Under Section 56 of the Canadian Patent Act, if your business independently invented and started using a process or product in good faith before someone else filed a patent for it, you are legally protected. You can continue to use your invention without paying royalties, but you generally cannot sell the right to use it to another company.
Imagine you run a successful manufacturing business in Edmonton, and for years you have been using a custom, highly efficient machine to assemble your products. You never bothered to patent it because you wanted to keep it a trade secret. Suddenly, you receive a cease-and-desist letter from a competitor in Ontario claiming they just patented that exact same machine. 🚨 Naturally, you might panic, assuming your business will be shut down or sued for millions in damages. Fortunately, Canadian law provides a powerful shield for businesses in this exact scenario.
This protection is known as “Prior Use Rights,” governed by Section 56 of the Patent Act. The core philosophy of this law is fairness. If you invested time, labour, and money into developing and using a technology in good faith before someone else claimed it as their exclusive property, the government will not force you to stop. However, asserting this defence is a highly nuanced legal process that requires meticulous documentation and the expertise of a Canadian intellectual property professional.
Step-by-Step Process for Asserting Prior Use in Canada
Defending your business against a patent infringement claim using Section 56 is not automatic. You must actively prove your case if challenged. 📋 If you receive a legal threat from a patent holder, you should generally follow these steps to protect your operations.
Step 1: Gathering Historical Evidence
The burden of proof rests entirely on your shoulders. You must immediately collect all evidence proving you used the invention before the patent’s “claim date” (usually the date the competitor filed their application). This evidence can include dated engineering drawings, internal lab notebooks, dated photographs of the machine in operation, invoices for parts, and sworn affidavits from your employees.
Step 2: Assessing “Good Faith”
Canadian courts will heavily scrutinise whether your prior use was in “good faith.” 🤝 This means you must have developed or acquired the invention independently. If you secretly stole the idea from the patent holder before they filed, Section 56 will not protect you. You and your legal team must clearly demonstrate that your business arrived at the solution through its own independent research and development.
Step 3: Replying to the Cease-and-Desist Letter
Do not ignore a legal threat. You should engage a Registered Patent Agent or an IP litigation lawyer. They will draft a formal response to the patent holder. In this letter, your legal counsel will assert your Section 56 Prior Use Rights, often providing a summary of your evidence. In many cases, a strong response is enough to make a “patent troll” or competitor back down, avoiding court entirely.
Step 4: Continuing Business Operations
If your defence is solid, you can legally continue to use the patented machine or process within your business. 🏭 However, there are strict limits. You cannot license this right to a third party. If you are manufacturing a patented physical product, you can sell the inventory you made before the claim date, but your ability to manufacture and sell more of the patented product might be restricted depending on the exact circumstances of your prior use.
Prior Use Defence vs Invalidating a Patent
| Feature | Prior Use Defence (Section 56) | Invalidating the Patent entirely |
|---|---|---|
| The Goal | Allows you to personally keep using the invention without penalty. | Destroys the patent so no one, including the patent owner, holds exclusive rights. |
| Effect on Competitors | The patent remains valid against everyone else in Canada except you. | The technology becomes public domain; anyone can freely use it. |
| Legal Standard | Must prove you used it in good faith before the claim date. | Must prove the invention was known to the public and obvious before filing. |
| Cost and Risk | Generally a simpler defence if challenged. | Requires full Federal Court litigation, which is extremely expensive. |
How Much Does it Cost in Canada?
Asserting your prior use rights does not involve paying any fees to CIPO, as it is a defence mechanism rather than an application process. However, the legal costs of defending your business can be significant. 💲 As of May 2026, here are the typical expenses in Canadian dollars (CAD):
- Initial Legal Consultation: Expect to pay between $350 and $600 CAD for an hour with a senior IP litigation lawyer.
- Drafting a Defence Letter: Having a law firm review your evidence and reply to a cease-and-desist letter typically costs between $2,000 and $5,000 CAD.
- Full Federal Court Litigation: If the patent holder refuses to back down and sues you for infringement, defending yourself in Canadian Federal Court is notoriously expensive, often exceeding $150,000 CAD through to trial.
How Long Does the Process Take?
The timeline for resolving a patent dispute based on prior use varies wildly depending on the aggression of the patent holder. ⏱ Here is a general idea of what to expect:
- Evidence Gathering: Can usually be completed internally within 2 to 4 weeks.
- Initial Dispute Resolution: Responding to letters and negotiating a settlement or understanding can take 3 to 6 months.
- Litigation: If a lawsuit is filed in Federal Court, it typically takes 2 to 3 years before a final judgment is rendered.
Frequently Asked Questions (FAQ)
Can I expand my business if I am protected by prior use?
Yes, generally speaking. The 2018 amendments to the Patent Act clarified that you can expand your business and increase your use of the invention, provided your expansion does not completely change the nature of how you were using the invention before the patent was filed.
Can I sell my prior use rights to another company?
No, you cannot sell or license the specific right to use the invention to a third party. However, if you sell your entire business (or the specific division of the business that uses the invention), the prior use rights can transfer to the new owner.
Does prior use protect me against trademark infringement?
No. Section 56 of the Patent Act only applies to patents (inventions and processes). Trademarks (brand names and logos) are governed by the Trademarks Act, which has entirely different rules for prior use and passing off.
What if I stopped using the invention years ago, but want to restart?
If you abandoned the use of the invention long before the competitor filed their patent, you likely cannot claim Section 56 protection to suddenly restart. The law generally protects continuous, active use or serious preparations to use the invention.
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