Thank you for your readership over the last year and welcome to what is sure to be an exciting 2018! In this year’s first issue of the E-TIPS® Newsletter, we will recap our most noteworthy reports from 2017 covering developments in IP and IT law, under the following categories: (1) “Supreme Court of Canada Matters”, (2) “Patents”, (3) “Trademarks/Copyright”, (4) “Pharmaceutical Matters”, (5) “IT/Privacy”, (6) “Legislative, Treaty and Policy Developments” and (7) “Foreign Developments”.
This issue of E-TIPS® Newsletter’s “2017: Year in Review” is brought to you by Jennifer R. Davidson, Robert Dewald and Junyi Chen. Remember, all of our past coverage – over 15 years’ worth – is accessible in our archive.
1. Supreme Court of Canada Matters
The Internet’s Borders are Removed and Rebuilt After the Supreme Court of Canada’s Worldwide Injunction Order is Blocked by a California Court
In June 2017, the Supreme Court of Canada (SCC) released its landmark decision in Google Inc v Equustek Solutions Inc, (2017 SCC 34). The SCC upheld the lower court’s worldwide interlocutory injunction requiring Google to de-index the website of Datalink Technology Gateways from its global search results. For our full report on the SCC decision, click here.
In November 2017, the District Court for Northern California granted Google’s motion for preliminary injunctive relief, blocking the enforcement of the worldwide interlocutory injunction upheld by the SCC. Later in the same month, Google moved to have the California Court finalize the ongoing dispute; Google requested that the Court convert the preliminary injunction into a permanent injunction and issue final judgment on January 18th, 2018. For our full report on the District Court decision, click here.
Supreme Court of Canada Considers Enforceability of Forum Selection Clause in Douez v Facebook
In June 2017, the Supreme Court of Canada (SCC) released its decision in Douez v Facebook, Inc, 2017 SCC 33, refusing to enforce the forum selection clause contained in Facebook Inc’s (Facebook) terms of service. The Applicant brought a class action against Facebook, alleging it had used her name and portrait in an advertisement product known as “Sponsored Stories” without her consent, contrary to the statutory tort created by British Columbia’s Privacy Act, which arises when a name or a portrait of a person is used for the purpose of advertising or promoting the sale of a product without that person’s consent for such use. Facebook argued that the British Columbia (BC) court should decline jurisdiction because California was the designated choice of jurisdiction according to its forum selection clause. The BC Supreme Court dismissed Facebook’s application to have the Court decline jurisdiction. The BC Court of Appeal allowed Facebook’s appeal, holding that its forum selection clause should be enforced (2015 BCCA 279, reversing 2012 BCSC 2097).
The SCC allowed the appeal, finding that, while the Privacy Act does not override the forum selection clause, the Applicant had established strong reasons not to enforce the clause. For our full report, click here.
R v Marakah: SCC Defends Reasonable Expectation of Privacy in Text Messages
In December 2017, the Supreme Court of Canada (SCC) found that text messages that have been sent and received can, in some cases, attract a reasonable expectation of privacy according to s.8 of the Charter of Rights and Freedoms and therefore can be protected against unreasonable search or seizure.
The Appellant, Mr. Marakah (M), was convicted of several offences including trafficking firearms. Before trial, he challenged the search and seizure of his accomplice’s (W’s) cell phone to which he had sent multiple text messages. The application judge concluded that M had no standing to challenge the search of W’s phone because he had no reasonable expectation of privacy in respect of those text messages. While the judge accepted that the sender of a text message has a reasonable expectation of privacy in the message’s content after it has been sent, the judge found that the reasonable expectation of privacy ends once the text message reaches its intended destination and is no longer under the sender’s control. The Court of Appeal dismissed the appeal. For our full report, click here.
Supreme Court of Canada Rejects “Promise Doctrine” When Determining Patent Utility
In June 2017, in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36, the Supreme Court of Canada (SCC) rejected the Promise Doctrine as the correct approach to determine patent utility. The decision provided much-needed guidance on how to determine patent utility, particularly in the pharmaceutical arts. Notably, the SCC provided a new approach to determining utility: (1) identify the subject-matter of the invention as claimed in the patent; and (2) ask whether that subject-matter is useful – is it capable of a practical purpose (an actual result). For our full report, click here.
Federal Court of Appeal Applies Supreme Court’s Utility Test for the First Time to Uphold Validity of BMS’ Dasatinib Patent
In September 2017, Canada’s Federal Court of Appeal (FCA) released its decision in BMS v Apotex Inc, 2017 FCA 190, reversing the Federal Court’s (FC) decision (2017 FC 296) that held BMS’s dasatinib (SPRYCEL®) patent invalid for lacking a demonstration or sound prediction of utility as of the Canadian filing date. This case marked the FCA’s first application of the utility test set down by the Supreme Court of Canada (SCC) in AstraZeneca Canada Inc v Apotex Inc (2017 SCC 36). For our full report, click here.
Federal Court of Appeal Considers Obviousness Test
In April 2017, in Bristol-Myers Squibb Canada Co v Teva Canada Limited (2017 FCA 76), the Federal Court of Appeal (FCA) clarified the test for assessing obviousness subsequent to the Supreme Court of Canada’s (SCC) 2008 seminal decision on this test in Apotex c v Sanofi-Synthelabo Canada Inc, 2008 SCC 61 (Plavix 1). Plavix 1, the SCC elaborated on how to construe the “inventive concept of the claim” and adopted the “obvious to try” test, which, it noted, might be appropriate in areas, such as pharmaceutical industry, where advances are often won by experimentation. In the present case, the FCA dismissed the appeal from the Federal Court (FC) alleging that the FC erred in its application of the “obvious to try” test. The FCA noted that the “inventive concept” has been referred to as “the solution taught by the patent”, “what is claimed” or “the invention” in the jurisprudence and that how the inventive concept is defined will make a finding of obviousness more or less likely. Regarding “obvious to try”, the FCA cautioned that this is not required for every case. For our full report, click here.
Subsequently, in November 2017, the FCA further considered the obviousness test in Ciba Speciality Chemicals Water Treatment v SNF Inc, 2017 FCA 225. The FCA clarified that step 3 of the 4-step obviousness test that was provided in Plavix 1 requires a comparison between the inventive concept (or the claim as construed) and the prior art, not the common general knowledge, to identify the differences, if any, between the inventive concept and the prior art. The FCA also clarified that step 4 asks whether the difference(s) between the inventive concept (or the claim as construed) and the prior art can be bridged by the skilled person using only their common general knowledge and other information which they could have found by making a reasonably diligent search. The FCA also noted that there was much uncertainty regarding the definition of “inventive concept” and chose to construe the claims instead.
BC Court of Appeal Finds Using Trademarks as Keywords in Internet Advertising Constitutes Passing Off
Keywords are words or phrases describing a product or service that determine when and where an ad can appear in a search engine. In January 2017, in Vancouver Community College v Vancouver Career College (Burnaby), 2017 BCCA 41, the BC Court of Appeal found that the use of the official marks “VCC” and “Vancouver Community College” in keyword advertising by a competitor, was a breach of official marks, contrary to the Trade-marks Act. Notably, the Court stated that confusion should be assessed from the searcher’s first encounter with the search results (initial interest confusion), rather than from the point where the searcher has reached the advertiser’s website, after clicking on an advertisement displaying the mark(s). For our full report, click here.
Federal Court Releases Major Decision on Mandatory Tariffs and Fair Dealing Under the Copyright Act
In July 2017, the Federal Court released its decision in The Canadian Copyright Licensing Agency (“Access Copyright”) v York University, 2017 FC 669. The decision held that an interim tariff established under the Copyright Act regarding fees payable by post-secondary educational institutions is mandatory and enforceable. In addition, the Court rejected the University’s fair dealing defence in light of the facts of this case. For our full report, click here.
Game Over: the Federal Court Puts an End to Video Game Hacking in Novel Case Considering Circumventions of TPMs
In March, 2017, the Federal Court (FC) awarded Nintendo $12.7 million in damages in Nintendo of America Inc v King et al, 2017 FC 246. This ruling marks the first occasion for the FC to consider the issue of circumvention of Technical Protection Measures (TPMs) under the Copyright Act. The dispute concerned three of Nintendo’s game consoles (Nintendo DS, 3DS and Wii). The Defendant was found to have sold and installed digital lock circumvention devices that mimicked Nintendo’s proprietary hardware and code to allow end users to play illegally downloaded video games. The FC’s discussion on TPMs brought new clarity into the treatment of digital locks in three important areas: (1) TPMs can include a physical configuration; (2) circumvention of TPMs include the replication of the TPMs; and (3) the interoperability defence cannot succeed where the defendant is unable to meet their evidentiary burden to demonstrate that the device is used for non-licenced third party software (homebrew) applications. For our full report, click here.
Interlocutory Injunction in Canada’s Trademark Infringement Cases – Success is in the Details
Interlocutory injunctions are rarely granted in trademark infringement cases in Canada (counterfeit cases aside). This is largely due to the difficulty of establishing irreparable harm, the second element of a three-part test for granting an interlocutory injunction. In February 2017, in Sleep Country Canada Inc v Sears Canada Inc, 2017 FC 148, the Federal Court (FC) issued a rare interlocutory injunction to Sleep Country against Sears’ new slogan “There is no reason to buy a mattress anywhere else” because the FC found that the depreciation of goodwill and loss of distinctiveness amounted to irreparable harm. For our full report, click here.
4. Pharmaceutical Matters
Federal Court of Appeal Affirms Validity and Infringement of AstraZeneca’s Omeprazole Formulation Patent but Amends Application of 6-Year Limitation Period
In January, 2017, the Federal Court of Appeal (FCA) upheld the validity and the infringement of AstraZeneca’s omeprazole formulation patent by Apotex in Apotex Inc v AstraZeneca Canada Inc, 2017 FCA 9. The key construction issue on appeal was whether the wording of the formulation claim covered a sub-coating that was applied using a process not known at the relevant time. The FCA held that the objective intention of the inventor “is to be found within the four corners of the patent” without reference to post-art evidence and that it “is trite law that a court will consider the disclosure” for claim construction as a special lexicon for an expression in the claim. Further discussion of the claim construction and limitations period are available in our full report here.
Federal Court Rejects Apotex’s Non-Infringing Alternatives in Omeprazole Profits Reference
AstraZeneca previously prevailed in the liability phase of its infringement actions against Apotex and sought an accounting of profits earned by Apotex from the patent infringement. Notably, the Federal Court had to consider whether non-infringing alternatives (NIA) were available during the infringement period of 2003 to 2008, which is discussed in our full report here.
Privacy Commissioner of Canada Responds to Equifax Data Breach
In September 2017, Equifax, a provider of consumer credit reports, reported that it had experienced a data breach affecting the personal information for as many as 143 million people located in or having dealings with the US. An undetermined number of Canadians with dealings in the US were affected as well. The Privacy Commissioner of Canada (the Privacy Commissioner) published an announcement responding to complaints relating to the Equifax data breach and also launched an official investigation into the situation. For our full report, click here.
Ontario Court of Appeal Recognizes Reasonable Expectation of Privacy in Energy Consumption Data
In August 2017, in R v Orlandis-Hansburgo (2017 ONCA 649), the Ontario Court of Appeal (ONCA) held that a reasonable expectation of privacy exists in energy consumption data capable of supporting inferences of activities taking place in a residence. The ONCA held that the seizure of such data by police, which led to the arrest of the appellants, constituted a violation of Section 8 of the Charter of Rights and Freedoms (the Charter). Nevertheless, the ONCA was not satisfied that the evidence obtained as a result of the violation of the appellants’ Charter rights should be excluded under Section 24(2) of the Charter. The ONCA dismissed the appeal. For our full report, click here.
CASL Indemnity Ordered in Addition to Order to Disclose Customer Data
In November 2017, the Nova Scotia Utility and Review Board (the Board) ordered EfficiencyOne (E1) to provide Nova Scotia Power Inc. (NSPI) with an indemnity in respect of any liability that NSPI argued could arise under Canadian Anti-Spam Legislation (CASL) as a result of NSPI disclosing customer names, e-mail addresses and electricity usage data to EfficiencyOne.
In EfficiencyOne (Re), 2017 NSUARB 174, E1 sought an order compelling NSPI to provide it with certain customer data, pursuant to s. 79K(1) of the Public Utilities Act (PUA). E1 sought the customer data with the intention of using the data in targeted mass marketing efforts. NSPI was concerned that E1’s commercial electronic message could result in potential liability under CASL.
For our full report, click here.
6. Legislative, Treaty and Policy Developments
The majority of the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act (“CETA”) came into force on September 21, 2017. CETA impacts trademark law and pharmaceutical patent law, among other things, in Canada.
Canada’s Trade-marks Act Amended to Expand Protection for Geographical Indications
Canada’s Trade-marks Act (Act) was amended as a result of CETA, expanding the definition of geographical indication (GI) to include agricultural products and foods. Protected GIs now include certain cheeses, meats, baked goods, oils, spices, nuts, cereals and animal fats as listed in Annex 20-A of CETA.
The amendments expand GI protection under the Act significantly, but also include provisions limiting the impact on current users and certain owners of prior Canadian trademark rights. For our full report, click here.
Pharmaceutical Patent Changes under CETA
CETA’s implementation has also resulted in a number of changes to Canada’s patent linkage regulations affecting the pharmaceutical industry. More specifically, CETA introduced a patent term extension of up to two years under the “certificates of supplementary protection” for regulatory delays and provided innovators with right of appeal under the Patented Medicines (Notice of Compliance) Regulations. For our full report, click here.
Several agencies within the Canadian Government and the Federal Court have released guidance documents or notices related to the application of CETA implementation of Pharmaceutical Patent Changes:
Health Canada Guidance Document: Certificate of Supplementary Protection Regulations; and
Federal Court: Guidelines for Actions under the Amended PMNOC Regulations.
For our full report on CETA implementation, click here.
Proposed Patent Rules Amendments Announced
In August 2017, the Government of Canada published substantive proposed amendments to the Patent Rules for public consultation. Publication in the Canada Gazette, Part I is expected to take place in early 2018, with publication in Part II in late 2018. If this schedule is adhered to, the amended Rules could come into force as early as 2019. For our full report, click here.
Canadian Intellectual Property Office Publishes Draft Trademark and Industrial Design Regulations
In June 2017, the Canadian Intellectual Property Office (CIPO) published draft regulations under the Trade-marks Act and the Industrial Design Act for consultation with the public. The draft regulations implement various legislative amendments passed in 2014 and 2015. The amendments constitute significant changes to Canadian practice, including the implementation of the international requests for trademark and industrial design protection under the Madrid Protocol and the Hague Agreement.
The proposed Trademarks Regulations introduce a per-class application and renewal fee structure, pursuant to which an initial fee covers only one class, and there is an additional fee for each additional class. Further changes include provisions for dividing and merging trademark applications, changes to the timing for certain steps in opposition proceedings, and implementing the Madrid Protocol.
The proposed Industrial Design Regulations implement a system of international registration for industrial design under the Hague Agreement. In addition, the draft regulations restrict the type of amendments that can be made to pending applications, and impose new time limits on filing divisional applications. For our full report, click here.
Canada Publishes Proposed Amendments to Regulations on Prices of Patented Medicines
In December 2017, the Government of Canada published Regulations Amending the Patented Medicines Regulations (Proposed Amendments) to include new price regulatory factors that will help enable the Patented Medicine Prices Review Board (PMPRB) to protect Canadian consumers from excessive prices. The Proposed Amendments mark the first major revisions to the Patented Medicines Regulations that govern patented medicines pricing in over 20 years. The 75-day consultation period for the Proposed Regulations will end on February 15, 2018 (Notice from Health Canada). The proposed coming-into-force date is January 1, 2019. For our full report, click here.
CRTC Publishes New Framework Regarding Differential Pricing Practices In Respect Of Net Neutrality
In April 2017, the Canadian Radio-television and Telecommunications Commission (CRTC) published a new framework regarding differential pricing practices of Internet service providers (ISPs) (Framework).
The Framework responds to net neutrality issues associated with recent practices by ISPs with respect to differential pricing, where the same or similar products or services are sold to customers at different prices. This Framework deals with the practice of discounting data traffic, where data from a certain source (e.g. a particular website or application) is discounted or not counted at all against a customer’s monthly data cap. Practices associated with ISPs’ own managed Internet protocol networks are not included in the analysis and determinations set out in the Framework. For our full report, click here.
Proposed Breach of Security Safeguards Regulations Released
In June 2017, the Digital Privacy Act (Bill S-4) amended Canada’s private sector privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA), to incorporate mandatory data breach reporting requirements. The data breach notification provisions in the amendment to PIPEDA are set out in Division 1.1 of PIPEDA, but are not yet in force.
In September 2017, the proposed regulations to implement the data breach reporting requirements were published for consultation. For our full report, click here.
Mandatory Reporting of Privacy Breaches to Ontario’s Information and Privacy Commissioner to Take Effect under the Personal Health Information Protection Act
In June 2017, the Ontario government published its amended Regulations to the Personal Health Information Protection Act (PHIPA) that detail the prescribed requirements under which health information custodians must report privacy breaches to the Information and Privacy Commissioner of Ontario. The mandatory notification provisions under section 12 of PHIPA came into force last June, while the amended Regulations are scheduled to take effect on October 1, 2017. For our full report, click here.
7. Foreign Developments
FCC Repealed Net Neutrality Rules
In December 2017, the FCC voted to dismantle the Net Neutrality regulations put in place by the Obama administration in 2015. Under the new regime, the FCC will no longer regulate high-speed internet delivery as a Title II designation under the Communication Act. The new rules are set to take effect in January 2018. For our full report, click here.
US Supreme Court Finds Prohibition on Registration of Offensive Names Unconstitutional
In Matal v Tam, the Supreme Court of the United States (the Court) unanimously found that section 2(a) of the Lanham Act was unconstitutional for violating a person’s First Amendment rights under the US Constitution.
Section 2(a) of the Lanham Act prohibits the registration of a trademark that “consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; […]” (the Disparagement Clause).
Justice Alito, writing for the Court, found that trademarks are acts of private speech, rather than government speech, even if they appear in a Register maintained by the government. Therefore, Justice Alito found that the Disparagement Clause was an unconstitutional restriction of private speech. For our full report, click here.
US Supreme Court: Not Patent Infringement to Supply Single Component for Manufacture Overseas In Multicomponent Patented Invention
In February 2017, in Life Technologies Corporation v Promega Corporation, the US Supreme Court held that the supply of a single component in a multicomponent patented invention for manufacture overseas does not constitute patent infringement. For our full report, click here.
US Supreme Court Rejects Equitable Defense of Laches in a Patent Infringement Case
In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the Supreme Court of the United States vacated the Court of Appeals’ decision and held that the equitable defence of laches cannot be invoked against claims for patent infringement occurring during the six-year statutory limitations period, as defined by 35 U.S.C. §286. For our full report, click here.
US Supreme Court Holds Patent Exhaustion Applies to both Domestic and International Sales
In Impression Products, Inc v Lexmark International, Inc, the United States Supreme Court held that “a patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale”. For our full report, click here.
UK Supreme Court Adopts Doctrine of Equivalents for Patent Infringement
In July 2017, the UK Supreme Court adopted the doctrine of equivalents for patent infringement in Actavis UK Limited v Eli Lilly ( UKSC 48). The doctrine of equivalents enables the court to capture variants outside of the claim language, even after applying a “purposive construction”. For our full report, click here.
UK High Court Makes Precedential Finding on FRAND Royalty Rates
In Unwired Planet International v Huawei,  EWHC 711, the UK High Court provided guidance on FRAND (which stands for Fair Reasonable and Non-Discriminatory) royalty rates. For our full report, click here.