Date: 20100108
Docket: T-1554-08
Citation: 2010 FC 23
Ottawa, Ontario, January 8, 2010
PRESENT: The Honourable Mr. Justice de Montigny
BETWEEN:
PRENBEC EQUIPMENT INC. and
QUADCO
EQUIPMENT INC.
Plaintiffs /
Defendants by
Counterclaim
and
TIMBERBLADE
INC.
Defendant /
Plaintiff by
Counterclaim
and
THE COMMISSIONER OF PATENTS and
THE ATTORNEY
GENERAL OF CANADA
Third parties
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This
is a motion by the plaintiffs seeking a stay of the re-examination process
before the patent re-examination board (the “Board”) appointed by the Canadian
Commissioner of Patents (the “Commissioner”) to review Canadian Patent No.
2,084,013 (the “‘013 Patent”) owned by the plaintiffs. That process was
initiated by a Request for re-examination that the defendant filed with the
Commissioner on December 10, 2008.
I. Facts
[2]
The
plaintiffs are engaged in the business of developing, designing, manufacturing
and selling wood harvesting products, including tree felling heads, saw discs,
tooth holders and saw teeth. Quadco Equipment Inc. (“Quadco”) is an affiliate
of Prenbec. Mr. Charles MacLennan is the president of Quadco.
[3]
Timberblade
was founded by Maurice Micacchi, former research and development manager at
Timberjack Inc. and an engineer at Koehring Waterous Inc., a division of
Timberjack Inc.
[4]
The
‘013 Patent, entitled Saw Tooth for Circular Saw, issued on November 1,
1994 for an invention related to an improved detachable saw tooth that can be
mounted on a circular saw disc for a felling head or a feller buncher (the
“Invention”). The application for the ‘013 Patent was filed on November 27,
1992, and claimed a priority date of October 9, 1992, based on the filing of a
corresponding application in the United States. A patent was also
granted in the United States for the Invention on April 27, 1993, under
Serial Number 5,205,199 (the “U.S. Patent”). The Canadian and U.S. claims are
identical.
[5]
The
plaintiffs claim that the Invention was conceived by Charles D. MacLennan (the
listed inventor) in the fall of 1991 and that drawing of the tooth were
prepared by an employee of Quadco in or about September 1991. Testing of the
saw tooth constructed in accordance with the Invention began in January of 1992,
followed by commercialisation thereof soon after. The Invention has been a
significant commercial success in Canada and in the United States.
[6]
In
Canada, the ‘013
Patent was the subject of litigation before the Federal Court and the Federal
Court of Appeal in the late 90’s and early 2000’s: see Quadco Equipment Inc.
v. Timberjack Inc., 2002 FCT 528, [2002] F.C.J. No. 682, aff’d in
2003 FCA 93, [2003] F.C.J. No. 264. In that case, Quadco claimed that three
models of saw teeth manufactured and sold by Timberjack infringed claims 1 and
5 of the ‘013 Patent.
[7]
Seeking
to invalidate the ‘013 Patent, Timberjack alleged in counterclaim (much as the
defendant alleges in the case at bar) that a saw tooth falling within the claim
of the ‘013 Patent, the Koehring Waterous 4000 saw tooth, had already been
disclosed to the public at a trade show in Tifton, Georgia in April 1992 and
that Timberjack advertised the teeth to the public in a June 1992 Timberjack
product news bulletin (the Southern Loggin’ Times). According to
Timberjack, these facts would have been admitted by Mr. MacLennan, on behalf of
Quadco, on his examination for discovery.
[8]
Quadco,
however, asserted, and still assert in the present action, that Mr. MacLennan
conceived the Invention in the fall of 1991. During the January 1992 testing
phase, Mr. MacLennan would have personally delivered samples of both versions
of the saw teeth to a sales representative of Warrior Tractor & Equipment
Company Inc. (Warrior Tractor). During that visit, John Lide, a sales
representative of Timberjack, would have been present at Warrior Tractor &
Equipment premises and would have seen the prototype. The plaintiffs also
allege in the current litigation that it was later discovered that a tooth was
missing from the testing prototype. They further state that John Lide admitted
to Mr. MacLennan at the April 1992 trade show in Georgia that
Timberjack had copied Quadco’s saw tooth, which had been given to Warrior
Tractor for testing purposes in January 1992.
[9]
After
having examined Mr. MacLennan for discovery, Timberjack moved for summary
judgment to dismiss Quadco’s action and to grant Timberjack’s counterclaim
invalidating the ‘013 Patent. Justice Elizabeth Heneghan dismissed this motion
for summary judgment, being of the view that the Court could not decide upon
the issue in a summary fashion since Timberjack had not proved that there were
no genuine issues of fact that would require the assessment of credibility at
trial. The Federal Court of Appeal upheld the decision of Justice Heneghan.
[10]
With
approximately four years remaining on the term of ‘013 Patent, the plaintiffs
served a Statement of Claim upon the defendant on October 15, 2008, seeking
that Timberblade cease and desist the use of an alleged infringing product of
the patented saw tooth. In its Statement of Defence and Counterclaim, served on
the plaintiffs on December 12, 2008, Timberblade denies infringement and
counterclaims that the ‘013 Patent is invalid inter alia due to
disclosure prior to October 9, 1992 by others, including Koehring Waterous
(then a division of Timberjack), of the tooth defined in the claims of the ‘013
Patent.
[11]
One
day prior to service of its Statement of Defence, the defendant also filed a Re-examination
Request of the ‘013 Patent with the Canadian Patent Office. In its Re-examination
Request, the defendant submits the same arguments and bases itself on the same
prior art raised in its Statement of Defence, including the Southern Loggin’
Times publication.
[12]
On
March 18, 2009, the defendant served a Notice of Motion seeking to establish a
timetable for the patent infringement action that“suspends all deadlines pending further
action by the Re-examination Board appointed pursuant to section 48.2 of the Patent
Act, R.S.C. 1985,
C. P-4 as
amended (the “Act”) to re-examine the ‘013 Patent. This motion, in
effect, was for a stay of the patent infringement proceeding before this Court
pending the outcome of the re-examination process, and was interpreted as such
by Prothonotary Kevin Aalto. In a decision released on June 3, 2009, the
Prothonotary dismissed the defendant’s motion: Prenbec Equipment Inc. v.
Timberblade Inc., 2009 FC 584, [2009] F.C.J. No. 775; that decision was
not appealed. Prothonotary Aalto was of the view that the plaintiffs would
suffer prejudice if Timberblade’s motion was granted, since the Re-examination
Board could not deal with credibility issues. Here is what he wrote in that
respect:
[17] The Re-examination
Board does not deal with credibility issues and cannot determine the real issue
at play in this case as credibility is central to the dispute between the
Plaintiffs and Timberblade. No cross-examination of witnesses or indeed the
hearing of oral testimony from witnesses is contemplated in the re-examination
process.
[18]
Thus, in my view the Plaintiffs will suffer prejudice if Timberblade’s
motion is granted. This is sufficient to dispose of the motion. (…)
[13]
On
April 6, 2009, the plaintiffs were informed by the Canadian Intellectual
Property Office that the Board had been established and that it would give
notice of its determination as to whether a substantial new question of
patentability is raised before July 6, 2009. On June 15, 2009, the Board
constituted pursuant to s. 48.2 of the Act wrote to the plaintiff Prenbec to
advise it that it had made a determination that a substantial new question of
patentability was raised by the Request for Re-examination. The plaintiffs were
given until September 15, 2009, to file their response with the Board. The plaintiffs
sought an extension of time to file their submissions, but it was denied by the
Board on the basis that the deadline is set by the Act and cannot be extended.
[14]
On
September 17, 2009 the plaintiffs served a motion record for an order for joinder
to add the Commissioner of Patents (the “Commissioner”) as third party to the plaintiff’s
present motion for a stay. This motion was granted on September 21, 2009 and Justice Michael
M. Shore ordered that
the Commissioner be added as a third party.
II. Issue
[15]
In
my view, this motion raises three questions which can be stated as follows:
a.) Does this
Court have jurisdiction to order a stay of the Re-examination Board’s ongoing
proceeding conducted pursuant to sections 48.1 ff. of the Act?
b.) If the Court
does have that jurisdiction, what is the applicable test for granting the stay?
c.) Should the
stay be granted in light of the facts before the Court?
III. Analysis
A. Preliminary remarks
[16]
Counsel
for the Commissioner of Patents argued that the Commissioner of Patents should
be struck from the style of cause and replaced by Her Majesty the Queen, in accordance
with the subsection 48(1) of the Federal Courts Act, R.S.C. 1985, c. F-7.
That provision is to the effect that an action against the Crown is brought
against Her Majesty the Queen.
[17]
It
is true that the plaintiffs’ motion does not contemplate staying a proceeding
under the control of the Commissioner. Indeed, the role of the Commissioner is
rather limited. Upon receiving a request for the re-examination of a patent,
she is responsible for sending a copy of this request to the patentee, if
necessary, as well as for establishing a Re-examination Board to which the
request is referred for determination. Once the Re-examination Board is
established, the Commissioner has no further part in the re-examination
process: Act, ss. 48.1(1) and (3), and s. 48.2(1).
[18]
The
statutory duties to make the determination as to whether or not the request for
re-examination raises a substantial new question of patentability, pursuant to
subsection 48.2(2) of the Act, as well as the duties to issue a certificate, in
accordance with section 48.4 of the Act, and to cancel or confirm a patent, or
parts thereof, rest entirely with the Re-examination Board. The motion for a
stay is therefore directed at the Re-examination Board, a statutory entity
which cannot be sued or named as a party to an action.
[19]
That
being said, I am not convinced that the Commissioner is not the proper third party.
Indeed, this issue has been fully canvassed as a result of an earlier motion
before this Court. On June 11, 2009, counsel for the Attorney General of Canada
wrote to the Court to advise that while the Attorney General of Canada had
received a copy of the plaintiffs’ motion record, as neither it nor the
Commissioner of Patents were a party to the cause or matter, the re-examination
process could not be stayed as requested by the plaintiffs. Counsel for the plaintiffs
then filed a motion, pursuant to rule 104(1)(b) of the Federal Courts Rules (SOR/98-106),
for an order that the Commissioner of Patents be added as a third party to the
plaintiffs’ motion. Counsel for the Commissioner, who happened to be the same
counsel representing the Attorney General of Canada, appeared and made
representations at the hearing of this motion, on September 21, 2009. Having
heard the arguments of the parties, Justice Shore ordered that
the Commissioner of Patent be added as a third party to the present motion to
ensure that all matters in dispute may be effectually and completely
determined.
[20]
The
Attorney General of Canada could have sought leave to intervene, pursuant to
section 109(1) of the Federal Courts Rules, but failed to do so. For all
intent and purposes, this may well be of no practical importance, as the
Attorney General of Canada would in all likelihood be represented by the same
counsel as the Commissioner and make the same representations. To the extent that
the Attorney General of Canada’s presence could be relevant to the enforcement
of any order that could be made by this Court, though, it may be advisable to
make him a party to this motion. All parties having agreed to that request made
by counsel for the Commissioner, the Attorney General of Canada shall therefore
be added as a third party to the plaintiff’s motion.
(1) Does
this Court have jurisdiction to order a stay of the Re-examination Board’s
ongoing proceeding conducted pursuant to sections 48.1 ff. of the Act?
[21]
Section
50(1)(b) of the Federal Courts Act provides that the Federal Court of
Appeal or the Federal Court can, in its discretion, stay proceedings in any
cause of matter where it is in the interest of justice that the proceedings be
stayed. I agree with counsel for the plaintiffs that this provision is not
limited to proceedings before the Federal Court, but encompasses other
proceedings in addition to those pending before this Court. There is nothing,
either in the French or in the English versions of that section, which would
indicate an intention to restrict the power of this Court to stay proceedings
to only those before it. As the Court of Appeal stated in New Brunswick
Electric Power Commission v. Maritime Electric Company Limited
and National Energy, [1985] 2 F.C. 13 (at para. 16), it would have been
easy for Parliament to so constrain the power of the Court had it wished to do
so:
Subsection 50(1) of the Act is
not on its face limited to proceedings “before the Court”. The inclusion of
those words or words of like effect would, I think, have removed any doubt as
to the intention of Parliament. Omission of them from subsection 50(1) lends
some support to an argument that by “proceedings” Parliament intended to confer
power, in appropriate circumstances, to stay proceedings in addition to those
pending in the Court itself. (…)
See also: Yri-York Ltd.
v. Canada (Attorney General), [1988] 3 F.C. 186, [1988]
F.C.J. No. 17 at para. 170.
[22]
This
power, it is true, has been used sparingly, contrary to the power to order
stays of proceedings or orders of federal tribunals pending judicial review,
pursuant to section 18.2 of the Federal Courts Act. But this is not to
say that it has never been used, when it is in the interest of justice to do
so. In Royal Bank of Canada v. Canadian
Imperial Bank of Commerce (1994), 84 F.T.R. 148, [1994] F.C.J. No. 1341 for
instance, the plaintiff successfully moved to stay opposition and section 45
proceedings before the Registrar of Trade-marks until the outcome of a
trade-mark infringement action pending before the Federal Court. In ordering a
stay of both administrative proceedings, the Court stated (at para. 16):
I am satisfied in the present
matter that the continuation of the opposition proceedings and the s. 45
proceedings could cause a serious prejudice to the Royal Bank since the issues,
including the validity of its trade marks, cannot be fully debated before the
tribunal. In my view, the allegation by the CIBC in those proceedings that the
Royal Bank did not or could not use its trade marks in relation to banking
activities based on a legal prohibition should not be shielded from examination
in light of the CIBC’s own practice as revealed by the discovery in this
action, which has been to consider such activities as authorized by law so long
as they are ancillary to banking services. The continuation of the [opposition
and Section 45] proceedings would be an abuse of the judicial process inasmuch
as it would allow decisions to be made without the benefit of highly relevant
evidence in circumstances where such evidence is known to exist and is
available to both parties.
[23]
More
recently, the broad discretion of the Federal Courts to stay proceedings and
issue interim orders was confirmed. In Canada (Attorney
General)
v. Canada (Canadian International Trade Tribunal), 2006 FCA 395, [2006]
F.C.J. No. 1827, the Federal Court of Appeal confirmed its jurisdiction to stay
a proceeding before an administrative tribunal like the Canadian International
Trade Tribunal (CITT), even if in that specific case it refused to do so
because the requirements of the test to grant a stay were not met. Responding
to an argument made by one of the respondents that the Court had no
jurisdiction to issue a stay because the CITT is under a statutory duty to deal
with a procurement complaint within 135 days after it is filed, Justice John Evans
wrote:
8 I do not agree. Paragraph
50(1)(b) of the Federal Courts Act, R.S.C. 1985, c. F-7, confers
a broad power on each of the Federal Courts to stay proceedings “in any cause
or matter” where it is in the interests of justice that proceedings be stayed.
Section 18.2 and subsection 28(2) empower this Court to issue interim orders
pending the final disposition of an application for judicial review. The
plenary jurisdiction exercisable by the Federal Courts over the matters
entrusted to them, including interim measures to regulate disputes before them
(see Canada (Human Rights Commission) v.
Canadian Liberty Net, [1998] 1 S.C.R. 626 at para.
36) is not lightly ousted.
[24]
Counsel
for the Commissioner similarly argued, in the case at bar, that to stay the re-examination
process would be inconsistent with the mandatory limitation period prescribed
by subsection 48.3(3) of the Act, which states that a re-examination of a
patent shall be completed within twelve months of the commencement of the
process. I do not find this argument persuasive. It is true that one of the reasons
given by Justice Evans in the above quoted case, that a time limitation period
found in a regulation (the 135 day limitation was prescribed by paragraph
12(c) of the Canadian International Trade Tribunal Procurement
Inquiry Regulations, SOR/93-602) could not prevail over an Act of
Parliament, does not apply here as the limitation period is found in the Act
itself. But Justice Evans was also of the view that language similar to
that found in s. 48.3(3) cannot be interpreted as mandatory, in the sense that
a decision outside the limitation period is void, as it would defeat the
purpose of the provision. In any event, it would take more than a time
limitation within which a tribunal must rule on an administrative proceeding to
oust the very explicit jurisdiction conferred on the Federal Courts by
Parliament. Subsection 48.3(3) of the Act may well be an important factor to
take into consideration in deciding whether to grant or not the stay sought by
the plaintiffs, but it cannot curtail the jurisdiction of this Court.
[25]
I
am therefore of the view that section 50(1) of the Federal Courts Act
does confer on this Court the power to issue a stay of the re-examination
proceedings before the Re-examination Board, when it would be in the interest
of justice to do so.
B. What is the applicable test
for granting the stay of proceedings?
[26]
There
is not much dispute with respect to the appropriate test to be applied when
considering a motion for a stay of proceeding. It has been definitively set out
by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada
(Attorney General), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17. At the first
stage, an applicant must demonstrate a serious question to be tried. Whether
that first part of the test has been satisfied should be determined on the
basis of common sense and an extremely limited review of the case on the merits.
Since the Court will only dismiss a motion when the case is frivolous or
vexatious on its merits, the plaintiffs correctly concentrated their arguments
on the second and third branches of the test. At the second stage, the
applicant must convince the Court that he will suffer irreparable harm if the
relief is not granted. Finally, the third branch of the test requires an
assessment of the balance of inconvenience. As the Court recently stated in Kent v. Universal
Studios Canada Inc., 2008 FC 906, [2008] F.C.J. No. 1129 at para. 15:
The general test to be applied
on a motion for a stay pursuant to section 50(1) of the Federal Courts Act
is a two-part test, which has been consistently applied by this Court and other
Courts over many years. This two-part test requires that the defendant
demonstrate:
(a) that the continuation of
the action will cause prejudice or injustice (not merely inconvenience or extra
expenses) to the defendant [plaintiffs]; and
(b) that the stay will not
work an injustice to the plaintiff [defendant].
[27]
The
onus is obviously on the party seeking a stay to establish that these two
conditions are met. The grant or refusal of the stay is within the discretionary
power of the judge. In exercising that discretion and weighing the advantages
and disadvantages of granting the stay, the judge may take into account the
fact that one proceeding is broader than the other, the possibilities of
inconsistent findings, the similarity of the legal issues involved and the
relief sought in the two proceedings and the existence of a time limitation
within which a proceeding may have to be completed: see White v. E.B.F.
Manufacturing Ltd., 2001 FCT 713, [2001] F.C.J. No. 1073; Sanwa Tekki
Corp v. Pacific Scientific Co., [1984] F.C.J. No. 1159.
C. Should the stay be granted in
light of the facts before the Court?
[28]
The
patent system serves both the patentee and the Crown, who represents the public
interest, by providing a limited time statutory monopoly over subject matter of
an invention in exchange for full disclosure to the public. There is no
inherent right to a patent. To obtain this monopoly, the patentee must
demonstrate that his invention meets the statutory requirements of novelty,
ingenuity and utility. The Commissioner grants a patent if all requirements for
the issuance of a patent are met.
[29]
It
is essential to ensure a strict compliance with the statutory scheme as it is
in the public interest to make sure that the patentees hold their end of the
bargain. In addition, it is also in the public interest to ensure that,
throughout the life of a patent, the monopoly enjoyed by the patentee is
justified. In furtherance of that objective, the Act was amended in 1987 to
provide for re-examination of claims of a patent after the patent has been
issued. The re-examination process is set out in sections 48.1 to 48.5 of the Act.
As this Court held in Genencor International, Inc. v. Canada
(Commissioner of Patents), 2008 FC 608, [2008] F.C.J. No. 752, one of the
purposes of these new sections is to provide a relatively summary and
inexpensive alternative to a full blown impeachment process by litigation
before the Federal Court pursuant to s. 60(1) of the Act.
[30]
Section
48.1 and following of the Act provide for a procedure wherein any person may
request re-examination of any claim of a patent by filing with the Commissioner
of Patents prior art, consisting inter alia of printed publications and
setting forth the pertinency of the prior art and the manner of applying the
prior art to the claim for which re-examination is requested.
[31]
Upon
receipt of a satisfactory request identifying the prior art and the manner of
applying it, a Re-examination Board is established in order to determine
whether a substantial new question of patentability affecting any claim of the
patent at issue is raised by the request for re-examination: s. 48.2.
[32]
Where
the Board determines that a request for re-examination raises a substantial new
question affecting the patentability of a claim of the patent concerned, the
patentee is given notice of its decision and, within three months, may make
reply submissions on the question of the patentability of the claim of the
patent in respect of which the notice was given: s. 48.2.
[33]
Re-examination
proceedings commence upon receipt of a reply or in the absence of any reply,
within three months after notice is given: s. 48.3.
[34]
In
its reply submissions, the patentee is limited to commenting solely on the
question of the patentability of the claim(s) at issue in light of the prior
art supplied by the requesting party. In this regard, while the Act defines the
procedure and framework of re-examination proceedings, it does not provide the
Board with any means for testing credibility to assess contested issues of fact.
As stated in the Manual of Patent Office Practice at pp. 23-24, “[t]he
re-examination board will not consider any matter except the claims in question
in view of the supplied prior art”.
[35]
Upon
conclusion of the re-examination proceedings, the Board may issue a certificate
cancelling any claim of the patent determined to be unpatentable and in the
event where the certificate cancels all claims of the patent, the patent shall
be deemed never to have been issued: s. 48.4.
[36]
If
the patentee is dissatisfied with the Re-examination Board’s final
determination, he may appeal to this Court and, in the meantime, the effect of
the board’s decision will be suspended until final judgment of this Court: s.
48.5.
[37]
The
plaintiffs allege that they will suffer prejudice if the re-examination
procedure is allowed to continue, as the invalidity arguments made by the defendants
raise an issue of credibility that cannot be assessed by the Re-examination Board.
As already mentioned in paragraphs 7 and 8 of these reasons, in its Re-examination
Request the defendant refer to the Canadian Timberjack litigation where
Timberjack invoked the Koehring Waterous 4000 saw tooth and alleged that it had
drawn the tooth covered by the ‘013 Patent before Charles D. MacLennan. On the
other hand, the plaintiffs submit that any disclosure associated with the
Koehring Waterous 4000 saw tooth and made after October 9, 1991, is not citable
against the validity of the ‘013 Patent as this tooth is either the actual
tooth conceived by Charles D. MacLennan or a copy thereof. It is the plaintiffs’
thesis that a prototype of the saw tooth was stolen and that Timberjack had
copied Quadco’s saw tooth during the testing phase of the invention.
[38]
In
dismissing Timberjack’s Motion for Summary Judgment, Justice Heneghan clearly
acknowledged the serious credibility issues surrounding the Koehring Waterous
4000 saw tooth:
The difficulty with these
allegations is the state of the evidence. The evidence submitted by the Defendant
is not conclusive on the issue of prior publication. That evidence consists
primarily of statements made by Mr. MacLennan upon discovery and certain
interrogatories prepared by the Defendant in response to the Plaintiff in the
context of litigation in the United
States of America.
Both the evidence on discovery
and the interrogatories are similar in nature; they are answers given under
oath in legal proceedings but without the benefit of cross-examination. They
represent a one-sided view. In my opinion, there are questions as to the
sufficiency and reliability of this evidence. Both the issues of sufficiency
and reliability would be better tested following a trial in which the
credibility of witnesses would be assessed by the trial judge.
The presentation of a
technical argument is insufficient, in the absence of conclusive and
categorical evidence, to merit the entry of summary judgment. I conclude that
such evidence has not been produced by the Defendant in support of this motion.
Quadco Equipment Inc. v. Timberjack Inc.,
supra, at paras. 21-23.
[39]
Counsel
for the defendant alleges that Justice Heneghan’s decision cannot govern the
case at bar, as the issue of credibility before her had to do with the handwritten
date appearing on a copy of a drawing prepared by Timberjack and submitted to a
manufacturer to produce the saw teeth. If proven, that date (May 5, 1991) would
have established that the design of the saw tooth had been conceptualised
before Mr. MacLennan’s alleged discovery. This argument, however, is without
merit. First of all, the same argument with respect to the actual date of the
disputed document is still at issue between the parties. Indeed, the defendant
alleges that Mr. MacLennan admitted in his examination for discovery in August
2000 that the Timberjack drawing was made in May 1991, an assertion vigorously
disputed by the plaintiffs. There is still no clear evidence as to who wrote
the date on the document afterwards. In short, the credibility issues
surrounding this document are still very much alive.
[40]
Moreover,
the allegation of theft made by the plaintiffs was not before Justice Heneghan.
Yet, she was clearly concerned by the credibility issues surrounding the coming
into existence of the Koehring Waterous 4000 saw tooth. If anything, the
possibility raised by the plaintiffs that Quadco’s saw tooth prototype may have
been stolen make the credibility issue even more central to the determination
of the case.
[41]
The
defendant also argues that the publication filed in support of its Re-examination
Request (the June 1992 issue of the Southern Loggin’ Times) was not at
issue before Justice Heneghan. That publication describes and advertises the
same Koehring Waterous 4000 saw tooth invoked in the Canadian Timberjack
litigation. Unless established that it directly or indirectly emanates from the
patentee, thereby qualifying it as a permissible public disclosure made during
the one-year grace period provided for in section 28.2(1) of the Act (from
October 9, 1991, to October 9, 1992), this publication prima facie
anticipates and therefore invalidates the ‘013 Patent given the October 9, 1992
claim date.
[42]
I
agree with the plaintiffs that they will suffer irreparable harm by the
continuation of the re-examination proceedings since the Board will most likely
ultimately invalidate the ‘013 Patent. It will consider the June 1992 Southern
Loggin’ Times publication at face value without having the benefit of
questioning its source and appreciating the significant credibility issues
surrounding the Koehring Waterous 4000 saw tooth. Indeed, the Re-examination
Board determined on June 15, 2009, that a substantial new question of novelty
and obviousness has been raised by the request for re-examination with respect
to all claims, when viewed in light of the Southern Loggin’ Times
document. It is the only piece of prior art upon which the Board questions the
validity of the ‘013 Patent.
[43]
Of
course, the plaintiffs could have filed an affidavit of Mr. MacLennan to the Re-examination
Board. But there could be no cross-examination by the defendant, and the weight
of such an affidavit would be limited in the absence of viva voce evidence.
The plaintiffs could also appeal an unfavourable decision from the Re-examination
Board, but it is hard to see on what basis. If the credibility issue cannot be
considered by the Board, there would presumably be no error in the decision.
[44]
By
filing its Re-examination Request after the commencement of the present
infringement action before this Court, the defendant is merely attempting to
avoid dealing with the issue of credibility surrounding its alleged prior art. This
Court can already entertain any and all the invalidity arguments made in
support of the defendant’s Re-examination Request, which are already contained
in its Statement of Defence and Counterclaim and, in particular, it can address
the significant credibility issues, which only this Court is capable of
hearing.
[45]
On
the other hand, the continuation of the re-examination proceedings will cause
the plaintiffs to suffer an injustice since not only does it cast a cloud of
uncertainty throughout the present action, but it will ultimately render the plaintiffs’
action nugatory following the cancellation of all the claims of the ‘013 Patent
by the Board after a summary consideration of the June 1992 Southern Loggin’
Times publication.
[46]
It
is true that one of the purposes of re-examination proceedings is to provide a
relatively summary and inexpensive alternative to a full blown impeachment
process by litigation. But resort to the re-examination procedure is
inappropriate in a situation such as the present, where it is being used by the
defendant as a means to avoid dealing with the ultimate issue regarding the
source of the Koehring Waterous 4000 saw tooth.
[47]
This
Court has already been seized by the plaintiffs and, in addition to issues
regarding infringement, can hear any and all arguments pertaining to the
invalidity of the ‘013 Patent raised by the defendant. This Court, however,
unlike the Board, can also hear witnesses and test credibility which in light
of the foregoing, is vital to a determination as to the validity of the ‘013
Patent. Such can hardly be considered to constitute a prejudice to the defendant.
As already mentioned at paragraph 12 of these reasons, this was one of the key
reasons given by Prothonotary Aalto to dismiss the defendant’s motion to stay
the proceedings before this Court.
[48]
Moreover,
as stated earlier, when determining whether to grant a stay, preference should
be given to the proceedings which are more comprehensive of the two. In this
regard, for reasons expressed above, re-examination proceedings are
unequivocally less comprehensive as compared to an infringement/invalidity
action before this Court.
[49]
For
all of the foregoing reasons, I am therefore of the view that it is in the
interest of justice that a stay of the re-examination proceedings be granted pending
the outcome of the present action before this Court.
[50]
Both
parties have requested costs on a solicitor-client basis. Such costs are
awarded only on very rare occasions, when a party has displayed reprehensible,
scandalous or outrageous conduct. Counsel for the plaintiffs argued that costs
on a solicitor-client basis payable forthwith would serve to deter future
parties from attempting to circumvent their obligations in a pre-existing and
comprehensive patent infringement action by inappropriately resorting to the
re-examination procedure.
[51]
I
have not been convinced that this is an appropriate case for making an award of
costs on a solicitor-client basis. There is no evidence that the re-examination
request was made with the sole purpose of thwarting the purpose of this action.
It is true that the defendant waited until the last minute, one day prior to
service of its Statement of Defence, to file its Re-examination Request with
the Canadian Patent Office. Nevertheless, the Re-examination Board found that
the request raised, prima facie, a legitimate and substantial new
question of novelty and obviousness. The defendant was entitled to use that
summary and inexpensive procedure, and it cannot be said that such use was
vexatious. I do not think that costs on a solicitor client basis should be used
to deter future parties from exercising their rights, absent clear evidence of
blameworthy or reprehensible behaviour. As a result, costs will be awarded to
the plaintiffs in accordance with Column III of Tariff B of the Federal
Courts Rules.
JUDGMENT
THIS COURT
ORDERS
AND ADJUDGES that the re-examination proceedings relating to the ‘013
Patent before the Re-examination Board be stayed until the final judgment of
this Court in the present action, with costs to the plaintiffs according to
Column III of Tariff B of the Federal Courts Rules. The style of cause
is amended in order to add the Attorney General of Canada as a third party.
“Yves de Montigny”
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