Canadian Patent Enforcement v American Patent Enforcement

In today’s tough economic times, large international companies holding patent rights in several countries are having to make tough decisions about which countries to actually enforce their patent rights. In order to maximize a company’s capital, it pays for in-house counsel to know which countries offer the biggest returns on its IP enforcement investment.

For example, corporations may choose to enforce its patent rights in Canada instead of (or at least prior to) enforcing its patents in the United States for several reasons. For one, IP litigation in Canada averages around $500,000 - $1 million, while IP litigation in America typically runs between $2-3 million. Why the big difference in costs? There are several reasons.

Unlike American law, Canada has no doctrine of patent abuse or inequitable conduct, so there is simply less issues to argue in Canadian courts. Also, there are no jury trials or Markman hearings in Canada, which tend to be a huge monetary drain for U.S. patent litigants. Instead, Canadian patent cases are tried by judges, which tend to award remarkably higher damages than United States patent juries.

Another major cost-saving factor of a Canadian patent trial is that under Canadian law, parties are typically allowed to depose only one witness each. These depositions are generally much longer than American depositions (2 weeks as opposed to 1-3 days) because the deponent may not have enough personal knowledge to answer a question. In American depositions, a deponent not designated as a 30(b)(6) witness for the corporation is not obligated to answer questions for which they have no personal knowledge. Often, this means that large amounts of time used to prepare questions and documents for a deposition are all but wasted when the deponent simply states they have no personal knowledge of subject matter essential to the case. This leaves the deposing party scrambling to serve subpoena’s to other individuals within the defendant’s corporation who may (or may not) have the vital information needed. In Canada, however, the deponent is obligated to find the person with the necessary information and report this information to the deposing party before the deposition is over, saving everyone time and money.

Similar to American patent litigation, each party is allowed to submit expert reports in order to support their arguments. But unlike in American patent litigation, Canadian experts are not deposed regarding their expert reports, saving even more time and money for both sides.

Of course, there are several aspects of Canadian patent litigation that could lead to disparate results than the American system. For example, the USPTO allows for a plethora of petitions to correct various mistakes during the prosecution of the patent, whether the mistake was the USPTO’s or the patent applicant’s. However, mistakes made in the prosecution of a Canadian patent are often unfixable if they are not rectified during the prosecution of the patent, leaving many patents invalid and unenforceable. Because of this difference, patent litigation in Canada often focuses on the prosecution of the patent in the Canadian patent office. In American patent litigation, the prosecution of an application is focused on either to establish what subject matter is not covered in the patent, or to establish inequitable conduct (a topic that is non-existent in Canadian patent law).

Many companies that have both a Canadian patent and an American patent covering the same subject matter choose to litigate the Canadian patent first in Canada. This often gives the patent holder an inexpensive route to uncovering a potential infringer’s best argument(s) before litigating in American courts. However, as discussed before, a Canadian patent trial will give a patent holder no clue regarding the patent’s unenforceability as to inequitable conduct; any patent holder’s worst nightmare. Great care must be taken before choosing Canada as a proving ground for subsequent patent litigation in America.