|Date Closed:||May 31, 2016|
|Client Name:||Intellectual Property Institute of Canada|
After retiring from his military career, Louis Brown obtained a patent for a specialized shelter system for protection against chemical and biological agents. When the patent was applied for, Mr. Brown was listed on the Supplementary Holding Reserve, a sub-component of the Reserve Force of the Canadian Forces. He had no duties, obligations to serve and received no pay or benefits.
The patent was licenced to NOR Environmental, a company owned by Mr. Brown. The Crown issued a tender for a protective chemical and biological shelter and awarded the contract to a competitor of NOR Environmental. Mr. Brown and NOR Environmental sued for patent infringement.
The Crown moved for summary judgment on the basis that Mr. Brown was a “public servant” when the patent was applied for, and thus subject to the Public Servants Invention Act. (PSIA).
Pursuant to the PSIA, public servants are required to report the making of an invention to the Minister and obtain permission of the Crown before seeking patent protection, either in Canada or abroad. In certain circumstances, an invention made by a public servant will vest in the Crown.
As Mr. Brown had not reported, the Crown alleged that his patent application contained an “untrue material allegation” that rendered the patent void, pursuant to s. 53 of the Patent Act. The Crown also pleaded that the invention vested in the Crown pursuant to the PSIA, but did not advance this issue on summary judgment.
The PSIA defines a public servant as “any person employed in a department, and includes a member of the Canadian Forces or the Royal Canadian Mounted Police.”
On the motion, the Court concluded that Mr. Brown was a “member” of the Canadian Forces because he was listed on the Supplementary Holding Reserve. It was immaterial that Mr. Brown was not “employed” in any sense by the Canadian Forces — he remained a public servant notwithstanding that he had no service obligations and received no remuneration. As such, he was required to report his invention to the Minister before seeking a patent.
The motions judge agreed with the Crown that the patent application thus contained an “untrue material allegation,” but declined to void the patent, finding that this remedy could require proof of fraudulent intent and was best left for trial.
Mr. Brown and NOR Environmental appealed. The Crown cross-appealed.
The Intellectual Property Institute of Canada (IPIC) was granted leave to intervene on the appeal.
The Federal Court of Appeal agreed with the Federal Court’s statutory interpretation of the definition of “public servant.” Mr. Brown did not have to be actively employed with the Canadian Forces in order to be a public servant. The fact that he was listed on the Supplementary Holding Reserve made him a “member” of the Canadian Forces and thus a “public servant,” even though he had embarked on a new, private sector career.
However, the Court of Appeal reversed the finding that s. 53 of the Patent Act could be used to invalidate Mr. Brown’s patent. Although the Federal Court concluded that the PSIA and Patent Act should be read together, the Court of Appeal disagreed that there was a nexus between the two statutes.
The Patent Act is complete code with respect to the obtaining, enforcement and loss of patent rights.
Non-compliance with the reporting requirements of the PSIA does not give rise to a basis for invalidating the resultant patent.
The PSIA has its own penalty provisions for non-compliance — an offence which is punishable on summary conviction by way of fine and/or imprisonment.
The decision effectively splits the vesting and reporting provisions of the PSIA. A military reservist who makes an invention in the course of a subsequent, post-military career in the private sector remains a public servant and is subject to the reporting requirements of the PSIA. This has implications for those who are hired to invent for a new employer or who are co-inventors with others. If the invention is not reported and a patent is applied for without ministerial permission, the penal sanctions of the PSIA may be triggered, even though the patent cannot be invalidated.
Left unresolved is interpretation of the statutory criteria for when an invention made by a “public servant” (such as a military reservist) will vest in the Crown.