Docket: T-1791-07
Citation: 2011 FC 1213
Ottawa, Ontario,
October 31, 2011
PRESENT: The
Honourable Mr. Justice Scott
BETWEEN:
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HOLLICK SOLAR SYSTEMS LTD. and CONSERVAL ENGINEERING INC.
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Plaintiffs
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and
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MATRIX ENERGY INC.
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Defendant
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REASONS
FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1] The
plaintiffs, Hollick Solar Systems Limited (HOLLICK) and Conserval Engineering
Inc. (CONSERVAL), claim that the defendant, Matrix Energy Inc. (MATRIX) has
infringed their Canadian Patent No 1,326,619 (the ‘619 patent), more
particularly claims 1 and 10, by selling a solar air heating system known as
the MatrixAir system (MatrixAir). The plaintiffs also claim the infringement
and depreciation of the value of the goodwill of the Trade-mark TMA 371,622
(SOLARWALL Trade-mark). Finally, the plaintiffs claim that the defendant has
passed-off its solar air heating systems for those of CONSERVAL. Their action
is based on section 55 of the Patent Act (RSC, 1985, c P-4) (Patent
Act) and the Trade-marks Act (RSC, 1985, c T-13) (Trade-marks Act).
For ease of reference, the relevant articles of both Patent Act and Trade-marks
Act have been appended hereto as Appendix A and B.
[2] Initially
the defendant disputed the validity of the patent. Subsequently, it amended its
pleading and took the position that the MatrixAir system is a variant outside
the scope of the ‘619 patent, as a result the patent cannot be infringed. The defendant
filed an amended statement of defence and counterclaim on January 11,
2008. The defendant also asserts it did not use the SOLARWALL Trade-mark
outside the scope of the Distributorship Agreements that were in place between
1991 and March 31st, 2007.
[3] At the
beginning of trial on September 6th, 2011, the Statement of claim in
all proceedings was amended on consent to remove from the style of cause all
parties that were no longer parties in the present instance that is: Enerconcept
Technologies Inc., Solutions Énergétiques Enerconcept Inc., 9153-1103 Quebec
Inc. and Christian Vachon.
II. FACTS
A. The parties
(1) The plaintiffs
[4] HOLLICK
is a corporation incorporated in 1976 pursuant to the laws of Ontario. HOLLICK is a holding company;
therefore it does not have any manufacturing, distributing or selling activities
(Agreed Statement of Facts and Documents, volume I, tab 1).
[5] CONSERVAL
is a corporation incorporated in 1977 pursuant to the laws of Ontario (Agreed Statement of Facts and
Documents, volume I, tab 2). It designs, markets and sells solar heating
systems in Canada, under the
SOLARWALL Trade-mark (Agreed Statement of Facts and Documents, volume I, tab 3).
[6] CONSERVAL
and HOLLICK are associated companies. The president of the plaintiffs is Mr. John
Hollick.
[7] CONSERVAL
has been delivering renewable energy solutions for 30 years, such as solar air
heating systems and more recently hybrid PV/thermal systems. It has been involved
in numerous solar air heating systems projects throughout the years.
[8] CONSERVAL
does not manufacture solar air heating systems. Rather, it purchases key
components from suppliers and resells them at a profit.
2. The defendant
[9] MATRIX
is a corporation incorporated in 1995 pursuant to the laws of Canada. The President of MATRIX is Brian
Wilkinson (transcript, volume 5, page 176, testimony of Brian Wilkinson).
[10] MATRIX
offers a range of solar electric air heating, solar heating, solar thermal,
wind energy, micro hydro products and systems since 1985 (transcript, volume 5,
pages 177 to 179, testimony of Brian Wilkinson).
B. Relationship between the parties and their sales
(1) Distributor Agreements
[11] MATRIX
distributed solar air heating systems designed by CONSERVAL from 1991 until
about March 31, 2007, at which time the terms of the latest Distribution
Agreement dated January 14, 2005 between the parties expired. Notwithstanding
the expiration of the contract, the parties continued to conduct some business
together until September 2007 as MATRIX was permitted to complete six projects
that were already signed on March 31, 2007 (transcript volume 1, September 6,
page 157, lines 18 to 20, testimony of John Hollick and plaintiffs’ Exhibit P-29,
list of SOLARWALL permitted projects).
[12] The
first Distributor Agreement between CONSERVAL and MATRIX was concluded on
August 13, 1991 (Agreed Statement of Facts and Documents, volume III, tab 57).
[13] A second
Distributor Agreement between CONSERVAL and MATRIX was concluded on August 11,
1994 (Agreed Statement of Facts and Documents, volume III, tab 58). Upon expiry
of the second Agreement, John Hollick proposed to Brian Wilkinson to continue
the same agreement (Agreed Statement of Facts and Documents, volume III, tab
60).
[14] A third
Distributor Agreement between CONSERVAL and MATRIX was concluded on August 13,
1999 and was to remain in full force for 5 years (Agreed Statement of Facts and
Documents, volume III, tab 61).
[15] The last
Distributor Agreement between CONSERVAL and MATRIX was concluded on January 14,
2005 and was set to expire on March 31, 2007 (Agreed Statement of Facts and
Documents, volume III, tab 62).
[16] At
different times over the years, MATRIX expressed a desire to obtain a license
to manufacture SOLARWALL cladding in Quebec.
[17] A
disagreement arose between the parties over the purchase of components (transcript,
volume 1, page 151, lines 4 to 14, testimony of John Hollick) and over the
terms of a revised distributor agreement that led them not to renew their
agreement or continue their relationship (transcript, volume 1, page 155, lines
1 to 25, testimony of John Hollick). Discussions took place between the parties
(E-mails exchanged between Brian Wilkinson and Duncan Coutts between March 16,
2007 and June 4, 2007) regarding continued distributorship after the expiry of
the last Distributor Agreement, but no agreement was reached or executed
between the parties (Agreed Statement of Facts and Documents, volume III, tab
71).
[18] After
the expiration of its Distributorship Agreement with CONSERVAL, MATRIX began quoting
and selling a solar air heating system known as the MatrixAir system, which is
the subject of this litigation (Agreed Statement of Facts and Documents, volume
IV, tabs 92.1 to 92.55).
(2) The plaintiff’s alleged rights
(a) The SOLARWALL Trade-mark
[19] CONSERVAL
is the recorded owner in Canada
of Trade-mark registration number TMA371,622 for the SOLARWALL Trade-mark (Agreed
Statement of Facts and Documents, volume I, tab 3).
(b) The ‘619 patent
[20] Patent
619 entitled “Improved method and apparatus for pre-heating ventilation air for
a building” was issued on February 1, 1994. Patent 619 expired on February 1,
2011 (Agreed Statement of Facts and Documents, volume I, tab 4). The invention
in patent 619 is described as follows on pages 2 and 3:
“GENERAL
DESCRIPTION OF THIS INVENTION
We now have a
new devised method and apparatus for accomplishing the desired goal at low cost
and without the above efficiency limitations for high panels.
More
specifically, this invention provides a method of preheating ventilation air
for a building having a sun-facing outer surface through which heat from the
interior of the building escapes, the method comprising the steps:
a)
providing on the sun facing outer surface of the
building a solar radiation-absorbent collector panel having an inside surface
and an outside surface, the collector panel defining an air collection space
between its inside surface and said sun-facing outer surface, said outside
surface being exposed to the ambience, the panel having substantially uniformly
distributed over the panel, a plurality of air inlet openings communicating
with said air collection space;
b)
heating outside air with solar heat from the
collector panel and with heat being lost from the interior of the building, and
passing the heated air upwardly in laminar flow along the panel; and
c)
withdrawing heated outside air through the air
inlet openings of the collector panel and into the air collection space behind
the panel, using air-moving means having an inlet at the top of the air
collection space and having an outlet within the interior of the building,
the air-moving means establishing a negative pressure differential across the
collector panel with respect to the ambience.”
[Emphasis
added]
[21] Further,
this invention provides an apparatus for preheating ventilation air for a
building having a sun facing outer surface through which heat from the interior
of the building escapes, comprising:
“A sunlight
absorben collector panel on the sun-facing surface, the panel having an inside
surface and an outside surface, the collector panel defining an air collection
space between its inside surface and the outer surface of the building, said
outside surface being exposed to the ambience, the panel being provided with a
plurality of air inlet openings substantially uniformly distributed over the
panel and communicating with the said space between the panel and the wall, and
air-moving means having at the top of the panel an inlet which
communicates with the air collection space between the panel and said outer
surface for receiving air that has been heated during upward passage and drawn
in through the plurality of air inlet openings, and having an outlet within the
interior of the building, the air-moving means establishing a negative pressure
differential across the panel with respect to the ambience.”
[Emphasis added]
[22] The plaintiffs
assert that defendant’s MatrixAir system infringes claims 1 and 10 of the ‘619
patent. These claims read as follows:
THE EMBODIMENTS
OF THE INVENTION IN WHICH AN EXCLUSIVE PROPERTY OR PRIVILEGE IS CLAIMED ARE
DEFINED AS FOLLOWS:
1.
A method of preheating ventilation air for a
building having a sun-facing outer surface through which heat from the interior
of the building escapes, the method comprising the steps:
a)
providing on the sun-facing outer surface of the
building a solar radiation –absorbent collector panel having an inside surface
and an outside surface, the collector panel defining an air collection space
between its inside surface and said sun-facing outer surface, said outside
surface being exposed to the ambience, the panel having, substantially
uniformly distributed over the panel a plurality of air inlet openings
communicating with said air collection space;
b)
heating outside air with solar heat from the
collector panel and with heat being lost from the interior of the building, and
passing the heated air upwardly in laminar flow along the panel; and
c)
Withdrawing heated outside air through the air
inlet openings of the collector panel and into the air collection space behind
the panel, using air-moving means having an inlet at the top of the air
collection space and having an outlet within the interior of the building,
the air-moving means establishing a negative pressure differential across the
collector panel with respect to the ambience.
[Emphasis
added]
10.
An apparatus for preheating ventilation air for
a building having a sun-facing outer surface through which heat from the
interior of the building escapes, comprising:
A
sunlight-absorbent collector panel on the sun-facing surface, the panel having
an inside surface and an outside surface, the collector panel defining an air
collection space between its inside surface and the outer surface of the
building, said outside surface being exposed to the ambience, the panel being
provided with a plurality of air inlet openings substantially uniformly
distributed over the panel and communicating with the said space between the
panel and the wall, and air moving means having at the top of the panel an
inlet which communicates with the air collection space between the panel
and said outer space for receiving air that has been heated during upward
passage and drawn in through the plurality of air inlet openings, and having an
outlet within the interior of the building, the air-moving means establishing a
negative pressure differential across the panel with respect to the ambience.
[Emphasis
added]
[23] On
November 6, 1991, SOLARWALL International Limited granted an exclusive license
to CONSERVAL to make, construct, manufacture, use and sell to others to be used
the method and apparatus forming the subject matter of the ‘619 patent in
Canada (Agreed Statement of Facts and Documents, volume I, tab 5).
[24] SOLARWALL
International Limited assigned the entire right, title and interest in and to
the ‘619 patent to Hollick Solar Systems Limited as of December 15, 2003 (Agreed
Statement of Facts and Documents, volume I, tab 6).
C. Scope of alleged infringing activities
(1) Alleged Infringement and Passing-off of
the SOLARWALL Trade-mark
[25] The
expression SOLARWALL appears on specific documents of MATRIX (Agreed Statement
of Facts and Documents, volume II, tabs 37 to 44). Quotes were produced,
invoices were issued, plans and drawings were provided by MATRIX to its clients
after March 31, 2007, in which the words “mur solaire” appeared (Agreed
Statement of Facts and Documents, volumes IV, V and VI, tabs 92.7 to 92.53).
(2) Alleged Infringement of the ‘619 patent
[26] Between
June 2007 and January 2011, MATRIX sold several solar air heating systems and
issued a great number of quotes for which no purchase order were received by
MATRIX to this day (Agreed Statement of Facts and Documents, volumes IV, V and
VI, tabs 92.1 to 92.55 and volume VII, tabs 93 to 139).
D. Evolution of the Canadian market for solar air heating and
incentives
[27] According
to the evidence adduced, solar air heating systems have been gaining in
popularity and the Canadian thermal industry has grown over the years (transcript,
volume 1, September 6, pages 133 and 134, testimony of John Hollick).
[28] Through
the Renewable Energy Deployment Initiative [REDI] program, Natural Resources
Canada offered a 25% subsidy starting in 1998. However, the initiative has not
been continuous and the subsidy has changed over the period. SOLARWALL solar
air heating system was accredited as a solar collector eligible under the REDI
program (transcript, volume 4, pages 18-20, testimony of Al Clark).
[29] The
EcoENERGY for Renewable Heat program from Natural Resources Canada ran from
April 1, 2007 to March 31, 2011 (not continuously). Incentives were offered to
the industrial/commercial/institutional/agricultural sectors to install active
energy-efficient solar air and/or water heating systems (transcript, volume 4, page
19, testimony of Al Clark).
[30] Over the
relevant years, SOLARWALL, MATRIXAIR, Luba Solar, Unitair and VTP were solar
collectors eligible for subsidy under the EcoENERGY program (Exhibit P-61).
[31] The
Energy Efficiency Fund [EEF] for Gaz Metro Customers program offers a financial
assistance for energy efficiency work done on the building envelope, such as
solar heating, since 2001. The EEF offers financial assistance towards the
purchase and installation of solar air or water heating system. All the panels
which were recognized by the old EcoENERGY Renewable Heat program at its
closure, on October 1, 2010, are accepted for the EEF program. In total 21
projects installing the Unitair and Luba solar heaters received grants between March
31, 2007 and December 31, 2010 (transcript, volume 4, page 13, testimony of
Benoît Paillé).
[32] The
Quebec Government also ran an energy efficiency program for which SOLARWALL and
MatrixAir were eligible for grants.
III. ISSUES
1.
Did MATRIX infringe the ‘619 patent
by promoting, offering for sale and selling the MATRIXAIR solar air heating
systems?
2.
If the answer to question 1 is
affirmative, what are the damages to which the plaintiffs are entitled?
3.
Did MATRIX infringe the SOLARWALL Trade-mark
that is the object of CanadianTrade-mark registration TMA371,622 or pass-off in
any manner its solar air heating systems for those of CONSERVAL?
4.
If the answers to question 3 are
affirmative, what are the remedies (damages, injunction) to which CONSERVAL is
entitled?
5.
Are the plaintiffs entitled to
exemplary and punitive damages?
IV. ANALYSIS
Preliminary
objections
[33] At trial,
counsel for the defendant objected to the production of the following documents
in the Agreed Statement of Facts and Documents, that is volume I, tabs 14 to 23,
CONSERVAL Sales Journal between April 2001 and March 2011; and volume I, tabs
24 to 31, the unaudited financial statements of CONSERVAL for years ending March
31, 2003 to March 31, 2010, inclusively, on the basis that they could not be
introduced at this later date because they were requested during discoveries
and refused by acting counsel for the plaintiffs at the time. Counsel for defendant
therefore argued that pursuant to the rules of the Court they could not be
introduced in the Agreed Statement of Facts and Documents. Me Lauzon, who is
now representing the plaintiffs, submitted to the Court that the documents in
question were properly introduced on the basis of the March 26, 2010 Order
issued by Prothonotary Tabib (the Order), based upon the parties agreement as
to the further steps to be taken in the proceedings. The Order set the
timelines for the parties to file all documents and amended affidavits if
necessary. The Court took the objection under reserve. Having reviewed the
documents, the transcript from the examination of John Hollick which was read
in the record, and the Order, it is clear to this Court that the documents are admissible.
The Order rendered was based on the mutual agreement of parties. Paragraphs 8
to 10 of the Order clearly addressed the documents and set a timeline for
filing which plaintiffs abided by. The objection is therefore dismissed.
[34] Counsel
for plaintiffs objected during trial to the production of an expert report
entitled in the Matter of Claims by Matrix Energy Inc. with Respect to the
Performance of the MatrixAir Solar Heating Device vis-à-vis other Similar
Devices and particularly the Solar Wall ® Device dated August 25, 2010 and
signed by Dr. K.G. Terry Hollands. That report was prepared for the litigation
between Conserval Engineering Inc v Matrix Energy Inc and Brian Wilkinson,
before the Superior Court of Quebec, Montreal district, in file No 500-17-056428-108. The Court took the
objection under reserve. Clearly, the document is admissible under rule 291 of
the Federal Courts Rules, SOR/98-106, since it was introduced by counsel
for the defendant to establish that the plaintiffs’ expert witness was
contradicting himself in his testimony and was deviating from previous
statements he made in the past. Exhibit D-7 is therefore admitted in the
record.
1. Did MATRIX infringe the ‘619 patent by
promoting, offering for sale and selling the MATRIXAIR solar air heating
systems?
Position of the
plaintiffs
[35] The plaintiffs
allege that the present case concerns one sole issue that is whether the
limitation “at the top” found in claims 1 and 10 is essential or not . A
finding that said limitation is not essential according to plaintiffs means
that it can be omitted and consequently all MatrixAir systems offered for sale
and sold by defendant have infringed Canadian Patent 619.
[36] The plaintiffs
further assert that the expression “at the top” is not ambiguous but the
question is to how the Court must purposively interpret the term in an informed
way, taking into consideration the teachings of the patent as would have the
skilled addressee in 1994.
[37] The plaintiffs
submit that both the ‘619 patent and the MatrixAir system fundamentally perform
the same function in that they
(1)
preheat outside air on the sun facing surface of
a transpired air collector;
(2) withdraw the heated air through the openings
on the collector on the basis of a negative pressure behind the plate; and
(3) further duct the heated air into the building through an
inlet using a ventilation fan.
[38] The plaintiffs
contend that the position of the air intake in the plenum, in the MatrixAir
device, is not “at the top” simply has no material effect on how the invention
works.
[39] The
plaintiffs submit that MATRIX’s contention that its system performs less
efficiently due to the effects of buoyancy forces in the plenum is irrelevant.
They also claim that this assertion is unsupported by the evidence and contrary
to MATRIX’s own representation and admissions.
[40] With
respect to the second question, that is on the understanding of the relevant
person of ordinary skill in the art of solar heating, on February 1, 1994, plaintiffs
allege that Dr. Hollands’ testimony that it would have been obvious to the
person of ordinary skill in the art, at the relevant time, that to place the
air inlet at the bottom or below the middle rather than at the top would not
have had a material effect on the way the ‘619 system works. Rather, what was
relevant to the person of ordinary skill in the art, at the relevant time, was
what was occurring on the outside of the plate, not in the plenum as plenum
design was very well known.
[41] Finally,
on the third question, plaintiffs refer to Dr. Hollands’ assertion that the
reader skilled in the art nevertheless would have understood from the wording
of the claims that the patentees had not intended strict compliance with the
primary meaning of the words used. According to Dr. Hollands, the patentees had
clear knowledge of plenum design. Therefore, they knew that the height of the
air intake did not have a material effect on the way the system would work.
Furthermore, the patentees did suggest that the ventilation fan could be ducted
at various levels.
Position of the
defendant
[42] The defendant
asserts firstly that plaintiffs bear the burden of proof. They must establish
on a balance of probabilities that the MatrixAir system sold after March 31st
2007 infringes at least one claim of patent 619.
[43] With
respect to claim 1, MATRIX takes the position that it did not use a “method of
preheating ventilation air for a building”. Therefore, in order to find
infringement, the Court will have to conclude that MATRIX induced the use of
said method described in claim 1.
[44] The defendant
also claims that since March 31, 2007, it has been selling the MatrixAir system
with an intake in the air collection space (between the solar panel and the
exterior wall of the building), located at the bottom of the panel. According
to defendant this constitutes a “variant”of the system described and claimed in
patent 619.
[45] The defendant
submits that the words used in claims 1 and 10 are clear and unambiguous and
that no evidence was adduced to establish that MATRIX ever sold, installed or
induced the installation of a MatrixAir system with an air intake located at
the top of the panel.
[46] The defendant
further affirms that plaintiffs’ contention with respect to infringement can be
summarized as follows: on a purposive construction of claims 1 and 10, the
location of the air intake at the top of the panel was clearly not intended to
be an essential element of the invention and that in any event the skilled
addressee would have understood that locating the air intake at the bottom part
of the panel would have no material effect on the performance of the invention.
[47] The defendant
relies on the principles established by the Supreme Court with respect to
patent construction in paragraph 31 and where a variant exits between the
features of the device and the limitations of the asserted claims in paragraph
55 of Free World Trust v Électro Santé Inc, [2000] 2 S.C.R. 1024, [2000]
SCJ No 67 [Free World Trust].
[48] Accordingly
the defendant submits that three questions must be answered:
(1) Does the variant have a material effect upon
the way the invention works? If the answer is in the affirmative then the
variant is outside the claim.
(2)
If the answer is in the negative would the fact
that it has no material effect have been obvious at the date of publication of
the patent to a reader skilled in the art? If the answer to this last question
is also negative then the variant is also outside the claim.
(3)
Should the answer be affirmative then a third
and final question should be answered. Would the reader skilled in the art have
nevertheless understood from the language of the claim that the patentee
intended that strict compliance with the primary meaning was an essential
requirement of the invention?
[49] Finally,
the defendant asserts that the location of the air intake in the MatrixAir
system has a material effect on the way the invention works and points to
testimony provided by one of the patentees, Mr. Hollick, and to Dr. Rice, defendant’s
expert report and testimony, and thirdly to the lesser performance factor
attributed to the MatrixAir system by Natural Resources Canada based on the
Bodycote report.
Analysis
[50] Infringement
is not defined in the Patent Act. The patentee bears the onus of proving
that its patent has been infringed (Lightning Fastener Co v Colonial Fastener Co, [1936] ExCR 1, [1936] 2 DLR
194; Monsanto
Canada Inc v Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 at para
29 [Schmeiser]). Any act that prevents the enjoyment of
the monopolistic rights granted by the patent has been held to constitute
infringement (Schmeiser at para 34; Lishman v Erom Roche Inc, [1996] FCJ No 560, (1996), 68 CPR (3d) 72 at para 16). This Court
must therefore define the scope of the rights granted in the ‘619 patent in
order to determine whether the defendant’s MatrixAir system infringes claims 1
and 10 as alleged by the plaintiffs.
[51] The
Supreme Court of Canada defined the approach to claim interpretation in Free
World Trust. Justice Binnie, at paragraph 31 of the decision, states that:
…
(a)
the Patent Act promotes adherence to the
language of the claims.
(b)
Adherence to the language of the claim in turn promotes
both fairness and predictability
(c)
The claim language must, however be read in an
informed and purposive way.
(d)
The language of the claims thus construed
defines the monopoly. There is no recourse to such vague notions as the “spirit
of the invention” to expand it further.
(e)
The claims language will, on a purposive
construction, show that some elements of the claimed invention are essential
while others are non-essential. The identification of elements as essential or
non-essential are made:
(i)
on the basis of the common knowledge of the
worker skilled in the art to which the patent relates;
(ii)
as of the date the patent is published;
(iii)
having regard to whether or not it was obvious
to the skilled reader at the time the patent was published that a variant of a
particular element would not make a difference to the way in which the
invention works; or
(iv)
according to the intent of the inventor,
expressed or inferred from the claims, that a particular element is essential
irrespective of its practical effect;
(v)
without however, resort to extrinsic evidence of
the inventor’s intention.
(f)
There is no infringement if an essential element
is different or omitted. There may still be infringement, however, if
non-essential elements are substituted or omitted.
[52] The
Supreme Court also affirmed the primacy of the language of the claims since it
defines the monopoly to which the patentee is entitled and the boundaries that cannot
be crossed.
[53] The
Supreme Court in paragraphs 50, 51 and 54 of the Free World Trust
decision provided further guidance to determine the essential and non-essential
elements of a patent which must be determined from the language used in the
claims as follows:
(i)
On the basis of the common knowledge of the
worker skilled in the art to which the patent relates.
(ii)
What constitutes an “essential element” is to be
interpreted in light of the knowledge of the art at the date of publication of
the patent specification.
(iii) Regard is to be had to whether it was obvious at the
time the patent was published that substitution of a different variant would
make a difference to the way in which the invention works.
[54] Justice
Binnie went on, in paragraph 55 of the Free World Trust decision, to
consider the following three precise questions identified by J. Hoffman in Improver
Corp v Remington (Consumer Products Ltd), [1990] FSR 181, that should be
answered to determine if the missing element of the asserted claims is
essential to the patent:
…
(i)
Does the variant have a material effect upon the
way the invention works? If yes, the variant is outside the claim. If no:--
(ii)
Would this (i.e. that the variant has no
material effect) have been obvious at the date of publication of the patent to
a reader skilled in the art? If no, the variant is outside the claim. If yes:--
(iii)
Would the reader skilled in the art nevertheless
have understood from the language of the claim that the patentee intended that
strict compliance with the primary meaning was an essential requirement of the
invention? If yes, the variant is outside the claim.
[55] Furthermore,
“the patentee[s] [have] the burden of proving, [on the balance of
probabilities], the known and obvious substitutability of a variant in the
scope of the claim at the date of publication of the patent” (Lapierre v
Équipements d’Érablière C.D.L. Inc, [2004] FCJ No 1091, 33 CPR (4th) 402
at para 35).
[56] The
location of the air intake in the MatrixAir systems sold after March 31, 2007
is at the bottom or at least below the midpoint in the air collection space
between the solar panel and the outside wall of the buildings where such
systems were installed. This constitutes, according to the defendant, the
variant from the system described and claimed in patent 619. This Court must
therefore determine, on a purposive construction of that patent, whether the
position of the air inlet inside the plenum at the top is an essential element
of claims 1 and 10 of the ‘619 patent or not.
[57] Plaintiffs
argue that the location of the air inlet is not an essential element since it
has no material effect on how the invention works. Dr. Hollands, the plaintiffs’
expert, was qualified as an expert in heat transfer, solar heating and fluid
mechanics by the Court (transcript, volume 2, pages 66 to 68). Dr. Hollands is
the only witness who testified to the effect that locating the air intake at
the bottom of the panel would have no material effect upon the way the
invention works and that it was not essential (Exhibit P-52, page 7, Dr.
Hollands’ expert report).
[58] When
examined on this point by plaintiffs’ counsel, Dr. Hollands explained his
understanding of the Free World Trust decision, at para 55, and more
precisely the extract “It would be unfair to allow a patent monopoly to be
breached with impunity by a copycat device that simply switched belles and
whistles to escape the literal claims of the patent.” “Now, in this context I
would say with the new … with the variant, it would … if we are to take
efficiency as being the criteria here, where does that lead us? The device can
either be an improvement, improve the efficiency, or it can actually decrease
the efficiency. Now, if it’s an improvement and improves the efficiency, this
is a moot point whether … I believe that is undecided, as far as I’m concerned.
I just want to deal with if it has a negative effect on the efficiency, if it
detracts from the efficiency. It if detracts from the efficiency, why is the
copycat or … why is the other person … why is he bringing it in if it doesn’t
add to the efficiency, if it’s negative on the efficiency. It seems to me the
only reason would be is that he just wants to have a device that escapes the
literal claims of the patent. So I think there’s a conflict between the first
question and the spirit of the paragraph, particularly the first sentence,
because I think it could be interpreted, if one just looks at the sentence,
that if the variant decreases the efficiency … and efficiency is the criteria
to be used here … that, therefore, you can’t get by the first question. I think
that may be being argued here; I don’t know. And I don’t believe that that
interpretation is what the authors implied. I’m not … of course, forgive me for
arguing law here, but … at any rate, for this reason, I did not interpret the
effect on efficiency as being the criteria on when we’re talking about a
material effect, the way the invention works” (transcript, volume 2, page 71,
lines 8 to 25 and page 72, lines 1 to 18).
[59] In this
context Dr. Hollands was clearly applying a criterion that is not accepted by
the jurisprudence of this Court. The criteria is not whether the variant
improves the performance of the invention but rather does it have a significant
effect on how the device functions, be it positive or negative.
[60] Dr. Rice,
defendant’s expert, was recognized by the Court as an expert in the field of
fluid dynamics and heat transfer, qualified to assist the Court in
understanding the apparatus and method described in patent ‘619 and the
workings of the SOLARWALL and MatrixAir devices. He opines that the variants
identified in the MatrixAir Sytems have a material effect on the way the
invention works. He attributes this difference to the presence of both buoyancy
and pressure forces in the plenum. “In the 619 collector” according to Dr. Rice
“the buoyancy and pressure forces are in the same direction as the flow, while
in the Matrix collector the buoyancy and pressure forces are in opposing
directions with the buoyancy force opposing the flow” (Exhibit D-16, pages 14
and 15).
[61] Dr.
Hollands did not consider the direction of the buoyancy and pressure forces in
the plenum chamber. He simply states that “The details of the airflow in the
plenum will depend in a modest way on where the air is taken off the plenum,
but these differences in flow pattern will not have a material effect on the
overall operation of the device, provided the plenum is properly sized to
maintain a uniform pressure” (Expert report of Dr. K.G. Terry Hollands, page
7). By omitting to do so, he did not discuss the role of the air inlet
at the top of the panel which is specifically mentioned in claims 1 and 10 of
the ‘619 patent.
[62] Yet
when cross examined by defendant’s counsel on this very point and when
confronted with an opinion previously given, albeit in a different case before
the Superior Court of Quebec when comparing the ‘619 patent and the MatrixAir
system, he acknowledged that buoyancy and pressure forces are both at work in
the plenum. On page 5 of his report dated August 25, 2010 (Exhibit D-7), he
writes:
“The effect of collector height is to lower the efficiency,
sometimes drastically, most especially if air is withdrawn from the bottom of
the collector, as in the case of the Matrix collector. Thus it is my opinion
that if the collectors had been tested at full height, the MatrixAir
performance would have performed even less well vis-à-vis SOLARWALL.
The reason is something called the buoyancy effect, the
chimney effect or the stack effect.’”
[63] In his
expert report dated March 9, 2010 at pages 8 and 9, Dr. Hollands writes: “it is
preferred that the duct 34 [be] located at the ceiling level for the sake of
convenience in industrial and commercial buildings. Other levels and routings
for duct 34 may be chosen in apartment buildings” (‘619 patent, page 6, lines
15 to18). According to Dr. Hollands’ perspective and his interpretation of the
words of the ‘619 patent, having the air flowing out of the plenum at the top
is a matter of convenience and is not an essential variant. This is somewhat
contradictory to the conclusions found in D-7, where Dr Hollands writes, in his
concluding paragraph at page 9:
“Based on
physical reasoning using well-known laws and supported by thermographic images
of systems with low and high intakes, the full-scale systems with low air
intake will be more subject to loss flow (flow of air actually leaving the
collector and returning to the ambient) and to non uniform air-heating than
full scale versions of the systems with high air intake. This will reduce their
performance vis-à-vis systems with high air intake even further than the
thermal testing had indicated.”
[64] On the
other hand, Dr. Rice opines that the role of buoyancy forces in a convection
process is generally considered to be of “fundamental importance and has a
material effect on the resulting flow and heat transfer processes by those of
skill in the art” (Exhibit D-16, para 31). Further, on page 17 of his expert
report he underlines that “it is interesting to observe that Dr. Hollands makes
no mention whatsoever in his report of the role buoyancy forces play in the
performance of the UTP collector.” According to Dr. Rice, having an air intake
near the top of the wall, such as the ‘619 patent, changes the performance of a
system. In his opinion, the variants between claims 1 and 10 of the ‘619 patent
and the MatrixAir system collector have a material effect on the way the
invention works.
[65] With
respect to both expert reports the Court finds that the probative value of Dr.
Hollands’ report is seriously undermined and lessened by the contradictions and
misinterpretations identified above.
[66] While
Dr. Hollands states that there is no variant because of the terms used in the
disclosure of the ‘619 patent. Dr. Rice clearly demonstrates that having the
air inlet at the top of the panel would result in a better flow distribution.
[67] Other
evidence clearly establishes the inferior performance of the MatrixAir system
vis-à-vis the ‘619 patent because of the location of the air inlet at the
bottom or below the midpoint of the panel. Mr. John Hollick stated, in
examination on discovery, that there is a benefit lost in the MatrixAir system
compared to the CONSERVAL system (the ‘619 patent) because “he is not
collecting as much of the solar heat as he could be collecting had it been
properly” (Exhibit D-15, page 46, lines 23 to 25). When asked where to place the
inlet in the CONSERVAL system he replied near the top in order to have the
benefit (Exhibit D-15, page 47, lines 5 to 10). During the same examination,
when questioned on the performance of one system vis-à-vis the other and more
precisely on their essential difference, Mr. Hollick stated that the essential
difference is the positioning on the air intake and that this provides an
essential benefit: “Well according to the EcoEnergy program, our system is
rated 1.0 and the matrix system is rated at .86 so there’s the federal
government recognized that we get at least 14 percent more energy that the
Matrix system does” (Exhibit D-15, page 49, lines 20 to 25).
[68] Mr.
Clark, the Manager of the EcoENERGY Program at Natural Resources Canada which
provided an incentive of 25 percent of the installation and capital costs of
solar energy collectors in commercial and institutional buildings, explained
how the performance factors were attributed to the MatrixAir system and to the
‘619 patent system. The latter received a rating of 1.0 whereas the MatrixAir
system received a rating of .86. The rating is based on the report by Bodycote
which rated the performance factor of different systems (transcript, volume 4,
pages 21 to 23). The difference of 14% is significant.
[69] The
plaintiffs questioned the reliability of Dr. Rice’s testimony, arguing that his
report is based solely on a theoretical model and not the actual system.
According to the plaintiffs, the evidence presented showed systems where the
air intake was actually closer to the middle. The Agreed Statement of Facts and
Documents contained drawings for different installations. There was no evidence
adduced by any witness on the actual physical location of an air intake in an
installed MatrixAir system after March 31, 2007. The only testimony related to
an existing installation was the Starbuck Project, in Kanata, Ontario. Even then, Mr. Landry, the contractor, was not
able to clearly establish the actual location of the intake. This lack of
evidence as to actually built MatrixAir systems also defeats plaintiffs’
subsidiary argument on MatrixAir systems with deflectors or large air intakes
near the middle.
[70] Upon
review the Court finds that Dr. Rice’s report is also based on the infrared
images of three MatrixAir Collectors that were taken by the plaintiffs. These
images showed significant temperature difference at the bottom of the collector
and the top which, according to Dr. Rice, confirmed that the variant is not as efficient
(Exhibit D-16, pages 19 to 24). The plaintiffs’ argument that the report is
based on a purely theoretical model must therefore be rejected.
[71] Counsel
for plaintiffs argued that the drawings of MatrixAir systems produced by defendant’s
counsel in the Agreed Statement of Facts and Documents did not portray any
reverse flow phenomenon and as such this constitutes a judicial admission. The
Court does not accept said argument because the indication of a general flow
will not necessarily preclude the existence of reverse flow or the
admissibility of expert evidence to establish the existence of such reverse
flow. The drawings have to be understood and interpreted in the overall context
in which they were produced.
[72] The
plaintiffs have not adduced any persuasive evidence showing that the MatrixAir
system performs essentially the same as the ‘619 patent. The burden of proof is
on the plaintiffs’ patentees. The Court acknowledges that some of the apparatus
used is the same, but the performance of one system in relation to the other is
significantly different because of the location of the air inlet in the plenum.
It is akin to two automobiles, one having rear wheel drive and the other front
wheel drive. Both serve the same function but the placement of the drive train
does have a direct impact on performance and handling. The variant has a
material effect on the way the invention works.
[73] The
Court therefore finds, from all the evidence presented, that on a balance of
probabilities, the variant, that is the placement of the air inlet at the
bottom or at least below the midpoint of the panel, has a material effect on
the way the invention described in claims 1 and 10 of the ‘619 patent works.
[74] To
summarize, the plaintiffs have failed to discharge their burden of proving, on
a balance of probabilities, that the variant does not have a material effect.
[75] Would
it have been obvious, at the date of publication of ‘619 patent, that is on
February 10, 1994, to an expert in the field , that drawing air from the bottom
part or at least below the midpoint of the panel would have a material effect
upon the way the invention works?
[76] Dr.
Hollands, the plaintiffs’ expert, opined that it is only through subsequent
work in the late 1990’s that the phenomenon of reverse flow was identified. On
the other hand Mr. Hollick, one of the patentees, testified that drawing air from
the bottom defied the basic laws of physics. Dr. Hollands, when cross
examined, acknowledged that in 1994 it was known that it was desirable to
extract as much of the heated air from the collector as possible (transcript, volume
2, page 203, lines 1-14 and page 204, line 1).
[77] It
is obvious from the evidence provided that a person skilled in the art would have
understood that the MatrixAir system variant would have a material effect on
the way the ‘619 patent system worked since it ran counter to the basic laws of
physics.
[78] If
we look at the third question, would a person skilled in the art have
understood that strict compliance with the primary meaning was an essential
element of the invention?
[79] The
disclosure only mentions one location from which to draw the air at the top.
The same wording is repeated in claims 1 and 10. It has been established that a
person skilled in the art, at the relevant time that is in February 1994, knew
that its objective was to draw as much heated air from the collector as possible.
The position of the air intake at the top had a direct impact on attaining this,
thereby adding to the efficiency of the device.
[80] The
Court cannot accept Dr. Hollands’ position that the air intake could be located
anywhere, since he concluded to the opposite in a previous opinion.
[81] Therefore,
the Court concludes, based on the evidence and on the balance of probabilities
that on February 10, 1994, a person skilled in the art would nonetheless have
concluded, on reading the language in claims 1 and 10 that the patentees
believed that strict compliance with the words chosen was a requirement of the
invention.
[82] The
Court finds that placement of the air inlet at the top of the panel to be an
essential element of the ‘619 patent. Since the placement of the inlet in the
variant is at the bottom, therefore at opposites or at least below the midpoint
and therefore not at the top, there is no infringement. The MatrixAir system
did not infringe patent 619.
2. If the answer to questions 1 is
affirmative, what are the damages to which the plaintiffs are entitled?
[83] The
Court’s answer to question 1 is negative. As a result, the plaintiffs are not
entitled to any damages.
3. Did MATRIX infringe the SOLARWALL Trade-mark
that is the object of Canadian Trade-mark registration TMA371,622 or pass-off
in any manner its solar heating systems for those of CONSERVAL?
Plaintiffs’ submissions
[84] In
the present case, plaintiffs allege that MATRIX lost all rights to the use of
the SOLARWALL Trade-mark when the distributor agreement ended on March 31, 2007
as per section 8.2 of said agreement (Agreed Statement of Facts and Documents, volume
III, tab 62).
[85] They
also claim that MATRIX failed to remove from its website any reference to the SOLARWALL
Trade-mark until at least the summer of 2007 that is three months after the
expiry of said distributor agreement. According to the plaintiffs, the defendant,
MATRIX, also failed to remove the links from within its website to other pages
that contained SOLARWALL material such as Fraser’s industrial directory (Exhibit
P-32).
[86] The
plaintiffs also reference the MATRIX catalogue that was distributed at the
CANSIA tradeshow in November 2007, as evidence of Trade-mark infringement since
it contained two pages related to SOLARWALL products.
[87] Plaintiffs
also claim that defendant failed to refer any potential client interested in a SOLARWALL
system as evidenced by Brian Wilkinson’s testimony. Rather defendant would have
offered its MatrixAir system instead.
[88] Advertising
using CONSERVAL’s SOLARWALL Trade-mark constitutes according to the plaintiffs
an infringement under subsections 6(5), 19, 20(1), and 22(1) of the Trade-marks
Act or at minimum an act of passing-off pursuant to subsections 7(b)
and (c) of the Trade-marks Act. The plaintiffs refer this Court
to the safeguard order that was awarded by the Quebec Superior Court in Hollick
Solar Systems Ltd v Savaria, 2008 QCCS 2008.
[89] Consequently,
it claims damages of 10,000$ on the basis that this Court will have partially
compensated plaintiffs for lost sales as a result of its claim for patent
infringement and since the illegal use of the Trade-mark did eventually cease.
Defendant’s submissions
[90] The
defendant claims never to have used the SOLARWALL Trade-mark outside the scope
of the distributor agreement. It asserts that during the summer of 2007, Mr.
Wilkinson requested that all references to the SOLARWALL Trade-mark be removed
from its website.
[91] The
defendant acknowledges that it is nor clear whether the reference to the SOLARWALL
Trade-mark was still on its website other than by using a “way back” function,
but claims that any such reference was associated with plaintiffs products and
not its own since the reference to ownership of the Trade-mark was clearly
identified.
[92] Finally,
defendant takes the position that if still available on MATRIX’s website after
March 2007, it was clearly inadvertently and that it derived no benefit from
promoting a system that was in direct competition with its own, the MatrixAir
system.
[93] The
defendant also claims that in order to succeed, plaintiffs had to show that the
appearance of the SOLARWALL Trade-mark, on its website, lead to confusion and
sales, both of which have not been proven.
Analysis
Infringement of the SOLARWALL Trade-mark
[94] Registration number TMA371,622 gives CONSERVAL the exclusive right to
the use of the SOLARWALL Trade-mark in respect of the wares for which it is
registered.
[95] The plaintiffs plead an infringement of their Trade-mark.
They have to prove that the defendant, MATRIX, used the SOLARWALL Trade-mark
outside the scope of the Distributor Agreement.
[96] The
use of a Trade-mark under section 2 of the Trade-marks Act means “any
use that by section 4 is deemed to be a use in association with wares or
services”. Section 4(2) of the Trade-marks Act, specifies that “a trade-mark
is deemed to be used in association with services if it
is used or displayed in the performance or advertising of those services.”
[97] In
Cie générale des établissements Michelin – Michelin & Cie v National
Automobile, Aerospace, Transportation and General Workers Union of Canada
(CAW-Canada), [1996] FCJ No 1685, Justice Teitelbaum writes at paragraph 35 “section
19 requires use of the identical mark for identical wares and services while
section 20 states that the mark need only be “confusing” and not identical to
the registered mark. Section 22 is even more open-ended since the mark need not
even be confusing as long as its use is likely to depreciate the value of the
goodwill”.
[98] In the present case,
Mr. Hollick testified that defendant used the SOLARWALL Trade-mark in several
instances after the expiry of the last Distributor Agreement on March 31, 2007.
(1) In the first instance, he
went on the Matrix Energy website in April, 2007, and noticed that SOLARWALL projects
and brochures were still mentioned and visible (transcript, volume 1, page 158,
lines 12 to 25 and Exhibit P-30).
(2) On August 8, 2007, Mr.
Hollick went on the wayback machine and printed document 52 from the Matrix
Energy website (Agreed Statement of Facts and Documents, Volume II, tab 52)
which is dated May 16, 2007. It portrays SOLARWALL projects.
(3) Thirdly, Mr. Hollick
explained having picked up a catalogue from the MATRIX booth at the CANSIA
conference in November of 2007. Said catalogue contained description of SOLARWALL
products on pages 71 and 72 (transcript, volume 1, page 163, lines 3 to 24 and
Agreed Statement of facts and Documents, volume II, tab 47).
(4) In May 2008, the Frasers.com
website which is the “to go-directory” for trades also had a link under SOLARWALL
to the Matrix Energy website and to a SOLARWALL brochure according to John
Hollick (transcript, volume 1, page 167 and Exhibit P-32).
(5) Exhibits P-33 and P-34
identified by John Hollick are documents describing SOLARWALL projects that
still appeared on the Matrix Energy website after March 31, 2007.
[99] The
defendant’s President, Brian Wilkinson, testified that after it became clear
that MATRIX was no longer representing SOLARWALL, he instructed his marketing
group to remove all information related to SOLARWALL from the Matrix Energy
website around June or July of 2007 (transcript, volume 5, pages 196 to 198,
testimony of Brian Wilkinson). Subsequently, in May 2008, Mr. Wilkinson would
have been alerted to the fact that SOLARWALL material was appearing on the
Matrix Energy website, he followed up with the employee who had been instructed
to delete said material in the summer of 2007 (Exhibit D-20, e-mail
exchange between Brian Wilkinson and Claudia Matus, May 26, 2008).
[100] When
cross examined by plaintiffs’ counsel, Mr. Wilkinson acknowledged that pages 71
and 72 of the catalogue distributed by MATRIX at the CANSIA tradeshow in
November 2007 (Agreed Statement of Facts and Documents, volume II, tab 47) did
portray a SOLARWALL product but that product was for residential use and
distributed by Solar Home, a duly licensed distributor of CONSERVAL, who was
purchasing the panel from CONSERVAL (transcript, volume 6, pages 58 to 60, Brian
Wilkinson cross examination).
[101] Mrs.
Matus, the marketing coordinator for MATRIX, testified and explained that she
was instructed to delete any reference to SOLARWALL, which she did in 2007.
According to her, the pages could still be accessed but they did not appear on
the website (transcript, volume 6, pages 3 and 4, testimony of Claudia Matus).
[102] The
Court finds that it is clear that all references to the SOLARWALL Trade-mark
were not removed after March 31, 2007. At best, the website would have been
expurgated at the earliest in June or July of 2007. The reference to two SOLARWALL
products in the catalogue distributed in November 2007 is also established and
proven but said products do not compete with plaintiffs. The link between SOLARWALL
and MatrixAir in the Fraser.com website is clearly beyond the control of the defendant
and there was no evidence adduced to link MATRIX with the creation of said
link. Therefore, of the five incidents related by plaintiffs, three are proven.
[103] There
was no evidence adduced by plaintiffs to establish that the use of the
expression “mur solaire” is covered by the SOLARWALL Trade-mark. The owner of
the Trade-mark has not registered the French equivalent of SOLARWALL and has
therefore no rights with respect to the expression “mur solaire”.
[104]
The three incidents are the SOLARWALL projects seen in April, May and June
2007 (Exhibits P-30 and P-32, Document 52, Agreed Statement of Facts and
Documents and Exhibits). It is not clear whether document 52 could be seen by
the general public.
[105] In
order to succeed in its claim on infringement and passing-off of the Trade-mark,
plaintiffs must also establish that the defendant,
MATRIX, has acted in such a way that it is likely to interfere with the
services or wares associated with the owner of the SOLARWALL Trade-mark. By its
acts, statements and omissions, the defendant, MATRIX has misrepresented to the
public that it is an authorized or licensed source of CONSERVAL and SOLARWALL
services and wares. As a result of the aforesaid conduct, the plaintiffs have
suffered loss and damage.
[106] The defendant,
MATRIX, pleads that it has used the plaintiffs’ Trade-mark in a proper manner
approved by the plaintiffs and in accordance with the Distributor Agreement.
The defendant MATRIX also denies that its conduct related to the sale of its
MATRIXAIR solar air heating system can in any manner be considered as
passing-off its wares, services or business for those of the plaintiffs.
[107] The defendant,
MATRIX, adds that the plaintiffs did not suffer any loss or damages by reason
of any activity of the defendant, MATRIX.
[108] Although
it has been established that the SOLARWALL Trade-mark was used on three
occasions by the defendant, the Court concludes that the evidence adduced proves
that the use was not to represent the MatrixAir system as a SOLARWALL system, since
Mr. Hollick acknowledged that ownership of the Trade-mark was clearly mentioned
as CONSERVAL’s. Hence, “where the use of the trade mark was not for the purpose
of distinguishing the goods as goods of the defendant, there [is] no breach of
section 19 of the Act” (Pepper King Ltd v Sunfresh Ltd, [2000] FCJ
No 1455 at para 44).
[109] In Clairol
International Corp v Thomas Supply & Equipment Co, [1968] 2 ExCR
552, 55 CPR 176 [Clairol], Justice Thurlow concludes at para 33 that:
… It is, however, in my view, of some importance to bear in
mind that in the case of the packages the attack failed not because the trade
marks were not used "in association with" the defendants' goods
within the meaning of sections 2(v) and 4(1) but because the use made of them
"in association with" the defendants' goods was not a use for the
purpose of distinguishing the goods as goods of the defendants and for that
reason alone was not a use the exclusive right to which had been conferred on
the plaintiffs by section 19.
The Court finds in
the present case that the use is somewhat similar to that found in the Clairol
case cited above. Consequently there is no infringement under sections 19 and
20 of the Trade-marks Act and no damages can be awarded.
Depreciation
of goodwill under section 22
[110] Plaintiffs
claim that defendant depreciated the value of the goodwill associated with the
SOLARWALL Trade-mark by their use, that is the manner in which it was presented
in the catalogue and on the website after March 31, 2007.
[111] A claim
under section 22 is based on a prohibition to use a Trade-mark in association
with wares, as defined in section 4, for the purpose of distinguishing such
wares with those manufactured by another person in such a manner as to
depreciate the value of the goodwill attaching to them. In this instance the
issue before the Court pursuant to section 22 is whether the defendant’s use of
the SOLARWALL Trade-mark after March 31, 2007 diminished its value.
[112] There is
no doubt that there is valuable goodwill associated with the SOLARWALL
Trade-mark. A depreciation of the value of the SOLARWALL goodwill means to
reduce in some way the reputation or to make it less extensive or advantageous.
The Court does not have any evidence before it that the goodwill of SOLARWALL
was so affected as a result of the references to SOLARWALL projects on the
Matrix Energy website or catalogue. In this instance the registered Trade-mark
was not used in comparison to the MatrixAir system or in any depreciative
manner but rather, it still appeared despite the fact that MATRIX no longer
represented CONSERVAL and SOLARWALL products. Clearly there was no malignant
intent and no evidence to such effect was presented. What appeared on the
Matrix Energy website prior to March 31, 2007 was endorsed by Plaintiffs. In
the absence of any evidence proving that what was leftover somehow depreciated
the Trade-mark the Court cannot find in favour of plaintiffs. Consequently, the
Court must reject the plaintiffs’ claim under section 22.
Confusion as to wares, services or business under section 7(b)
[113] Section 7(b)
of the Trade-marks Act does not incorporate criteria specific to Trade-marks
which are otherwise governed by section 6 of the Trade-marks Act. To
make a successful claim pursuant to section 7(b) of the Trade-marks
Act, the plaintiffs must meet: i) a conduct test; ii) a confusion test; and
iii) a timing test.
i)
Conduct test: direct public attention
[114] The plaintiffs
had to demonstrate that defendant advertised using the SOLARWALL Trade-mark and
sold solar air heating systems to clients under the SOLARWALL name. That was
not proven. The presence of the name SOLARWALL on the defendant’s website after
March 31 could be construed as such, but there was no evidence that MatrixAir
systems were sold as SOLARWALL systems.
ii) Confusion test: in such a way as to cause or be
likely to cause confusion in Canada
[115] Plaintiffs
also had to demonstrate that this conduct fell outside the scope of the
Distributor Agreement and brought confusion in the Canadian market. The
likelihood of confusion is a matter of first impression and is generally
difficult to demonstrate. The Court must take into consideration the fact that
both parties are selling solar air heating systems. Solar systems are
specialized goods. There is less likelihood of confusion even in the case of
identical marks, because it can be assumed that purchasers of solar heating
systems make judicious inquiries as to the quality and performance of the wares
and services they are purchasing, more so, when the amount of government grants
differs between the two systems. In this case, there is no evidence that
confusion existed. Furthermore, Mr. Hollick acknowledged, in cross examination,
that the notice of ownership of the SOLARWALL Trade-mark also appeared on Exhibits
P-33 and P-34 which are the printouts from the Matrix Energy website (transcript,
volume 1, page 200, cross examination of John Hollick).
ii)
Timing test:
[116] In Old Dutch Foods Ltd v W.H.
Malkin Ltd, [1969] 2 ExCR 316,
58 CPR 146 at para 34, Justice Gibson points out that
"The relevant time to consider in determining whether or not this
statutory tort has been committed is the time of the commencement of the
employment of any such method of directing public attention to them or
it". The plaintiffs have proven that the defendant utilized the SOLARWALL
Trade-mark after March 31, 2007.
[117] All three
criteria must be satisfied (Top-Notch Construction Ltd v Top
Notch Oilfield Services Ltd, [2001] FCJ No 996, 13 CPR (4th) 515
at para 36). In light of the absence of evidence before the Court to establish
that there was confusion which lead to lost sales, the only evidence adduced
was Brian Wilkinson’s statement that he did not refer clients back to plaintiffs
after March 31st but that does not prove confusion. The second
criteria is therefore not met under section 7(b) of the Trade-marks Act
and consequently this claim based on section 7(b) is rejected and no
damages can be awarded.
Statutory passing-off under section 7(c)
[118] In Kirkbi
AG v Ritvik Holdings Inc, [2005] 3 S.C.R. 302, 2005 SCC 65, the
Supreme Court of Canada underlines the three components of a passing-off
action. The three components are: i) the existence of goodwill; ii) deception
of the public due to a misrepresentation; and iii) actual or potential damage
to the plaintiff.
i) The existence of goodwill
[119] There is
no doubt in the Court’s assessment that there is goodwill associated with the SOLARWALL
Trade-mark, and that was established by Mr. Hollick’s testimony.
ii) Deception of the public
[120] The
action of passing-off covers negligent or careless representation by the trader
(Ciba-Geigy Canada Ltd v Apotex Inc, [1992] 3 S.C.R. 120, 95
DLR (4th) 385). The plaintiffs had to demonstrate to the Court that
MATRIX’ representations misled their clients into thinking they were purchasing
SOLARWALL heating systems from CONSERVAL. No evidence was introduced to establish
that when MATRIX started promoting its MatrixAir system shortly after March 31,
2007, it used the SOLARWALL Trade-mark in association with its system, save for
SOLARWALL projects and catalogue still appearing on the website in April. MATRIX
never depicted the MatrixAir system as a SOLARWALL system. In fact, a clear
notice appeared distinguishing the variant in the MatrixAir system that is the
placement of the air intake.
iii) Actual or potential damage
[121] The proof
of actual or potential damages is essential to any passing-off action under 7(c)
of the Trade-marks Act. The plaintiffs must prove they have suffered
damages from the passing-off of their wares by the defendant, MATRIX. There is
no evidence before this Court that sales of specific projects were actually
lost on account of the three incidents that were proven. CONSERVAL’s financial
statements were presented but no evidence was provided to link decreased
revenues with the illegal use of the SOLARWALL Trade-mark on the website or in
the catalogue after March 31, 2007.
[122] Therefore
the Court rejects plaintiffs’ claim of passing-off and Trade-mark infringement
and no damages can be awarded.
V. CONCLUSION
[123] The
defendant, MATRIX, did not infringe the ‘619 patent by making, designing and
selling the MatrixAir system since the placement of the air inlet at the top of
the air collection space constitutes an essential element of the invention
described in patent 619, more precisely claims 1 and 10. Since the placement of
the air inlet in the MatrixAir system is at the bottom or at least below the
middle point of the air collection space it constitutes a variant there can
therefore be no infringement.
[124] Because
there is no infringement the infringement action is dismissed with costs.
[125] The
plaintiffs failed to prove loss of sales from the use of the SOLARWALL Trade-mark
by defendant, MATRIX, after March 31, 2007. Therefore, their claim for Trade-mark
infringement and passing-off is also dismissed, with costs.
THIS COURT’S JUDGMENT is that:
1.
The patent infringement action is dismissed with
costs against the plaintiffs as per the column 3 of the tariff.
2.
The Trade-mark infringement and passing-off
action is also dismissed with costs against the plaintiffs.
"André F.J. Scott"
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