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The Markman and the Grandfather: Federal Court Determines Claim Construction by Partial Summary Judgment and Interprets the Prior Use Defence

In Kobold Corporation v. NCS Multistage Inc., 2021 FC 1437, the Federal Court addressed two often pondered questions in Canadian patent law: can the court decide the construction of a patent’s claims before trial, and when can a prior user rely on a prior use defence to infringement?

By granting partial summary judgment, the Court provided a final ruling on claims construction while directing the remaining issues, including infringement, to be determined at trial. The Court also interpreted the new prior use defence set out in s. 56 of the Patent Act, though it deferred the final ruling on the merits—which would require a determination of infringement—to trial.

This decision is part of a general trend of the Court to employ, where possible, simplified procedures in patent actions, including eschewing the need for expert evidence to construe non-technical claims1 and allowing complex pharmaceutical litigation to be determined by summary trial.2 It remains to be seen whether this case opens the door to procedures for determining claims construction prior to trial.


Kobold Corporation and NCS Multistage Inc. both provide fracking equipment for the oil and gas industry. Kobold commenced an action against NCS alleging that four of NCS’s tools used in fracking infringe Kobold’s patent. In particular, all four of NCS’s tools use an allegedly infringing device, the “Blue Bullet.” NCS has used some form of the Blue Bullet with its tools since 2012—three years before the 2015 claim date of Kobold’s patent. However, variations of the Blue Bullet had been developed and deployed over time.

NCS brought a motion for summary judgment to resolve the action based on s. 56 of the Patent Act, arguing that its prior and continuing use of the Blue Bullet device is a complete defence to any patent infringement claim, notwithstanding the modifications to the original 2012 Blue Bullet device. To determine the applicability of this defence, the Court needed to first construe the claims and consider whether the NCS’s activities fell within the scope of the claims, then assess whether NCS could avail itself of s. 56.3

The Markman: Motions for Claims Construction Come to Canada?

The Court held it could make a determination on claims construction, but could not do so on infringement due to insufficient evidence, and therefore it could not make a final determination on the prior use defence. Rather than dismiss the entire motion, the Court made its construction of the claims binding, leaving the remaining issues for trial.

In particular, the Court proceeded to construe the claims as construction is a question of law, and the judge found there was enough evidence before the Court to enable the exercise. Further, only one term—“secured”—was in dispute.

The Court’s ultimate approach in Kobold echoes the U.S. process where “Markman” hearings have long been used to determine claims construction before any trial on the matters of validity or infringement. Despite calls for Markman-style hearings in Canada, the courts have long resisted attempts to introduce this type of procedure in Canadian patent actions.4

Although the Court’s decision effectively turned the summary judgment motion into a Markman-style hearing, it is unclear if the Court would entertain motions to solely construe claims in future cases.

The Grandfather: Allowing Infringement Where There Was Prior Use

Despite the Court’s finding that there was insufficient evidence to determine infringement, the Court nonetheless considered the scope of the new prior use defence provided by s. 56(1) of the Patent Act.

Before 2018, Canada’s prior use defence was very limited. In particular, it did not permit any further manufacturing of subject matter protected by the patent.5

Every person who, before the claim date of a claim in a patent has purchased, constructed or acquired the subject matter defined by the claim, has the right to use and sell to others the specific article, machine, manufacture or composition of matter patented and so purchased, constructed or acquired without being liable to the patentee or the legal representatives of the patentee for so doing.

In 2018, amendments to s. 56(1) came into force. They were intended to expand the defence to one that would allow the same continued use in respect of manufacturing, using or selling the patented invention and would also extend to third party customers.6

The Court reviewed the new provision and noted that it does not provide a general defence to infringement, but rather a right to continue manufacturing, using or selling as the prior user did before the patent; i.e. the provision essentially “grandfathers” the prior use. The prior user may rely on s. 56 if they make non-functional changes (e.g. changing the colour of the product) or functional changes that do not relate to the inventive concept of the asserted claim(s) after the asserted patent’s claim date.7 However, the prior user’s actions may not be sheltered by s. 56 if post-claim changes made are tied to the inventive concept of the asserted claim(s), even if the post-claim modification would infringe the same claims in the same manner as the pre-claim act.8

The Court established a three-part test for a s. 56(1) prior use defence:

  1. Did the user perform identical acts before and after the claim date, disregarding any wholly non-functional changes? If yes, s. 56(1) would be a defence to infringement, and there is no need to consider whether the user’s action would infringe the patent.
  2. If the acts are not identical, do the acts infringe the patent, and if so, which claims? If the post-claim acts do not infringe the patent, there is no need to rely on s. 56(1). If the pre-claim acts would not have infringed the patent, s. 56(1) cannot apply. Further, s. 56(1) will not apply if the post-claim acts infringe claims that would not be infringed by the pre-claim acts.
  3. If the pre-claim and post-claim acts are not identical and only infringe the same claims, do the changes from the pre-claim acts to the post-claim acts relate to the inventive concept of the patent? If no, then s. 56(1) will provide a defence to the infringement.

Although the Court did not make a determination on whether NCS could rely on s. 56(1), it dismissed NCS’s defence with respect to s. 56(6) and 56(9), because those provisions apply only to third-party customers.


NCS has commenced an appeal of this decision. Should the Federal Court of Appeal uphold the lower court’s decision, it may bring Canada a step closer to a Markman-style approach for pre-trial determination of claims construction.

Further, the lower court’s interpretation of s. 56 results in a narrow exception to infringement. In the context of the twenty-year term of a patent, many prior users will need to make some modifications, and care will need to be taken to evaluate whether those alterations would take the prior user outside of the defence. In industries where continued innovation is necessary to remain competitive, the defence may not be truly available. It remains to be seen whether the appellate court will uphold this narrow scope.

1 Canmar Foods Ltd. v. TA Foods Ltd., 2019 FC 1233, aff’d 2021 FCA 7.

2 ViiV Healthcare Company v. Gilead Sciences Canada, Inc., 2020 FC 486, aff’d 2021 FCA 122.

3 Kobold at paras 112–16.

4 See Realsearch Inc. v. Valon Kone Brunette Ltd., 2004 FCA 5 at paras 18–21; Merck & Co. v. Pharmascience Inc., 2010 FC 510 at para 47.

5 See Kobold at paras 65–76, where the Court discussed the history and changes of the prior use defence in further detail.

6 Kobold at para 71.

7 Kobold at paras 101, 111.

8 Kobold at para 111.