Taking Comfort in the Past – Canada’s New Prior Use Patent Infringement Defence

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January 18, 2022

In 2018, amendments to Canada’s Patent Act[1] changed the nature and scope of certain defences to patent infringement, including the so-called prior use defence[2]. Whereas previously the Act’s provisions limited the prior use defence to articles, machines, and manufactures or compositions of matter, the new prior use defence provides protections more generally for a person who (1) continues to commit an “act” that they performed before the claim date, or (2) has purchased the part of a business that performed a particular “act” prior to the claim date.

This article will discuss the recent decision of Kobold Corporation et al. v NCS Multistage Inc.[3], (“Kobold”) where Justice Zinn of the Federal Court considered the scope of the new prior use defence as it applied to the patentee’s allegations that the defendant NCS infringed Canadian Patent No. 2,919,561 (the “561 Patent”) related to bottomhole assemblies used in fracking.

The Prior Use Defence

The new prior use defence provisions apply to various scenarios. For example, one provision applies to purchasers of infringing articles, while another applies to the selling of an infringing business, etc. For the reader’s ease of reference, the prior use defence provisions most relevant to this discussion of the Kobold case are set out below[4]:

56 (1) Subject to subsection (2), if — before the claim date of a claim in a patent — a person, in good faith, committed an act that would otherwise constitute an infringement of the patent in respect of that claim, or made serious and effective preparations to commit such an act, it is not an infringement of the patent or any certificate of supplementary protection that sets out the patent, in respect of that claim, if the person commits the same act on or after that claim date.

…

(6) Subject to subsection (7), the use of an article is not an infringement of a patent or any certificate of supplementary protection that sets out the patent, in respect of a claim, if the article was acquired, directly or indirectly, from a person who, before the claim date of that claim, in good faith, made or sold, or made serious and effective preparations to make or sell, an article that is substantially the same as the one used, for that use.

…

(9) Subject to subsection (10), the use of a service is not an infringement of a patent in respect of a claim if the service is provided by a person who, before the claim date of that claim, in good faith, provided, or made serious and effective preparations to provide, a service that is substantially the same as the one used, for that use.

The Scope of the Defence

Whereas the prior use defence in the previous Act was limited to the “right to use and sell” a patented article, the amended Act establishes a new manufacturer/service provider prior use defence by providing protection for the continued performance of an infringing “act”.

Justice Zinn accepted NCS’s submission that the term “act” in subsection 56(1) was intended to protect against all exclusive privileges awarded to a patentee, namely making, constructing and using an invention and selling it to others to be used. Notably, this protection also extends to the use of patented methods[5].

Interestingly, the amended Act provides different protections depending on whether the infringing act (1) was committed by the defendant (as defined in subsection 56(1), and hereinafter referred to as a “manufacturer infringement” for ease of reference), or (2) results from the use of an infringing article or service acquired by the defendant (as defined in subsections 56(6) and (9), respectively, and hereinafter referred to as “purchaser infringement”).

Manufacturer Infringement

In respect of manufacturer infringement, the prior use defence in the amended Act provides protection where the defendant commits, after the claim date, “the same act” the defendant committed prior to the claim date.  Justice Zinn agreed with Kobold’s interpretation that the term “the same act” requires an identical act. NCS’s argument that “the same act” in subsection 56(1) means “substantially the same” (a term broader than “the same act”), was rejected.

Justice Zinn’s decision in this regard was based in large measure on the fact Parliament, in drafting s. 56(6) and (9), chose to extend the prior use defence to third parties who committed certain acts in respect of “substantially the same” article or service as prior to the claim date but in subsection 56(1) only provided a defence to someone who commits “the same act” as prior to the claim date.

The Kobold decision also provides guidance as to how sameness or identicality is assessed. In a first aspect, the sameness of an “act” refers to the exclusive rights granted to the patentee. As an example, a defendant previously manufacturing and using a device (the “acts”) can continue to manufacture and use the device but cannot after the claim date commit the act of selling the device and expect to be shielded by the prior use defence.

In a second aspect, the sameness of the “act” is also assessed relative to the claims of the asserted patent. Consider the question: Do changes to a pre-claim date act that are non-functional (e.g., a change of colour which does not affect the operation of the article) prevent a defendant from relying upon the prior use defence in subsection 56(1)?

In answer to a similar question, Justice Zinn found that the defendant is allowed to make changes unrelated to “the infringing aspect[s]” of the “act”, where the “infringing aspect[s]” are determined with reference to the “inventive concept” of the asserted claim(s). This limitation precludes patentees from expanding their patent rights further than the scope of their contribution to the public sphere. Conversely, in order to receive the benefit of the new prior use defence, a defendant is not allowed to make changes to how its “act” infringes the “inventive concept” of the asserted claim(s). For example, in Kobold, the addition of a set screw, which may pull on the sealing element to create an annular passageway similar to the 561 Patent, to a post-claim date NCS device may be sufficient to prevent NCS from enjoying the benefits of the prior use defence.

In summary, the new prior use defence allows a defendant to change aspects of its “act” unrelated to the “inventive concept” of the asserted claim(s), but does not allow the defendant to change its, for lack of a better term, mode of operation, related to the “act” (e.g., selling, manufacturing, using).

Purchaser Infringement

In respect of purchaser infringement, Zinn J. interpreted subsections 56(6) and (9) of the Act as providing a greater degree of protection than that afforded to a manufacturer or service provider; the infringing “act” need only be “substantially the same” as the one committed prior to the claim date.

The scope of “substantially the same” was not canvassed in depth as NCS was found unable to rely on these provisions (since it did not adduce sufficient evidence to show that it had purchased an article from a third party rather than simply having commissioned someone else to manufacture the product in accordance with NCS’s design). Justice Zinn agreed with Kobold that these provisions are only available to purchasers.

Similarly, NCS’s argument that the services it provided with the infringing articles were identical pre and post claim date, resulting in entitlement to protection under subsection 56(9), was also rejected. Only NCS customers, who were purchasers of NCS’s allegedly infringing services, were found to be able to rely upon the prior use defence in subsection 56(9).  

Prior Use Defence Mechanics

Having defined the scope of the relevant prior use defence provisions in the amended Act, Justice Zinn proceeded to set out the test for establishing the defence.

Overarchingly, the test focuses on the asserted claim(s) as the prior use defence is claim-specific. As stated by Justice Zinn[6], “if the act done pre-patent would have infringed claim 1, but no other, the subsequent act is protected vis-à-vis claim 1, but no other.” The three-step test includes determining[7]:

• whether the defendant’s “act(s)” before and after the claim date are identical. If so, the defendant’s “act(s)” are protected by the new prior use defence;
• if the “act(s)” are not identical, whether the non-identical acts infringe the asserted claim(s). If the non-identical acts do not infringe, there is no infringement or application of the new prior use defence; and
• whether the non-identical acts are dissimilar in a manner that does not relate to the “inventive concept” of the claim in question. If the dissimilarity does not relate to the “inventive concept” of the claim in question, then the defendant can avail itself of the prior use defence.

Of importance to defendants is that claiming protection under the new prior use defence provisions inherently requires the defendant to argue claim construction. In the result, seeking summary judgment in an infringement proceeding by relying upon the new prior use defence provisions, from a practical perspective, requires defendants to adduce expert evidence as to claim construction. As such, this likely means that summary judgment motions to assert the prior use defence will more closely resemble trials as they will require the defendant to muster the required expert evidence.

Did NCS Establish a Prior Use Defence?

In respect of the first step of the test, it was found that the assemblies used by NCS were not identical to pre-claim date assemblies. As alluded to above, in at least one assembly a set screw was added, and in another assembly, a split ring was added.

In respect of the second step, Justice Zinn found that there was insufficient evidence to determine whether the new NCS assemblies infringed the claims. The inventive concept of the claims was found to be[8] “connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure”. The evidence was insufficient to determine whether NCS’s addition of the set screw or split ring after the claim date infringed on the identified inventive concept.

Conclusion

The statutory prior use defence has been expanded; it is now potentially a shield against patented methods and allows defendants to do more than simply divest of existing infringing stock. The new prior use defence allows defendants to continue to infringe the patent so long as their act is “the same act” in the case of manufacturers or service providers, or their use of an infringing article or service is “substantially the same” in the case of purchasers.

Manufacturers and service providers intending to rely upon the new prior use defence need to evaluate their history of “acts” scrupulously; the statute only provides protection for an identical “act”. A defendant is not permitted any change to the “act” after the claim date, whether related to the exclusive right of the patentee (e.g., selling, manufacturing), or related to the inventive concept of the asserted claim(s). Seemingly inconsequential changes over time may prove fatal to a prior use defence. In Kobold, the matter was sent to trial as a result of the defendant adding a set screw to its assembly. The added set screw may result in the defendant losing the protection of the new prior use defence.

The Kobold decision is an important step in the courts’ interpretation of section 56, but there will no doubt be many future cases that will call upon the courts to construe other aspects of the prior use defence, such as the manner in which other parties like customers or the purchaser of a business can also benefit from the defence.

 

[1] RSC 1985, c P-4

[2] Ibid, section 56

[3] 2021 FC 1437

[4] Supra, the Act, subsection 56(1), 56(6), and 56(9)

[5] Supra, Kobold, at para [71]

[6] Ibid, at para [100]

[7] Ibid, at para [112] to [115]

[8] Ibid, at para [153]

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