In Rovi Guides, Inc. v. Bell Canada, 2022 FC 1388, Justice Lafrenière adjudicated a trial involving the infringement and invalidity of four patents relating to interactive television programming guides—the kind of technological features that many of us rely on to enhance our television viewing. However, this decision may have dramatic effects on the prosecution of patents before the patent office. While in the past it may well have been the case that ‘what goes on in the patent office, stays in the patent office,’ that rule may no longer be the case.
Following a lengthy trial, Justice Lafrenière found the patents to be invalid and consequently not infringed. However, he also went on to consider two remedial aspects, in case he was wrong in his assessment of the merits: whether the plaintiffs/patentees, assuming that the patents had been valid and infringed, were entitled to an accounting of profits and/or a permanent injunction. Lafrenière J. would have denied the plaintiffs an award of an accounting of profits and he would have exercised his discretion in denying them an injunction because of what the Court considered to be unfair practices in prosecuting the patent applications before the patent office.
The patents-in-suit took between 9 to 17.5 years to issue after they were filed. The Court found that the patentee waited the maximum amount of time to request examination, failed to pay fees, and even allowed certain of the applications to go abandoned before being later reinstated. While the patentee argued that the patents were filed, prosecuted and issued in accordance with the law, and that there was no expert evidence led to suggest that the prosecutions in this case were inordinate, delayed or otherwise not in accordance with standard practice, Lafrenière J. disagreed. He called out the patentees’ failure to justify the steps taken in the prosecution of its patents and citing the behaviour as ‘gaming the system’.
The Court also noted that it was not satisfied that the defendants were aware of the patents and claims that would be asserted against them. The Court observed that the prosecution behaviour ran parallel to the licensing negotiations, which the Court referred to as a ‘patent holdup’—a situation in which the accused infringer is allowed to integrate the allegedly patented technology into their systems before the patents were issued—indeed before some of the asserted claims were added during prosecution:
By failing to prosecute their Patents diligently, Rovi left the Defendants in the invidious position of not knowing which patents were allegedly infringed, while they attempted to maximize the value of their patented technology. [para. 625]
Lafrenière J. denied an accounting of profits in this ‘patent holdup’ situation, particularly where conduct in the patent office was unexplained and unjustified. The Court considered that to hold otherwise would create an incentive for organizations to replicate Rovi’s conduct.
The ‘patent holdup’ theme carried through into the Court’s reasons which would have disentitled the plaintiffs/patentees to an injunction had the patent been held to be valid and infringed. Here the Court observed that the plaintiffs, non-practising entities, did not compete with the telecommunication carriers and that it would not be in the public interest to deny Canadian subscribers their access to features they previously enjoyed.
Here are the key take-aways from the decision:
- Consult with patent counsel regarding steps taken in the prosecution of a patent application. Taking the full amount of time permitted (especially via extensions and reinstatement) and/or amending patent claims to cover ‘infringing’ devices may be considered to be acting in bad faith when it comes to asking for equitable relief later.
- When accusing a party of patent infringement, be clear in setting out the patent rights and the claims at issue. Be informative and ensure that the accused infringer knows the basis up which your complaint is based.
The decision has been appealed (Federal Court of Appeal File No. A-231-22, commenced November 11, 2022). It is interesting to note that the Intellectual Property Institute of Canada has approved a limited intervention on the narrow issue of whether a patentee should be disentitled to injunctive relief in circumstances where it has merely followed the timelines prescribed by the Patent Act and Rules (absent some additional and specific finding of bad faith). This is important because, in patent practice, the time-lines and procedures are set out as being permissive—i.e., a party is permitted to take advantage of the time provided. This is not a consequence of ‘bad faith,’ but rather part of the planning process that pertains to all files. If the Federal Court of Appeal were to adopt the categorical approach of the Federal Court—that bad faith can arise even where one is simply conforming to statutory deadlines, this decision will very likely take on greater significance and the patent practitioner will want to be able to justify any perceived delay in prosecuting a patent application.
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