy.

2. Trademark Criminal Sanctions

Sections 406-410 of the Criminal Code reference criminal offences of trademark forgery, passing off, and other more specific offences. s.406 lays out the preconditions for the forgery of a trademark, which includes (a) making or reproducing, without the consent of the proprietor of a trademark, a trademark or a mark so nearly resembling it as to be calculated to deceive or (b) falsifying, in any manner, a genuine trademark. To do either of these actions would make you liable for an offence under s. 407.

S. 408 references the common law tort of passing off. It seeks to target persons who are attempting to convey a false sense of origin, likely to trick the consumer into thinking their product is of equal quality to the trademarked product they are attempting to pass off. The provisions states that a person commits an offence who, with intent to deceive or defraud the public or any person, whether ascertained or not:

  • (a) passes off other wares or services as and for those ordered or required; or
  • (b) makes use, in association with wares or services, of any description that is false in a material respect regarding
    • (i) the kind, quality, quantity or composition;
    • (ii) the geographical origin; or
    • (iii) the mode of the manufacture, production or performance of those wares or services.

The remaining provisions in the Criminal Code relating to trademarks reference the forbiddance of instruments used to forge trademarks, defacing, concealing or removing a trademark without consent, and manufacturing bottles of liquid using a trademark for the purposes of sale or traffic.

3. Copyright Criminal Sanctions

Under the TRIPS act, copyright piracy differs from copyright infringement in that it is for commercial purposes and requires the infringer to make an ‘illicit copy’. In Canada this was implemented into the Copyright Act under s.42(1) stating every person is guilty of a criminal offence who knowingly:

  • (a) makes for sale or rental an infringing copy of a work or other subject-matter in which copyright subsists
  • (b) sells or rents out, or by way of trade exposes or offers for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists;
  • (c) distributes infringing copies of a work or other subject-matter in which copyright subsists, either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright;
  • (d) by way of trade exhibits in public an infringing copy of a work or other subject-matter in which copyright subsists;
  • (e) possesses, for sale, rental, distribution for the purpose of trade or exhibition in public by way of trade, an infringing copy of a work or other subject-matter in which copyright subsists;
  • (f) imports, for sale or rental, into Canada any infringing copy of a work or other subject-matter in which copyright subsists; or
  • (g) exports or attempts to export, for sale or rental, an infringing copy of a work or other subject-matter in which copyright subsists.

s.42(2) lists the possession and performance offences and punishment for every person who knowingly, “…makes or possesses any plate for the purpose of making infringing copies of any work in which copyright subsists [or] for private profit causes to be performed in public, without the consent of the owner of the copyright, any work in which copyright subsists is guilty of an offence and liable.”

Under these provisions, the accused is liable either on summary conviction to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding six months or to both. Or on conviction on indictment, to a fine not exceeding one million dollars or to imprisonment for a term not exceeding five years, or to both. The final provisions under s.42(3) states that the court has full discretion to determine the infringing copies or plates for the purpose of making infringing copies be destroyed or delivered up to the copyright owner or dealt with in other methods as the court sees fit.

The 2014 case of R v Strowbridge saw a conviction for both the criminal sanctions within the Copyright Act and within the Criminal Code for trademark infringement. The accused was selling counterfeit brand-name car products from a van when $500 worth of product was seized. He plead guilty and was sentenced to 15 months in prison, six of which were for copyright and trademark infringement while the remaining nine were for fraud.

F. Border Measures

Canada has developed measures to ensure people and businesses can protect their IP rights both inside and at the Canadian borders. In January 2015, Canada adopted a new border enforcement system under the Combating Counterfeit Products Act that amended the copyright and trademark acts. It empowers officials of the Canada Border Services Agency (CBSA) to detain suspected counterfeit or pirated products as per s. 101 of the Customs Act. CBSA officials work with the RCMP at the border to prevent infringing importation.S. 44.04(1) of the Copyright Act lays out the prohibitions for import and exportation of copyrighted works. It states that copies of a work or other subject-matter in which copyright subsists shall not be imported or exported if, “(a) they were made without the consent of the owner of the copyright in the country where they were made; and (b) they infringe copyright or, if they were not made in Canada, they would infringe copyright had they been made in Canada by the person who made them.” An exception to this provision under s.44.01(2) states it does not apply to “…copies that are imported or exported by an individual in their possession or baggage if the circumstances, including the number of copies, indicate that the copies are intended only for their personal use.”

Image by Andrew Scheer from Flickr.

S. 51.03(1) of the Trademarks Act also sets prohibitions regarding the import and exportation of goods bearing protected trademarks stating, “[g]oods shall not be imported or exported if the goods or their labels or packaging bear — without the consent of the owner of a registered trademark for such goods — a trademark that is identical to, or that cannot be distinguished in its essential aspects from, that registered trademark.”

Exceptions for this provision under s.51.03(2) state it does not apply if (a) the trademark used had the consent of the owner of the trademark in the country where it was applied. (b) the sale or distribution of the trademarked goods in association with the labels or packaging would not be contrary to this Act, or (c) the individual who is importing or exporting the trademarked good(s) indicate that they are only intended for their personal use.

Under this section, there are also provisions that specify it is a violation of the act to import or export a wine, spirit, food, or agricultural product that bears a geographical indication if that product is not from the territory indicated by the indication or is from that territory but was not produced or manufactured in accordance with the law applicable to that territory.

S. 51.06 then empowers a CBSA officer who has reasonable grounds to suspect that the importation or exportation of the goods is prohibited under s.51.03 to provide the trademark owner with a sample of the goods and with information about the goods that could assist them in pursuing a remedy under the Trademarks Act.

There are no express provisions under the Patent Act (or the Industrial Design Act) that empower CBSA officials to act on allegations of infringement during the process of import and exportation. However, a trademark owner can still obtain a final order declaring unlawful importations by specific defendants to prevent them from doing so.

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Canadian Intellectual Property Law Copyright © by Haley MacLean is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License, except where otherwise noted.

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