Third Party Prior User Rights

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in last week’s post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1) provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. Zinn J granted summary judgment on the interpretation of this provision. I’ve discussed aspects of the decision relating to 56(1) in previous posts.

Zinn J also briefly addressed 56(6) and 56(9), which protect third parties. Subsection 56(6) provides that “the use of an article is not an infringement. . . if the article was acquired. . . from a person who, before the claim date . . . in good faith, made or sold. . . an article that is substantially the same as the one used, for that use.” Subsection 56(9) similarly protects a person who uses a service provided by a third party who had provided substantially the same service before the claim date. Note that there is no requirement in these provisions that the third party itself bought the product or service before the claim date; the third party can buy the product after the claim date from a party who sold a substantially similar product before the claim date.

NCS argued that it was protected by this provision because it bought the Blue Bullet element from a third party. The Blue Bullet was part of the packer assembly [27], and presumably an important part; in any event, its exact nature is not important to the decision. Zinn J rejected the s 56(9) argument purely on the facts. There was no evidence that NCS purchased the service from others; on the contrary, NCS was providing the service: [146]. Consequently, on its face s 56(9) does not apply. Zinn J also rejected the 56(6) argument on facts, on the basis that there was no evidence that NCS actually acquired the Blue Bullet from a third party, as is required by the provision: [146].

That turns simply on the facts, but one interesting point concerning the language “substantially” the same, found in 56(6),(9), which is evidently broader than “the same,” which is used in 56(1). Kobold submitted that this was intended to protect a third party “from having to prove what it is using is the same as what was previously available, provided it is still substantially the same and used for the same use” [144]. Presumably this is on the view that the third party may have bought the product after the claim date, and may not have easy access to evidence of what was being sold before the claim date, in contrast to the manufacturer, who should be able to provide evidence of what they themselves were doing before the claim date. That’s at least a plausible suggestion, though I’m not sure that a different substantive test is the best way to deal with that problem. After all, the third party still has to prove that the product is substantially the same as the pre-claim date product, so it still has to have some kind of access to that earlier product, so the evidentiary problem largely remains. If the problem is one of evidence, it might have been better addressed directly, by an evidentiary presumption of some kind. Further, these provisions do not provide a great deal of additional protection to the third party. If the new product purchased by the third party is not “the same” but it is “substantially the same,” then the third party will generally not be able to purchase it anyway; even if the purchaser can take advantage of 56(6) to use the product, it will probably not be able to purchase the product after the claim date, because the vendor who cannot take advantage of 56(1) will likely be enjoined from selling.

In any event, the current Act does have two different standards, “the same” and “substantially the same,” which are evidently different. This case has told us what “the same” means; it will take another case to find out what “substantially the same” means. Kobold’s suggestion is plausible, but not beyond doubt. No doubt we’ll see further speculation as to the purpose of the “substantially the same” requirement, given that it is relevant to a purposive interpretation of the provision.

Zinn J also gave a second reason for rejecting the 56(6) argument:

[149] I also agree with Kobold’s further submission that subsection 56(6) does not apply because the use of the Blue Bullet element is not the potentially infringing act. Claims 1, 9, and 12 of the ‘561 Patent are for the use of tools that incorporate elements that are not present in the Blue Bullet element. Claim 15 is for a pressure equalization tool having elements not present on the Blue Bullet element. It is only the use of the Blue Bullet element in conjunction with the other elements of NCS’s packer assemblies that infringes the claims.

I’m just going to leave this here. Because Zinn J ordered a trial, the facts are not particularly well developed, and I don’t understand why the use of the Blue Bullet element is not the potentially infringing act. It does seems to have been the element that incorporates all of the key elements of the inventive concept. This isn’t to say I disagree; I just don’t understand the point well enough to comment. I am flagging it nonetheless, as it does appear to be some kind of substantive restriction on the availability of 56(6).

Prior User Rights and English Law

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in last week’s post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1) provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. Zinn J granted summary judgment on the interpretation of this provision.

My last post discussed the central holding, that the subsequent act will be the same so long as any changes do not relate to the inventive concept. In addressing that question I did not address Zinn J’s initial discussion of the meaning of the term “the same,” and whether it should be interpreted to mean “substantially the same act”, as NCS argued [82], or rather “near identicality,” as Kobold argued [88]. Zinn J agreed with Kobold that the more stringent interpretation was correct, even saying that the two acts must be “identical” [92] “in the sense that one can only perform those acts set out in section 42 of the Patent Act which were actually performed pre-patent” [97].

This might seem like a very important point to have omitted; but it is less important than it might seem. Knowing that the test is “identical” rather than “substantially the same” is not particularly helpful unless we know what those terms mean. As I discussed in my last post, it is perfectly clear from Zinn J’s subsequent discussion that when he said “the same” should be interpreted to mean “identical” [92], he did not mean that it must be exactly identical in every respect. He expressly stated that a variety of changes, from paint, to location method, to fracking fluid, would all be permitted. Indeed, after concluding that “the same” meant “identical,” began the next part by saying “[t]his interpretation then leads one to ask if the same act is the manufacture of a device, must it be an identical device that is manufactured to obtain the protection of subsection 56(1)” [99]; he clearly did not consider this question to have been settled by the holding that “the same” means “identical,” and he went on to outline many differences that would be permitted, such as a different paint colour, or the use of a more efficient fracking fluid in the claimed method. So, even though Zinn J did hold that “the same” means “identical” [92], [97], it would a misleading to take that out of context as a summary of his holding.

With that said, I’ll comment briefly on that part of Zinn J’s decision.

His reasons for holding that “the same” means “identical,” were first, “identical” is the dictionary meaning of the word the “same” [93]. Second, “substantially the same” is used in 56(6),(9) and “the same” must mean something different, and presumably more restrictive [94]. Third, the phrase “the act” in the corresponding provision of the UK Act, s 64, had been interpreted as meaning “substantially the same” and to the extent the Canadian drafters were looking to the UK Act, the decision to use “the same act” instead of simply “the act” implies they were looking for a more restrictive meaning than under the UK Act [95], [79]. Fourth, even if an identical act is required, this is still more expansive protection than under the previous provision, which restricted protection to the same specific article [98].

The most significant point is the third, as it implies that the test for similarity in Canadian law is more stringent than in UK law, which in turn means that UK caselaw will be of limited assistance at most. I am not persuaded by this point. Now, I should say that this doesn’t make much difference, as we’re not going to find much guidance in the UK cases anyway. So far there are very few UK cases discussing s 64, and none of them go into what it means to be the same acts, and they mostly turn on whether effective preparations were made. But the point perhaps worth exploring nonetheless, in case future UK decisions are more helpful.

The UK Act says a person who does “an act” before the claim date has the right “to continue to do the act.” “The” is a definite article, which, at least according to Wikipedia “denot[es] . . . things already mentioned, under discussion, implied or otherwise presumed familiar to. . . readers.” So “the act” refers to an act already mentioned, namely the prior act referred to in the first part of the provision. So I would say that as a matter of grammar “the act” in the UK provision means the same act as was previously mentioned in the sentence, which is to say the prior act. So I have a hard time giving much significance to the inclusion of the word “same” in the Canadian provision, as it seems to me to have been grammatically implicit in the UK Act.

More importantly, “the same” was interpreted as meaning “substantially the same by Jacob J in Lubrizol v Esso [1997] 114 RPC 195 (Pat)*, in a passage quoted by Zinn J at [81] (original italics, underling added by Zinn J):

In deciding whether the activity is substantially the same all the circumstances must be considered. Both technical and commercial matters must be taken into account. That is important in a case such as the present where there are inherent minor variations in starting materials or the like. If the protected act has to be exactly the same (whatever that may mean) as the prior act then the protection given by the section would be illusory. The section is intended to give a practical protection to enable a man to continue doing what in substance he was doing before.

I don’t see any real between what Jacob J was saying in this passage and Zinn J’s holding in the remainder of the decision. As noted, Zinn J explicitly held that changes in paint colour, location method, and fracking fluid, would all be permitted, even though the latter two are actually elements of the claim. This goes well beyond the example of “inherent minor variations in starting materials” given by Jacob J. So when Jacob J held that the act had to be “substantially” similar, this was by way of rejecting a requirement that the acts by strictly identical—a requirement which Zinn J also rejected, notwithstanding that he did say that “the same” means “identical” at [92]. I also note that at [97] Zinn J explained “identical” as meaning “in the sense that one can only perform those acts set out in section 42 of the Patent Act which were actually performed pre-patent” [97] and that “[o]n this interpretation [ie identical] if the person claiming the protection of subsection 56(1) had, for example, previously only manufactured and used its device, then they can continue to manufacture and use it, but they cannot now sell the device to others to use” [98]. This suggests that “identical act” means the type of infringement—whether it be the make, sell, or use—that must be identical.

On the whole, I don’t find this discussion of whether “the same” means “identical” or “substantially” the same to be helpful. The label doesn’t matter. The real question the nature and extent of the differences that are permitted. Zinn J’s lengthy discussion of that central question, discussed in Monday’s post, surely supersedes his statement that “the same” means “identical.”

*Zinn J cited the passage as “[1997] RPC 195 (Eng CA) at 216,” which is a pinpoint to the decision of Jacob J in the Patents Court. Aldous LJ in the EWCA did quote and affirm the last two sentences of that passage, [1998] 115 RPC 727 (CA) 700, but did not quote the part related to “substantially the same”.

 

When Are Two Acts “The Same” for the Purpose of 56(1)?

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in my last post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1), provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. This turns out to be a very difficult question. I’ll suggest that there is some internal tension in Zinn J’s approach; but I don’t see any flaws in his reasoning, and I don’t have anything better to suggest. The facts are outlined in my previous post. I won’t repeat them here, but some of the examples in the following discussion assume familiarity with the invention.

As discussed in the last post, it is clear that the prior user right is not confined to the same specific article that had been used prior to the claim date. On the other hand, the fact that the person did an ‘infringing’ act before the claim date does not give them carte blanche to carry out any infringing act after the claim date. Some halfway house is needed: the subsequent act must be the same as the prior act in a way that goes beyond the mere fact that both are infringing. (If the prior act is not infringing, 56(1) does not apply; and if the subsequent act is not infringing, there is no need to appeal to 56(1): [114].)

The question then, is as to the nature and degree of changes permitted before the subsequent act is no longer considered to be “the same” as the prior act and the protection of s 56 is lost.

First Decision on Prior User Rights: Overview

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

This motion for summary judgment is the first decision to consider the new prior user defence set out in s 56 of the Act, which came into in effect in December 2018 [53]. The previous s 56 also provided for a form of prior user defence, but the new provisions are so completely revamped that the cases interpreting the old s 56 are of no assistance (except, in some cases, in the negative sense of constituting the problem that the legislature intended to correct). Zinn J’s decision in Kobold v NCS has given us a very careful analysis of the key operative provision, 56(1), as well as some discussion of 56(6),(9), which provides for third party prior user rights. This post will give an overview and discuss some of Zinn J’s general observations.

Prior user rights are assessed on a claim by claim basis, and the key date for establishing such rights is the claim date. Subsection 56(1) provides that if a person, before the claim date,

committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.

The key question is what it means for the subsequent act to be “the same act” as the prior act. This question didn’t arise under the old provision, which gave protection only in respect of “the specific article” that had been used or acquired before the claim date. It is clear that the new provision is intended to expand the prior user rights, so that a person who used an infringing device—more precisely, a device that would be infringing if used after the claim date—before the claim date can not only use that very device, but can also use new devices, so long as the new device is “the same” as the old device. What if the old device was painted green and the new device is painted red, but is otherwise identical—is it the same? The answer is clearly yes. Where, then, do we draw the line? At the risk of oversimplifying, Zinn J’s view is that considerable variation is permitted, so long as the new device does not incorporate changes related to the inventive concept. I’ll discuss this key point at more length in my next post.

Then the question is what it means for changes to relate to the inventive concept. This decision provides some guidance in this respect, although it is limited. Zinn J granted summary judgment on the interpretation of 56(1), but not on its application to the facts, which he held required a trial; but he did address a couple of points on the facts. Zinn J also granted summary judgment on claim construction, which did of course turn on the facts, but the analysis did not implicate the s 56 issue. Finally, he also granted summary judgment in respect of the 56(6), (9), but this did not turn on the question of whether the prior acts were the same as the subsequent acts.

The facts nonetheless provide context for the rest of the discussion. The 561 patent relates the bottomhole assembly [BHA] used in fracking. Fracking involves pumping large volumes of fluid at high pressure into the well to fracture the formation. Kobold’s 561 patent particularly relates to one element of the BHA, namely the packer, which seals the well so the pressurized fluid cannot escape. The packers at issue in this litigation use an elastomeric material to seal the well. The BHA is pushed into the desired position, and then the packer is anchored to the wall of the well. A mandrel connected to the packer is then pushed further, compressing the elastomer, and causing it to expand and seal the well. This much was all part of the prior art [7–13]. The trick is to get the BHA out again. After fracking, there is a large pressure differential above and below the packer that has to be equalized before the BHA can be moved. The most common ways to do this in the prior art were the use of an equalization valve on the sealing element, or by having a passageway through the centre of the tool. The inventive concept of the ‘561 patent is a new method of equalizing pressure by using the mandrel to pull on the sealing element, decompressing the elastomer, which contracts, creating an annular passageway on the outside of the packer which the fluid flows through, equalizing the pressure [13–18]. The inventive concept “is the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure” [153]. (Note that most of the claims, including Claim 1, the representative claim, were method claims, to the method of using such a BHA, not the BHA itself, though some claims were to the tool itself: nothing turns on this.)

NCS builds and operates four BHAs at issue in this litigation [26]. One, known as the Mongoose, was in use since 2012, predating the claim date of the 561 patent [30]. I assume that NCS did not argue that the 561 patent was invalid as being anticipated by the Mongoose because the BHA would not have been available to the public, since it was used at the bottom of a high pressure oil well and, so far as I can tell, was actually operated by NCS, rather than being leased out so that it might have been available for inspection. Kobold conceded that NCS could continue to use the Mongoose, presumably because it was protected by s 56 [31]. The question for s 56 was whether the other three models can be considered “the same” as the Mongoose.

Expanded protection

Zinn J began his analysis with a comparison of the old and new provisions. He noted that it is express in the amending legislation that the new s 56 is intended to grant more expansive rights than the previous version: [67]–[68], referring to Budget Implementation Act, 2018, No 2, SC 2018, c 27, Summary of Subdivision A of Division 7 of Part 4.

He observed that the current version of subsection 56(1) differs in three key ways from the former [70]:

● The former provision was limited to physical inventions and did not cover patented methods. The current provision, referring to “an act” that would otherwise be infringing, encompasses any act kind of potentially infringing act: [71]. (For convenience, in what follows I will generally refer to a physical device, like a BHA, but keep in mind that the protection is broader; the actual claims at issue in this case were method claims.)

● The former provision protected the “specific article”; the current provision instead protects “the same act”: [72].

● The former version only protected persons who had committed an infringing act prior to the claim date; the current provision also protects persons who made “serious and effective preparations” to do so [73]. Zinn J pointed out that this change was likely intended to legislatively overturn Merck v Apotex 2006 FCA 323, in which the FCA held that Apotex was not protected by the former s 56 because it had not actually acquired title to the infringing product by the claim date, even it had ordered the product and production had actually started [74]–[75]. Merck v Apotex can no longer be considered good law.

Further, Zinn J noted that s 56(6) and 56(9), which deal with third party use of a purchased article or service have no corresponding provisions in the previous provision.

The same type of infringement

The current provision protects “the same act.” What does it mean for the acts to be the “same”?

Part of the answer is that the acts must be the same in the sense that the type of infringement—make, sell or use—must be the same. So, if a person manufactured and used an infringing device prior to the claim date, “they can continue to manufacture and use it, but they cannot now sell the device to others to use, as selling is not an act done prior to the issuance of the patent” [98], and see [97], [91]. Section 56 seems to be broadly modeled on the corresponding provision of the UK Patents Act 1977, s 64, and this holding is consistent with the UK caselaw: see Lubrizol Corp v Esso Petroleum Co Ltd [1998] 115 RPC 727 (CA) 769–70 (Aldous LJ); Forticrete [2005] EWHC 3024 [15] (Kitchin J). This point does not appear to have been disputed.

In some cases, this limitation seems straightforward. If NCS was making and operating infringing BHAs before the claim date, but was not selling them to third parties, then it can continue to make and operate the same BHA after the claim date, but it does not have the right to start selling them. A more difficult question arises if a person has in good faith imported an infringing product prior to the claim date, with the intention of selling it, but did not actually make any sales prior to the claim date. In such a case, it appears that the protection would allow the person to continue to import the product, but not to sell it—”unless the importation amounted to an effective and serious preparation to sell it”: see Forticrete [2005] EWHC 3024 [15]. Zinn J did not discuss this point, which did not arise on the facts of this case.

It is necessary that the type of infringement is the same, but that is not sufficient to invoke s 56: a person who makes one infringing device prior to the claim date does not have carte blanche to make any infringing device after the claim date: [100], [90]. A comparison must be made between the prior act and the subsequent act to determine if those acts are the same. This point does not seem to have been contested. (Zinn J accepted Kobold’s submission on that point [90], and that submission does not appear to have been opposed by NCS.) This holding is also consistent with the UK jurisprudence: Lubrizol v Esso (No. 1) (1992) 109 RPC 281 (Pat) 295 (Laddie QC); Lubrizol Corp v Esso Petroleum Co Ltd [1998] 115 RPC 727 (CA) 770 (Aldous LJ); Forticrete [2005] EWHC 3024 [25] (Kitchin J).

So, it is clear that on the one hand, the prior user right is not confined to the same specific article that had been used prior to the claim date; but the fact that the person did an ‘infringing’ act before the claim date does not give them carte blanche to carry out any infringing act after the claim date. The answer lies somewhere between these two extremes. This will be the subject of my next post.

Gillette Defence and Prior User Rights

Kobold Corporation v NCS Multistage Inc 2021 FC 742 Zinn J

            2,919,561

At one level this is a mundane procedural decision denying a motion to file expert reply evidence on the basis that the issue ought to have been anticipated [10]. But the effect is to hold that a Gillette defence cannot be based on prior use rights found in s 56 of the Act, with the consequence that the underlying motion for summary judgment was also derailed [19]. This is problematic in light of the “culture shift” in favour of simplified procedures endorsed by the SCC in Hryniak v Mauldin 2014 SCC 7 [2] that has been embraced by the Federal Courts in several recent decisions, most recently Canmar Foods 2021 FCA 7 affg 2019 FC 1233 (here). I suggest that a purposive analysis of the provision in question indicates that there may be a way to permit a motion for summary judgment to proceed in similar future cases.

After being sued for infringement of the 561 patent by Kobold, NCS brought a motion for summary judgment on the basis that the allegedly infringing procedure it currently uses is the same procedure that it had used prior to the claim date [5], [6]. NCS’s argument is similar to the so-called “Gillette defence,” established in Gillette Safety Razor (1913) 30 RPC 465 (HL), which permits the defendant to prove that the alleged infringement was practised in the prior art, so that either the alleged infringement does not fall within the claims of the plaintiff’s patent, or if it does, the patent is invalid for anticipation. (The Gillette defence may also turn on obviousness.) As Locke JA explained in Western Oilfield 2021 FCA 24 [77] the Gillette defence is not actually a distinct defence under the Act, but is rather “a shortcut around the often difficult and time-consuming process of construing the claims of a patent, and then determining whether those claims are valid and whether they have been infringed.” So, if the defendant can prove that it was only doing what it had always done publicly, which is purely a matter of fact, the claims asserted against it must either be invalid or not infringed. Crucially, this makes it unnecessary to construe the claims and assess anticipation; the whole point of the Gillette defence is that it avoids the cost of construing the claims and assessing validity in favour of a purely factual inquiry. The Gillette defence is often less helpful in practice because it is rare that a defendant will be willing to put all its eggs in that basket—but this suggests that the Gillette defence is a prime candidate for a summary trial, where determination of a single factual issue can determine the case.

That was NCS’s position in this case. NCS argued that the procedure it uses today is the same procedure it used prior to the claim date. But NCS did not rely on the Gillette defence as such. The allegedly infringing device was a bottom hole assembly used in oil and gas drilling and I suspect that NCS was concerned that it might not be able to establish that its prior use had made its device available to the public so as to be prior art for the purposes of anticipation under s 28.2. NCS instead sought to rely on the prior user rights granted by s 56, the effect of which is to allow a person to continue to do any act that it had done prior the claim date, even if its prior use had not been public.

More particularly, s 56(1) provides that “if—before the claim date of a claim in a patent—a person. . . committed an act that would otherwise constitute an infringement of the patent in respect of that claim. . . it is not an infringement of the patent. . . if the person commits the same act on or after that claim date.” The difficulty for NCS lay in the phrase “that would otherwise constitute an infringement of the patent.” In support of its motion for summary judgment based on s 56, NCS filed a fact affidavit of one its employees, evidently to the effect that NCS’s allegedly infringing bottom hole assembly was the same as NCS had used prior to the claim date [3]. In response, Kobold filed an expert affidavit going to infringement and (apparently) to claim construction [4]. NCS then brought a motion seeking to file expert reply evidence.

The Rules do not expressly allow for evidence in reply and such evidence is permitted only in special circumstances: Amgen v Apotex 2016 FCA 121. NCS argued the reply evidence should be permitted because it could not have anticipated that Kobold would file evidence on claim construction, because claim construction was irrelevant to the question of whether the bottom hole assembly it currently uses is the same as the assembly it used before the claim date [6]. Zinn J rejected this argument, saying that issues related to claims construction and whether NCS’s device was infringing ought to have been anticipated by NCS:

[10] These are two of the very issues at the heart of this litigation. Moreover, they are the very issues to be addressed when relying on section 56 of the Patent Act, unless a party admits that its tools and procedures do breach the relevant patent, but argues that they have been in use prior to the patent claim date.

The key point is that s 56 is available only in respect of “an act that would otherwise constitute an infringement.” As Zinn J put it, NCS’s position

ignores the express wording of section 56, which. . . speaks to a defendant committing an act before the claim date “that would otherwise constitute an infringement of the patent in respect of that claim.” This language brings directly into issue both claims construction and infringement. [11]

The effect of this holding is that a Gillette defence is available based on a prior public use, but not based on a prior secret use; while a defendant can avoid addressing claim construction and infringement when its prior use was public, it cannot avoid addressing those issues when its prior use was secret.

This also effectively means that a summary judgment is not available based on prior user rights. If the NCS’s device would not constitute an infringement, s 56 is not available, and unless NCS admits infringement, validity and infringement are therefore in issue. To get a summary trial focusing on the purely factual issue of prior use, NCS must admit infringement. It is of course a very risky proposition to put all its eggs in that basket.

This is somewhat counter-intuitive. In either case, the argument is that the defendant should be permitted to keep doing what it had always been doing, on the basis that the act must either be non-infringing, or permitted, either because the patent is invalid by anticipation, in the former case, or by prior user rights under s 56, in the latter case. Why should there be a functional difference between the two scenarios?

To answer that question we should look to the purpose of the key phrase. Why does s 56 apply only to an act “that would otherwise constitute an infringement of the patent”?

The long-standing provisions of the Act relating to prior user rights were replaced by entirely new provisions in 2018. It appears that the new provisions were modeled on the corresponding provisions of the UK Patents Act 1977, namely s 64. While there are some significant differences in the overall provision, this particular passage is very similar. It appears that the intent of this phrase in the UK Act is to ensure that prior uses which are non-infringing by virtue of statutory exceptions under s 60(5) of the UK Act, eg an experimental use, are not protected by the prior use provisions: see Terrell on Patents §14-203. It seems reasonable to suppose that the purpose of the parallel phrase in the Canadian Act is the same. (The main exceptions under the Canadian Act appear to be use authorized to respond to a public health emergency under s 19.4(7); regulatory use under s 55.2; and experimental use under s 55.3. There are also third party rights under s 55.11 which give rise to an exception under certain circumstances, but these have their own prior use provisions.)

That is, it appears that the intent of the key phrase is to ensure that the statutory exceptions to infringement do not give rise to prior user rights. An experimental use, for example, is a limited exception to infringement, which does not confer unlimited rights to make, sell and use the invention; consequently, an experimental use prior to the claim date should not give rise to a general right to make, sell and use the invention after the claim date. The defendant who was engaged in experimental use prior to the claim date is nonetheless entitled to continue engaging in the same limited experimental acts after the claim date, not by virtue of the prior user rights provisions, which are inapplicable, but by virtue of the experimental use exception itself. Extending the prior user rights acts to prior experimental use is therefore both unnecessary and undesirable.

If that is indeed the purpose of the key phrase, I suggest that the defendant need not admit infringement in order to take advantage of s 56; it should be enough for the defendant to admit that its acts do not fall within any statutory exception to infringement. On a motion for summary judgment, if NCS could then establish the factual point that the prior use was the same as the current use, while admitting that it was not subject to any exception—including eg that the use was not experimental—this would establish that NCS was entitled to the prior use defence without requiring it to admit infringement.