Foreign entities can be liable for Canadian patent infringement

By Scott Foster

The Federal Court of Appeal confirmed that an entity based outside Canada, without any operations in Canada, can be liable for infringement of a Canadian patent if it makes arrangements that result in infringement of the Canadian patent.

The appellate court held that to infringe a Canadian patent, infringing activities must occur in Canada. However, an entity located outside Canada can be liable for infringement where it makes itself liable by “either having a common cause with a Canadian actor…or otherwise being a party to the infringement.”

In the case at hand, a U.S. based entity: (i) had no role in the manufacture, use or sale of the infringing products; (ii) had no office or employees in Canada; (iii) made design and marketing decisions; and (iv) did nothing in Canada.

Nevertheless, the trial judge found the U.S. entity liable for infringement. The Court of Appeal dismissed the appeal holding that the entity “had participated in the infringing activities sufficiently to be liable for infringement.” The Court went on to say “…a person cannot avoid liability for infringement by setting itself up outside Canada, and then making arrangements from there that result in infringement of a patent in Canada.”

The language used by the Federal Court of Appeal is similar to the principle of liability through common design, which has been established in the United Kingdom since at least 1988 (Sea Shepherd UK v Fish & Fish Limited [2015] UKSC 10).

Key take away: even though an entity may not operate in Canada, in certain circumstances it can be liable for patent infringement through association with the activities of a Canadian infringer. Although, of course, it will all depend on the facts of the case.