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Federal Court Interprets Patent Act Amendments to Prior User Rights Provisions

March 8, 2022

By Melanie Szweras and Nyrie Israelian

The Federal Court has provided the first interpretation of the recently amended Patent Act provisions relating to the prior use defence to claims of patent infringement. In Kobold Corporation v NCS Multistage Inc, the Court interprets section 56 of the Patent Act and provides a procedure for deciding whether the defence will apply. 

In this dispute, the plaintiff Kobold alleged that the defendant NCS’s four proprietary fracking tools were infringing its Canadian patent related to equalizing pressure within wellbores. NCS brought a motion for summary judgment asking for the action to be resolved based on the defence of prior use pursuant to section 56 of the Patent Act.  The Court found that the interpretations of subsections 56(1), (6) and (9) are a discrete question of law and therefore suitable for summary judgment.

The previous section 56 contained a substantive prior use defence in subsection 56(1) which granted every person who, before the claim date of a patent has purchased, constructed or acquired the subject matter defined by the claim, the right to use or sell the specific physical invention without being liable for patent infringement.

The amended section 56 came into effect on December 13, 2018 and grants more expansive prior user rights than the previous version. The current version grants a person who, in good faith, committed an “act” that would otherwise infringe a patent claim (or made serious and effective preparations to commit such an act), the right to commit “the same” act without being liable for patent infringement. The current section 56 also includes subsections 56(6) and 56(9), which protects third parties. Subsection 56(6) protects a third party who uses an infringing article acquired from a manufacturer or a seller who previously made or sold “an article that is substantially the same” as made or sold before the claim date. Similarly, subsection 56(9) protects a third party who uses an infringing service from a service provider that is “substantially the same” as one used before the claim date. Like subsection 56(6), it does not protect the service provider, who must rely on subsection 56(1) for a defence.

Subsection 56(1) provides a defence to a person doing an “act” that would otherwise be an infringement of a claim based on a comparison of the pre- and post-patent infringing “act”. The Court began its interpretation by finding that the potentially protected “act” means “making, constructing and using the invention and selling it to others to be used”. Further “the same” in subsection 56(1) means identical, as the choice to use “substantially the same” in subsections 56(6) and 56(9) indicates Parliament’s intention for different standards to apply in these respective provisions.

Under this interpretation, the acts committed pre- and post-claim date of a patent must be identical. The previous version of the defence of prior use made reference to being able to make use of a “specific” physical manifestation of the invention, and effectively, was a right to deplete one’s existing stock, but to not construct additional or somewhat different physical manifestations. The new version grants the broader right to perform “the same act”. This would mean that, for example, if a prior user previously manufactured and sold an article, they would be entitled to continue to manufacture and sell more of the same article, rather than simply sell existing inventory. However, had the person only manufactured and used its device, they cannot now sell the device to others, as selling is not an act done prior to the claim date of the patent.

Further, a prior user may add to or alter the invention in other aspects that do not further infringe the patent. Therefore, a prior user has the ability to make changes to aspects of its device or process that are part of the prior art or outside the claims of the patent. However, the prior user is prevented from making any change to the infringing aspect of the device or process. A user cannot make any change to the infringing aspect, otherwise, the user is no longer engaging in the same act in respect of the patent’s claims, but rather is engaging in a different act vis-à-vis the infringed claim.

The Court then laid out the process to be followed in considering whether the subsection 56(1) defence applies:

  • First, the Court must decide whether the acts being performed pre- and post-claim date are identical (other than wholly non-functional changes, such as colour). If they are, then subsection 56(1) applies. These cases are particularly well suited for summary judgment, as there is no need to construe the claims of the patent or conduct an infringement analysis.
  • If the acts are not identical, the Court must determine whether the acts infringe the patent, and if they do, which claims. If the post-claim date acts do not infringe the patent, then there are no “otherwise infringing acts” and therefore no need to rely on subsection 56(1). If the pre-claim date acts do not infringe the patent, subsection 56(1) cannot apply. If the post-claim date acts infringe a particular patent claim that the pre-claim acts do not, subsection 56(1) cannot apply.
  • Finally, if the pre- and post-claim date acts are not identical but only infringe the same claims, the Court must determine whether the changes relate to the inventive concept of the patent. If they do not, then subsection 56(1) will apply.

The Court then turned to the question of whether NCS can rely on section 56 as a defence to any infringement. NCS submitted that it purchased the infringing element of its tools from a third-party manufacturer prior to the claim date of Kobold’s patent, and therefore subsection 56(6) grants it the right to continue to keep using those elements. NCS also submitted that the services provided using the infringing element is substantially the same today as it was in 2012, and so subsection 56(9) applied. However, the Court found that there is no evidence to establish that NCS purchases the element from a third party, nor is there evidence that NCS is purchasing services from another. Therefore, the Court granted summary judgment finding that subsections 56(6) and (9) are not available as a defence.

However, the Court found that whether subsection 56(1) applied could not be decided by summary judgment. Because NCS’s acts prior to the claim date of Kobold’s patent were not identical to those after the claim date, an infringement analysis was necessary.  The Court found that there was insufficient evidence to determine which acts of NCS infringe Kobold’s patent, and that this matter required a trial.

This decision gives important guidance on the interpretation of the prior use defence set out in section 56 of the Patent Act. Future cases will provide further clarity on the application of the defence set out in subsection 56(1) and will likely require further interpretation of the provision. 

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Author(s):

Melanie Szweras Melanie Szweras
B.Sc., Ph.D. (Genetics), LL.B.
Partner
416.957.1678  email Melanie Szweras
Nyrie Israelian Nyrie Israelian
Ph.D. (Immunology), BA&Sc. (Biomedical Science)
Articling Student
416.957.6300  email Nyrie Israelian