Date: 20090603
Docket: T-1554-08
Citation: 2009
FC 584
Toronto, Ontario, June 3, 2009
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
PRENBEC
EQUIPMENT INC. and QUADCO EQUIPMENT INC.
Plaintiffs
(Defendants by Counterclaim)
and
TIMBERBLADE
INC.
Defendant
(Plaintiff by Counterclaim)
REASONS FOR ORDER AND ORDER
[1]
The
Defendant/Plaintiff by Counterclaim (“Timberblade”) brings this motion to
establish a timetable for this 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 Canadian Patent No. 2,084,013 (“the ‘013 Patent”)” in accordance
with the proposed timetable attached to the Notice of Motion.
[2]
The proposed
timetable contemplates that essentially no further steps in this proceeding
will be taken until after the earlier of the final determination of the Re-examination
Board or Notice from the Re-examination Board that it does not consider that
the request for re-examination raises a substantial new question effecting the
patentability of any claim in the ‘013 Patent. Although not couched as such,
Timberblade is really seeking a stay of this proceeding pending the outcome of
the re-examination process.
[3]
A brief
review of the chronology is necessary to put the issue in context. The ’013
Patent claims an invention in a detachable saw tooth that can be mounted on a
circular saw disc for a feller head or a feller buncher. The ‘013 Patent was
issued on November 1, 1994. The invention has apparently been very successful
in the forestry industry. The invention is also patented in the United States where it has been subject to
litigation.
[4]
In Canada, the ‘013 Patent has been
subject to prior litigation and survived unscathed. The Statement of Claim in
this action was served on the Defendant on October 15, 2008 after an exchange
of correspondence initiated by counsel for the Plaintiffs seeking that Timberblade
cease and desist the use of an alleged infringing product.
[5]
Timberblade
served a Statement of Defence and Counterclaim on the Plaintiffs on December
12, 2008. In its Statement of Defence, Timberblade denies infringement and
counterclaims for an order declaring that the ‘013 Patent is invalid. One of
the major grounds upon which invalidity is alleged is that there was prior
disclosure by others of the saw tooth defined in the claims of the ‘013 Patent.
[6]
On
December 11, 2008, one day prior to the service of its Statement of Defence and
Counterclaim, Timberblade filed a Re-examination Request of the ‘013 Patent
with the Canadian Patent Office pursuant to ss. 48.1 to 48.5 of the Act.
Following the close of pleadings, Timberblade brought this motion.
[7]
A useful
description of the re-examination process is found in Genencor
International, Inc. v. Canada Commissioner of Patents (2008), 66
C.P.R. 4th 181. As Justice Gibson notes in para. 4 of that decision
the purpose of the re-examination process is to provide a relatively summary
and inexpensive alternative to a full blown impeachment process by litigation.
[8]
The re-examination
process is detailed in ss. 48.1 to 48.5 of the Act. These
sections of the Act contemplate a process whereby a Re-examination Board
will decide, within three-months, whether or not a substantial new question of
patentability affecting any claim of a patent is raised by the re-examination request.
If the decision is affirmative then a Re-examination Board is established and
the re-examination proceeding by the Board is required to be completed within
the twelve-months of the commencement of the proceedings. In this case, the
three-month period has not yet elapsed.
[9]
The Plaintiffs
argue that this motion is a scheduling request in the guise of a stay motion.
To that end they argue that the factors relevant to a stay must be considered.
[10]
The
factors to be considered on a request for a stay and the test to be applied are
summarized in Kent v. Universal Studios
Canada Inc. 2008 FC 906 at paragraph 15. In essence, a party seeking a
stay must demonstrate that the continuation of the action will cause prejudice
or injustice to the party and that there will be no injustice to the Plaintiff.
In applying these tests there are a number of factors which have evolved from
the cases. These guidelines have been usefully set out in White v. E.B.F.
Manufacturing Ltd., 2001 FCT 713 at para. 3. The list of factors is
neither exhaustive nor is it cumulative. Each case must be determined on its
own particular facts giving weight to the appropriate elements that arise from
those facts. The elements are as follows:
1.
Would the
continuation of the action cause prejudice or injustice (not merely
inconvenience or extra expense) to the defendant?
2.
Would the
stay work an injustice to the plaintiff?
3.
The onus
is on the party which seeks a stay to establish that these two conditions are
met;
4.
The grant
or refusal of the stay is within the discretionary power of the judge;
5.
The power
to grant a stay may only be exercised sparingly and in the clearest of cases;
6.
Are the facts
alleged, the legal issues involved and the relief sought similar in both
actions?
7.
What are
the possibilities of inconsistent findings in both Courts?
8.
Until
there is a risk of imminent adjudication in the two different forums, the Court
should be very reluctant to interfere with any litigant’s right of access to
another jurisdiction;
9.
Priority
ought not necessarily be given to the first proceeding over the second one or,
vice versa.
[11]
For its
part, Timberblade argues that the applicable tests on this motion are found in Rule
8 of the Federal Courts Rules. Rule 8 permits the Court to extend any
time period provided for in the Rules. The tests on extensions include
the following:
(a)
whether
the party is seeking the extension has a continuing intention in pursue or
defend the matter;
(b)
whether
the position of the moving party has some merit;
(c)
the extent
of any prejudice to the opposite party; and
(d)
the
explanation for the requested extension.
[12]
Both the
tests for a stay and for an extension fall to be determined within the
particular facts of the case which the Court must take into account in
exercising its discretion. Further, in applying either the tests for a stay or
for an extension, the Rules should be applied in accordance with the admonition
of Rule 3 that they are to be interpreted and applied so as to secure the just,
must expeditious and least expensive determination of every proceeding on its
merits.
[13]
Timberblade
vigorously argues that it meets all of the tests for an extension.
[14]
Irrespective
of whether one applies the tests for a stay or the tests for an extension, it
is my view that the equities do not favour Timberblade in this matter and that
as a result Timberblade’s proposed schedule should not be approved. The
proceeding should move forward in a much more abbreviated timetable in
accordance with the needs of the case and the Rules.
[15]
I reach
this conclusion for the following reasons. First, this patent was issued in
November 1, 1994 and has been the subject of two law suits which have alleged
invalidity yet invalidity has not yet been established. Second, while the
Defendant quite properly points out that the re-examination process in the Act is
to provide for a summary and inexpensive means for parties to challenge the
validity of an issued patent, the Re-examination Board does not review
credibility of witnesses on the re-examination.
[16]
One of the
main points of contention as between the parties is how a saw tooth known as
the Koehring Waterous 4000 came to be described and advertised in a June 1992
issue of the “Southern Loggin’ Times”, a trade publication serving loggers in
the Southern United States. This particular saw tooth is similar if not
identical to the saw tooth described in the claims of the ‘013 Patent. There
are allegations that a prototype of the saw tooth which is the subject of the ‘013
Patent disappeared from the possession of one of the Plaintiffs and further
that there was an admission that the Plaintiffs’ saw tooth had been copied. In
effect, the invention was “stolen”.
[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. However, additional
support for this conclusion is found by taking into consideration other factors
relating to either extensions or stays. In particular, Timberblade had ample
opportunity long before the delivery of the Statement of Defence and
Counterclaim in this matter, indeed before the commencement of this action, to
seek a re-examination of the ‘013 Patent. Further, the Plaintiffs commenced
this proceeding first and it will allow for the assessment of the credibility
of witnesses to determine the issues which Timberblade has raised and to
determine if there has been infringement and whether the ‘013 Patent is valid.
The scope of this action is wider than that of the re-examination process.
[19]
In
addition, Timberblade has not demonstrated any prejudice if this action is
allowed to proceed in the ordinary course. Any prejudice can be compensated
for in costs if they are ultimately successful in the action. There is no
basis on the facts of this case given that the ‘013 Patent was issued in 1994
to permit the re-examination process to continue in priority to the rights of
the Plaintiffs to enforce their patent rights. While it is not determinative,
it is noteworthy that Justice Gibson in Genencor observed:
[40] . . . it can only be inferred from
the re-examination process that Parliament intended it to be a simplified and
relatively inexpensive alternative to impeachment proceedings under section 60
of the Act. It recognizes the expertise of those who have to date been
chosen to make up re-examination boards. Resort to the re-examination process
does not foreclose impeachment proceedings where it is invoked. It is only in
circumstances where re-examination, as here, results in a patent being deemed
never to have been issued or to be narrowed, apparently a rare circumstance
inferring from experience to date, where an appeal such this is pursued.
(emphasis added).
[20]
Notably,
Justice Gibson also observes in that paragraph that re-examination proceedings
do not foreclose impeachment proceedings and thus, on the facts of this case,
there is no good reason why infringement proceedings as well should await the
outcome of the re-examination. While Timberblade argues that it will be
deprived of its re-examination right if the infringement proceeding continues,
in my view they do not lose that right. The re-examination proceedings have
been set in motion by Timberblade and there is nothing more substantively for
it to do in the re-examination until the process is completed.
[21]
Finally,
the Court should be wary of granting either a stay or approving a timetable
which effectively amounts to a stay pending the outcome of a re-examination
process. This is so because parties may use the re-examination process as a
means of delaying infringement actions generally by filing a Request for Re-examination.
While this is a “floodgates” argument, it has not been borne out by the prior
history of patent proceedings in this Court. Nonetheless, to grant the relief
requested in this case, the Court must be persuaded on more cogent and
compelling evidence that the patent being re-examined might be deemed never to
have been issued or be narrowed. It should not be granted where the patent
subject to the re-examination, as here, is the focus of allegations of being
copied or stolen which gives rise to the necessity of the Court assessing
credibility.
[22]
The motion
is therefore dismissed and with costs to the Plaintiffs to be fixed and payable
forthwith.
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