Category Archives: Patents

Ontario Court Affirms the Enforceability of Patent No-Challenge Clauses

In a recent decision[1], the Ontario Superior Court of Justice, Divisional Court (the “Court”), affirmed the enforceability of patent restrictive covenants (so-called “no-challenge clauses”) in settlement agreements.

In 2014, Loops L.L.C. and Loops Flexbrush L.L.C. (“Loops”) and Maxill Inc. (“Maxill”) entered into a settlement agreement to resolve a patent infringement action by Loops against Maxill. The agreement, governed by the laws of Canada and Ontario, contained a no-challenge clause in which Maxill agreed “not to directly or indirectly assist any person in attacking the validity” of certain Loops patents.[2] Loops subsequently commenced actions in Ontario and Utah claiming Maxill breached the agreement and infringed a U.S. patent covered by the agreement.[3] Loops filed a motion for an interlocutory injunction in the Ontario action. The motion judge dismissed the injunction request.[4] The motion judge found that a strong prima facie case was lacking because Loops’ evidence was rebutted by the fact that the no-challenge clause was not reasonable in the public interest, based on U.S. caselaw principles.[5]

The main issue on appeal was whether the motion judge erred in finding that Loops did not have a strong prima facie case when applying the three-part test for an interlocutory injunction.[6] The Court rejected the motion judge’s reasoning, acknowledging that while there may be limits on contractual restrictions that harm the general public, imposing such a limitation would require evidence allowing the Court to weigh the implications of enforcing the contract. The Court found that no such evidence had been adduced. On this basis, the Court reasoned that an agreement precluding the subsequent use of a defence by a party to the benefit of another party was not able to be limited to prevent public harm.[7]

The Court rejected a line of U.S. caselaw holding that no-challenge clauses may be void under U.S. law due to concerns that they restrict the free use of ideas in the public domain by inhibiting challenges to patent validity.[8] The Court clarified that, contrary to U.S. decisions setting aside the principle that patent licensees may be estopped from attacking patent validity, the estoppel principle continues to apply in Canada.[9] In view of this, and the fact that the no-challenge clause at issue was part of a settlement of a case in which the validity of Loops’ patents was challenged, the Court held that the no-challenge clause was enforceable and, accordingly, Loops had a strong prima facie case.[10]

Upon finding that Loops also satisfied the second and third parts of the test (irreparable harm and balance of convenience), the Court granted the appeal and ordered an interlocutory injunction against Maxill.[11]

This decision will be of interest to patent owners, licensees, and others who may be bound by no-challenge clauses. Notably, the Court left open the possibility that it could be persuaded to hold a no-challenge clause unenforceable with evidence of public harm. The Court’s reasoning is broad enough that it may be applied to other intellectual property rights as well (e.g., copyright). Fasken’s team of experienced intellectual property lawyers are available to consult on all manner of IP matters including litigation, dispute settlement, and licensing.


[1] Loops L.L.C. v. Maxill Inc., 2020 ONSC 5438.

[2] Ibid at paras 3-4.

[3] Ibid at paras 7-9.

[4] Ibid at para 1.

[5] Ibid at paras 47-49.

[6] Ibid at paras 14-15.

[7] Ibid at para 50.

[8] Ibid at paras 52-71.

[9] Ibid at para 72.

[10] Ibid at para 73.

[11] Ibid at paras 74-80 and 83.

Canada Announces Accelerated Exam for Pandemic Related Inventions Filed by “Small Entities”

On July  7th, 2020, the Canadian Intellectual Property Office (“CIPO”) announced a pilot project allowing applicants who qualify as “small entities” (e.g. universities, or businesses employing 50 or fewer employees) to expedite the examination of their patent applications for COVID-19-related inventions. Details of the program can be found on the CIPO website here. The program is limited, however, to only fifty (50) patent applications.

As businesses work to address the COVID-19 pandemic, this pilot project is designed to help smaller sized entities get products to market as soon as possible. To request accelerated examination under the program, applicants must include a statement that the technology is medical and related to COVID-19 and that an approval for its use has been obtained from or has been submitted to Health Canada.  Applicants must also have requested examination and paid the applicable Canadian government fee for requesting examination. Finally, the application must be open to public inspection or the applicant must have submitted a request for early publication. There is no additional fees to use this process.

For further information on whether you qualify and how to take advantage of this program or any other program at CIPO, please reach out to one of the patent professionals at Fasken.

Fasken’s IP group continues to take steps to ensure continuity of our services to our clients during the pandemic. As CIPO’s online solutions are available 24/7 and from anywhere, we are available to continue to assist our clients during this period. Please don’t hesitate to reach out, should you need assistance with your intellectual property.

Changes to the PMPRB Delayed Due to COVID-19

The Patented Medicine Prices Review Board (PMPRB) has delayed the coming into force of the amended Patent Medicines Regulations to January 1, 2021.

The Regulations Amending the Patented Medicines Regulations (Additional Factors and Information Reporting Requirements) were set to come into force on July 1, 2020 and provide the PMPRB with additional price regulatory factors to assess whether the price of a patented medicine sold in Canada was “excessive”. But on June 1st, 2020, the Canadian government delayed their coming into force, citing an increased demand on the pharmaceutical industry in light of COVID-19.

Then, on June 19th, 2020, the PMPRB released its Draft Guidelines 2020. These changes were the result of extensive stakeholder feedback received during public consultations. While the new Guidelines have the same conceptual structure as those released back in November 2019, there are now some substantial quantitative changes.

In particular, in the new Draft Guidelines 2020, the thresholds for identifying high-priority drugs has changed: The PMPRB will classify new patented drugs as either high or low priority based on their anticipated financial impact. If they have a high treatment cost (now above $90,000 annually per patient) or large anticipated marketed size (now above $50M in sales) then they will be subject to a more comprehensive price review. This comprehensive review will take into consideration new additional price regulatory factors, including a drug’s pharmacoeconomic value, market size and the gross domestic product (GDP) and GDP per capita in Canada.

The Draft Guidelines are available for public comment until July 20, 2020. We have extensive experience in this area and are available for a consultation if you are interested in responding.

Cease and Desist Letters: Use with Care

Cease and desist letters are an important part of a lawyer’s tool kit: they notify the recipient of a claim, and ideally lead to the client resolving an issue without litigation. However, receiving such a letter can be unpleasant. They may even seem excessive, as if they were intended to achieve the maximum possible threatening effect. In Fluid Energy Group Ltd. v. Exaltexx Inc. (“Fluid v. Exaltexx”), Justice McHaffie of the Federal Court found that that indeed appeared to be the intention of Fluid’s letters, taking the unusual step of issuing an injunction ordering Fluid not to communicate with Exaltexx’s suppliers with respect to such suppliers’ alleged infringement of Fluid’s patents.

Where is the line between an appropriate cease and desist letter and one worthy of an injunction? In the case of letters alleging patent infringement, strangely enough, the answer may lie in section 7(a) the Trademarks Act, which was the basis for Exaltexx’s motion for the interlocutory injunction. That section reads: “No person shall … make a false or misleading statement tending to discredit the business, goods or services of a competitor…” This provision, however, must be read down so as to include only statements relating to the competitor’s intellectual property.

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Rapid Patenting of Solutions to Covid-19

Are you a small business or independent inventor with an invention which may help in the fight against COVID-19?

On 8 May 2020, the United States Patent and Trademark Office (USPTO) announced a new program for accelerating the review of patent applications related to COVID-19. This could be your lucky day (if you’re one of the 500 selected…)!

The purpose of this program is to facilitate the patenting process by reducing cost and allowing rapid review of eligible filed patent applications.

What do you need to know about the new program (“COVID-19 Prioritized Examination Pilot Program”)? Here’s a snapshot:

  • The patent application must cover a product or process that is subject to U.S. Food and Drug Administration (FDA) approval for use in the prevention and/or treatment of COVID-19.
  • Only small and micro entities are eligible (companies with <500 employees or independent inventors).
  • Prioritized examination fees are not required under this program (regular fees apply).
  • Total of 500 applications will be reviewed under the program.

Full details may be found by clicking here (link to USPTO).

Canada’s Intellectual Property Office (CIPO) does not have a specific program for inventors in response to COVID-19 but it has multiple programs for expediting review of new patent applications, and at a low cost relative to the U.S., which may be used as before. Canadian patent applications may be expedited under one of the following scenarios:

  1. By payment of a fee of $500CAD (useable on virtually all applications).
  2. By having a corresponding patent issued in a foreign patent office. For example, if you have filed the same patent application in the U.S. and Canada and a U.S. patent has issued, CIPO will expedite review of the corresponding Canadian application.

For any questions or further information, please contact a member of our patent group.