Navigating IP litigation and contentious matters

The landscape of intellectual property disputes is evolving. Patents, industrial designs, trademarks, trade secrets, and copyrights are critical business assets that deserve greater attention from business leaders

Smart & Biggar is widely recognized as Canada’s leading firm for intellectual property (IP) law. With offices across Canada and over 175 lawyers, patent agents, and trademark agents, we are the largest firm focused purely on IP and related specialty areas. For over 100 years, we have remained devoted to protecting our clients’ IP and technology assets. Whether we are advising an innovative company on patent strategy or infringement issues, providing counsel on brand protection and enforcement, or handling the IP aspects of a corporate transaction, we provide clients with solutions to protect, enforce, and leverage their IP.

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Published November 21, 2024

Protecting a brand’s image is much more than registering one’s trademarks. “It is about protecting all intellectual property rights forming part of the business’ branding image and the goodwill and reputation that has been acquired,” says Chan. This can include protecting and, where necessary, enforcing one’s rights in the product appearance and trade dress indicia; the pharmaceutical trade rights; the iconic brand colours; avoiding the dilution of famous marks; online trademark and domain name use; and cross-border rights. Smart & Biggar has successfully defended such rights including with innovative pre-trial relief, counterfeiting remedies, and landmark damage awards. Similarly, protecting a company’s R&D innovation is much more than obtaining a patent. In some instances, it may be best to protect the innovation as a trade secret. In cases where a patent is warranted, it is important to monitor what competitors are doing to address any infringement swiftly. It is also relevant to be aware of one’s patent portfolio and monitor competitors’ patent portfolios to optimize one’s intellectual property strategy.

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“Business leaders need to proactively manage their intangible assets including by vigilantly protecting and strategically enforcing the rights in their intellectual property portfolio”

Brigitte Chan, Smart & Biggar

The value of patents, industrial designs, trademarks, trade secrets, and copyrights is increasing significantly; in many business sectors, the value of these intangible assets is surpassing the value of the tangible assets. “Business leaders need to proactively manage their intangible assets including by vigilantly protecting and strategically enforcing the rights in their intellectual property portfolio,” says Brigitte Chan, principal at Smart & Biggar. Chan’s practice includes trademark litigation and enforcement as part of Smart & Biggar’s well-established Litigation Group, a leader in IP litigation in Canada.

Various options are available to address contentious matters outside the court system such as out-of-court settlements including those involving mediators, as well as matters handled by the Trademark Opposition Board (TMOB), the Canadian Internet Registration Authority (CIRA)’s Dispute Resolution Policy (CDRP), and the patent re-examination board. “Currently we are seeing that many more patent cases are settling out of court while several trademark cases are being launched. Patent cases tend to require more time and investment due to their complexity, and settlement can often take place just before trial,” says Audrey Berteau, associate in Smart & Biggar’s Litigation Group. The Federal Court also offers mediation assistance, where a judge or associate judge, as part of their case management role, can convene a mediation conference. “We have successfully settled cases with the assistance of this mediation process, where clients appreciated the expertise and insightfulness of the mediator,” explains Berteau.

team has obtained numerous precedent-setting judgments and record-setting damages for its clients. Though the firm’s extensive track record of successfully litigated cases is notable, Berteau notes, “It’s our insight and focus into each client’s business objectives and holistic intellectual property strategy that makes us an invaluable partner to our clients.” Chan adds that “our greatest value-add for clients is our commitment to providing strategic guidance at every step of our clients’ intellectual property journey, supporting companies in building and protecting their intellectual property assets and, when necessary, navigating contentious proceedings and litigation to enforce those rights.”

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Federal Court IP proceedings in 2023

50% 40% 30% 20% 10% 0%

Out-of-court options to address contentious intellectual property matters

“It’s our insight and focus into each client’s business objectives and holistic intellectual property strategy that makes us an invaluable partner to our clients”

Audrey Berteau, Smart & Biggar

Trademark owners can oppose applications once they are advertised in the Trademarks Journal. The opposition process at the Trademarks Opposition Board (TMOB) operates similarly to a court proceeding: both parties file pleadings, submit evidence, and may cross-examine affiants, and arguments, in the form of written representations, are made. Optionally there can be an oral hearing. Following this, the TMOB renders a written decision that may be appealed to the Federal Court by either party. A party can also seek a summary cancellation of a registered mark, by making a written request to the Canadian Intellectual Property Office, if the mark has not been used for the past three years.

980 oppositions ( 61%) 88% did not require a hearing or decision 77 opposition hearings held ( 57%) 129 opposition decisions rendered ( 11%) 745 requests for expungement (section 45) ( 35%) 57% of trademarks automatically expunged since no evidence of use was filed by the registered owner 56 hearings held ( 11%) 161 section 45 decisions rendered ( 71%) 191 files awaiting a decision from the Trademarks Opposition Board 11 months, on average, to schedule a hearing (down from 19 months in 2021-2022) Decrease from 2021-2022 Increase from 2021-2022

For companies facing cybersquatting issues, this problem can be addressed via the CIRA’s Dispute Resolution Policy, a mechanism specifically designed to resolve disputes involving bad-faith registrations of .ca domain names. This is an effective tool to protect a brand’s online presence. For third parties aiming to challenge a patent either before it is granted (with the examiner) or after it is granted (with the re-examination board), the means to intervene are limited. Before the patent is granted, a third party can file a protest to the examiner. The examiner will review the protest but will not respond to the third party. All the third party can do is submit an additional protest. After a patent is granted, a third party can challenge the patent, either in court or by requesting a re-examination. A successful re-examination can require that the patentee amend or cancel the claim(s). The person challenging the patent in a re-examination has no procedural rights, including appeal rights. Trends and new developments in intellectual property litigation The possibility of third-party litigation funding is increasingly a question of interest raised by smaller clients. Third-party litigation funding can empower smaller players in the intellectual property space by providing access to essential capital, thus allowing businesses of all sizes to enforce their intellectual property rights, and levels the playing field against larger, better-resourced competitors. When parties must go to court for an intellectual property matter, they tend to prefer the Federal Court as opposed to a provincial court. Most IP matters in Canada are litigated in the Federal Court as the Federal Court can issue Canada-wide injunctions; it has a case and trial management mechanism for complex proceedings, which helps speed up the process; it has the exclusive jurisdiction to declare a patent invalid; a successful litigant can expect to recover about 25 to 33 percent of its actual legal fees plus all reasonable disbursements; and it has judges with expertise in intellectual property matters. Concerning the latter point, last year a pilot project in the Federal Court created three specialized chambers of the court including an Intellectual Property and Competition Chambers. Artificial intelligence (AI) has significantly impacted various fields in recent years, including intellectual property litigation. The Federal Court proactively issued a “Notice to the Parties and the Profession – The Use of Artificial Intelligence in Court Proceedings” on May 7, 2024. Most notably, this notice requires that all parties, whether represented or self-represented, disclose if AI was used in preparing documents. This notice follows the “Interim Principles and Guidelines on the Court’s Use of Artificial Intelligence” issued December 20, 2023, where the Federal Court made public the guidelines it imposed on itself when using AI tools. At the intersection of AI and IP litigation, there are significant concerns about generative AI tools and copyright infringement litigation. Innovators are also concerned about how the use of AI tools in their inventive process could impact the validity of a patent. Currently, Canadian courts and the Canadian Intellectual Property Office have not provided guidance on how AI-assisted inventions will affect patentability. In 2023, the Federal Court of Appeal issued a decision that reconsidered the way to determine the patentable subject matter eligibility of computer-implemented inventions. “This area of law has experienced significant changes in recent years, resulting in considerable unpredictability, and it is likely that AI-assisted inventions will encounter similar challenges,” Berteau says. An area of law gaining notable attention recently is trade dress. Trade dress refers to the visual characteristics of a product or its packaging that identify the source to consumers – such as the triangular packaging of the Toblerone chocolate bar. “Trade dress is increasingly a topic of interest for clients seeking to safeguard the distinctive features of their product and prevent consumer confusion,” says Chan, thereby ensuring the longevity of their brand in a competitive business landscape.

Elevating IP strategy and the Smart & Biggar advantage Smart & Biggar is a dominant leader in the space, possessing a diverse team with a combination of litigation expertise, technical knowledge, and strategic thinking. The team draws on a breadth and depth of contentious proceedings, trial, and appellate experience in high-stake matters. Handling complex intellectual property matters, the team’s experience spans patent, trademark, copyright, and industrial design infringement cases; patent and trademark impeachments; extraordinary remedies including injunctions, Anton Pillar Orders, Mareva Orders, Norwich Orders, and Site Blocking Orders; trade secret cases; intellectual property-related employment issues; domain name disputes; the enforcement of foreign intellectual property judgments; and arbitration and other alternative dispute resolution mechanisms. The Smart & Biggar

Copyrights

Trademarks

Patents

*Types of Matters

In 2023, intellectual property matters represented 269 proceedings or 9.8% of Federal Court proceedings. *Based on the "type" designated by the Federal Court.

trademarks oppositions, 2022-2023

Source: Canadian Intellectual Property Office, Annual Report 2022-2023, page 14.