In 2005, Nautical Enterprises Ltd

question 16

Essay

In 2005, Nautical Enterprises Ltd. applied for and received a patent for its new invention of a specialized scuba-diving suit. The claims statement accompanying the patent application stated that the new diving suit was capable of performing five specialized functions not formerly available to purchasers of such suits. In the same year, Nautical also patented the suit in the United States and granted a license to ABC Co. to manufacture the suit at its facilities in Florida. ABC commenced manufacturing immediately to meet the demand for the suits in the U.S. and exported them to diving suppliers in Canada
At the time of ABC's export, there were six Canadian companies engaged in the manufacture of diving suits. One of them, having learned of the new specialized suit, began producing suits with highly similar characteristics and functions and sold the suits through Canadian distributors.
In early 2007, Nautical and ABC learned of the manufacturing activity in Canada and immediately sent a letter to the manufacturer informing it that they were the patentee and licensee respectively of the diving suit. Nautical invited the manufacturer to negotiate a licence to produce the suits as Canadian Nautical itself, did not wish to manufacture in Canada. Several years of negotiation, however, failed to achieve an acceptable agreement during which time the similar suits continued to be manufactured in Canada by this manufacturer. In 2009, another Canadian diving suit manufacturer, Deep Diving Suits Inc., recognized the demand for Nautical suits in Canada. Deep Diving had the facilities to manufacture the patented suit and wished to do so on a commercial scale. The company applied to the court for assistance
Discuss the nature of this application and its probable outcome. Include in your discussion all factors which may affect the court's decision.
C.P.R. (3d) 154, this case examines the obligations upon patentees to supply the Canadian market as well as the ability of an interested manufacturer to obtain a compulsory license if the patentee fails to meet its obligations. The issue of patent infringement is also dealt with.
In order for an interested Canadian manufacturer to obtain a compulsory licence, its application must be brought no earlier than three years after the patent has been in effect. In this case, the time period expired in 1988 so the applicant has properly brought the application. It must further show that the patentee is not working the patent on a commercial scale to meet public demand assuming that the invention is capable of being worked in Canada.
Here, the patent is being worked in Canada, however, by an infringing manufacturer without the express authorization of the patentee. Since the infringing activity is subject to legal action by the patentee, courts generally do not consider it to be legitimate commercial working to satisfy the patentee's obligation, as it may be properly suspended at any time. Similarly, the importation activity carried on by Canadian suppliers may also constitute infringement if it lacks the consent of or payment of royalties to the patentee. Therefore, there is no effective manufacture of the diving suit in Canada and the patentee does not appear willing to establish such manufacture itself.
It seems apparent that the patentee, then, cannot supply Canadian demand and has little reason other than unwillingness for that situation. The court would, in such circumstances, issue a compulsory licence to the applicant to manufacture the diving suits in Canada on a royalty basis to the patentee. The Commissioner of Patents in this case, in fact, issued a non-exclusive licence to the applicant.

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Definitions:

Carbohydrates

Organic compounds, including sugars, starches, and cellulose, which are an important source of energy for the body.

Cell Metabolism

The complex series of chemical reactions occurring within a cell to maintain life, involving the processing of nutrients for energy and the synthesis of necessary substances.

Plasma Membrane

The lipid bilayer that forms the outer boundary of a cell, regulating the passage of substances in and out of the cell.

Phospholipids

Phospholipids are a class of lipids that are a major component of all cell membranes as they can form lipid bilayers.