Beyond Borders: Canadian IP Rights and Infringement by Exportation – Part One

Published August 22nd, 2017

The interaction between national borders and the jurisdictional nature of intellectual property rights raises complex issues regarding the infringement of Canadian intellectual property rights through activities with an extraterritorial component. This three-part article series seeks to provide a brief overview of the scope of intellectual property rights held in Canada in relation to export-related activities and the potential for infringement of those rights through such activities. This is Part One, which addresses patents and industrial designs. Part Two will address trade-marks and Part Three will address copyright.

Patents

The Canadian Patent Act grants a patentee the exclusive right to make, construct, use and sell the patented invention. However, the Patent Act does not expressly address a patentee’s rights in relation to exportation of the patented invention. The general position of the Canadian courts has been that the exclusive rights conferred by a Canadian patent are territorially limited to Canada. In other words, a person will not have infringed a Canadian patent unless they have made, constructed, used, or sold the patented invention in Canada. That said, the courts have adopted a broad interpretation of use.

In Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 (CanLII), the Supreme Court of Canada concluded that a rebuttable presumption of “use” exists by merely possessing a patented product in Canada, at least in commercial circumstances (see Monsanto at 58). This position has since been elaborated by the lower courts – for example, the Federal Court has held that “the purchase or possession of infringing articles in Canada, with a view to sale or trade, or for the purpose of export, constitutes infringement” (emphasis added – see Laboratories Servier et al. v. Apotex Inc., 2008 FC 825 (aff’d 2009 FCA 222) (CanLII) at 143).

The issue of whether the exportation of component parts of a patented invention constitutes infringement of a Canadian patent is less straight forward. The Canadian courts have adopted the general principle that “where all the elements of an invention are sold in a substantially unified and combined form for the purpose of later assembly, infringement may not be avoided by a separation or division of parts which leaves to the purchaser a simple task of integration and assembly” (see Beloit Canada Ltd. v. Valmet-Dominion Inc., [1997] 3 FCR 497, 1997 CanLII 6342 (FCA)). However, the application of this principle to exportation of component parts appears to be dependent on the specific facts of each case.

For example, the manufacture of component parts in Canada of an infringing product, which were then assembled for testing in Canada and later disassembled as parts and exported for reassembly abroad, has been held to be an infringement of the Canadian patent (see Beloit).

In another example, a Canadian patent that claimed a product “for use in” a specified process was held to be infringed by the manufacture of the patented product in Canada, where the product was subsequently sold and exported outside of Canada specifically for use in the specified process (see AlliedSignal Inc. v. Du Pont Canada Inc., [1995] F.C.J. No. 744 (FCA)).

In yet another example, the manufacture and exportation of component parts for assembly and use outside of Canada was held not to infringe the method claims of a Canadian patent, since the method was only performed outside of Canada and therefore not within the jurisdiction of the Canadian courts. However, the act of selling the component parts in Canada for later export and assembly abroad was considered to be an infringement of the claims for the assembled product (see Varco Canada Limited v. Pason Systems Corp., 2013 FC 750 (FC) (CanLII)).

Industrial Designs

The Industrial Design Act sets out the provisions governing industrial design registrations in Canada, which are the Canadian equivalent of a design patent in the United States. Section 11 of the Industrial Design Act gives the proprietor of an industrial design registration the exclusive right to make, import (for the purpose of trade or business), sell, rent or offer for sale or rent any article, or any kits for articles, to which the registered design or a design not differing substantially therefrom has been applied.

As with the Patent Act, the Industrial Design Act is silent as to a proprietor’s rights in relation to the exportation of articles or kits covered by a registered design and there is a lack of Canadian jurisprudence regarding infringement in the context of exportation for registered designs. While the explicit reference to importation in section 11 of the Industrial Design Act and the silence regarding exportation suggests that the exclusive rights afforded by an industrial design registration do not extend to exportation, it is possible that the Canadian courts could adopt an approach similar to the one outlined above for patent rights.

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