The focus of this book is the notion of characteristic operator function of a bounded linear operator A with finite real part, and we address several questions like the study of J-contractive functions, where J is self-adjoint and unitary, and we also treat the inverse problem, namely to characterize which J-contractive functions are characteristic operator functions of an operator. In particular, we prove the counterpart of Potapov's factorization theorem in this framework. Besides other topics, we consider canonical differential equations in the setting of slice hyperholomorphic functions and we define the lossless inverse scattering problem. We also consider the inverse scattering problem associated with canonical differential equations. These equations provide a convenient unifying framework to discuss a number of questions pertaining, for example, to inverse scattering, non-linear partial differential equations and are studied in the last section of this book.