Is your patent being infringed in Canada? Top 5 things to consider before launching the lawsuit
Whether this is your first time enforcing your Canadian patent, or you’re a frequent flyer in the Canadian courts, it is important to cover your bases before firing off a claim. Prudent planning will help to ensure that legal and financial resources are deployed efficiently. Although not exhaustive, here are the top 5 things to consider before issuing your statement of claim.
- In what jurisdiction should the lawsuit be pursued? The plaintiff can choose between the Federal Court and the provincial courts. Each has unique rules. Consider where best to commence the action. For example, summary judgment might be easier to obtain in Ontario with its relatively robust and modern summary judgment rules while Canada-wide enforcement may be simpler in the Federal Court.
- Should you first threaten litigation? Infringement lawsuits rarely come out of the blue. They are often preceded by threats (e.g., the dreaded “cease and desist” letter). While attempting resolution without a lawsuit is worthwhile, such threats (when not made properly) can have unintended consequences and should be carefully considered before being made. For example, some threats may allow the alleged infringer to initiate the lawsuit, select the most favourable jurisdiction and put your patent at risk. Furthermore, sending cease and desist letters to a wide audience can be dangerous, as it may give rise to a claim for damages. For more information, check out this blog on 10 steps to take when Responding to Threats of Patent Infringement.
- What does a win look like? Usually, a win is securing the market via injunction and obtaining a monetary award. It is going to take at least two years of litigation to achieve that and, unless you can show irreparable harm, you won’t get an interlocutory injunction. Monetary recovery can be further delayed, as that issue is often bifurcated from the liability issues, and liability is tried first. Plan to manage your business in the face of ongoing infringement during the litigation and don’t bank on the eventual award. Evaluate the likely award early, collect the documentation necessary to prove it, and develop a comprehensive exit strategy.
- Are you prepared to see the litigation through? It has been said that patents are only as good as your ability to enforce them. Only commence a lawsuit if you are prepared to see it through. Have a clear picture of what you are getting into. Patent lawsuits take time and resources. Discovery can be distracting. Resources will be spent on document collection, retention and disclosure. There will be examinations for discovery. Employees will be required to testify at trial. Expert witnesses are almost always needed. Develop a robust litigation plan with your lawyers. Where available, use project management tools to create a budget and set reasonable estimates of litigation expenses.
- Who are the parties to the lawsuit? There are two sides to consider.
(a) Plaintiffs: Patentee and licensees can sue for patent infringement in Canada. The patentee is a necessary party. Evaluate your physical/financial supply chain. Identify entities harmed by the infringement. Do they have standing to sue? Take the steps necessary steps to properly name them as plaintiffs to maximize potential recovery.
(b) Defendants: Direct and indirect infringers (i.e., inducers) can be sued. They are usually easy to identify. However, other parties may be drawn in; sometimes unintentionally. For example, a third party may have indemnified the defendant in relation to some aspect of its infringing technology and might get named or take over the defence. That can be concerning when the third party has a large war chest. Worse when it is one of your own customers! Try to deal with any such concerns in advance.
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