[1]
Distrimedic
Inc. commenced the present proceeding on September 26, 2005, with the filing of
a Statement of Claim seeking a declaration of non-infringement of Canadian
Patent No. 2,207,045 (the ‘045 Patent), owned by Emballages Richards Inc.
(hereinafter “Richards”), pursuant to subsection 60(2) of the Patent Act,
RSC 1985, c P-4 (Patent Act). The product for which the declaration was
sought is a kit for the manufacture of a set of individual pill containers.
Distrimedic Inc. amended its Statement of Claim on November 3, 2005.
[2]
On
or about December 1, 2005, Richards filed a Statement of Defence and Counterclaim
against Distrimedic Inc. and various related parties (Robert Poirier, Claude
Filiatrault, Distrimedic Inc. and 9268-2244 Quebec Inc.). Each of these
Defendants to the Counterclaim is represented by the same counsel and will
hereinafter collectively be referred to as “Distrimedic”. The Statement of
Defence and Counterclaim was amended on November 27, 2006, on January 29, 2007,
and again on September 27, 2010. Shortly before filing its original Statement
of Defence and Counterclaim, Richards filed a document purporting to be a
disclaimer under section 48 of the Patent Act in relation to some of the
claims of the ‘045 Patent.
[3]
On
February 12, 2010, Distrimedic Inc. discontinued its original action, paying
costs assessed in the amount of $11,908.82 to Richards as a result.
Nevertheless, the counterclaim continued.
[4]
In
Distrimedic’s view, the Three Times Amended Statement of Defence and Counterclaim
significantly expanded the scope of the proceeding, adding many new allegations
and legal claims and joining many other companies and people affiliated with
Distrimedic. In addition to alleging infringement of the ‘045 Patent (and thus
covering precisely the subject-matter of Distrimedic’s action), Richards’
Counterclaim added several new issues, namely the infringement of the
disclaimed claims, the validity of the disclaimer, copyright infringement,
several issues related to trade-mark rights alleged to be held by Richards,
breach of the Competition Act, RSC 1985, c C-34 and
damages claimed in relation to the various allegedly infringed rights. In
Richards’ view, it was necessary to add the related Defendants as they have in
effect rendered Distrimedic Inc. judgment-proof through their corporate
arrangement of the various related parties.
[5]
The
hearing of this file took place from March 25 to April 16, 2013, and the
parties filed written representations on April 15 and 16, respectively. Both
parties made submissions in connection with a list of issues established in an
Order of Prothonotary Morneau dated September 28, 2011, following a pre-trial
conference between the parties.
[6]
For
the reasons that follow, the Court finds that Richards’ counterclaim should be
dismissed.
[7]
As
described by Richards and in the parties’ Agreed Statement of Facts, this case
has its genesis in an idea of Mr. Michel Bouthiette, a dentist by training and
the named inventor of the patent in suit.
[8]
Mr.
Bouthiette, who was also active in the retirement home business, had an idea
for a system that would improve the administration of medication to a patient
over a given period of time, such as a week. After applying for a United States patent in 1996, Mr. Bouthiette filed a Canadian patent application claiming priority
from his United States filing, and the ‘045 Patent issued on June 1, 1999.
[9]
Bouthiette
incorporated Dispill Inc. (Dispill) to sell the components of his pill
dispensing and storage system on November 11, 1997; he operated as a sole
proprietor until he exchanged his business and its assets as consideration for
shares of Dispill in 1998.
[10]
Dispill
rented office space from La Société d’Impression Filiatrault & Poirier (La
Société), a corporation owned by Defendants Robert Poirier and Claude Filiatrault,
and La Société purchased a 50% shareholding in Dispill for $100,000. From 1998
until September 2002, Filiatrault and Poirier were both employees and, through
La Société, shareholders of Dispill.
[11]
In
2002, a dispute arose and Filiatrault and Bouthiette invoked a shotgun clause
in the Dispill Shareholders Agreement; however, Bouthiette prevailed and the
relationship ended with a numbered company owned by Bouthiette purchasing La
Société’s shares in Dispill.
[12]
Although
subject to a two-year non-compete agreement from September 3, 2002 to September
3, 2004, Filiatrault and Poirier met with patent agents during that time to
discuss whether they might develop a pill dispenser product in order to compete
with Dispill, upon expiry of the non-compete agreement, without infringing the
‘045 Patent.
[13]
Distrimedic
Inc. was incorporated on September 7, 2004, and, by 2005, Filiatrault and
Poirier were ready to compete with Dispill. Distrimedic Inc. does not have
employees on its payroll as it shares resources, including employees and sales
representatives, with two other companies owned and operated by Filiatrault and
Poirier: La Société, which offers printing services and printed products to
pharmacies, pharmaceutical laboratories, insurance companies and others; and
Emballages Alpha Inc. (Alpha), which sells vials for medicines to pharmacists.
The two companies bill Distrimedic Inc. for salaries and commissions
accordingly.
[14]
In
a series of transactions, Richards, a manufacturer and distributor of packaging
products incorporated under the laws of Canada, acquired Dispill from
Bouthiette in July 2005 and Dispill was subsequently dissolved. On July 29,
2005, prior to dissolution, Dispill assigned the ‘045 Patent to Richards.
[15]
On
September 16, 2005, Richards had its counsel send a letter to Filiatrault and
Poirier, care of La Société, alleging that their efforts to market Distrimedic
Inc.’s competing pill dispenser system infringed Richards’ exclusive patent and
trade-mark rights.
[16]
In
an attempt to settle the patent infringement issue, Distrimedic Inc. commenced
its action seeking a declaration of non-infringement of the ‘045 Patent on
September 26, 2005. An Amended Statement of Claim was filed November 3, 2005.
[17]
On
November 8, 2005, after being served with Distrimedic Inc.’s Statement of Claim
but prior to entering a defence, Richards filed a disclaimer in relation to a
number of claims in its ‘045 Patent (the Disclaimer).
[18]
Richards
then filed its Statement of Defence and Counterclaim, which it subsequently
amended three times as described above. Also described above, Distrimedic Inc.
discontinued its original action on February 12, 2010, and paid Richards costs
assessed at $11,908.82.
[19]
Following
the filing of these proceedings, in October 2010, Filiatrault and Poirier
entered into an agreement in which Filiatrault repurchased all of Poirier’s
shares in all of the Quebec companies (La Société, Distrimedic Inc., Alpha and
9120-2994, an investment company). In exchange, Poirier repurchased all of
Filiatrault’s shares in Distrimedic France and another company, Rx-V.
Distrimedic Canada Inc., which was incorporated for sales of Distrimedic
products in provinces other than Quebec and one of the original Defendants to
the Counterclaim, never did business and was dissolved in 2008. On September 1,
2012, Alpha and La Société amalgamated to form 9268-2244 Quebec Inc. To reflect
these transactions, the syle of cause has been amended accordingly.
[20]
The
‘045 Patent in dispute in this action, registered in connection with Richards’
product, is entitled “Kit and Process for the Manufacture of a Set of
Individual Pill Containers”. It was filed on May 21, 1997, claiming priority on
a US provisional patent application filed on July 22, 1996. The ‘045 Patent
was opened to the public on June 21, 1997 and issued on June 1, 1999. It will
expire on May 21, 2017.
[21]
The
‘045 Patent, as originally issued, had 28 claims, with Claims 1, 11, 15, 22, 26
and 28 being independent and the remainder dependent, either directly or
indirectly, on one of the independent claims. Richards filed a disclaimer on
November 8, 2005 in relation to a number of claims of the ‘045 Patent, namely Claims
15 to 21. The disclaimer amended Claims 15 and 17 to 21 and removed Claim 16
entirely. More will be said about the disclaimer below.
[22]
The
‘045 Patent describes a system for preparing a pill dispenser. The system
comprises a tray having a number of evenly spaced apart recesses that is used
to support a container-defining sheet made of clear plastic and itself having a
corresponding number of evenly spaced apart cavities embossed therein. The
idea is to make a series of containers for holding pills to be taken four times
per day (breakfast, lunch, dinner, and bedtime) over seven days.
[23]
Once
filled as prescribed, the container-defining sheet is sealed by a self-adhesive
container-sealing sheet upon which has been printed required information about
the prescription such as the names of the patient and the pharmacist, the date,
and the medications in each container. The container-sealing sheet is aligned
with the container-defining sheet by means of two upwardly projecting
protuberances on the top surface of the tray that engage corresponding pairs of
holes in both the container-sealing sheet and the container-defining sheet.
The alignment of the sheets aligns the perforations thereon, permitting each
container to be readily separated from the others. Once the alignment has been
achieved, an adhesive cover on the back of the container-sealing sheet can be
removed and the sheet stuck over the container-defining sheet.
[24]
The
first page of the ‘045 Patent provides a brief description of the prior art
over which it claims to provide an improvement:
To prepare a set of individual pill containers for
use by a patient, it has already been suggested to use a sheet of plastic
material in which a plurality of recesses are molded. Each of these recesses
defines a small upwardly opened container that can be filled with pills. After
filling, all the containers are closed by means of a plastic sealing sheet on which
can be printed all the desirable indications like the patient’s name, the date
and hour of administration, etc…. The sealing sheet is applied onto the
container-defining sheet and thermo-sealed onto same. As can be understood,
the indications are printed and formatted onto the sealing sheet so that each
group of information referring to a given container be positioned in regard to
the said container. Tearing lines are provided on both the container-defining
sheet and the sealing sheet to allow for easy separation of the individual pill
containers.
This assembly is efficient. However, it has some
drawbacks. More particularly, it is very difficult and time consuming to
ensure correct positioning of the preprinted sealing sheet on top of the
containers. As can be understood, incorrect positioning of the sealing sheet
will make the pill containers difficult to separate. Also, thermo sealing is
not economical, as it calls for thermo-sealing equipment.
[25]
The
US Patent No. 3,780,856 (the “Braverman Patent”), reproduced in the Appendix to
these Reasons, was published on December 25, 1973. It is thus citable as prior
art against the ‘045 Patent for the purposes of both anticipation and
obviousness. It describes a pill dispensing device similar in many ways with
the pill dispensing system described in the ‘045 Patent. As stated by the
Patent Office in its December 17, 1998 Office Action during prosecution of the
application that led to the ‘045 Patent:
The patent to Braverman discloses a kit and method
for the manufacture of a set of individual pill containers. The kit is
comprised of a container-defining sheet (100) made of plastic which has a top
surface with a given number of evenly spaced apart cavities embossed therein.
These cavities are shown to be in regularly spaced apart rows and columns.
Each cavity is upwardly opened and defines a container (120). Each container
is surrounded by a flange (122) that has a central dotted line (117,118)
punched therein The kit also has a recessed support (200) with a top surface
provided with a number of recesses (212) at least equal to the number of
cavities in the container-defining sheet. A container-sealing sheet (122) is
provided. This sheet has a top surface and a bottom surface and is shaped and
sized to cover at least all of the containers and surrounding flanges. The
bottom surface of the container-sealing sheet has bands (126) covered with a
self-adhesive material that are shaped and sized to exactly correspond to and
fit over the flanges. The bands are covered until use by a protective peelable
covering (128,129) and have central tearing lines (170,172) of their own.
Positioning means provided on at least the top surface of the
container-defining sheet and on the container-sealing sheet (the edges of the
sheets 196) to ensure that, in use, the bands covered with self-adhesive
material and their tearing lines be in exact superposition on top of the
flanges and the dotted lines of the container-defining sheet. The patent to
Braverman also discloses printing information on the container-sealing sheet
(see column 4, lines 32 to 37, for example). The number of recesses is not
considered patentable subject matter.
Joint Book of Documents, No 144.
The figures found in the Braverman
Patent and referred to in the above quote are reproduced below:
[26]
It
is not necessary, for the purposes of this proceeding, to consider all of the
elements of the claims found in the ‘045 Patent. The key element of Claim 1
(including Claims 2 to 10 dependent thereon), 11 (including Claims 12 to 14 dependent
thereon), 15 (including Claims 17 to 21 dependent thereon) and 22 (including Claims
23 to 25 dependent thereon) reads as follows:
d) positioning means provided on at least the top
surface of the container-defining sheet and on the container-sealing sheet to
ensure that, in use, after the container-defining-sheet is fitted onto the
recessed support, the paper covering is peeled off from the bands of the
container-sealing sheet and said container-sealing sheet is positioned on top
of the top surface of the container-defining sheet, the bands covered with a
self-adhesive material and their tearing lines be in exact superposition on top
of the flanges and the dotted lines of the container-defining sheet,
wherein the positioning means comprises at least one
upwardly projecting protuberance provided on the top surface of the recessed
support, at least one hole provided into the container-defining sheet and at
least one other hole provided in the container-sealing sheet, said at least one
hole and one other hole being sized and positioned to correspond to and be
engaged by said protuberance.
[27]
Claim
15, as disclaimed, reads as follows (with amendments introduced by disclaimer
indicated in bold underlining):
d) positioning means provided on at least the top
surface of the container-defining sheet and on the container-sealing sheet to
ensure that, in use, after the container-defining sheet is fitted onto the
recessed support, the container-sealing sheet is properly positioned on top of
the top surface of the container-defining sheet, with its tearing lines in
exact superposition on top of the dotted lines of the container-defining sheet,
wherein the positioning means comprises at least one
upwardly projecting protuberance provided on the top surface of the recessed
support and engaging means provided on the
container-defining sheet and other engaging means provided on
the container-sealing sheet, said engaging means and other
engaging means being sized and positioned to correspond to and be
engaged by said protuberance.
[28]
With
regard to the remaining claims (Claims 26 to 28), construction of the claims is
not necessary because there is no evidence or argument that the elements
thereof are incorporated in any product manufactured, used or sold by
Distrimedic.
[29]
The
positioning means are described in the ‘045 Patent as follows at page 8:
Positioning means are provided onto at least the top
surface of the container-defining sheet (3) and on the container-sealing sheet
(9) to ensure that, when the latter is positioned on top of the top surface of
the container-defining sheet (3), the bands (18) and their tearing lines (11)
be in exact superposition on top of the flanges (10) and the dotted lines (4)
of the container-defining sheet (3). In the illustrated embodiments, which are
the preferred ones, these positioning means comprise two protuberances (5)
provided on the support (1) and which project upwardly from the top surface of
the recessed area “A”. The positioning means also comprises the holes (7),
provided with the container-defining sheet (3)container-sealing sheet (9), two
holes (15) sized and positioned to engage the two protuberances (5) of the
support (1).
[30]
The
‘045 Patent also describes (at p. 10) an alternative for the positioning means
as follows:
Because the dotted and tearing lines (11) and (4)
have to be precisely one above the other, it is very important that the
container sealing sheet (9) be precisely positioned above the container
defining sheet (3). To do so, the two holes (15) of the container-sealing
sheet (9) engage the two protuberances (5) of the support (1).
It has been found more convenient to provide the
support (1) with protuberances, and the container-defining sheet (3) and the
container-sealing sheet (9) with corresponding holes. However, some variations
can be made without departing from the spirit of the invention. For example,
the protuberance(s) to be engaged by the corresponding hole(s) provided on the
container-sealing sheet (9), may be moulded directly on the top surface of the
container-defining sheet (3) instead of being provided on the support (1).
After the holes (15) of the container-sealing sheet
(9) are engaged to the protuberances (5) of the support (1), the paper covering
is peeled off the bands (18) of the container-sealing sheet (9) and applied on
the top surface of the container-defining sheet (3).
[31]
The
figures to which the numbers found in these two quotes from the ‘045 Patent are
reproduced below:
[32]
Both
Richards and Distrimedic produce weekly, detachable pill dispenser products
that are primarily used in nursing home facilities. The parties’ respective
products are described in greater detail below.
[33]
Richards
sells a pill dispenser to sort pills, tablets and capsules. Richards’ pill
dispenser is described in the ‘045 Patent and in Figure 7 thereof, (reproduced
above).
[34]
As
described by both parties, the lowermost element of Figure 7 is a tray (also
called a recessed support) that is used to support a container-defining sheet
made of clear plastic (sometimes called a blister) having a given number of
evenly spaced apart cavities embossed therein. Once filled as prescribed, the
container-defining sheet is sealed by a container-sealing sheet (sometimes
called a label), which is the uppermost element of Figure 7. The
container-sealing sheet is aligned with the container-defining sheet by means
of two upwardly projecting protuberances on the top surface of the recessed
support that engage corresponding pairs of holes in both the container-sealing
sheet and the container-defining sheet.
[35]
Richards
uses two types of container-sealing sheets, one for covering the
container-defining sheet permanently (permanent labels), and one that is
resealable/replaceable (replaceable labels). Both types of its
container-sealing sheets have a top surface on which information may be
printed, and a peelable bottom layer to permit the sealing of the cavities of
the container-defining sheet. The top surface of each container-sealing sheet
has an upper portion which is white, and a lower portion which is divided into
four columns of equal width being, respectively from left to right, pink,
green, yellow and white. Examples of Richards’ permanent and replaceable
container-sealing sheets are reproduced here:
[36]
The
mounting tray for a resealable label has indentations that facilitate pulling
up tabs (Exh. 508) (JBD 19).
The blister tray has slight
indentations on the side that align with these indentations to facilitate the
tab. The difference between the permanent and the removable blisters are the
indentations on the side allowing one to access the tabs on the removable
blisters (Exh. 509) (JBD 21):
The difference between permanent
and resealable labels is that there is a small plastic tab aligned with the
colouring on the resealable label that allows for pealing back and resealing,
while there are indentations to facilitate the breaking of the seal to remove
the pill on the permanent label (Exh. 510 (permanent label) and 511 (resealable
label):
Computer-generated information
associated with when the pill is taken, the name of the pharmacy and the name
of the patient can be printed on each cell of a sealed and completed sheet as
demonstrated in Figure 6 of the ‘045 Patent (reproduced above).
[37]
Richards
initially sold an 8.5” x 10” label only, but later sold an 8.5” x 11” label
also. It presently sells both sizes. Blank labels are sold to the
pharmacists, who fill the blisters and do their own printing.
[38]
Richards
makes a variety of accessories available to pharmacists to facilitate the
filling, verification and shipping of the product, as well as the making of
corrections to previously sealed sheets. These include, among others, a pill
sorter, which consists of two moving plastic sheets that permit the user to put
the pills on an indented tray first and then move it across to dispense the
pills into the appropriate recesses in the container-defining sheet, as well as
a knife and knife guide, verification stand, and shipping-related products.
[39]
As
described in the Agreed Statement of Facts, Distrimedic also sells a pill
dispenser to sort pills, tablets and capsules. Distrimedic’s pill dispenser
includes a container-defining sheet made of clear plastic having a given number
of evenly spaced apart cavities embossed therein, which is sealed by a
container-sealing sheet.
[40]
The
following is an image of one of Distrimedic’s trays (Exh. 500):
[41]
Like
Richards, Distrimedic provides both permanent and replaceable container-sealing
sheets in 8.5” x 11” and A4 size, all of which have a top surface with an upper
portion that is white, and a lower portion that is divided into four coloured
columns. Distrimedic’s current container-sealing sheet is reproduced here:
[42]
As
noted above, on November 8, 2005, subsequent to the commencement of the main
action by Distrimedic Inc., but prior to entering a defence or launching its
counterclaim, Richards filed a disclaimer in connection with the ‘045 Patent
pursuant to section 48 of the Patent Act with a request that “recordal
of th[e] disclaimer be expedited” (JBD 144).
[43]
The
changes in Claim 15 resulting from the disclaimer filed by Richards on November
8, 2005, are shown in bold and in parentheses:
a) a container-defining sheet made of a plastic
material, said container-defining sheet having a top surface comprising a given
number of evenly spaced apart cavities embossed therein, each of said cavities
being upwardly opened and thus defining a container, each of said containers
being surrounded by a flange of a given width provided with a central dotted
line punched therein, said dotted lines provided in all of said flanges making
it possible to detach each of the containers from the container-defining sheet
and from the adjacent containers;
b) a recessed support having a top surface provided
with a number of recesses at least equal to the number of cavities embossed in
the container-defining sheet, said recesses being positioned, shaped and sized
to receive the containers defined by said cavities embossed in the
container-defining sheet;
c) a container-sealing sheet having a top surface
and a bottom surface and being shaped and sized to cover at least all the
containers and surrounding flanges of the container-defining sheet, the
bottom surface of said container-sealing sheet having bands that are
positioned, shaped and sized to exactly correspond to and fit over the flanges
of the container-defining sheet, with at least said bands being covered with a
self-adhesive material which is covered until use by a protective peelable
paper covering, and said container sealing sheet being provided with
tearing lines making it possible to tear said container-sealing sheet into a
number of cover pieces corresponding to the number of said containers; and
d) positioning means provided on at least the top
surface of the container-defining sheet and on the container-sealing sheet to
ensure that, in use, after the container-defining sheet is fitted onto the
recessed support, the container-sealing sheet is properly positioned on top of
the top surface of the container-defining sheet, with its tearing lines in
exact superposition on top of the dotted lines of the container-defining sheet,
wherein the positioning means comprises at least one
upwardly projecting protuberance provided on the top surface of the recessed
support [at least one hole] and engaging means provided [into] on
the container-defining sheet and [at least one other hole] other
engaging means provided [in] on the container-sealing sheet, said
[at least one hole] engaging means and [one other hole] other
engaging means being sized and positioned to correspond to and be engaged
by said protuberance.
[44]
As
described by Justice Martineau in a decision of the Court on application for
judicial review, Richards was notified after the filing of its disclaimer that
its request had been referred to a patent examiner (Richards Packaging Inc v
Canada (Attorney General), 2007 FC 11 at para 19 [Richards]). The
file was ultimately considered by a Patent Project Officer, who refused
Richards’ disclaimer by letter dated December 20, 2005. The Officer found that
the request could not be considered a disclaimer and should therefore be
refused, reasoning that the disclaimer rendered the whole claim broader than
what was originally allowed and that it would result in claiming more than what
was until then protected in the claims of the patent (Richards, above, at
para 21).
[45]
Richards
filed an application for judicial review seeking mandamus and other forms of
declaratory relief and, on February 27, 2006, Prothonotary Morneau allowed a
motion made by Distrimedic to be added as a respondent to the judicial review
proceeding (Richards Packaging Inc v Attorney General of Canada, 2006 FC
257).
[46]
In
Richards, at paragraph 23, Justice Martineau described the impact of the
disclaimer at that point in time on the file now before this Court as follows:
23 At this point, I note that on December 1,
2005, following the filing with the Patent Office of the applicant's
disclaimer, but prior to the making of the impugned decision, the applicant
filed before the Court a statement of defence and counterclaim in which it
contends that various claims in the patent are valid and that Distrimedic
infringed these claims. Its allegations rely in large part on the applicant's
disclaimer, filed on November 8, 2005. Following a motion to strike brought by
Distrimedic, on June 29, 2006, Prothonotary Morneau ordered that the paragraphs
of the applicant's defence and counterclaim making reference to the applicant's
disclaimer be struck out. Although this Court had not yet addressed the
legality of the impugned decision, Prothonotary Morneau nevertheless concluded
that "this notice of application for judicial review does not for the time
being change the fact that there is no valid disclaimer now affecting
the patent '045 claims" (Distrimedic Inc. v. Dispill Inc., [2006]
F.C.J. No. 1045, 2006 FC 832 at para. 38) [emphasis added]. On October 17,
2006, my colleague Justice Max M. Teitelbaum maintained Prothonotary Morneau's
order on appeal and agreed "that until the issue of the validity and
effect of the disclaimer has been judicially reviewed, the references to
the disclaimer should be struck out of the Defence and Counterclaim on the
grounds that they are immaterial and frivolous pursuant to Rule 221(1)(b) and
(c) of the Federal Court Rules" [emphasis added] (Distrimedic Inc.
v. Dispill Inc., [2006] F.C.J. No. 1532, 2006 FC 1229 at para. 56). That
being said, Justice Teitelbaum indicated, at paragraph 54, that should the
applicant "be successful in that judicial review proceeding, they may then
move this Court to allow them to amend their pleadings to reintroduce
allegations based on the disclaimer into the Defence and counterclaim".
[Underlining in original]
[47]
Finding
that the Patent Office had no discretion to refuse entry or recordal of a
disclaimer once it has been submitted in the proper form and manner and the
prescribed fee has been paid, Justice Martineau accepted Richards’ arguments
that: “1) Dionne [the Patent Officer] had no jurisdiction under the Act and the
Rules either by way of delegation or otherwise to examine the applicant's
disclaimer and to make the impugned decision; and 2) that the Commissioner is
not empowered under the Act and the Rules to refuse the filing or recordal of
the applicant's disclaimer that was filed on November 8, 2005 in the prescribed
form and manner, as provided by subsection 48(2) of the Act and section 44 of
the Rules” (Richards, above, at para 24).
[48]
Although
Distrimedic argued that “the Court's adoption of the applicant's position would
render patents unfair, impossible to predict and make them a ‘public nuisance’”
and that “potential competitors of the patentee would be in a constant state of
uncertainty with respect to the scope of the patent, since the patentee could
broaden the claims at any time by way of a document purporting to be a
disclaimer”, Justice Martineau concluded that Canadian patent law is entirely
statutory and “this Court cannot rely on valid policy considerations to
substitute itself for Parliament” (Richards, above, at para 25).
[49]
Finding
that the power to consider the validity of a disclaimer rests entirely with the
courts, but that a judicial review proceeding was not “the proper vehicle to
obtain a judicial declaration as to the validity or invalidity of a disclaimer
filed by a patentee with the Patent Office”, partially given the lack of expert
evidence, Justice Martineau set aside the Officer’s decision letter such that
the disclaimer would be considered filed and effective as of its filing date of
November 8, 2005. In doing so, Justice Martineau overturned the Patent
Officer’s finding that the amendment would result in claiming more than what is
currently protected in the claims of the patent, as this is a factual and legal
determination on the merit of the disclaimer which the Patent Officer had no
jurisdiction to make.
[50]
Justice
Martineau’s decision was confirmed by the Federal Court of Appeal in an oral
judgment rendered on January 8, 2008 (Distrimedic Inc v Richards Packaging
Inc, 2008 FCA 4).
[51]
In
its Three Times Amended Statement of Defence and Counterclaim, Richards argues
that by virtue of its extensive advertising and sales, the “Richards Packaging
Label Colour Trade Marks” (i.e., the colours applied to the top surface of both
its permanent container-sealing sheets and its replacement container-sealing
sheets) have become well and favourably known to pharmacists, nurses and
nursing home employees, as well as the public, and have become distinctive
trade-marks of Richards’ packaging in association with its Dispill pill
dispenser (Statement of Defence and Counterclaim, September 27, 2010, at paras
28-29).
[52]
The
Richards Colour Trade Mark, referred to by Distrimedic as the “Dispill Colour
Scheme”, is the subject of Canadian Trade-mark Application No. 1,393,024. Upon
opposition of the registration by Distrimedic, an oral hearing was held and the
Registrar of Trade-marks ultimately refused the application on October 31,
2012. The Registrar found that Richards had not used the colour scheme as a
trade-mark, as defined in section 2 of the Trade-marks Act, RSC 1985, c
T-13, but as a colour code indicating the time of day for taking the medication
contained in the pill dispenser rather than as a trade-mark identifying the
source of the wares. As a result, the Opposition Board allowed Distrimedic’s
opposition and concluded that (i) the Dispill Colour Scheme was not intended to
be used as a trade-mark; (ii) the Dispill Colour Scheme is inherently
non-distinctive because it is functional; and (iii) Richards did not present
sufficient evidence of public recognition of the Dispill Colour Scheme as a
trade-mark.
[53]
An
appeal of the Registrar’s decision was submitted on February 4, 2013, and is
currently before this Court as Richards Packaging Inc v Distrimedic Inc,
T-236-13. Richards filed a requisition for hearing on June 21, 2013. Richards
argues that, in rejecting the application, the Registrar erred in a number of
ways: by applying a higher standard of proof than appropriate in considering
use of the applied-for mark (which he considered “non-traditional”); by holding
that in a situation where a mark possesses some level of functionality, the
burden on the applicant to establish the distinctiveness of the trade-mark will
be high; by holding that a trade-mark comprising a colour or colours applied to
the surface of a product is inherently non-distinctive; in its consideration of
the evidence and testimony before it; and in connection with one finding of
fact, although the significance of the alleged error is unclear based on the
Notice of Application alone. Richards made much the same arguments in the
context of the case at bar.
[54]
On
September 28, 2011, following a pre-trial conference with the parties,
Prothonotary Morneau issued an Order setting out the following list of issues
to be addressed at trial:
Patent
1 Construction of the 2,207,045 Patent
2 Whether Distrimedic
has infringed the 2,207,045 Patent by manufacturing and selling the Distrimedic
pill dispenser
3 Whether the disclaimer
filed in relation to claims 15 to 21 of the ‘045 Patent is valid, and whether
claims 15 and 17-21 as disclaimed are invalid in light of invalidity of the
disclaimer.
4 In the event that the
disclaimer is valid and the disclaimed claims are construed broadly enough to
encompass the Distrimedic pill dispenser, are claims 15 and 17-19 as disclaimed
nevertheless invalid as being anticipated by or made obvious in light of US
Patent No. 3,780,856 (Braverman)
Alleged Misrepresentations
5 Whether the defendants
to the counterclaim have made false and misleading statements that tended to
discredit the business, services and wares of Richards
Trade-Mark
6 Whether trade-mark
rights subsist in the arrangement of colours applied to Richards’
container-sealing sheet
7 Whether Distrimedic has
used any such trade-mark rights in the original colour arrangement that is or
was contrary to section 7(b) of the Trade-Marks Act
8 Has Distrimedic
directed public attention to its business in such a way as to cause confusion
in Canada with those of Richards?
Copyright
9 Whether copyright subsists in the Dispill
Label Form
10 Whether
Richards is the owner of any such copyright in the Dispill Label Form
11 Whether Distrimedic has
infringed any copyright owned by Richards in the Dispill Label Form
Alleged Joint Liability
12 Whether any of the
Defendants to the Counterclaim other than Distrimedic Inc. are liable for any
of the allegedly-infringing activities
Remedies
13 In the event that there
has been infringement as alleged, whether:
a) Richards has suffered
damages and, if so, the extent of same
b) regarding copyright
infringement, whether Richards is entitled to damages and an accounting of
profits
c) whether Richards is
entitled to an injunction and to the declarations requested regarding validity
of the Patent and actions of the defendants to the counterclaim
14 Costs.
[55]
Prior
to the commencement of the trial, both Richards and Distrimedic proposed to
call three fact witnesses each.
[56]
Richards
would call Gerry Glynn, Chief Executive Officer (CEO) of Richards Packaging
Inc., Marie-Josée Glaude, the General Manager of Richards’ Dispill Division,
and René Thibault, a pharmacist and Dispill customer who was approached by
Distrimedic when it entered the market.
[57]
Distrimedic
would call Claude Filiatrault and Robert Poirier, both former employees of and
shareholders in Dispill and current or former shareholders in the other
corporate Defendants to the Counterclaim. Distrimedic also intended to call
Paul van Gheluwe, a prior Dispill employee and sale representative for
Distrimedic, but felt that his testimony was unnecessary for the reasons
explained below.
[58]
Mr.
Gerald Glynn has been the CEO of Richards since 2002, and was called to provide
factual evidence regarding Richards Packaging Inc., Dispill Inc., the Dispill pill
dispenser and related financial information, as well as to testify regarding
the use of the Richards’ colour trade-mark, the Dispill Label Form, and the
patent disclaimer.
[59]
During
his examination-in-chief, Mr. Glynn provided an explanation of his role within
Richards and a picture of Richards’ corporate structure and business as a
whole, including the types of products sold. Mr. Glynn then went on to describe
the circumstances surrounding the acquisition of Dispill Inc. and the
Division’s place within the company as a whole, including geographical
distribution, representation and internal reporting structure. Glynn described
what he referred to as the “Dispill solution” and its primary customers.
[60]
Richards’
counsel went on to have Mr. Glynn introduce various documents into the record
related to the acquisition of Dispill Inc, acknowledging that Mr. Glynn cannot
read French, and it was agreed that documents would be taken as proven unless
an objection was raised. After introducing a number of documents, Mr. Glynn
testified that he learned of Mr. Filiatrault and Mr. Poirier and their failed
attempt to acquire Dispill Inc. during the due diligence related to Richards’
acquisition but that, apart from reading about them, he had never met them.
[61]
Mr.
Glynn introduced two DVDs containing instructional videos for nursing homes and
pharmacies, respectively, which constituted marketing material for Richards and
were played for the benefit of the Court. Mr. Glynn was unsure when they were
made but confirmed that they pre-dated the 2005 acquisition. Mr. Glynn then
introduced a number of physical items into the record, and explained their
uses. Mr. Glynn took the Court through the items listed in a Dispill price
list, explaining the intended uses for specific product components and
accessories and who would use them (e.g., the pharmacist, nurses or
non-professional staff of either the drug store or nursing home). Mr. Glynn
went on to discuss the profit margin for various products, noting that the
majority of Richards’ sales are of consumables (blisters and labels) and that
accessories are sold primarily to facilitate the consumable business. Sample
labels were then introduced and described.
[62]
Mr.
Glynn explained that when Dispill Inc. commenced operations, it had an exclusive
relationship with the pharmaceutical company Novopharm Quebec. Products
purchased or ordered by pharmacies were invoiced to and paid for by Novopharm.
Later, that relationship with Novopharm came to an end and, thereafter, Dispill
invoiced pharmacies directly for products they ordered.
[63]
After
introducing additional physical exhibits, Mr. Glynn introduced a complete
solution provided to Richards by Distrimedic as a sample when their action was
begun, with a label bearing the same colours as the Richards product, as well
as a sample received at a trade show with Distrimedic’s current colour scheme.
[64]
Mr.
Glynn reviewed Richards’ disclaimer, explaining why in his view certain claims
were too broad and needed to be narrowed and indicating that they wanted to
provide a more specific definition of the label and a clearer description of
the purpose of the holes, which was to provide an engaging means. Mr. Glynn
explained that the timing of the disclaimer was motivated by their review of
the patent following receipt of Distrimedic’s Statement of Claim and indicated
that the intent of the disclaimer was to narrow the patent’s application and to
correct inadvertent errors or inadequate descriptions, both for the benefit of
the litigation involving Distrimedic and to clarify the patent in connection
with Richards’ other competitors.
[65]
Mr.
Glynn went on to discuss the importance of the colours on the Dispill labels,
explaining that they do two things: one is to “sort of brand your product as
recognizable”, the other is “to facilitate the sort of use of the product” (Transcript,
March 25, at p 125). He noted that unless otherwise required by law, for
example when issuing narcotics, Richards always uses the same colour scheme and
is not aware of any other company using the same colours, apart from
Distrimedic’s brief use of them. Mr. Glynn indicated that the pharmacists do
their own printing and that patients aren’t likely to see a complete label. He
then went on to discuss the products and colours employed by various Richards’
competitors, specifically Jones and Manrex, and the advantages of the Richards
solution over those other products (e.g., Richards’ does not require a thermal
seal), introducing samples along the way. He added that the Dispill system is a
superior system to both Jones’ and Manrex’s systems due to its functionality
and to the added safety of printing on the blister cell. Delivery of pills to
patients takes less time with the Dispill system and the error rate is lower.
Jones and Manrex have a small percentage of the market in Quebec, but they have
a larger share of the overall Canadian marketplace. As for the other products
on the market prior to Distrimedic’s entrance, Mr. Glynn suggested they were
alternate solutions to dispensing pills and not competing products.
[66]
Mr.
Glynn went on to discuss the various software companies and programs associated
with Dispill Inc. at various points in time, including Kroll and DLD’s Mentor
program. He stated that when Dispill had an agreement with a software company,
the agreement would recognize that the software company was using Dispill’s
software. Screenshots from both DOS and Windows versions of the DLD software
were reviewed, noting a hyperlink connected with Distrimedic’s name in at least
one version.
[67]
Mr.
Glynn confirmed that sales of consumables represent about 97-98% of Richards’
business and noted that label sales exceed blister sales by approximately
20-25%, as more labels will be used if any changes are made. Financial
documents demonstrating discounting, price decreases and rebates were also
discussed. Mr. Glynn indicated that prices dropped by about 20% when
Distrimedic entered the market in 2006. Correspondingly, the number of
customers being offered discounts increased, even if the discounts offered did
not change. Mr. Glynn indicated that rebates are offered in response to
pricing pressures in the marketplace from Distrimedic. With the exception of
the initial launch year by Distrimedic and the corresponding correction of the
pricing, Richards’ sales have been growing each year thereafter. If
Distrimedic were not in the marketplace, Mr. Glynn believes that Richards would
be able to increase its prices.
[68]
In
her cross-examination of Mr. Glynn (Glynn, March 26, at pp 45-153),
Distrimedic’s counsel touched on a variety of issues. Mr. Glynn confirmed that
he is not involved in the day-to-day activities of the Dispill Division and
spends “very little” of his overall time on that portion of Richards’ business;
he also admitted that he had no direct knowledge of the business of Dispill
Inc. prior to Richards’ July 2005 acquisition, apart from information disclosed
to him as part of the due diligence that preceded the transaction.
[69]
Counsel
also questioned Mr. Glynn with respect to Richards’ concurrent trade-mark
application proceedings, Richards’ specific trade-mark concerns (no claim in
relation to Distrimedic’s current colour use or name), the specifics of
Richards’ copyright claim (no claim in any software and no claim that
Distrimedic used the software themselves but rather that they induced use on
the part of pharmacists, admitting the DOS version likely hasn’t been used
since at least 2006), and Richards’ relationship with the various software
companies (including the ownership of the Dispill Label Form and payments for
programming services or software licensing).
[70]
Mr.
Glynn reiterated that the Dispill product has become an industry standard and
has basically dominated the Quebec market. Counsel had Mr. Glynn clarify the
circumstances surrounding the 2005 acquisition and intellectual
property-related due diligence. He admitted that neither the Dispill Colour
Scheme nor the Dispill Label Form were specifically discussed during the due
diligence or specifically mentioned in the transaction agreements. He
indicated, however, that the agreement between Richards and Dispill Inc. was
meant to be all-inclusive such that all intellectual property held by Dispill
Inc. would be transferred to Richards. In his view, although Schedule 5.1(ee)
of the Share Purchase Agreement dated July 29, 2005 (JBD 244), which makes no
mention of the Dispill Colour Scheme or Dispill Label Form, indicates that it
is a list of all intellectual property, it was the seller’s obligation to
complete the list. To the extent that anything was missing from the seller’s
representation of its intellectual property, it would not affect Richards’
right to acquire all of Dispill Inc.’s intellectual property.
[71]
Counsel
went on to question Mr. Glynn regarding the attribution of decreased pricing to
Distrimedic’s entry in the market, Richards’ response to Distrimedic’s entry
(e.g., the notice sent to all pharmacist customers in September 2005 with
respect to potential infringement of Dispill’s patent, purportedly in response
to confusion in Richards’ customer base and to dispel any confusion between
Richards and Distrimedic), and the legality of the movement of employees from
Dispill to Distrimedic.
[72]
Finally,
counsel had Mr. Glynn discuss the practical differences between the Dispill
solution and solutions offered by competitors such as Jones and Manrex (e.g.,
with respect to sealing and printing labels, querying why although they are
also authorizing pharmacists to print labels with similar information to
Richards’ they have not been sued), and the difference between the Dispill
Label Form and the broader pharmacy software programs. At one point Mr. Glynn
agreed that the copyright Richards is claiming is in the method of printing
information onto individual cells, not on the top part of the container-sealing
sheet. In other words, he suggested that the copyright that is claimed is the
method of having individual cells that can be broken off while remaining
sealed, with information displayed on the back of the cell so that it can be a
stand alone product. He describes Richards’ copyright as being identifiable on
the basis of a two-part test: so long as the information appears on each cell
and is substantially the same as what was selected as part of Richards’
screenshots, copyright will be infringed. When pointed to a recently released
Jones product incorporating printing on individual cells, Mr. Glynn indicated
that Richards hadn’t followed up on the details of the product and wasn’t sure
if it was infringing the patent, but, as far as his company was concerned,
Jones was infringing the copyright by printing on the back of each cell of its
solution, however the printed information is organized.
[73]
With
respect to patents, counsel for Distrimedic had Mr. Glynn confirm that
accessories are not sold subject to any restriction regarding their use apart
from the fact that they are patent-protected. He also confirmed that there is
no allegation that Distrimedic is selling a knife or a cutting board. Reviewing
Richards’ reasons for filing the patent disclaimer, Mr. Glynn accepted that the
last paragraph of the original Claim 15 stated that the holes were sized and
positioned to correspond to and be engaged by said protuberances, and
ultimately offered that he filed the disclaimer on the basis that “the new
description is a better description when read in combination with this than
this alone”, presumably referring to the new and old wording (Transcript, March
26, at p 102). Despite acknowledging similarities between Claims 1 and 15 of
the ‘045 Patent, Mr. Glynn had no answer as to why the disclaimer was not made
to apply to Claim 1 as well as to Claim 15. He indicated that Richards did not
speak to Mr. Bouthiette regarding the need for a disclaimer, that it was a
mistake not to specify a reference to adhesive bands in the original patent,
and that the language referring to engagement was “not as descriptive as it
should have been” (Transcript, March 26, at p 104).
[74]
Upon
being asked for some further clarification regarding the copyright infringement
claim and the specific claims arising from or underlying “Dispill’s Label
Form”, Mr. Glynn (referring to Exh. 164 and 165) claimed that initially there
was no Distrimedic link in the Mentor software, so the printing of the
Distrimedic label would be done by defaulting to the Dispill label. When a
Distrimedic link was subsequently added to the software, Mr. Glynn agreed that
“the problem [Richards has] with Distrimedic, with respect to the copyright and
the software is that they have -- Distrimedic has commissioned an application
in the existing pharmacy software that allows the pharmacists to make the same
selection of fields and print them onto a label …on top of the cell”
(Transcript, March 26, at pp 122-123). Maintaining his position that Dispill
offers a value-add over competitors’ products in part due to the value of the
associated intellectual property and in part due to ease of use, Mr. Glynn
confirmed that Richards has “the right to prevent anybody from using the Mentor
program for purposes of printing onto a pill dispenser with the information on
individual cells” (Transcript, March 26, at p 126).
[75]
Mr.
Glynn went on to discuss the Dispill target customers (pharmacists and nursing
homes), factors affecting competition (nursing homes are more concerned with functionality
and accuracy than with price) and pricing in the marketplace. Mr. Glynn
repeated that Richards began increasing its rebates in 2006 and decreasing its
prices in 2007 in response to Distrimedic coming into the market; Dispill had
no competitor before Distrimedic, as Jones and Manrex were alternate solutions
but were not offering the same kind of product. Mr. Glynn mentioned that the
intellectual property owned by Dispill Inc. was not a factor in the
negotiations leading to its purchase by Richards.
[76]
In
2006, Richards removed the volume target necessary to obtain a rebate instead
of lowering its prices as a means of appeasing certain customers without
immediately offering a lower price to each customer. Before Distrimedic
entered the market, few customers reached the volume targets and thus the
number of rebates offered was small. Afterwards, the volume rebate percentage
remained at approximately 7%, but the number of rebates increased because the
number of customers who were offered discounts increased significantly in order
to compete with Distrimedic’s lower prices. In 2007, Richards was forced to
drive down its prices due to competition by Distrimedic. The price (revenue per
case unit) had dropped by approximately 20% by December 31, 2007. Outside of Quebec, however, pricing and discounting remained the same before and after Distrimedic’s
launch.
[77]
Marie-Josée
Glaude, Vice-President of Sales and Trade Relations in Richards’ Retail
Division and General Manager of Richards’ Dispill Division in Montreal, was
called to provide factual evidence and introduce various documents regarding
Richards Packaging Inc., its relationship with various software companies, and
pricing, including discounts offered in connection with Dispill products. Ms.
Glaude was examined and cross-examined on March 26 and 27, 2013. She broadly
confirmed Mr. Glynn’s testimony with respect to pricing, adding that the
pricing of Dispill products was dealt with on a case-by-case basis; the price
was lowered if it made sense to do so in order to keep a customer. She
provided numerous examples of Dispill customers consistently advising Dispill,
after the entry of Distrimedic into the marketplace, that they could get the
same product at a lower price from Distrimedic. She also referred to some
emails and handwritten notes of employees of Richards tending to establish that
some representatives of Distrimedic had used Dispill brochures to order
Distrimedic products and suggesting that Dispill accessories can be used with
Distrimedic products. When made aware of these practices in the fall of 2005,
a Notice to Pharmacists was sent by mail stating that “[i]t has come to our
attention that certain persons without our authority have been promoting a
product similar to DISPILL® or as a complete substitute for DISPILL®”. The
letter went on to advise that such persons were not associated with DISPILL® or
Richards Packaging and did not have any authority to sell the product or to
represent themselves as associated with it. The letter indicated that any other
product represented as related to DISPILL® would infringe Richards’ trade-mark
rights, that DISPILL® is protected by patent, that any use of components such
as blister sheets or adhesive backing sheets purchased from sources not
authorized by Richards to manufacture sets of individual pill containers would
infringe its patented method for DISPILL®, and that any product that was a copy
of or purported to be the same as DISPILL® would infringe Richards’ patent
rights in the product (Exh. 141 and 143).
[78]
I
agree with counsel for the Defendants to the Counterclaim that Ms. Glaude is
not a witness who can testify to the distinctiveness of the alleged trade-mark
or to any instance of confusion or misrepresentation on the part of any of the
Defendants to the Counterclaim without it being hearsay or speculation.
Indeed, she admitted to not being in direct contact with Dispill’s pharmacy
customers and did not present any evidence to the effect that she is in contact
with nursing homes. With respect to software issues, Ms. Glaude admitted to not
being familiar with Mentor or the more modern versions of pharmacy software and
indicated that she could not speak to the Dispill Label Form (JBD 149), which
ceased being used prior to Richards’ acquisition of Dispill Inc. For those
reasons, I find that her testimony has little relevance on this point and
should be given little weight.
[79]
Moreover,
certain documents relied upon by Ms. Glaude to bolster Richards’ allegations of
misrepresentations are not admissible because they contain hearsay. This is
true, particularly in light of an email exchange ending with a January 3, 2007
message from Hugo Lebrun to Dispill, which includes a handwritten note (found
at JBD 168 and JBD 352 at p 6), an email dated October 25, 2007 from Maryse
Fontaine to Hugo Lebrun (found at JBD 182, JBD 183 at p 2 and JBD 352 at p 7),
and a handwritten page headed “Automne 2006” referring to Ph Fleury & Ass.
(found at JBD 352 on the third last page). All of these records were prepared
by Maryse Fontaine, who works at Richards’ Dispill Division in Granby, Quebec.
[80]
The
general rule prohibiting hearsay evidence has been succinctly stated as
follows:
Written or oral statements, or communicative conduct
made by persons otherwise than in testimony at the proceeding in which it is
offered, are inadmissible, if such statements or conduct are tendered either as
proof of their truth or as proof of assertions implicit therein.
Alan W. Bryant, Sidney N. Lederman & Michelle K.
Fuerst, Sopinka, Lederman & Bryant: the law of evidence in Canada, 3rd ed (Markham: LexisNexis, 2009) at 229-230.
[81]
At
the core, the rule prohibits reliance on any written or oral statements made
out-of-court, if the evidence is to be tendered for the truth of its contents.
The Plaintiff by Counterclaim argues that the above-mentioned documents should
be accepted as admissible even if they contain hearsay evidence because they
constitute business records.
[82]
The
exception to the inadmissibility of hearsay evidence for business records is
grounded in the fact that the identity of the person who created the record may
be unknown and, even if present in Court, such person could not add anything to
what appears in the record. Moreover, there are reasons for confidence in the
accuracy of information contained in business records: the routine and habit of
making entries in business records, and an employee’s concern over disciplinary
consequences that could follow in the event of any inaccuracy.
[83]
Section
30(1) of the Canada Evidence Act, RSC 1985, c C-5 allows
for documents to be admitted into evidence that would otherwise be hearsay
provided that they are identified as records made in the usual and ordinary
course of business. However, section 30(10) sets out certain categories of
records that are not rendered admissible under section 30(1), including
documents made in contemplation of a legal proceeding (s. 30(10)(a)(ii)). This
exception exists because there is a danger that a record made in contemplation
of a legal proceeding will lack objectivity, rendering it unreliable: see Performing
Rights Organization of Canada Ltd v Lion d’Or (1981) Ltée, [1987] FCJ No.
934, at p 3; Setak Computer Services Corp v Burroughs Business Machines Ltd
(1977), 15 OR (2d) 750, at p 755 (On Sup Ct). The main requirements for
admission of hearsay evidence under the common law business records exception
are that the person who created the record did so contemporaneously, based on
personal knowledge and under a duty to do so: Ares v Venner, [1970] SCR
608. Under the principled approach, hearsay evidence must be necessary to
prove a fact in issue and must be reliable, with necessity going to the
relevance and availability of evidence: R v Khan, [1990] 2 S.C.R. 531; R
v Khalawon, [2006] 2 S.C.R. 787.
[84]
In
the case at bar, Ms. Glaude gave no indication that Maryse Fontaine was
unavailable to give testimony, and in fact confirmed that Ms. Fontaine was
working in Granby on the day of Ms. Glaude’s testimony. Ms. Glaude also
acknowledged that at least a portion of Ms. Fontaine’s notes were not written
contemporaneously but rather later in time, either from memory or based on
other notes not tendered as evidence.
[85]
Moreover,
the first chain of emails ending with the January 3, 2007 message from Hugo
Lebrun to Dispill alleges that a representative of Distrimedic showed a
potential customer a Dispill catalogue for the purposes of ordering
accessories. The alleged event occurred between the representative of
Distrimedic and the potential customer. The potential customer then allegedly
communicated this event to two Dispill representatives who in turn allegedly
communicated it to Fontaine who, according to Glaude, wrote the note. The
content of the handwritten note therefore constitutes triple hearsay. Even if
the handwritten note were qualified as a business record, it would still
constitute double hearsay.
[86]
The
email dated October 25, 2007 from Ms. Fontaine to Hugo Lebrun alleges that
Distrimedic told one of its customers to call Dispill for accessories. The situation
is similar to that set out in the previous paragraph. The alleged event
occurred between Distrimedic and the customer. The customer then allegedly
communicated the alleged event to a nursing home that in turn allegedly
communicated it to Fontaine who, according to Glaude, wrote the email. The
content of the email therefore constitutes triple hearsay such that, even if it
were qualified as a business record, it would still constitute double hearsay.
[87]
Finally,
the handwritten page headed “Automne 2006” alleges that a pharmacist received a
La Société d’Impression business card with Dispill’s phone number written on
it. The pharmacist allegedly advised Ms. Fontaine. There is no evidence that
either Ms. Fontaine or Ms. Glaude saw the alleged card. Moreover, there is no
evidence as to when the page was written. The page indicates the date as
“Automne 2006 (Je crois Nov. 06)”. This indicates that the document was
created after the alleged phone call was received, likely by several months.
[88]
None
of the issues in dispute described by the above-listed documents was based on
personal knowledge of Ms. Fontaine. Further, all such documents were created
well after the commencement of the present action in September 2005 and it does
not appear that Richards’ practice was to create such documents before the
commencement of the present action. For all of the foregoing reasons, I find
that these documents fail to satisfy the business record exception to the
hearsay rule.
[89]
Mr.
René Thibault, a pharmacist and Head of the Département de pharmacie, Centre
CSSS, Institut universitaire de gériatrie de Sherbrooke, was a customer of the
Dispill pill dispenser who was approached by Distrimedic when it first entered
the market. Mr. Thibault was examined and cross-examined on March 27, 2013.
[90]
In
2006, Mr. Thibault became aware of Distrimedic because he was looking for the
best offer available for blister products. In the autumn of that year, Mr.
Thibault met with a representative from Distrimedic, Mr. Paul van Gheluwe, in
order to see whether Distrimedic could offer a better contract on blister
products than Dispill was offering at the time. When Mr. Thibault considered
switching from the Dispill product to the Distrimedic product, he was concerned
with whether Distrimedic had the same or similar accessories as the Dispill
system. He testified that the representative of Distrimedic presented
accessories that could be used with the Distrimedic pill dispenser with the
help of a catalogue. When Mr. Thibault, who at the time was very familiar with
Richards’ pill dispenser, asked if Distrimedic had accessories to use with their
products, he was shown product sheets that were very similar to the sheets
found in the Dispill catalogue shown to him as Exhibit 513, but without the
word “Dispill” on them. It was due to this similarity that he thought the two
companies must have had the same external supplier.
[91]
On
cross-examination, Mr. Thibault testified that ease of use was his primary
consideration in choosing a product. He also indicated that some information
must be printed on a prescription drug, like the name of the patient, the name
of the drug and its strength, its dosage and how it should be taken. Since
such information is required by law, he would not be allowed to use a pill
dispenser that did not allow for the inclusion of the required information.
[92]
Mr.
Thibault also mentioned that he was the one who contacted the representative
from Distrimedic in 2006 to inquire about his product, after being told by colleagues
that Distrimedic offered a similar product to Dispill at a lower price. When
shown the Distrimedic price lists (JBD 27 and 34), he did not think that such
price lists would have left him with the same impression of similarity to
Dispill’s catalogue as the lists he remembered viewing. Mr. Thibault also
acknowledged, however, that when he met with the representative of Distrimedic,
the representative did not try to mislead him into thinking that he was a
Dispill representative or that he was selling Dispill products, and never
falsely and misleadingly presented Distrimedic’s products; it was clear to him
at the time that they were two distinct companies.
[93]
Counsel
for the Plaintiff by Counterclaim argued that the Court ought to draw an
adverse inference from the failure of the Defendants to the Counterclaim to
call Mr. van Gheluwe in order to contradict any of Mr. Thibault’s evidence. In
response, counsel for the Defendants to the Counterclaim submitted that there
was no reason to call Mr. van Gheluwe as a witness since there was no evidence
of wrongdoing to be rebutted; indeed, Distrimedic’s counsel are of the view
that Mr. Thibault was a very credible witness, that he was the only one of
Richards’ witnesses in a position to give non-hearsay evidence of the
misrepresentations or false statements allegedly made by Distrimedic, that he
gave clear and precise answers and that the weight of his evidence should be
considered high. I shall say more about his testimony when discussing the
allegations of misrepresentation in the analysis portion of these reasons.
[94]
Mr.
Claude Filiatrault was examined on April 5, 2013, with the examination
continuing and the cross-examination taking place from April 8 to 9, 2013.
[95]
Mr.
Filiatrault is the unique shareholder of the corporate Defendants to the
Counterclaim, and also a Defendant to the Counterclaim in his personal
capacity. He is the common thread between each of the named defendants in this
case and was one of three officers of Dispill Inc. from 1997 to 2002, before he
and Mr. Poirier sold their shares to Mr. Bouthiette. Following a two-year term
instituted by a non-compete agreement, he started Distrimedic with Mr. Robert
Poirier, with whom he controlled or directed each of the other corporate
defendants (with Alpha and La Société amalgamating last year). His testimony
was presented as relevant to Dispill background and his activities at Dispill,
Distrimedic’s background, activities, products and operations, and the activities,
products and operations of other Defendants to the Counterclaim.
[96]
Mr.
Filiatrault explained that the corporate Defendants to the Counterclaim share
certain resources for efficiency, resource management and fiscal purposes, but
are operated as distinct entities that are each responsible for separate
commercial activities. Each of these companies keep distinct and clearly
separated financial records and account to one another for the value of shared
resources. For example, there is only one payroll for all the employees of the
three companies; La Société is responsible for paying all the employees and
then invoices the other two companies for the amounts paid in salaries and
commissions. Mr. Filiatrault also explained that rebates are sometimes given
to a client of one company in recognition of the fact that it also purchases
products of the two other companies, as a way to build loyalty.
[97]
Mr.
Filiatrault suggested that in recent years pharmacists have become more and
more sophisticated as consumers and managers, that they share commercial
information, and that those working for banners have commercial support from
trained staff and even receive training in business negotiation. He also
explained the roles of the banner corporations versus the franchised pharmacies
in deciding which products are bought and at what price. He touched upon the
early days of Dispill Inc. and its business relationship with Novopharm.
[98]
Mr.
Filiatrault mentioned that Dispill Inc.’s executives, at the time of marketing
their product, never contemplated using the colour code as a trade-mark, but
rather always viewed it as a safety feature of their products. He also spoke
of the pharmacists as the key targets of the company’s publicity and marketing
efforts, and of an aborted consumer-wide promotional campaign that Dispill had
to discontinue because pharmacists were not able to respond to the consumers’
demand.
[99]
As
for the selection of information appearing on each cell, Mr. Filiatrault did
not remember how it was made but was of the impression that it was originally
selected by Mr. Bouthiette as a result of his collaboration with a pharmacist;
he added that the Ordre des Pharmaciens du Québec would also have a practice
code specifying the minimum amount of information to appear on the label of
drug containers sold to customers. He testified that Bouthiette’s nephew
programmed the initial DOS software, and that some input was also received from
pharmacist and software companies as to the selection of fields and operation
of the DOS software. He then went through some of the computer software
programs that had been used through the years to transfer the information about
patients in the pharmacists’ data banks to the Dispill label sheets. In this
respect, he introduced into evidence two agreements, one between Dispill Inc.
and DLD and the other between Dispill Inc. and InfoPharm, relating to the
installation of the DOS software and the creation of a “bridge” from the DOS
software to the DLD and InfoPharm platforms. To his knowledge, no copyright
for these applications was ever registered.
[100] Mr.
Filiatrault then went on to explain the circumstances surrounding the sale of
his and Mr. Poirier’s shares to Mr. Bouthiette, and the non-competition
agreement clause whereby Mr. Filiatrault and Mr. Poirier agreed that they would
not compete with Dispill for a two-year period beginning September 3, 2002. He
stated that they never had any intention to breach that agreement. They also
sought the opinion of legal counsel on the basis of the drawing of a new
product to determine if they would be infringing the ‘045 Patent of Dispill
Inc. According to that opinion dated March 5, 2003, their drawing would not
infringe any of the claims found in the ‘045 Patent. They then sat on that
project until the beginning of 2005, after having incorporated Distrimedic Inc.
on September 7, 2004. It took most of 2005 to find a manufacturer and to
obtain a good quality prototype of their new product that they would start
showing to pharmacists in order to get their feedback. Distrimedic started
selling its products in June of 2006. At the time, a box of 500 labels
(container-sealing sheets) with 500 blisters (container-defining sheets) would
sell for approximately $380.00, while the equivalent product from Dispill sold
for approximately $460.00.
[101] Mr.
Filiatrault introduced into evidence a document (JBD 549) compiling all the
labels that have been used by Distrimedic since November 2005. He admitted
that, in November and December of 2005, they printed a small quantity of
container-sealing sheets using the same colour scheme as the Dispill Colour
Scheme. Mr. Filiatrault stated that approximately 100,000 sheets with that
colour scheme were printed, of which about 15 batches of 500 sheets were
distributed for free to approximately 11 pharmacies for testing purposes. Mr.
Filiatrault claimed that these sheets were later destroyed and were never used
by pharmacists to sell to their clients. It should be noted that Distrimedic
used the same product codes (ETCA-500 and ETCP-500) for labels incorporating,
at different points in time, the allegedly infringing colour scheme and its
current colour scheme.
[102] Mr.
Filiatrault also mentioned that Distrimedic never used catalogues, but only
price lists with illustrations of their products; they now use an internet
website to show their products to pharmacists. He also insisted that he never
told his clients that they could use Distrimedic products with Dispill
accessories, because they had their own accessories and products that they
wished to sell and because at least some of Dispill’s accessories do not fit
with Distrimedic products. He explained that some of Dispill’s customers
changed to Distrimedic because their products are more functional (claiming
larger cells, more legible labels, more ergonomic trays), because of their
customer service and because their prices were competitive. He added that a
decision to change from one product to another is usually not made on the spur
of the moment and may take days, if not weeks, depending on the decision-making
process in each pharmacy and the amount of time required to acquire the new
computer software.
[103] Mr.
Robert Poirier was examined, cross-examined and re-examined from April 11 to
12, 2013. He was presented to provide additional information on most of the
areas addressed by Mr. Filiatrault.
[104] Mr.
Poirier is a Defendant to the Counterclaim in his personal capacity and was a
shareholder of the corporate Defendants to the Counterclaim until 2010, as well
as being one of three officers of Dispill Inc. from 1997 to 2002. Mr. Poirier
actively participated in the development of the Dispill product and, although
he has been absent from the day-to-day business of Distrimedic since 2006 and
completely absent from the business since 2010, his testimony confirmed and
supplemented that of Mr. Filiatrault and was helpful in providing background
information about the start of Dispill Inc.
[105] Among
other things, Mr. Poirier confirmed that Dispill’s executives never intended to
use the Dispill Colour Scheme as a trade-mark but rather only viewed it as a
functional element of their product, as an indication of the periods of the day
when pills should be taken. He also corroborated Mr. Filiatrault’s testimony
that Mr. Bouthiette’s nephew programmed the DOS software used to print the
information on the Dispill label sheets. He confirmed that Distrimedic
distributed small quantities of the container-sealing sheets bearing
Distrimedic’s Original Colour Scheme as a prototype to no more than 15 of its
client pharmacists; these sheets were later destroyed and were never used by
pharmacists to sell to their clients.
[106] Mr.
Poirier denied having misrepresented Distrimedic as being Dispill, or
encouraged Dispill’s clients to buy Distrimedic and use it with Dispill
accessories. Finally, Mr. Poirier testified that the software written in the
DOS language, which was used originally as the Dispill Label Form, has ceased
to be used since the late 1990s or early 2000s. According to Mr. Poirier, neither
he nor Mr. Filiatrault had any involvement in the execution of the mandate
given to DLD to create the Distrimedic Module, which permits users of the Mentor software to print on to Distrimedic’s container-sealing sheets.
[107] Distrimedic
elected not to call Mr. Paul van Gheluwe, a prior Dispill employee and sale
representative for Distrimedic. Counsel for Distrimedic intended to have Mr. van
Gheluwe present a response to allegations of misrepresentation, but concluded
that the evidence presented by Mr. Thibault was not sufficient to support Richards’
case so no further testimony was needed.
[108] Richards
presented expert witnesses to provide opinions on the patent-related issues,
going to the claims of copyright and trade-mark infringement, and in support of
its claims for various associated remedies.
[109] Distrimedic
presented both patent and financial experts to respond to the submissions made
by Richards’ experts in both those regards.
[110] Richards
presented Mr. Koen de Winter as an expert in support of its patent-related
claims, Dr. Tarek Abdelrahman for his opinions regarding computer software (in
support of the copyright infringement claims), Ms. France Morissette as an
expert user of the Dispill product and as a fact witness with respect to the
product’s colours (going to the trade-mark infringement claims), and Mr. James
McAuley as a financial expert in support of the associated claims for remedies.
[111] Richards
tendered Mr. de Winter as an expert on the state of knowledge of a person
skilled in the art to which the ‘045 patent relates and, as such, to give
opinions regarding its interpretation and to comment regarding infringement of
that patent and the validity of certain claims in issue.
[112] Mr.
de Winter studied ceramic technologies in 1962 and completed his education in
industrial design. He designed numerous industrial objects and is a named
inventor of more than 25 patents. He has also won several awards in industrial
and graphic design, and has been a professor at the Université du Québec à
Montréal since 1985. His expertise was not challenged.
[113] Mr.
de Winter was examined and cross-examined from April 4 to 6, 2013. He presented
two affidavits: the first dated September 30, 2010, and the second, dated
February 12, 2011. The first affidavit set out the issues addressed and Mr. de
Winter’s qualifications, his opinions on the patent, the person ordinarily
skilled in the art, potential infringement, the disclaimed claims, anticipation
and obviousness. The second affidavit commented primarily on two additional
Distrimedic mounting trays and a container-sealing sheet that were received
after the completion of his first report.
[114] According
to Mr. de Winter, the person of ordinary skill in the art (“POSITA”) to whom
the ‘045 Patent is addressed is an industrial designer with at least one year
of experience in product design, with formal education from either a community
college or a university together with at least one year of relevant practical
experience with manufacturing and production technologies. The POSITA would
also have knowledge of limitations associated with production and be familiar
with industrial processes, including vacuum forming techniques.
[115] The
‘045 Patent contains 27 claims, namely Claims 1-14 and Claims 17-28. A disclaimer
was filed in respect of Claims 15-21. Claims 1, 11, 15, 22, 26 and 28 are
independent claims. The remainder are dependent claims.
[116] Claim
1 includes a recessed support, a container-defining sheet, a container-sealing
sheet and a positioning means. With respect to the “positioning means”, Mr. de
Winter opines that the engagement of the protuberance and holes is particularly
important with respect to the container-sealing sheet since the self-adhesive
material on the bottom surface must be positioned, shaped and sized to fit over
the flanges of the containers of the container-defining sheet. In addition, a
positioning means that functionally permits the container-sealing sheet be in
precise superposition (with very small tolerances) on top of the
container-defining sheet which is an essential element of the invention. If it
were not in precise superposition the container-sealing sheet would tear when
individual cells were separated, limiting its desired use. The plastic and
paper elements must be in the exact same position, allowing the user to bend it
a few times and break it off. Mr. de Winter notes that the positioning means
is referred to several times in the specification, including on page 3, line
13; page 9, lines 1-4; page 10, lines 8, 13 and 18; page 11, line 22; and page
15, line 22.
[117] Mr.
de Winter further states that the engagement of the protuberance and hole
prevents the container-sealing sheet from sliding horizontally (in 2 dimensions)
up and down, sideways and at all other angles. This acts to hold the
self-adhesive strips on the bottom of the container-sealing sheet in alignment
with the flanges of the container-defining sheet so that the container-sealing
sheet is ready to be applied to the container-defining sheet. Claim 1 refers
to “at least one other hole provided in the container-sealing sheet”; however,
no particular shape of the “hole” is specified. While the drawings in the ‘045
Patent show two round holes, the hole need not necessarily be round, as that
shape would not serve the required purpose if only one round hole and one round
protuberance were used; without additional support, the container-sealing sheet
could rotate around the protuberance, which would not secure the bands of the
container-sealing sheet in exact superposition on top of the flanges of the
container-defining sheet.
[118] In
order to be functional, the chosen protuberance must also have a certain shape
and size to engage the hole. If it is too small, it may not retain the
container-sealing sheet, as the tolerances of the container-sealing sheet
positioned on the container-defining sheet would be too large. Since the paper
is flexible, there must be enough contact with the protuberance to maintain the
sheet in place. In Mr. de Winter’s view, therefore, the words “hole” and
“protuberance” should be understood in relation to their stated functions, i.e.,
protuberances extending above the recessed support and the container-defining
sheet which engage an edge or edges of the container-defining sheet and the
container-sealing sheet, preventing two-dimensional movement of the
container-sealing sheet such that the bands of the container-sealing sheet are
in exact superposition on top of the flanges of the container-defining sheet.
[119] With
regards to Claim 2, Mr. de Winter explained that as with Claim 1, the
container-sealing sheet would be rendered secure.
[120] With
regards to Claim 3, Mr. de Winter opined that an essential function of the
container-defining sheet was to be able to break it up into individual
containers. This was best done on a practical basis if the breaking lines
were straight in both directions. This in turn required the containers to be
positioned in straight horizontal and straight vertical rows, as is the case
with the Distrimedic pill dispenser.
[121] With
regards to Claim 4, Mr. de Winter opined that printing appeared on the top
surface of the container-sealing sheet of the Distrimedic pill dispenser, with
the printing corresponding with each of the containers of the
container-defining sheet and providing information about the material to be
placed in each container.
[122] With
regards to Claim 5, Mr. de Winter explained that the Distrimedic pill dispenser
also had 28 recesses and corresponding containers in four columns and seven
lines/rows.
[123] With
regards to Claim 6, Mr. de Winter explained that the Richards pill sorter
device has first and second stackable panels and all the features and
functional characteristics described in Claim 6. In particular, it has a first
panel in which the openings in the bottom wall of the half-bottomed recesses
are positioned and shaped like the containers of the container-defining sheet.
The set of half-bottomed recesses has a flat bottom wall that when stacked
extends above the containers of the container-defining sheet. The bottom wall
is sized to allow a pill to fall into the container below. It has a second
panel containing hollow bottom recesses smaller than the half-bottomed recesses
of the first panel and positioned to fit onto the half-bottomed recesses when
the second panel is stacked and slid over such recesses in unison from the
half-bottom recess to the opening in such recess, permitting pills to be placed
in the half-bottomed recesses and dropped into the containers below.
[124] With
regards to Claim 7, Mr. de Winter commented that the openings in the bottom
wall of the half-bottomed recesses occupy about half of the surface area of
said bottom wall and are on one side.
[125] With
regards to Claim 8, Mr. de Winter commented that the Richards pill sorter has a
first panel and second panel and contains all of the features essential to the
operation of the kit described in Claims 6-9. Rivets are used and horizontal
slots allow the second panel to slide horizontally with respect to the first
panel.
[126] With
regards to Claim 9, Mr. de Winter commented that according to Claim 1 only one
protuberance and corresponding hole is required. Claim 9 refers to a
particular configuration of the protuberances and the corresponding holes. In order
for the kit to be functional, and in order to be a logically formed kit, the
hole or holes and the protuberance or protuberances should be shaped and sized
in such a way that fit exactly together to locate and stabilize each of the
components in the proper position.
[127] With
regards to Claim 10, Mr. de Winter commented that he read the word “trough” as
being “through”. Figure 12 of the ‘045 Patent identified this feature. This
describes Richards’ items 124 and 208, which contain all of the features described
in this claim as being essential to the operation of the device.
[128] With
respect to Claim 11, Mr. de Winter explained that he read the reference to
“contact sealing sheet” as meaning “container-sealing sheet”. Using the
Distrimedic product in accordance with the procedure shown on the Distrimedic
website would constitute the method described in this claim.
[129] On
Claim 12, Mr. de Winter opined that the method shown on the Distrimedic website
is the method described in Claim 12 as printing information on the sealing
sheet as shown.
[130] With
respect to Claim 13, Mr. de Winter explained that if the Richards pill sorter (JBD
20) were used with the appropriately same-sized Distrimedic pill dispenser,
then the user would employ this particular method.
[131] With
respect to Claim 14, Mr. de Winter explained that considering the function of
the pill sorter, which is to check each individual pill before it is added to
the already existing container, performance of the method of Claim 14 would be
inevitable. The Richards pill sorter was used in exactly the same way.
[132] The
two main problems that the patent seeks to solve are: (1) the alignment of the
container-defining sheet with the container-sealing sheet, and (2) avoiding the
use of thermosealing. In Mr. de Winter’s view, the patent should be interpreted
as follows in connection with the Richards and Distrimedic products.
[133] Having
a dotted line punched, die-cut, on the flange of each container is essential to
the design because it is necessary to detach the individual pill containers.
There are a variety of options for such dotted lines, such as dots or slots.
The number of perforations chosen by a manufacturer will determine how
difficult it is for the containers to be separated. Bending the plastic
material to tear it, without any perforations, would not be satisfactory as
this might temporarily strengthen the plastic, leading to great difficulty in
separating it. Detaching the container from the container-defining sheet has
the effect of detaching it from adjacent containers.
[134] The
term “hole” as used in the Patent should not be read literally as a complete
circular hole (and there is no particular shape specified), but rather should
be understood from a functional point of view in connection with aligning the
container-sealing sheet in its proper position. Therefore, the “hole” need not
necessarily be round. Page 15 of the Patent, for instance, also envisions
other embodiments of the patented product beyond that used by the Dispill
device.
[135] Mr.
de Winter explained that in examining the functionality of the hole and
protuberance in the Distrimedic device, one must consider the invention
dynamically, as it would be used in practice, as opposed to statically, such as
when the plastic blister sheet and label sheet have already been placed in the
mounting tray. The two side tabs are very important in easily and quickly
locating the plastic blister sheet, which is an important consideration to a
pharmacist or other user who fills tens to hundreds of pill dispensers in any one
given day. Although the plastic blister sheet is also located by the cavities
which fit into the recesses on the mounting tray, that would not be an
efficient way of locating the blister sheet. From a dynamic point of view,
therefore, the two side tabs perform the same function as the hole and
protuberance in the container-defining sheet in the Dispill device.
Additionally, as previously described, the label sheet is located by abutting
onto the raised protuberances or edges at the top of the Distrimedic mounting
tray. One could say that, as in the claim, it “corresponds to and engages the
hole”. Thus, the raised edges perform the same function as the hole and
protuberance in the container-sealing sheet in the Dispill device.
[136] The
protuberances are essential for the positioning of the container-sealing sheet
on the container-defining sheet because they form the connection between the
two. The positioning is achieved using a combination of cavities in the
container-defining sheets and the edges of the tabs on the container-defining
sheet, which enables the container-defining sheet to be suspended. The
container-sealing sheet must be slid into position, following which the
self-adhesive protection sheet can be pulled off and glued to the container-defining
sheet.
[137] The
Distrimedic pill dispenser has a protuberance to engage the edges of the
container-defining sheet and container-sealing sheet such that the
container-sealing sheet does not move in two dimensions. According to Mr. de
Winter, this pill dispenser works in the same way as the pill dispenser of the
Patent; the difference in the protuberance used in the Distrimedic pill
dispenser from the particular protuberances illustrated in the Patent does not
have a material effect upon the way the pill dispenser works. The Distrimedic
pill dispenser also has a horizontal strip removed from the bottom surface of
the container-sealing sheet exposing a self-adhesive strip to attach to the top
surface of the container-defining sheet to supplement the prevention of
movement and, additionally, to stabilize it in a third (vertical) dimension.
Mr. de Winter is therefore of the opinion that the Distrimedic pill dispenser
provides the same function as set out in Claim 1 and that, in view of the lack
of specific description of shape and size of both the protuberance and the
corresponding hole in Claim 1 of the Patent, it does it in the same way.
[138] Finally,
in Mr. de Winter’s opinion, the Braverman Patent does not disclose how to
perform or make what is disclaimed and claimed as the invention in the ‘045
Patent. In his opinion, as of June 21, 1997, the Braverman Patent would have
been given very little weight when considering how to obtain a result of the
nature described and claimed in the Patent in the relevant field.
[139] The
Braverman Patent includes spring-loaded pins and a pressure-applying member.
The claims in columns 5 and 6 of that patent do not reference the pins as part
of the invention claimed. Mr. de Winter noted that in column 4 there appear to
be some errors regarding the numbers in the drawing, which correspond to the
spring-loaded pins.
[140] Mr.
de Winter explained that the spring-loaded pins are not used to secure or align
the container-sealing sheet to the container-defining sheet in the Braverman Patent,
and trial and error would not lead to any such conclusion. In his view, they
are simply used to push back the weight that is being applied to the
self-adhesive. A pin would, to a person with a mechanical mind, convey the
message that it is to push back something because that is what such a pin is
usually used for. According to Mr. de Winter, this is confirmed twice in the
Braverman Patent, as Braverman twice states that the function of the pins is to
eject the pressure-applying member.
[141] The
pressure-applying member does not serve to align the container-sealing sheet;
instead, it serves the function of the roller used with the Distrimedic
product, i.e., it further presses the container-sealing sheet onto the
container-defining sheet. The spring-loaded pins are properly described as
guiding the sheet into the desired position, but do not locate the sheet. A
person locates the sheet by holding it by hand through a nipped corner. In
addition, Column 4, line 45, refers to a liner strip covering the nipped corner,
which suggested to Mr. de Winter that the sheet would be held with a finger
since the nipped corner is diagonally opposite to the pins, reinforcing his
opinion that the pins do not hold the sheet in place.
[142] Mr.
de Winter concluded that a POSITA would not be led directly and without
difficulty to the invention in the claims of the Patent and a POSITA would not
be motivated to try such in view of the Braverman Patent. On a view of the
whole ‘045 Patent, it was not something that would be obvious, nor would the improvements
from the Braverman Patent to the ‘045 Patent be obvious. The Braverman Patent
is focused on keeping three of the corners in place in order to peel back the
sheet. In reconstructing the position of a POSITA for the particular technology,
it would not be obvious to that person, on looking at the Braverman Patent,
that the key missing part of the invention was the lack of an ability to locate
the container-sealing sheet.
[143] Dr.
Abdelrahman is a professor in computer engineering at the University of Toronto. Dr. Abdelrahman was presented to offer expert opinion on matters related to two
computer programs. More specifically, Richards asked him to offer expert
opinion on:
The relationship between the DOS and Windows
operating systems in so far as this relationship pertains to the continuing
value of the information provided in the form of the Richards DOS program when
the Mentor pharmacy management system is used to print label sheets.
The significance of the Mentor pharmacy management
program having separate print buttons, one for Dispill labels and one for
Distrimedic labels, in terms of how the software works.
[Dr. Abdelrahman Expert Report, Trial Exhibit 545,
at para 2.]
[144] The
examination of the various documents mentioned in Dr. Abdelrahman’s expert
report led him to conclude the following:
- The
difference in the “look” between the DOS program and the Windows program is due
to the different user interfaces used by the DOS and Windows operating systems.
- In
spite of this difference in look and in relation to the printing of label
sheets, the information provided to the form of the DOS program is necessary
for the Windows program to print Dispill or Distrimedic label sheets.
- Having
two print buttons in the Windows program is significant only in that the
buttons indicate to the program which program module to execute, and thus to
format and print information based on the type of label sheet.
[145] The
Richards DOS program has a Medication Management screen that collects input related
to a medication: prescription number, DIN, medication name, medication type
(antibiotic, narcotic or regular), medication strength and format, number of
renewals, date of last renewal, prescribed dosage, and doctor’s name. The
prescribed dosage is indicated using the number of pills to take in the
morning, midday, at dinner time and at bedtime. The program also has a Label
Printing screen that collects input related to the patient: name, room number,
table number, patient language, file number, the start of the prescription, the
start date of the label sheet and the number of days. Finally, the program has
a Configuration screen that collects the pharmacist’s name, address and phone
number, as well as configures the printer parameters.
[146] Table
1 of the Abdelrahman Affidavit identifies 14 items to be entered in the form.
Paragraphs 24-27 of his affidavit referenced an additional item: time of day.
Twelve of these fifteen items were present in the DLD Mentor program as fields
available to be entered. He could not verify whether this was also the case
for the remaining three items (file no., pharmacist name, pharmacist
address/phone); however, he indicated it is possible these are entered during
installation of the program at a given pharmacy. Thus, he concluded that the
elements of the Dispill Label Form continued in the Windows version.
[147] Although
there are significant differences in the “look” of the screens of the DOS
program and the “look” of the windows of the Mentor programs, these differences
are expected because of the different user interfaces employed by the two
operating systems (character-based for DOS versus graphics-based for Windows).
Although the various windows of the Mentor Windows program collect additional
input compared to the DOS program, this input is not produced on the printed
labels and does not appear to be relevant for the purpose of printing.
[148] Ultimately,
the same input information is required to print label sheets from the Mentor program as from the Richards program.
[149] To
print labels from the Mentor program, the pharmacist selects the medications
that are to be printed to the labels and clicks on the action button, which
causes a pop-up menu to appear. The pharmacist would then click on the
“Imprimer” menu item, which would cause a printing submenu to appear. Within
this submenu, there are several printing choices including “Dispill Laser”
(which causes a Dispill label sheet to print) and “Distrimedic” (which causes a
Distrimedic label to print).
[150] Printing
a completed label sheet from the program can be accomplished in two ways.
First, the formatting for the label sheet can be embedded as instructions in
the software module. In the alternative, the program could use a pre-set
template with placeholder text that is replaced with the actual information
about the particular patient, medication, pharmacist and so on when the label
is printed.
[151] The
Distrimedic sheet size has reverted from A4 back to 8.5” x 11”. This makes the
layout and format of the Dispill and Distrimedic label sheets substantially
similar. Therefore, Dr. Abdelrahman concluded that one of three outcomes is
likely to occur: (1) the instructions of the program module that execute when
the “Distrimedic” submenu is selected have been updated to reflect the change
from A4 to 8.5” x 11”; (2) the program module that executes when the “Dispill
Laser” submenu is selected is made to execute when the “Distrimedic” submenu is
selected; or (3) the selection of the “Dispill Laser” submenu is used to print
the 8.5” x 11” Distrimedic label sheet. In cases (2) and (3), it is important
to note that the key information printed on the label sheet would be arranged
as on a Dispill label sheet and not in any arrangement specific to Distrimedic
labels.
iii.
France Morissette
[152] Ms.
Morissette was examined and cross-examined on March 28, after being examined
and cross-examined regarding her qualifications. Subject to the qualifications
described below and established at trial, she has submitted two expert reports,
dated September 13, 2010, and October 14, 2011, respectively.
[153] The
first affidavit expresses her opinion regarding the commercial effect and
usefulness of the Dispill pill dispenser and sets out her qualifications,
facts, assumptions and opinions, including with respect to the pill dispenser’s
ability to provide for the safe administration of medication by
non-professional staff. The second affidavit merely brought her experience and
qualifications up to date, attaching an updated curriculum vitae.
[154] Ms.
Morissette, a nurse, was presented as a user of pill dispensers in healthcare
facilities and as having knowledge of the usefulness and commercial success of
such products and related trade-marks. Distrimedic countered that Ms.
Morissette was not an expert in marketing, surveys, psychology or other areas
relevant to brand recognition, and submitted that her testimony should be
accepted for the value of her personal experience only, as she is not a
representative of the relevant public for any alleged trade-mark.
[155] Ultimately,
the parties agreed that Ms. Morissette would only be qualified as an expert to
the extent of the following description offered by Richards’ counsel:
France Morissette is offered as someone experienced
as a user of the relevant devices, i.e. as a skilled worker in the art who can
comment on and who understands the problems to be overcome and how different
remedial devices might work.
[Morissette, March 28, 2013, at p 43, l. 20 to p 44,
l. 3]
[156] The
parties and the Court further agreed that Ms. Morissette would be admitted as a
user who can factually speak to the colours and shapes of the Dispill pill
dispenser and other similar dispensers, but not as an expert on trade-mark
issues.
[157] In
Ms. Morissette’s experience, the Dispill pill dispenser is effective, efficient
and provides a level of safety. It was recommended to 12 of the 14 residences
with which she worked. The other two residences prefer to use the unidose
system. One of the biggest problems with the unidose system is that there is a
greater need for storage. Ms. Morissette also testified that the Dispill
colour Scheme provides an easy way of ensuring that non-professionals in
particular can administer medications safely. While professional staff may be
trained to administer medication, non-professionals such as orderlies generally
are not, and Dispill’s colour-coding system provides a way for such
non-professionals to ensure they are administering the correct medication. She
indicated that she prefers a colour-coding system when non-professional staff
administer medication. Finally, she testified that the colours used for the
Dispill label are well known to the nursing homes with which she is in contact,
and that she was not aware of anyone other than Richards Packaging Inc./Dispill
who use those colours in connection with pill dispenser labels.
[158] Counsel
for Distrimedic acknowledged that they had no reason to dispute Ms.
Morissette’s credibility or that of her testimony. In their view, Ms.
Morissette’s testimony was very useful in understanding the functional features
of the Dispill product, including the Dispill Colour Arrangement, from the
standpoint of nurses responsible for insuring the safe administration of
medication in nursing homes. They further noted that Ms. Morissette confirmed the
usefulness of having certain information printed onto each individual cell of
the Dispill product, in addition to confirming that nursing homes and
pharmacists participate in the selection of such information to suit their
specific needs [Morissette, March 28, 2013, at p 56, ll. 13-17 and p 59, l. 1
to p 61, l. 4].
[159] In
cross-examination, she indicated that patients do not choose the pill
dispensers and do not generally use the pill dispenser without assistance.
Indeed, pill dispensers are never remitted to residents of nursing homes, and
only the small blister with the medication specific to a given time of day is
actually given to the patient.
[160] Mr.
McAuley, a partner and senior vice president with KPMG LLP, was examined and
cross-examined from April 3 to 4, 2013, testifying as an expert on accounting
issues. At trial his expertise was defined as follows:
[W]e ask that Mr. McAuley be admitted as an expert
on damages analysis and quantification and in accounting and profits analysis
and quantification.
[McAuley, April 3, 2013, at p 220]
[161] Prior
to trial, he submitted a single expert report, dated February 9, 2011. In the
report, Mr. McAuley describes KPMG’s mandate as follows:
We have been asked to quantify the losses suffered
by Richards as a result of the alleged patent infringement and copyright
infringement by Distrimedic and the other defendants to the counterclaim. We
have also been asked to calculate an accounting of profits regarding the
copyright. We understand that this report may be used by the Court to help
assess Richards’ losses. […]
[McAuley Expert Report, February 9, 2011 at p 4, s.
2.3.]
[162] Mr.
McAuley was instructed to prepare a calculation for the potential losses
suffered by Richards under the alleged patent infringement and an estimate of
the accounting of profits under the alleged copyright infringement. When
Distrimedic entered the market, it is alleged that it was offering a
patent-infringing product at a lower price. It is alleged that Distrimedic’s
lower price created a competitive imperative for Richards to reduce its prices
in Quebec. It is this reduced price that forms the basis for the claimed loss
of income. Since the information necessary to appropriately review and
quantify Richards’ alleged loss of customers to Distrimedic was not available,
Mr. McAuley did not estimate that head of loss of income. He did, however,
prepare an estimate of the profit that Distrimedic earned on the sale of
labels, as this would provide an estimate of Richards’ losses under copyright
law.
[163] In
calculating the loss of past income due to price suppression, KPMG compared
Richards’ prices, net of rebates, to those of Distrimedic. Prior to
Distrimedic’s entry into the market, Richards’ net unit prices were in the
range of $260 and $183 for blisters and labels, respectively. Richards’ net
prices began to decrease in 2006 after Distrimedic entered the market with
estimated net unit prices of about $174 and $56 for blisters and labels,
respectively.
[164] In
estimating the loss due to reduced unit prices, Mr. McAuley calculated
Richards’ actual average unit price prior to any rebates in Quebec by dividing
the total annual gross sales for blisters and labels in Quebec by the number of
units of each sold in Quebec each year. Assuming that, but for Distrimedic’s
entry in the market, the average selling price in Quebec would have mirrored
the selling price in the territories other than Quebec, Mr. McAuley adopted the
average selling price in the other territories as the assumed or expected unit
price that Richards would have used in Quebec. The difference between the
actual unit price and the assumed/expected unit price had Distrimedic not been
in the market represents the estimated unit price reduction in each year. To
calculate the total loss due to reduced prices each year, the unit price
reduction is multiplied by the actual number of units sold in each year. Mr.
McAuley’s calculations show that Richards’ actual average unit price of
blisters and labels in Quebec began decreasing in 2006.
[165] Increased
sales by reason of diminution of price is also a factor that must be taken into
account in a price suppression analysis. Mr. McAuley considered in his
analysis the possibility that Dispill’s increase in sales from 2008 to 2009
would have been due to the lower price offered by Dispill for its pill
dispenser, but explained that the sales volume history did not show that type
of price sensitivity in the market and attributed the growth to sales effort,
penetration and marketing by Dispill.
[166] Mr.
McAuley assumed that but for Distrimedic’s entry into the market, the average
rebate per unit in Quebec would have remained at the same level it was at in Quebec in 2005, prior to Distrimedic’s entrance into the market. Using this approach, he
calculated that the total loss of income (up to December 31, 2010) is between
$6,112,100 and $6,594,500. He added that this loss would have continued for
two more years, to 2013, and using the loss for the year 2010 as a proxy for
the years 2011 and 2012 (an incremental loss of approximately $1.6 million),
this would bring Richards’ total loss close to $10 million.
[167] With
respect to an accounting of Distrimedic’s profits for the purpose of
calculating the damages under the alleged copyright infringement, Mr. McAuley employed
the differential cost approach, which involves calculating the contribution
margin by deducting the estimated variable costs related to labels from the
revenue from labels, net of sales discounts.
[168] The
Defendants to the Counterclaim submit that Distrimedic is effectively a
“one-product company”, the argument being that if they had not sold the labels,
they would not have sold blisters, with the two products constituting the
majority of all sales. Thus, the approach taken by the expert called by Distrimedic
on this question was to take Distrimedic’s net income and divide it among
blisters (44.29%) and labels (55.71%) to arrive at the profits made from
labels. As a result of a “hot-tubbing” exercise involving Mr. McAuley and
Distrimedic’s expert, Mr. Levi, Mr. McAuley was satisfied with using this
approach so long as an adjustment was made for three types of costs that, in
his opinion, should not be deductible in this case: i) income taxes; ii)
professional fees; and iii) market development costs related to Europe. On
that basis, Mr. McAuley arrived at an amount of $552,972 as Distrimedic’s total
profit for labels.
[169] In
addition to the accounting for profits, the remedy under s. 35 of the Copyright
Act, RSC
1985, c C-42
(as
amended by the Copyright Modernization Act, SC 2012, c 20) allows
recovery of financial loss where a plaintiff is forced to reduce the price of
its product to compete. According to Mr. McAuley, the total loss due to price
suppression for labels, already calculated under patent infringement, would
amount to $2,707,372 (low estimate) or $2,938,332 (high estimate). He also
explained that this calculation was made to December 31, 2010, and that this
loss would have continued for two more years. Using the loss for the year 2010
as a proxy for the years 2011 and 2012 (an incremental loss of approximately
$712,000), this would bring Richards’ total loss close to $4.1 million.
[170] Finally,
Mr. McAuley calculated the loss related to the alleged trade-mark passing off.
The total estimated gross revenue of the labels allegedly subject to the trade-mark
passing off is $62,000. Applying Distrimedic’s contribution margin related to
labels (as calculated for the accounting of profits in copyright infringement),
he calculated that Richards suffered a loss of $49,000 on the sale of these
labels.
[171] Distrimedic
presented only two expert witnesses: Mr. Claude Mauffette regarding the various
patent-related issues and Mr. Philip Levi regarding Richards’ financial claims
going to remedies.
[172] Distrimedic
presented Mr. Mauffette as an expert on patent issues. He was examined and
cross-examined from April 9 to 10, 2013. His expertise was defined as follows:
[W]e would submit Mr. Mauffette as an expert on the state
of knowledge of a person skilled in the art to which the patent in suit relates
so as to give opinions regarding how the invention described in the patent
works, the meaning of terms used in the patent, including interpretation of the
claims, the relevance of prior art related to the patent in suit and whether
Distrimedic’s products incorporate the essential elements of those claims.
[Mauffette, April 9, 2013, at pp 130-131]
[173] Mr.
Mauffette graduated in sculpture and industrial design. He is a member of the
Association des designers industriels du Québec since 1986. He is the named
inventor of a number of industrial products, and he has been awarded a number
of prizes and scholarships. He teaches part-time at the Université de Montréal,
and has also been a lecturer at the Université du Québec à Montréal between
1993 and 2000.
[174] Mr.
Mauffette submitted an expert report, dated July 14, 2011, prepared in French,
setting out his experience, his mandate, the materials relied upon, and his
opinions regarding the ‘045 Patent, the Distrimedic product, and the Braverman
Patent.
[175] Richards
did not challenge Mr. Mauffette’s expertise, although it did move at trial to
have Mr. Mauffette testify in English, given that he is fluently bilingual.
This motion was quickly dismissed, on the basis of both of section 133 of the Constitution
Act, 1867 (UK), 30 & 31 Vict, c 3, and of the Official Languages Act,
RSC 1985, c 31 (4th Supp), ss 14-20: see also Attorney General of Quebec v Blaikie et al, [1979] 2 S.C.R. 1016.
[176] Mr. Mauffette
testified that it does not take any particular skills to understand certain
aspects of the ‘045 Patent, such as the essentiality of the claimed
protuberances. However, he clearly indicated that his opinion was based on his
instructions to give the claims a purposive construction.
[177] According
to Mr. Mauffette, the ‘045 Patent describes a system for preparing a pill
dispenser. As shown in Figure 7 of the Patent, the system comprises a tray
having a number of evenly spaced apart recesses, that is used to support a
container-defining sheet made of clear plastic and itself having a
corresponding number of evenly spaced apart cavities embossed therein. Once
filled as prescribed, the container-defining sheet is sealed by a self-adhesive
container-sealing sheet upon which has been printed required information about
the prescription such as the names of the patient and the pharmacist, the date,
and the medications in each container.
[178] He
indicated that in Claims 1, 11 and 22, as well as the claims dependent thereon,
the positioning means contemplates “at least one upwardly projecting
protuberance provided on the top surface of the recessed support” and “at least
one hole provided into the container defining sheet and at least one other hole
provided in the container sealing sheet”. He added that a hole implies an area
without material surrounded by material. For example, a tennis racquet has a
hole within the frame, whereas a ping pong bat has no hole.
[179] He
testified that in Claim 15, as well as the claims dependent thereon, the
positioning means contemplates “at least one upwardly projecting protuberance
provided on the top surface of the recessed support” and “engaging means
provided on the container defining sheet and other engaging means provided on
the container sealing sheet.” The engaging means could be a hole or something
other than a hole that engages at least one upwardly projecting protuberance.
In his view, nothing in the ‘045 Patent suggests that the inventor did not
consider the positioning means provided on the container-defining sheet and on
the container-sealing sheet to be essential elements. Moreover, nothing in the
‘045 Patent suggests that, in Claims 1, 11 and 22, the inventor did not
consider the upwardly projecting protuberance(s) and the holes to be essential
elements.
[180] Mr.
Mauffette testified that the recessed support of the Distrimedic system does
not include any upwardly projecting protuberance to correspond to and be
engaged by any holes. The container-sealing sheet and the container-defining
sheet are aligned and fixed together in a manner that is materially different
from that described and claimed in the ‘045 Patent. As a result, it is his
position that the Distrimedic product doesn’t incorporate any of the essential
claims of the ‘045 Patent, since the container-defining sheet has no hole or
other engaging means to engage corresponding protuberance(s) in the support
tray.
[181] Finally,
Mr. Mauffette is of the view that the Braverman Patent describes a
pill-dispensing device similar in many ways to the Distrimedic product. It
employs a tray with recesses, which receives and holds a container-defining
sheet with corresponding cavities. Once the chambers are appropriately filled,
a container-sealing sheet with an adhesive coating covers them. Accordingly,
the Distrimedic system and the system described in the Braverman Patent work in
essentially the same way.
[182] Mr.
Levi was presented as an expert on financial issues. He was examined,
cross-examined and re-examined from April 10 to 11, 2013, then subsequently
took part in a “hot-tubbing” of witnesses together with Mr. McAuley on April
11, 2013, as mentioned above. He submitted a report dated July 8, 2011, that
describes his expertise and mandate, sets out his analysis regarding Dispill’s
changing product line and the alleged losses on its original and new product
lines, and states his conclusions and opinion.
[183] Distrimedic
described Mr. Levi’s expertise as follows:
[W]e would submit Mr. Levi as an expert on the
analysis of financial statements and the analysis and quantification of damages
and profits.
[Levi, April 10, 2013, at pp 118-119]
[184] In a
section of his report describing his mandate, Mr. Levi states that he was
engaged by Distrimedic:
without limiting any specific areas for review, to
provide an expert opinion in connection with the estimated damages alleged to
have been suffered by Richards, as calculated by KPMG in their report dated
February 9, 2011
[Levi Expert Report, April 10, 2013, para 1.2.1]
[185] Based
on information Distrimedic obtained during the testimony of Mr. Glynn regarding
the meaning of certain product codes, Mr. Levi submitted a revised version of
his report on April 2, 2013. Based on further information learned during the
testimony of Mr. McAuley regarding the association of volume discounts and
rebates in his report, Mr. Levi undertook to further revise his numbers by
April 19, 2013, submitting a second revised expert report that day.
[186] Distrimedic
notes that although Mr. Levi’s expertise was not challenged, Richards attempted
to attack his credibility during its cross-examination. In particular, Richards
questioned Mr. Levi regarding his involvement as a witness in three prior
cases. I agree with counsel for Distrimedic that none of the cases raised reflected
on Mr. Levi’s credibility as an expert in the present case.
[187] While
Mr. McAuley treats all of Richards’ blister products and all of Richards’
labels in the same way, Mr. Levi differentiates between Richards’ original
product line and its new product line. Mr. Levi treats as original all
products that were sold before Distrimedic entered the market in 2006. All
other products and those with an extra inch of height are treated as new. It
appears that the new product line quickly took over the majority of Richards’
sales of the products in issue. According to Mr. Levi, it is not proper to
group both product lines together for purposes of determining Richards’ alleged
losses based on price reductions, as was done by Mr. McAuley. In his view, it
is only necessary to look at those products that existed at the time that
Distrimedic entered the market to determine the impact of reduced pricing for
sales due to Distrimedic’s entry into the market.
[188] Mr.
Levi also questions one of the assumptions made by Mr. McAuley, that the market
in Quebec would mirror the market in territories outside of Quebec. In Mr.
Levi’s view, such an assumption ignores the possible impact of legislation
introduced in Quebec in 2005 and 2006 to limit rebates and other benefits that
could be offered to pharmacists in connection with pharmaceuticals. The impact
of the reduction of benefits offered to pharmacists in Quebec (previously as
high as 50%, now restricted to 20%) was substantial, and would necessarily lead
pharmacists to press for bigger profit margins from other products to make up
the difference.
[189] Mr.
Levi also disagrees with another assumption used by Mr. McAuley, namely that,
but for Distrimedic’s entry into the market, Richards’ average selling prices
for blisters and labels in Quebec would have increased or decreased at the same
rate as those outside Quebec. Mr. Levi points out that Richards’ sales in Quebec have always been much higher than outside Quebec, and that Richards’ sales in Quebec grew at a healthy pace during the period in question despite competition from
Distrimedic.
[190] Another
source of debate between Mr. Levi and Mr. McAuley is with regard to the
treatment of volume discounts as rebates for the purpose of calculating the
amount of price suppression. Mr. McAuley treats all discounts as rebates,
whether they are volume discounts, promotional prices or other types of
rebates. Mr. Levi notes in his Revised April 19, 2013 Report that the McAuley
Report makes no reference to volume discounts, and includes those discounts in
his calculations. As he explained during his testimony, sales using the basic
product codes, those without the *ESC or *PR suffix, appear to reflect
Richards’ price list. The *ESC suffix appears to reflect volume discounts, and
the *PR suffix appears to reflect a promotional price that was offered only in Quebec. In Mr. Levi’s view, volume discounts and discounts for purchase of other products
such as vials (reflected by product codes with a *ESC suffix) are not related
to competition from Distrimedic and, therefore, should not be considered in
calculating any loss of income Richards may have suffered due to Distrimedic’s
entry into the market. In his report, Mr. Levi applies these same assumptions
to calculate the alleged loss of future income.
[191] Mr.
Levi also disagrees with Mr. McAulay’s assessment of Distrimedic’s profits from
the sales of its labels. He points out that Distrimedic is a single-product
company whose product involves both blisters and labels, and that the company
cannot sell one consumable without the other. All expenses of the company are
relevant to its revenues, and therefore all of its expenses should be
considered when calculating profits. Mr. Levi calculated profits related to
labels by taking Distrimedic’s cumulative profits that relate to labels as a
fraction of its total profits, i.e., 55.71% of about $116,000, yielding a
figure of about $64,000. This figure was later raised to about $85,000 after
the two experts met.
[192] Finally,
Mr. Levi assessed the alleged loss of past and future income on the new product
line applying the same methodology. The results of his calculations for
alleged past losses due to price suppression and increased rebates for the new
product line amount to $1,889,000, and for alleged future losses to $1,723,400
(scenario 1), $2,283,600 (scenario 2) or $2,841,700 (scenario 3).
[193] The
patent-related issues as set out by Prothonotary Morneau in his September 28,
2011 Order raise questions of patent construction, infringement, validity of
the disclaimer, and invalidity arising from anticipation or obviousness in
light of the United States Braverman Patent described in the facts section
(Part II), above. Each of these issues will be addressed in turn below.
[194] It is
well established that any assessment of infringement and/or invalidity of a
patent requires that the Court first construe the claims of the patent at issue
to ascertain the invention defined therein and the scope of the monopoly: Whirlpool
Corp v Camco Inc, 2000 SCC 67, [2000] 2 S.C.R. 1067, at para 43 [Whirlpool].
[195] It is
the language of the claims, properly construed, that defines the patentee’s
exclusive rights and establishes the basis for all infringement and invalidity
inquiries. The following principles set out by the Supreme Court of Canada
constitute the starting point of any patent infringement/invalidity analysis:
(a) The Patent Act promotes adherence
to the language of the claims.
(b) Adherence to the language of the claims
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 is made:
1) on the basis of the common knowledge of
the worker skilled in the art to which the patent relates;
2) as of the date the patent is published;
3) 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
4) according to the intent of the inventor,
expressed or inferred from the claims, that a particular element is essential
irrespective of its practical effect;
5) 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.
Free World Trust v Électro Santé Inc, 2000 SCC 66, [2000]
2 SCR 1024, at para 31 [Free World Trust]
[196] The
primacy of the claims language was clearly rooted deeply in our jurisprudence
before Free World Trust, and Canadian courts have long rejected the idea
that claims construction ought to look to substance rather than form to protect
the inventive idea underlying the claim language. Subsection 27(4) of the Patent
Act, conveys this notion with the following language: “The specification
must end with a claim or claims defining distinctly and in explicit terms the
subject-matter of the invention for which an exclusive privilege or property is
claimed”. For that reason, the usual rule will be that “what is not claimed is
considered disclaimed” (Whirlpool Corp, above, at para 42).
[197] In
other words, the ingenuity of a patent lies not in the identification of a
desirable result, but in teaching one particular means to achieve it. The
claims cannot be stretched to allow the patentee to monopolize anything that
achieves the desirable result. To take an example given by the Supreme Court
in Free World Trust (at para 32), it would not be legitimate to obtain a
patent for a particular method that grows hair on bald men and thereafter claim
as infringing anything that grows hair on bald men.
[198] Adherence
to the language of the claims promotes predictability, and ensures that
competition is not “chilled”. A patent of uncertain scope would impede
research and development and discourage economic activity. That being said, a
patentee must be protected from the effects of excessive literalism. This goal
is achieved by interpreting claims in light of the knowledge of the person to
whom the patent was addressed at the date of publication of the patent. While
the construction of a patent is for the court, it is to be done on the basis
that it is addressed to the POSITA to which the patent relates, who are thereby
able to put the invention described in the claims into practice. Of course,
the level of sophistication attributed to a POSITA will depend largely on the
field to which the patent relates and the Court must construe the patent in
light of the knowledge and understanding of such persons (Whirlpool Corp,
above, at para 53; Free World Trust, above, at para 44).
[199] The
following quote from the decision of the Supreme Court in Free World Trust
at paragraph 51 sums up the issue quite nicely:
[51] (…) The involvement in claims construction of
the skilled addressee holds out to the patentee the comfort that the claims
will be read in light of the knowledge provided to the court by expert evidence
on the technical meaning of the terms and concepts used in the claims. The
words chosen by the inventor will be read in the sense the inventor is presumed
to have intended, and in a way that is sympathetic to accomplishment of the
inventor’s purpose expressed or implicit in the text of the claims. However,
if the inventor has misspoken or otherwise created an unnecessary or
troublesome limitation in the claims, it is a self-inflicted wound. The public
is entitled to rely on the words used provided the words used are
interpreted fairly and knowledgeably.
[200] Finally,
it is only those elements of the claims that can be considered as essential
whose breach will be sufficient to justify a finding of infringement. This is
consistent with the notion that patents should not be interpreted so as to
unduly limit competition and that claims should not be stretched to allow the
patentee to monopolize anything that achieves a desirable result:
For an element to be considered non-essential and
thus substitutable, it must be shown either (i) that on a purposive
construction of the words of the claim it was clearly not [emphasis
added] intended to be essential, or (ii) that at the date of publication of the
patent, the skilled addressees would have appreciated that a particular element
could be substituted without affecting the working of the invention, i.e. had
the skilled worker at that time been told of both the element specified in the
claim and the variant and “asked whether the variant would obviously work in
the same way”, the answer would be yes: Improver Corp. v. Remington, supra, at p. 192. In this context, I
think “work in the same way” should be taken for our purposes as meaning that
the variant (or component) would perform substantially the same function in
substantially the same way to obtain substantially the same result.
See: Free World Trust, above, at para 55.
[201] The
Plaintiff bears the burden of establishing known and obvious substitutability
at the date of publication. In other words, everything that is claimed is
presumed essential unless the patentee establishes otherwise or the claim
language otherwise dictates:
While it would be unfair to permit a patent monopoly
to be breached with impunity by a copycat device that simply switched bells and
whistles to escape the literal claims of the patent, the onus is on the
patentee to establish known and obvious substitutability at the date of
publication. If the patentee fails to discharge that onus, the descriptive
word or expression in the claim is to be considered essential unless the
context of the claim language otherwise dictates. The claims cannot be
stretched to allow a patentee to monopolize anything that achieves the desirable
result.
Canamould Extrusions Ltd v Driangle Inc, 2003 FCT 244, 229 FTR
104, at para 35, aff’d 2004 FCA 63. See also Free World Trust, above, at
paras 55, 57; Quadco Equipment Inc v Timberjack Inc (2002), 17 CPR (4th)
224, at para 28.
[202] It is
clear from a careful reading of the ‘045 Patent that the positioning means
provided on the container-defining sheet and on the container-sealing sheet are
essential elements of the invention. I come to this conclusion for the
following reasons. First of all, the description of the prior art found in the
Patent indicates that pill dispensers were efficient but had some drawbacks,
one of which was the difficulty and the time involved in ensuring the correct
positioning of the preprinted sealing sheet on top of the containers. The
claimed invention purports to deal with this problem with a means of aligning
the two components of the kit (the container-defining sheet and the container-sealing
sheet) so that each pill container can be easily separated.
[203] As
previously mentioned, it is also quite telling that the positioning means is
part and parcel of each of the independent claims, and is referred to several
times in the specification, including on: page 3, line 13; page 8, lines 25-1
and page 9, lines 1-4; page 10, lines 8, 13 and 18; page 11, line 22; and page
15, line 22.
[204] Both
experts called upon by the parties to testify with respect to the Patent also
came to that conclusion. Mr. de Winter states, in paragraph 10 of his first
affidavit:
In my view, a container-defining sheet, a recessed
support and a container-sealing sheet and a positioning means are essential
elements. A positioning means which provides the functionality to have the
container-sealing sheet be in precise superposition (with very small tolerances)
on top of the container-defining sheet is an essential element of the
invention. If it is not in precise superposition the container-sealing sheet
would be torn, limiting its desired use.
(de Winter, September 30, 2010, at para 10)
[205] As
for Mr. Mauffette, he opined that nothing in the ‘045 Patent suggests that the
inventor did not consider the positioning means provided on the
container-defining sheet and on the container-sealing sheet to be essential
elements. Moreover, nothing in the ‘045 Patent suggests that, in Claims 1, 11
and 22, the inventor did not consider the upwardly projecting protuberance(s)
and the holes to be essential elements. Bearing in mind that everything that
is claimed is presumed essential and that the onus is on the patentee to establish
known and obvious substitutability at the date of publication, the consensus of
the parties’ experts as to the essential nature of the positioning means is a
significant factor to consider.
[206] Finally,
it is interesting to note that there was a stage in the application process for
the ‘045 Patent at which the last portion of the independent claims where it
defines the holes and protuberances was not included (the “wherein clause”), as
can be seen from a letter dated May 8, 1998 from Dispill’s counsel to the
Commissioner of Patents in response to a previous rejection (JBD 144). At the
time, paragraph (d) of Claim 1 (and corresponding paragraphs of the other
independent claims) read as follows:
Positioning means provided on at least the top
surface of the container-defining sheet and on the container-sealing sheet to
ensure that, in use, after the container-defining sheet is fitted onto the
recessed support, the paper covering is peeled off from the bands of the
container-sealing sheet and said container-sealing sheet is positioned on top
of the top surface of the container-defining sheet, the bands covered with a
self-adhesive material and their tearing lines be in exact superposition on top
of the flanges and the dotted lines of the container-defining sheet.
[207] The
claims were originally allowed by the Patent Office without the paragraph
referring to upwardly projecting protuberances and holes. However, the
original Notice of Allowance was withdrawn, and claims then of record rejected,
when the Braverman Patent, of which more will be said below, was brought to the
attention of the Patent Office. The paragraphs defining the upwardly
projecting protuberance(s) and the holes were added to the claims by the
applicant, Mr. Bouthiette (Richards’ predecessor) in order to overcome this
rejection.
[208] Counsel
for the Defendants to the Counterclaim submitted that it is difficult to
imagine a clearer indication of the essentiality of a claim element than its
addition to a claim in order to overcome an objection from the Patent Office. Indeed,
counsel for Mr. Bouthiette at the time explicitly stated as much in his
covering letter to the Commissioner:
U.S. patent No. 3,380,856 [sic] to BRAVERMAN
discloses and illustrates in Figs. 14 to 17, a kit for the manufacture of a set
of individual pill containers comprising:
a) a container-defining sheet
made of plastic material (corresponding to item 3 in the drawings of the
present application);
b) a recessed support having a
top surface provided with a number of recesses at least equal to the number of
cavities embossed in the container defining sheet (see item 1 in the drawings
of the present application); and
c) a container sealing sheet
(item 9 in the drawings of the present application).
It is admitted that the basic structure and
operation of each of these elements as disclosed in BRAVERMAN is substantially
identical to what is disclosed in the present application.
However, contrary to what has been argued, BRAVERMAN
does not disclose or suggest the following structural feature, which is the key
feature of the present invention, namely:
d) positioning means provided on
at least the top surface of the container defining sheet and on the
container sealing sheet.
Such positioning means were defined in former claims
3 and 4 as being preferably protuberances and holes identified by reference
numerals 5, 7 and 15 in the drawings of the present application.
It is hereby submitted that the pins 201 shown in
Figs. 14 to 16 of BRAVERMAN and against which the sealing sheet can be leaned,
does not correspond to, and is not an equivalent of the positioning means
disclosed and claimed in the present application. Indeed, the claims presently
on file call for the positioning means (pins) to be provided on at least
the top surface of the container-defining sheet and on the container
sealing sheet to ensure proper positioning of both of these elements with
respect to each other.
In BRAVERMAN, the pin [sic] 210 (1) are not
provided on or pass through the top surface of the container-defining sheet and
(2) they do not “lock” the container defining sheet with the sealing sheet as
is called for in the claims of the present application.
[emphasis in original]
[209] Counsel
for Richards vigorously objected to the use of the file history (or “file
wrapper”), arguing on the basis of the Supreme Court decision in Free World
Trust that such use of extrinsic evidence has been rejected. In that case,
Justice Binnie stated (at par 66):
In my view, those references to the inventor’s
intention refer to an objective manifestation of that intent in the patent
claims, as interpreted by the person skilled in the art, and do not contemplate
extrinsic evidence such as statements or admissions made in the course of
patent prosecution. To allow such extrinsic evidence for the purpose of
defining the monopoly would undermine the public notice function of the claims,
and increase uncertainty as well as fuelling the already overheated engines of
patent litigation. The current emphasis on purposive construction, which keeps
the focus on the language of the claims, seems also to be inconsistent with
opening the Pandora’s box of file wrapper estoppel. If significant
representations are made to the Patent Office touching the scope of the claims,
the Patent Office should insist where necessary on an amendment to the claims
to reflect the representation.
[210] I am
not convinced that the letter referred to by the Defendants to the Counterclaim
falls squarely within the compass of that exclusion. While statements or
admissions made in the course of patent prosecution shall not be used for the
purpose of interpreting a claim, this is not what the Court is called upon to
do in the case at bar. A change in the wording of a claim as a result of an
objection from the Patent Office is an objective fact from which an inference
may be drawn, and is not the same as representations made to the Patent
Office. A purposive construction should obviously focus on the wording of a
claim, obviously, but this is a far cry from saying that nothing else should be
considered.
[211] Be
that as it may, counsel for Richards do not dispute that the protuberances and
the holes are an important element of the ‘045 Patent, but they counter
(relying on Mr. de Winter’s expert evidence) that the term “hole” as used in
the Patent should not be read literally as a complete circular hole but rather
should be understood from a functional point of view of aligning the
container-sealing sheet in its proper position. As he wrote at paragraph 14 of
his first affidavit:
In order to be functional, the chosen protuberance
must also be given a certain shape and size to engage the hole. If it is too
small, it may not retain the container-sealing sheet as the tolerances of the
container-sealing sheet positioned on the container-defining sheet would be too
large. Since the paper is flexible, there must be enough contact to maintain
the sheet in place. Thus, in my opinion, the words “hole” and “protuberance”
should be understood in relation to their stated functions, i.e. protuberances
extending above the recessed support and the container-defining sheet which
engage an edge or edges of the container-defining sheet and the
container-sealing sheet preventing two-dimensional movement of the
container-sealing sheet such that the bands of the container-sealing sheet are
in exact superposition on top of the flanges of the container-defining sheet.
(de Winter, September 30, 2010, at para 14)
[212] With
all due respect, this definition of a “hole” strains the imagination and
stretches the ordinary interpretation of that word beyond what is acceptable.
As stated by Mr. Mauffette in his expert report, [and as a POSITA might
reasonably conclude, in the context of this patent,] for a hole to exist there
must be an empty space with material around it. It appears that Mr. de Winter
improperly focused on the positioning means defined elsewhere in the claims,
without giving proper attention to the use of the word “hole” therein. One
cannot do away with the concept of a hole in interpreting the independent
claims. Had these claims not referred to holes and protuberances, then they
could have been interpreted as if holes and protuberances were not the only way
that positioning could be achieved. Indeed, it is quite telling that the only
alternative to the positioning means described in the ‘045 Patent (above, at para
30 of these reasons) still refers to holes and protuberances, the only
difference being that they are arranged differently to achieve the necessary
alignment.
[213] Mr.
de Winter indicated that he was driven to construe the word “hole” broadly
because the ‘045 Patent does not explicitly exclude the use of a single round
hole. He reasoned that the inventor must have contemplated non-round holes.
Up to this point, this is a fair assumption. However, based on this contemplation
of non-round holes, Mr. de Winter then took the unwarranted leap of concluding
that the invention must have been intended to encompass devices that are not
typical holes but that perform the same positioning function. In Mr. de
Winter’s view, this reasoning supports his opinion that a raised wall should be
considered equivalent to a partial hole since it would perform the same
function as two separate protuberances and holes.
[214] Once
again, I agree with counsel for Distrimedic that such a construction of a
“hole” is unwarranted, and Mr. de Winter himself acknowledged that he was
stretching the definition of hole. He went as far as saying that he chose to
focus more on the function of a hole than on the concept of a hole itself
(Transcript, April 2, at pp 172-173). This is clearly inconsistent with the
principles governing the construction of claims: while claims are to be
construed in a purposive manner, their language must still be adhered to. A
hole, at least in the context of this patent, does not have an unconventional
or exceptional meaning, and there is nothing in the Patent indicating that a
particular skill set is required to understand what is meant by the description
of the positioning means.
[215] For
all the above reasons, the interpretation of the ‘045 Patent, and in particular
of the positioning means, put forward by counsel for Richards must be
rejected. The words of the ‘045 Patent are plain and unambiguous and do not,
on their face, raise great subtleties of interpretation. Accordingly, the
words “hole” and “protuberance” must bear their ordinary meaning. A hole
cannot encompass anything that performs the aligning function of a hole, and
there is no basis in the language of the ‘045 Patent for the proposition that a
hole could be the edge of a sheet abutting a protuberance. The Supreme Court
has cautioned that the ingenuity of a patent lies not in the identification of
a desirable result but in teaching one particular means to achieve it (Free
World Trust, above, at para 32).
[216] Infringement
is to be determined by comparing the allegedly-infringing product to the
claims, and not to the patentee’s own product (Free World Trust, above, at
paras 69-70). There is infringement if all of the essential elements of a
claim are incorporated in a product, but there is no infringement if an
essential element is different or omitted (Free World Trust, above, at
paras 31 and 68; McKay v Weatherford Canada Ltd, 2007 FC 1233 at para
32, aff’d 2008 FCA 369). On the other hand, substitution or omission of
non-essential elements is not necessarily fatal to an allegation of
infringement: Stonehouse v Batco Manufacturing Ltd, 2004 FC 1767, at
paras 137-138.
[217] A
patent will not be infringed merely because the product in issue accomplishes
the same function as the patented invention (Emmanuel Simard & Fils (1983)
Inc v Raydan Manufacturing Ltd, 2005 FC 973, at paras 80-81, rev’d on costs
2006 FCA 293). What matters is whether the product in issue incorporates all of
the essential elements of the claim, not whether the product and the patent
function similarly (Canamould Extrusions Ltd v Driangle Inc, 2004 FCA
63, aff’g 2003 FCT 244 at para 52).
[218] Even if
the alleged infringer has not itself performed all of the steps of the claimed
invention or incorporated all of the essential elements of the claimed
invention into its product, it may still be found liable for inducing
infringement by someone else. This Court recently set out the elements for a
finding of inducing infringement: 1) there must be an act of infringement by
the direct infringer; 2) this act must be influenced by the seller to the point
where, without this influence, infringement by the buyer would not otherwise
take place; and 3) the influence must be knowingly exercised by the seller,
i.e., the seller knows that this influence will result in the completion of the
act of infringement (MacLennan v Produits Gilbert Inc, 2008 FCA 35, at
para 13, aff’g 2006 FC 1038).
[219] This
Court has cautioned, however, that it is not sufficient to generally allege the
products in suit are sold with instructions as to their use and that a
defendant’s customers or ultimate users infringe the patent in suit when they
use the defendant’s products in suit as instructed. Evidence of such
instructions must be conclusive. Completion of the infringing act must occur
as a result of the influence of the direct infringer and there must be evidence
of such influence (Hershkovitz v Tyco Safety Products Canada Ltd, 2009
FC 256 at para 160 [Hershkovitz]).
[220] In
their submissions, counsel for Richards argued that the Distrimedic pill
dispenser borrows a number of essential elements from the ‘045 Patent. They
mentioned, among other things, the horizontal strip that can be removed from
the bottom surface of the container-sealing sheet exposing a self-adhesive
strip to attach to the top surface of the container-defining sheet. They also
mentioned the dotted line (die-cut) punched in the container-sealing sheet as
another important feature or even essential element of that product. I do not,
however, need to make any findings with respect to those alleged similarities in
light of the fact that counsel for Distrimedic have chosen to focus their non-infringement
argument on other essential elements of the claims. As previously mentioned,
it is sufficient for the Defendants to the Counterclaim to establish that at
least one essential element of each of the claims of the ‘045 Patent is not
present in the Distrimedic system to avoid a finding of infringement (Free
World Trust, above, at para 31).
[221] A key
feature of each of Claims 1 to 25 is the “positioning means provided on at
least the top surface of the container-defining sheet and on the
container-sealing sheet”. Counsel for Distrimedic argues that the Distrimedic
system does away with this feature at least because the container-defining
sheet does not have positioning means on its top surface. I agree with Mr.
Mauffette that the container-defining sheet of the Distrimedic system is kept
in position by the snug fit of its cavities in the recesses of the tray.
Neither the edge, nor any other part of the container-sealing sheet of the
Distrimedic system engages any protuberance or raised portion of the tray.
[222] There
was a lot of discussion about the proximity of the top of the
container-defining sheet and the protruding zone of the support tray. They are
indeed close, but there does not appear to be any functional reason why they
need to be. It would arguably make it more difficult to fit the container-defining
sheet on the tray if the top of the sheet or the two side tabs were to touch
the vertical protruding zone of the tray. Even if I were prepared to accept,
however, that the two side tabs on the container-defining sheet somehow help to
align that sheet against the raised vertical edges of the mounting tray, another
key element would still be missing. Claims 1 to 14 and 22 to 25 (claims 15 to
21 were subject to a disclaimer and are addressed below), specify that:
the positioning means comprises at least one
upwardly projecting protuberance provided on the top surface of the recessed
support, at least one hole provided into the container-defining sheet and at
least one other hole provided in the container-sealing sheet, said at least one
hole and one other hole being sized and positioned to correspond to and be
engaged by said protuberance.
[223] Neither
the container-defining sheet nor the container-sealing sheet of the Distrimedic
system has any holes. Moreover, the recessed support of the Distrimedic system
does not include any upwardly projecting protuberance to correspond to and be
engaged by any holes. The container-sealing sheet and the container-defining
sheet are aligned and fixed together in a manner that is materially different
from that described and claimed in the ‘045 Patent.
[224] Counsel
for Richards argued that from a dynamic point of view, the two side tabs
perform the same function as the holes and protuberances of the Dispill
device. They also suggested that locating the label sheet by abutting it
against the raised protuberances or edges at the top of the Distrimedic
mounting tray is equivalent to and corresponds with engaging the hole as in the
claims. In their submission, therefore, the raised edges perform the same
function as the holes in the container-defining and container-sealing sheets and
the protuberance in the recessed support in the patent.
[225] I
have already indicated, in the previous section dealing with the construction
of the ‘045 Patent, that such a convoluted reading of the Patent ought to be
rejected for a number of reasons. Not only would such an interpretation of the
words “hole” and “protuberance” not be in keeping with the common knowledge of
the worker skilled in the art to which the patent relates, but it would also render
at least some of the claims invalid for anticipation in light of the Braverman
Patent.
[226] The
remaining claims of the ‘045 Patent, Claims 26 to 28, define either a
pill-sorting device or a device for opening a set of pill containers with a
knife. Richards does not allege direct infringement of these claims, since
there is no evidence or argument that the Distrimedic system incorporates any
device similar to those claimed in the ‘045 Patent. Rather, Richards claim
that Distrimedic induced infringement of these claims by pharmacists. This argument,
which Richards’ counsel did not vigorously advance cannot succeed. Quite apart
from the fact that these two devices don’t appear to work properly with the
Distrimedic system, purchasers of such devices from Richards must be presumed
to have acquired an implicit right to use them without restriction (Eli
Lilly & Co c Novopharm Ltd, [1998] 2 RCS 129, at para 100; Signalisation
de Montréal Inc v Services de Béton Universels Ltée, [1993] 1 FC 341 (CAF),
at para 20).
In cross-examination, Mr. Glynn confirmed that Richards does not communicate to
purchasers any restrictions on the use of its products that would override the
implicit right to use without restriction.
[227] It
follows then that Richards’ purchasers are not infringing the ‘045 Patent when
they use such devices, regardless of how they use them. There can be no
inducement to infringe on this basis not least because the first element of the
three-part test (an act of infringement by the direct infringer) is not
satisfied. Moreover, Richards has adduced no admissible evidence regarding the
second element of the test for inducing infringement, i.e., that any infringing
act by a user of the devices in question was influenced by Distrimedic such
that, without this influence, the infringing act would not have taken place.
Accordingly, there is no infringement of any claim that includes the
pill-sorting device or the device for opening a set of pill containers with a
knife on the basis alleged.
[228] Finally,
though many of the trays sold as part of the Distrimedic system incorporate “a
number of recesses at least equal to the number of cavities embossed in the
container-defining sheet” (defined in Claims 1 to 25), two of them (Exh. 543
and 544) do not incorporate this feature. The first two rows of recesses are
evenly spaced and intended to receive cavities of container-defining sheets,
similar to other Distrimedic trays, but the remaining recesses are different.
Moreover, these trays also do not infringe Claims 5 and 19 for the additional
reason that they do not comprise 28 recesses.
[229] Having
found that Distrimedic has not infringed the ‘045 Patent, it is not strictly
necessary for me to address the next two questions identified by the
Prothonotary with respect to patent law. Since these issues have been
thoroughly canvassed by the parties, however, and because the validity of the
disclaimer has been explicitly left open as a result of the decisions taken by
this Court and by the Court of Appeal, ordering the Commissioner to accept the
disclaimer, I shall deal with them briefly now.
[230] As
previously mentioned, Richards filed a disclaimer in respect of Claims 15 to 21
of the ‘045 Patent. Claim 15 is an independent claim while Claims 17, 18 and
19 are dependent claims. The entirety of Claim 16 was disclaimed. The changes
in Claim 15 resulting from the disclaimer are found in paragraph 43 of these
reasons.
[231] A
disclaimer is a significant, formal and public act filed at the Patent Office.
It is a mechanism that, when filed in the prescribed form and manner, is used
by patentees to disclaim part of their patent when, by mistake, accident or
inadvertence, and without wilful intent to defraud or mislead the public, the
patentee has done one of two things: a) framed his patent too broadly, or b) incorrectly
claimed to be the inventor of any material or substantial part of the patent to
which he had no lawful right (or incorrectly claimed some other person as the
inventor thereof) (Patent Act, s. 48(1)).
[232] A disclaimer
must be filed in the prescribed form and manner: Patent Act, s. 48(2). More
specifically, it must follow the form and instructions for its completion as
set out in Form 2 of Schedule 1 of the Patent Rules, to the extent the
provisions of the form and the instructions are applicable (Patent Rules, SOR/96-423,
s. 44). In completing Form 2, the patentee must follow the precise form of
items 3(1) or 3(2), which specify the subject matter disclaimed. Either the
patentee disclaims the entirety of a claim or the entirety of a claim with the
exception of listed elements of that claim. The expression “…with the
exception of the following…” used in item 3(2) of Form 2 makes it clear that a
disclaimer is essentially a negative allegation, and it is clearly not to be
used as a device for reformulating or redefining the invention disclosed and
claimed.
[233] Patents
are presumed to be valid pursuant to s. 43(2) of the Patent Act, but
this presumption does not extend to disclaimers (Sanofi-Aventis Canada Inc v
Hospira Healthcare Corp, 2009 FC 1077, at para 142 [Sanofi-Aventis]).
The fact that the Commissioner of Patents must accept disclaimers when filed
does not speak to their validity and is not determinative of whether or not the
disclaiming party has fulfilled the requirements of section 48(1) of the Patent
Act. This is precisely what this Court and the Court of Appeal reiterated
when they set aside, on judicial review, the Commissioner’s decision refusing
to record the disclaimer because it attempted to broaden, rather than narrow,
the scope of at least one claim (see paras 44 to 50 of these reasons).
When a disclaimer is contested, its validity must be proven, and it is for the
Court to determine whether the patentee made the disclaimer in good faith and
not for an improper purpose. The law pertaining to these issues has been aptly
summarized by my colleague Justice Martineau in Hershkovitz, above, at
para 79:
Finally, when the validity of a disclaimer is
contested, the onus of showing that there was “mistake, accident or
inadvertence” is on the patentee, and the propriety or validity of such
disclaimer may be reviewed by the Court if the patent is litigated. Moreover,
according to the case law, the validity of the disclaimer depends on the “state
of mind” of the patentee at the time he made his specification. The patentee
must be able to demonstrate to the Court that the disclaimer is made in good
faith and not for an improper purpose. Where the patentee does not discharge
this burden, the disclaimer will be held to be invalid. The fact that the
patent Office had accepted a disclaimer is not determinative…
See also: Pfizer Canada Inc v Apotex Inc,
[2007] FC 971, at para 38; Sanofi-Aventis, above, at paras 140-142; ICN
Pharmaceuticals, Inc v Canada (Staff of the Patented Medicine Prices Review
Board), [1997] 1 FC 32, at para 70.
[234] Having
considered all the evidence on the record, I am inclined to believe that the patentee
has failed to meet its onus to show that a mistake, an accident or an
inadvertence led to the specification being too broad. First of all, it was only
after the commencement of the present proceedings that Richards saw the need to
file a disclaimer; no concerns appear to have been raised when the patent was
reviewed at the time that Richards acquired it. While this chronology is
obviously not sufficient, in and of itself, to establish bad faith, it is
certainly a contextual element that can be considered in determining what
prompted the filing of a disclaimer.
[235] Richards’
attempt at an explanation for the portion of the disclaimer concerning
replacement of the word “hole” with “engaging means” was both unconvincing and
inadequate. According to Mr. Glynn, Richards’ concern was that there wasn’t “a
proper description around the holes being engaging means grabbing the
protuberance” (Transcript, March 25, at p 123). However, the disclaimed claim,
in its original form, already defined the holes as “being sized and positioned
to correspond to and be engaged by said protuberance”. It may be, as Mr. Glynn
added, that the new description is a better description of the positioning
means, but this is insufficient to constitute a mistake, accident or
inadvertence for the purposes of establishing the validity of a disclaimer.
[236] Moreover,
neither the inventor, Bouthiette, nor anyone else involved in the original
patent application was ever consulted about the disclaimer. Again, while this
is not determinative in determining whether a disclaimer has been filed for an
improper purpose, it is nevertheless a relevant indicia to consider, especially
when the inventor is available and easily reachable as was attested to here.
[237] Finally,
one cannot help but wonder why Claim 1, which has virtually identical language
to that disclaimed in Claim 15, was not similarly disclaimed. When questioned
on that point, Mr. Glynn could give no explanation. If there had been a
genuine mistake, accident or inadvertence which prompted the filing of the
disclaimer, other claims using identical language should logically have been
amended as well.
[238] The
substance of the disclaimer is equally problematic, as it clearly broadens the
scope of the patent instead of narrowing it. As indicated above, a key change
made through the disclaimer was changing the language of “at least one hole” to
“engaging means” and “at least one other hole” to “other engaging means”. A
hole is undoubtedly an engaging means, but engaging means is not limited to a
hole. It could include, for example, a depression or a recess.
[239] Bearing
in mind that the validity of the disclaimer is the subject of an application
for judicial review, I shall refrain from ruling definitively on the issue. My
comments on this subject are only meant to be an additional reason for
concluding that the Defendants to the Counterclaim have not infringed the ‘045
Patent. That being said, I cannot agree with counsel for Distrimedic that the
original patent should be invalidated, on the basis that it is tainted by the
admission made by Richards that the disclaimed claims in their original form were
too broad. I cannot accept this argument in the case at bar. The reasoning
advanced by the Defendants to the Counterclaim would hold true if the
disclaimed claims in their original form were indeed too broad. However, quite
to the contrary, it is the disclaimer that would impermissibly broaden the
scope of the claim. I appreciate that Richards, by filing the disclaimer,
conceded that their original patent was too broad in scope. There is, however, no
independent evidence to that effect, and the Defendants to the Counterclaim
have not submitted any arguments in support of their claim that the original
patent is overbroad. Contrary to the hypothetical example given by Justice Martineau
in Hershkovitz, above, at para 49, where he assumes that a line
can clearly be drawn between the scope of the original claim and the more
limited scope of the disclaimed claim, there is no such clear line in the
present case. In fact, one would be hard pressed to delineate an area open for
innovation where new competitors could have jumped in as a result of the disclaimer,
given that the disclaimer so clearly expands rather than limits the original
claim. Such being the case, the Defendants to the Counterclaim have failed to
demonstrate anything within the scheme of the Patent Act that would
prevent the patentee from returning to the pre-disclaimer patent.
[240] The
subject-matter defined by each of the claims of a patent must be new in order
to be patentable; in other words, the subject matter of a patent must not have
been previously disclosed. A claim that is not new cannot be valid.
Anticipation, or lack of novelty, asserts that the invention is not new because
it has been made known to the public prior to the relevant time. The relevant
time, according to the current Patent Act, is normally the “claim date”,
which is defined as the filing date of the application for the patent in Canada or the filing date of a properly claimed foreign priority application. In cases
where the prior art came from the applicant, the applicant cannot have disclosed
the subject matter defined by the claim more than one year prior to the
Canadian filing date.
[241] The
traditional approach to anticipation, which was set forth in Beloit Canada
Ltd v Valmet Oy (1986), 8 CPR(3d) 289, at 297 (FCA) [Beloit], reads
as follows:
It will be recalled that anticipation, or lack of
novelty, asserts that the invention has been made known to the public prior to
the relevant time. The enquiry is directed to the very invention in suit and
not, as in the case of obviousness, to the state of the art and to common
general knowledge. Also, […] anticipation must be found in a specific patent
or other published document; it is not enough to pick bits and pieces from a
variety of prior publications and to meld them together so as to come up with
the claimed invention. One must, in effect, be able to look at a prior, single
publication and find in it all the information which, for practical purposes,
is needed to produce the claimed invention without the exercise of any
inventive skill. The prior publication must contain so clear a direction that a
skilled person reading and following it would in every case and without
possibility of error be led to the claimed invention.
See also: Abbott Laboratories v Canada (Minister of Health), 2006 FCA 187, at para 20, leave to appeal to SCC refused, [2006]
SCCA No 292; Pfizer Canada Inc c Canada (Minister of Health), 2006 FCA
214, at para 35.
[242] The
Supreme Court later refined the test for anticipation in Apotex Inc v
Sanofi-Sunthelabo Canada Inc, 2008 SCC 61, [2008] 3 S.C.R. 265 [Apotex Inc],
by requiring that a single prior publication must both disclose and enable the
subject matter at issue. The traditional test set out above in Beloit concerned the disclosure portion of the test, but did not deal with
enablement.
[243] For
the purposes of disclosure, the prior publication must “disclose subject matter
which, if performed, would necessarily result in infringement of that patent… At
this stage, there is no room for trial and error or experimentation by the
skilled person” (Apotex Inc, above, at para 25). The first requirement
for a claim to be anticipated is therefore that the prior publication must
disclose subject matter that, if performed, would necessarily result in the
infringement of the patent. As has been stated, “what infringes if later,
anticipates if earlier”: Hughes and Woodley on Patents (2nd edition), at
page 134, cited with approval in Consolboard Inc v MacMillan Bloedel,
[1981] 1 S.C.R. 504, at p 534; Abbott Laboratories v Canada (Minister of
Health), 2006 FCA 187, at para 25, leave to appeal to SCC refused, [2006]
SCCA No 292; Lightning Fastener Co v Colonial Fastener Co, [1933] SCR
377, at p. 381.
[244] If
the disclosure requirement is satisfied, the second requirement of enablement requires
that the POSITA be able to perform the invention. It is only at the enablement
stage that trial and error or experimentation is permitted provided it does not
constitute an undue burden. If the Court finds that an inventive step was
required to get to the invention of the patent in suit, the prior publication
will not have been “enabling” (Apotex, above, at paras 26, 27 and
33).
[245] The
following factors should be considered in the analysis of the enablement
requirement, as discussed in Apotex Inc, above, at para 37:
1. Enablement is to be assessed having regard to the
prior patent as a whole including the specification and the claims. There is
no reason to limit what the skilled person may consider in the prior patent in
order to discover how to perform or make the invention of the subsequent
patent. The entire prior patent constitutes prior art.
2. The skilled person may use his or her common
general knowledge to supplement information contained in the prior patent.
Common general knowledge means knowledge generally known by persons skilled in
the relevant art at the relevant time.
3. The prior patent must provide enough
information to allow the subsequently claimed invention to be performed without
undue burden. When considering whether there is undue burden, the nature of
the invention must be taken into account. For example, if the invention takes
place in a field of technology in which trials and experiments are generally
carried out, the threshold for undue burden will tend to be higher than in
circumstances in which less effort is normal. If inventive steps are required,
the prior art will not be considered as enabling. However, routine trials are
acceptable and would not be considered undue burden. But experiments or trials
and errors are not to be prolonged even in fields of technology in which trials
and experiments are generally carried out. No time limits on exercises of
energy can be laid down; however, prolonged or arduous trial and error would
not be considered routine.
4. Obvious errors or omissions in the prior patent
will not prevent enablement if reasonable skill and knowledge in the art could
readily correct the error or find what was omitted.
[246] As
for obviousness, section 28.3 of the Patent Act states that “[t]he
subject-matter defined by a claim in an application for a patent in Canada must
be subject-matter that would not have been obvious on the claim date to a
person skilled in the art or science to which it pertains […].” The relevant
date for determination of obviousness is similar to that for anticipation:
normally, the “claim date” (the Canadian filing date or the priority date, if
any) or, in cases where prior art came from the applicant, one year before the
Canadian filing date.
[247] Obviousness,
or non-inventiveness, asserts that, even if the invention was new, the POSITA,
knowing of the state of the art and of the relevant common general knowledge at
the relevant date, would have come “directly and without difficulty” to the
invention. The traditional approach to obviousness reads as follows:
The test for obviousness is not to ask what
competent inventors did or would have done to solve the problem. Inventors are
by definition inventive. The classical touchstone for obviousness is the
technician skilled in the art but having no scintilla of inventiveness or
imagination; a paragon of deduction and dexterity, wholly devoid of intuition;
a triumph of the left hemisphere over the right. The question to be asked is
whether this mythical creature (the man in the Clapham omnibus of patent law)
would, in the light of the state of the art and of common general knowledge as
at the claimed date of invention, have come directly and without difficulty to
the solution taught by the patent. It is a very difficult test to satisfy.
(Beloit, above, at 294)
[248] The
Supreme Court of Canada in Apotex at paragraph 67 recently clarified the
law on obviousness and elucidated a four-part approach to such an inquiry:
(1) (a) Identify the notional “person skilled in the
art”;
(b) Identify the relevant
common general knowledge of that person;
(2) Identify the inventive
concept of the claim in question or if that cannot readily be done, construe
it;
(3) Identify what, if any,
differences exist between the matter cited as forming part of the “state of the
art” and the inventive concept of the claim or the claim as construed;
(4) Viewed without any knowledge
of the alleged invention as claimed, do those differences constitute steps
which would have been obvious to the person skilled in the art or do they
require any degree of invention?
[249] In
that same decision, the Supreme Court introduced an “obvious to try” test as a
factor that can be considered at the fourth step of its suggested approach to
obviousness. The “obvious to try” test is appropriate in those areas of
endeavour where advances are often made through experimentation, such as the
pharmaceutical industry. However, the “obvious to try” test must be approached
cautiously, and it is only one factor to assist in the obviousness inquiry.
[250] If an
“obvious to try” test is warranted, the following non-exhaustive list of
factors should be taken into consideration at the fourth step of the
obviousness inquiry:
1. Is it more or less self-evident that what is
being tried ought to work? Are there a finite number of identified predictable
solutions known to persons skilled in the art?
2. What is the extent, nature and amount of effort
required to achieve the invention? Are routine trials carried out or is the
experimentation prolonged and arduous, such that the trials would not be
considered routine?
3. Is there a motive provided in the prior art to
find the solution the patent addresses?
(Apotex,
above, at para 69)
[251] Finally,
the inventive concept is to be ascertained by reference to the claims, rather
than the specification (Sanofi-Aventis Canada Inc v Apotex Inc, 2009 FC
676, at para 267; Laboratoires Servier v Apotex Inc, 2009 FCA 222, at
paras 57). Indeed, it is a well established principle of patent law that
“[t]he description does not define an invention; rather, the claims read in the
context of the description define the invention (or inventions) of the patent”
(Laboratoires Servier v Apotex Inc, 2008 FC 825, at para 133, aff’d 2009
FCA 222, leave to appeal to the SCC denied [2009] SCC No 403).
[252] The
Defendants to the Counterclaim base both their anticipation and obviousness
allegations upon the disclosure made through the Braverman Patent for a “Medicinal
Dispensing Device”. It is important to stress that there is no claim that the
‘045 Patent is invalid because of the prior Braverman Patent. What is asserted
is that, because of that patent, the claims in the ‘045 Patent cannot possibly
have the breadth that Richards is claiming.
[253] According
to the Defendants to the Counterclaim, the Braverman Patent recognizes the
importance of alignment of the container-defining sheet and the
container-sealing sheet. This alignment is achieved in the Braverman Patent
with the assistance of pins (210) along two edges of the base (202). As stated
at column 4, lines 59 to 63: “The resilient pins are properly arranged so as to
guide the placement of the closure member as can be seen in FIG. 15 wherein
edges 196 of the closure member are in actual contact with the pins 210.”
[254] The
Defendants to the Counterclaim view this interaction between the closure member
and the pins as similar to the interaction between the container-sealing sheet
and the raised portion of the tray in the Distrimedic system. The
container-sealing sheet of the Distrimedic system abuts the raised portion of
the tray and is not otherwise held in place. Therefore, as noted in the
submission of the Defendants to the Counterclaim, the Distrimedic system and
the system described in the Braverman Patent work in essentially the same way.
[255] After
having carefully read both the ‘045 Patent and the Braverman Patent, as well as
the expert reports of Messrs. de Winter and Mauffette, I have come to the
conclusion that the allegation of the Defendants to the Counterclaim cannot be
sustained and that the Braverman Patent does not disclose a positioning means
that functions in the same way as the ‘045 Patent, that is, with active
engagement of both the container-sealing and container-defining sheets. While
it cannot be denied that the spring-loaded pins help in guiding the
container-sealing sheet, as Mr. de Winter admitted, they do not locate the
sheet in the sense of keeping it in position. Moreover, even guiding the
container-sealing sheet is clearly not their main function. Spring loaded pins
are expensive, particularly as a stainless steel mounting tray would require
stainless steel pins; if their function was purely to locate the
container-sealing sheet, they could have been replaced by plastic molding
components. Furthermore, the Braverman Patent twice mentions that the function
of the pins is to eject the pressure applying member, which is consistent with
the normal use of such pins and is typical in molding, stamping, and tooling.
Finally, it appears that the sheet is aligned by a person holding it by hand through
the nipped corner diagonally opposite to the pins, reinforcing the view that
the pins are not meant to hold the sheet in place.
[256] In
light of the above, I accept Mr. de Winter’s assessment that the invention
described in the ‘045 Patent was neither obvious nor anticipated. The Braverman
Patent does not provide disclosure of how to perform or make what is disclosed
and claimed as the invention in the ‘045 Patent. To borrow from the language
of Justice Hugessen in Beloit, the Braverman Patent does not provide
“all the information which, for practical purposes, is needed to produce the
claimed invention without exercise of any inventive skill” (Beloit, above,
at 297). The upwardly projecting protuberances and the holes as a means of
positioning the container-sealing sheet over the container-defining sheet were
not obvious either, in light of the common general knowledge as of July 22,
1996. The Braverman Patent may have triggered an inventor to think of a new
(and equally inventive) concept, but this is insufficient to render the later
idea obvious.
[257] This
finding is consistent with my earlier determination that the disclaimer is
invalid. As previously mentioned, the paragraph defining the “at least one
upwardly projecting protuberance” and the holes was added to Claim 15 by the
applicant (Richards’ predecessor) in order to overcome a rejection of the
previous wording of the claim by the Patent Office. This essential element is
clearly the innovative element of the claim. Replacing the terms “at least one
hole” and “at least one other hole” by “engaging means” and “other engaging
means” would clearly broaden the scope of the claim since it would no longer be
limited to a system in which the container-sealing sheet is aligned with the
container-defining sheet by way of the engagement of holes in each with at
least one corresponding upwardly projecting protuberance in the recessed
support. By invalidating the disclaimer and upholding the validity of the ‘045
Patent in its original form, its newness or inventiveness would therefore be
preserved.
[258] As
noted above, Prothonotary Morneau framed the issue related to misrepresentation
as follows: “Whether the defendants to the counterclaim have made false and
misleading statements that tended to discredit the business, services and wares
of Richards.”
[259] Subsection
52(1) of the Competition Act provides that no person shall knowingly or
recklessly make a representation to the public that is false or misleading in a
material respect for the purpose of promoting the supply or use of a product or
for the purpose of promoting any business interest. Pursuant to paragraphs
52(1.1)(a) and (c), it is not necessary that any person be in fact deceived or
misled by the false or misleading representation, nor that the representation
be made in a place to which the public had access. While subsection 52(1)
establishes a criminal prohibition, sections 74.01 and following provide a
civil track for pursuing claims of misleading representation.
[260] There
is no allegation that the Defendants to the Counterclaim made any false or
misleading statements in advertising, and no such evidence was adduced. In
their Pre-Trial Conference Memorandum (at para 30), Richards alleged that, in
2005, Filiatrault, Poirier and/or representatives of the Defendants to the Counterclaim
made one or more of the following statements to Richards’ clients:
(a) that Filiatrault and Poirier had left Dispill
due to its alleged price gouging and/or that the representatives were
developing a similar solution that they would sell at a more fair price; and
(b) That the representatives were authorized by
Dispill to offer an alternative solution to the Richards pill dispenser, but
that the product would be sold under a different trade-mark.
[261] At
the end of the trial, counsel for Richards somewhat narrowed this allegation,
claiming instead that a representative of Distrimedic visited Mr. Thibault’s
pharmacy in order to present the Distrimedic pill dispenser. Counsel made much
of the fact that during that meeting, Mr. Thibault remembers having been shown
product sheets that he found to be very similar to the Dispill catalogue, to
such an extent that he was under the impression that the two companies must
have had the same external supplier. Mr. Thibault went so far as saying, on
cross-examination, that he did not think the Distrimedic price lists would have
left him with the same impression of similarity.
[262] The
principles applicable to a determination under section 52 of the Competition
Act have been well summarized by Justice Hood, of the Supreme Court of Nova
Scotia, in Maritime Travel Inc v Go Travel Direct.Com Inc (2008) 66 CPR
(4th) 61, at para 39, aff’d 2009 NSCA 42:
1. The general impression of the advertisement must
be determined. In doing so, the nature of the particular portion of the public
to whom it is directed must be considered.
2. The literal meaning of the advertisement is to be
considered as well.
3. In determining if the advertisement is false or
misleading in a material respect, extraneous evidence may be considered but not
for the purpose of altering the general impression already arrived at.
4. Misleading advertising must be misleading in a
material respect. Materiality is defined in terms of the effect it would have
upon a consumer’s buying decision. It must be “so pertinent, germane or
essential” (quoting from Apotex) that it would have an effect upon that
decision. Mere “puffery” is not sufficient to constitute misleading
advertising.
5. Aggressive advertising is not circumscribed by
the Competition Act unless it is an “untruthful disparagement” of the
goods or services of a competitor (quoting from Purolator).
6. The Court should not interfere with competition
in the workplace unless the advertisements are “clearly unfair” (Puralotor).
7. Even advertisements which “push the bounds of
what is fair” are not misleading in a material way (Tele-Mobile).
8. In the civil context, the burden of proof on the
plaintiff is still proof on the balance of probabilities but it is a heavier
burden because of the seriousness of the allegations. There must be
“substantial proof” of activity which is “a very serious public crime.” (Janelle).
[263] The
evidence adduced by Richards falls far short of proving that false and
misleading statements were made. Mr. Thibault, the only witness called by
Richards on this matter, clearly stated both in his examination in chief and in
cross-examination that when he met with the representative of Distrimedic in
2006, the representative did not try to mislead him into thinking that he was a
Dispill representative or that he was selling Dispill products, and never
falsely or misleadingly presented Distrimedic’s products.
[264] The only
remaining fact offered in support of Richards’ claim is that Mr. Thibault was
led to believe that the two companies had the same external supplier due to
similarities between the product sheets shown to him by Distrimedic’s
representative and the Dispill catalogue with which he was familiar. In my
view, this is far from sufficient to establish that Distrimedic ran afoul of section
52 of the Competition Act. I appreciate that such a representation, had
it been substantiated, would have been quite material considering that the
availability of similar accessories to those offered with the Dispill system
was a key factor in Mr. Thibault’s decision to switch from the Dispill system
to the Distrimedic system. Nevertheless, although Mr. Thibault may have been
under that impression, no evidence has been offered to suggest that he came to
that impression as a result of any misrepresentation by Distrimedic’s
representative.
[265] While
one should not lose sight of the fact that some of Distrimedic’s accessories
are indeed similar to the Dispill accessories, Distrimedic does not have the
exact same line of accessories as Dispill. It is equally noteworthy that
Richards’ expert, Mr. de Winter, testified that the use of the Dispill pill
sorter with the Distrimedic product would be “awkward” because the Distrimedic
and Dispill solutions are “two different systems”.
[266] Both Messrs.
Filiatrault and Poirier denied misrepresenting themselves as being Dispill, or encouraging
their clients to buy Distrimedic and use it with Dispill accessories, and they
provided credible explanations as to why they would not have done that. They
testified that they wanted to preserve their reputation of honesty and
reliability among pharmacists, that they did not want to compromise their relationship
with the Association québécoise des pharmaciens proprietaries (AQPP), that they
had their own accessories and products that they wished to sell, and that at
least some of Dispill’s accessories do not fit with Distrimedic products.
During their examination and cross-examination, they both came across as
forthcoming and truthful in their answers, and their credibility was not
impugned or undermined in any respect. For that reason, I am inclined to give
much weight to their evidence and to find it reliable.
[267] Finally,
a close reading of Mr. Thibault’s cross-examination reveals that he is the one
who initiated contact with Distrimedic, that he was never presented with the
Dispill catalogue, that the product sheets did not bear the name “Dispill”, and
that he only drew the conclusion that the Distrimedic products were made by the
same external supplier as the Dispill products because they looked much the
same. He did mention that he did not think the Distrimedic price lists shown
to him at trial would have left him with the same impression of similarity, but
he cautioned that this is based on recollection more than seven years after the
fact.
[268] Counsel
for Richards made much of the fact that the Defendants to the Counterclaim
chose not to call Mr. Paul van Gheluwe as a witness to rebut the evidence of
Mr.Thibault. While his evidence (and in particular his cross-examination)
could have been helpful in ascertaining what really took place when he met Mr. Thibault
in 2006, I am not prepared to draw a negative inference from the strategic
decision made by counsel for Distrimedic not to call him, as there is no
evidence of wrongdoing to be rebutted.
[269] In
fact, the same criticism can be levelled against the conscious decision of
Richards not to present any other pharmacists to whom misrepresentations were
allegedly made. Instead, Richards presented a few emails and handwritten notes
of its employees to whom instances of misrepresentation by Distrimedic were
allegedly reported. The authors of such handwritten notes and emails did not
testify at trial to establish what exactly was said to them, and by whom, and
Distrimedic therefore had no opportunity to cross-examine them. Even if the
authors had testified at trial, they are clearly not the individuals to whom the
alleged false and misleading statements were made. Indeed, these emails and
written notes are simply Richards employees to whom clients (mostly
pharmacists) have reported conversations with Distrimedic representatives.
They clearly constitute hearsay (and, in at least one instance, double hearsay)
evidence, and as such are not admissible.
[270] Considering
the seriousness of the allegations made against the Defendants to the Counterclaim,
I find that counsel for the Plaintiffs by Counterclaim have not met their
burden of proof. The evidence does not rise to the stringent standard of a
high preponderance of probabilities established by the case law: see Janelle
Pharmacy Ltd v Blue Cross of Canada, 2003 NSSC 179, 27 CPR (4th) 19, at
paras 95-97; Pentagon Investments Ltd v Canadian Surety Co, [1992] NSJ
No 402 (NSCA). In coming to this conclusion, I bear in mind that the purchasers
of the Dispill and Distrimedic products are sophisticated purchasers unlikely
to be easily influenced or mislead; the decision to adopt one kind of pill
dispenser instead of another is most often taken by medical professionals and more
than one person whether in the context of pharmacies or nursing homes, and it
is in that context that the general impression of the advertisement or of the
representations has been assessed.
[271] For
all of the foregoing reasons, I find that the allegations of misrepresentation
have not been made out. The evidence is far from sufficient to establish, on a
high preponderance of probabilities, that Distrimedic or its representatives
made misleading representations with respect to their wares or disparaging
comments regarding Richards’ goods and services.
[272] Richards
claims that the Defendants to the Counterclaim have “wrongfully directed public
attention to their business, services and wares in such a way as to cause or be
likely to cause confusion in Canada at the time they commenced so to direct
attention between their businesses, wares and services and those of the
Defendant Richards”, contrary to paragraph 7(b) of the Trade-marks Act
(Three Times Amended Statement of Defence and Counterclaim, at para 48(i)).
More specifically, Richards claims that: (1) by virtue of its extensive
advertising and sales, the “Richards Packaging Label Colour Trade Marks” has “become
well and favourably known to pharmacists, nurses and nursing home employees and
the public in respect of Richards Packaging’s pill dispenser and have become
distinctive trade marks of Richards Packaging”, and that (2) “[t]he continued use
of the colour trade marks applied to the top surface of the container-sealing
sheets for use with the DISTRIMEDIC Product by the Defendants to the
Counterclaim and their agents is likely to lead members of the public to the
inference that either the business or wares of Distrimedic and the other
Defendants to the Counterclaim are associated with Richards Packaging’s
container-sealing sheets and Richards Packaging’s pill dispenser or that
Richards Packaging endorses or otherwise approves of the business, services and
wares of Distrimedic, and the other Defendants to the Counterclaim” (Three
Times Amended Statement of Defence and Counterclaim, at paras 29 and 46).
[273] Passing
off occurs when a company’s business reputation or goodwill will or will likely
be injured by a misrepresentation through which a competitor creates an
illusion of sameness or similarity to its wares or services, causing confusion
in the consumer’s mind to the effect that one’s goods or services are someone
else’s or sponsored by or associated with that other person. It is effectively
a “piggybacking” by misrepresentation. As Fleming put it in his seminal book The
Law of Torts, 4th ed (Sydney: Law Book Co, 1971), at p 626:
Yet another form of misrepresentation concerning the
plaintiff’s business – unfair competition par excellence – is the tort
of passing-off, which differs from injurious falsehood in prejudicing the
plaintiff’s goodwill, not by deprecatory remarks, but quite to the contrary by
taking a free ride on it in pretending that one’s own goods or services are the
plaintiff’s or associated with or sponsored by him.
See also: Canadian Business School Inc v Sunrise
Academy Inc (2002), 23 CPR(4th) 220 (FC), at paras 21, 23.
[274] Despite
making this argument, counsel for the Plaintiffs by Counterclaim have offered
little (whether in their written submissions or orally) to substantiate it.
Aside from referring in their written representations to Schedule “A”,
comparing Distrimedic customers of the labels ETCP-500 and ETCA-500 with Distrimedic
customers of the A4 format of labels, and to Schedule “B”, showing that
Richards and Distrimedic have many customers in common, there is very little
discussion of the necessary components to ground a finding of passing off,
whether based on common law or paragraph 7(b) of the Trade-marks Act.
Having carefully reviewed the evidence, I have come to the conclusion that
Richards’ claim under that section must fail as it has not demonstrated any of
the elements necessary for an action in passing off to succeed, or even that it
holds trade-mark rights in its colour scheme.
[275] Before
going any further, it is worth clarifying what is at stake here. Richards
admitted that Distrimedic’s current colour scheme, which has been in use since
2006 and is reproduced below, does not infringe upon any trade-marks rights
Richards claims to possess (Agreed Statement of Facts, Trial Exhibit 500, at
para 39).
[276] It is
therefore only the original colour scheme that Distrimedic used for a period in
2005 that is the subject of Richards’ claim under the Trade-marks Act.
Distrimedic recognized that it printed and distributed a colour scheme that was
for all intent and purpose identical to the Dispill Colour Scheme in its early
days of operation, but submits that it made only a limited run of labels
bearing the original colour scheme and that they were distributed solely for
testing purposes. This original colour scheme used by Distrimedic, which is
identical to that used by Dispill, is reproduced below:
[277] The
first issue identified by the Prothonotary in his Order dated September 28,
2011 relates to the very existence of a trade-mark right in the Dispill Colour
Scheme. This is entirely consistent with the inherent logic of a passing off
action under paragraph 7(b) of the Trade-marks Act. As the Federal
Court of Appeal stated in Kirkbi AG v Ritvik Holdings Inc, 2003 FCA 297,
aff’d 2005 SCC 65, [2005] 3 S.C.R. 302 [Kirkbi], the scope of a passing off
action is limited to situations where the plaintiff can demonstrate that it
holds trade-marks rights in the indicia alleged to have been misappropriated:
38. (…) Paragraph 7(b) is the equivalent statutory
expression of the common law tort of passing off, with one exception: in order
to use paragraph 7(b) a person must prove that they have a valid and
enforceable trade-mark, whether registered or unregistered. The thing that
distinguishes the common law action of passing-off from a passing-off action
under paragraph 7(b) of the Act is that in the common law action a litigant
need not rely on a trade-mark to make use of the action. To bring a
passing-off action under the Act, one must have a valid trade-mark within the
meaning of the Act. The definitions in section 2 of the Act are integral to
any trade-mark passing off action under paragraph 7(b), such as the Appellants’
action.
[278] The
Supreme Court confirmed the Federal Court of Appeal’s findings with respect to
the necessity of showing that a “trade-mark” exists in order to succeed in a
passing off action. This decision is interesting and of much relevance in
deciding the case at bar. Kirkbi was the owner of the patents for the LEGO
construction sets. When the patents expired, Ritvik, a Canadian toy
manufacturer, began manufacturing and selling bricks interchangeable with LEGO.
Kirkbi tried to assert a trade-mark in the “LEGO indicia” (i.e., the upper
surface of the block with eight studs distributed in a regular geometric
pattern), but was unsuccessful with the Registrar of Trade-marks. Kirkbi then
claimed the LEGO indicia as an unregistered mark and sought a declaration that
it had been infringed by Ritvik pursuant to paragraph 7(b) of the Trade-marks
Act and the common law doctrine of passing off. It requested a permanent
injunction to prevent Ritvik from marketing infringing products and sought
damages.
[279] After
having found that paragraph 7(b) of the Trade-marks Act is intra
vires the jurisdiction of Parliament as it is directly connected, in pith
and substance, to the enforcement of trade-marks and trade-names in Canada, the
Supreme Court applied the doctrine of functionality and determined that an
unregistered trade-mark consisting solely of the technical or functional
characteristics of the LEGO bricks cannot be the basis of a trade-mark. In
coming to this conclusion, the Supreme Court reiterated that a mark that goes
beyond distinguishing the wares of its owner to protect the functional
structure of the wares themselves is transgressing the legitimate bounds of a
trade-mark. It would indeed be a perversion of trade-mark law to grant
trade-mark protection to a mark that has a primarily functional use, as it
would provide something which a patent for the same product could not provide
because patent protection cannot be perpetual. The Supreme Court quoted with
approval the following paragraph from the reasons of Justice Sexton of the
Federal Court of Appeal:
Indeed, in my view, subsection 13(2) [of the Trade-marks
Act] reinforces the concept that the doctrine of functionality invalidates
a mark which is primarily functional. It makes clear that the public is not
constrained from using any utilitarian features of a distinguishing guise. It
follows that if a distinguishing guise is wholly or primarily functional, then
the public is not constrained from using the distinguishing guise in its
entirety. Thus a distinguishing guise which is primarily functional provides no
rights to exclusive use and hence no trade-mark protection. In other words the
fact that the distinguishing guise is primarily functional means that it cannot
be a trade-mark. The appellants have simply misconstrued subsection 13(2).
(Kirkbi, above, at para 59 as quoted by the
SCC in its Reasons at para 60)
[280] In
order to succeed under paragraph 7(b), therefore, Richards needed to show that
it holds trade-mark rights in the Dispill Colour Scheme. As already mentioned,
I find that Richards has failed to do so, first and foremost because the
Dispill Colour Scheme has a purely functional purpose, second because there is
no convincing evidence that Richards’ intention was to use the Dispill Colour Scheme
as a trade-mark, and finally because the Dispill Colour Scheme has not acquired
trade-mark recognition among the relevant public. I will now expand on each of
these shortcomings.
[281] In
order to determine whether the Dispill Colour Scheme is a trade-mark, it is
essential to go back to the definition of a “trade-mark” found in the Trade-marks
Act, at section 2:
|
(a)
a mark that is used by a person for the purpose of distinguishing or so as to
distinguish wares or services manufactured, sold, leased, hired or performed
by him from those manufactured, sold, leased, hired or performed by others,
|
a)
marque employée par une personne pour distinguer, ou de façon à distinguer,
les marchandises fabriquées, vendues, données à bail ou louées ou les
services loués ou exécutés, par elle, des marchandises fabriquées, vendues,
données à bail ou louées ou des services loués ou exécutés, par d’autres;
|
[282] The
appearance of a product which is “known” or “different” but not used for the
purpose of distinguishing is not a “trade-mark”. In other words, it is not
sufficient simply to say that the goods of a defendant are very much like the
goods of a plaintiff. It must be established that consumers have, by reason of
the appearance of the goods of the plaintiff, come to regard those goods as
having a single source or provenance, even if the customers do not know or
believe that the plaintiff is the only source of the product: Oxford
Pendaflex Canada Ltd v Korr Marketing Ltd, [1982] 1 S.C.R. 494, at 502.
[283] Even
if intention is not necessary for a trade-mark to be “used for the purpose of
distinguishing”, the owner’s intention to use it as a trade-mark and the public
recognition of the mark as a trade-mark are relevant considerations. This is
inherent in the use of the disjunctive in the definition of a trade-mark, that
it is used “for the purpose of distinguishing or so as to distinguish”. As the
Federal Court of Appeal stated in Tommy Hilfiger Licensing Inc v International
Clothiers Inc, 2004 FCA 252, at para 35:
…in determining whether a mark has been used as a
trade-mark, the user’s intention and public recognition are relevant
considerations, and that one or the other may be sufficient to demonstrate that
the mark has been used as a trade-mark.
See also: Medox Ltd v Roussel (Canada) Ltée, [1979] TMOB No 21 (QL), 48 CPR (2d) 97, at paras 11-15.
[284] Counsel
for the Defendants to the Counterclaim argued that the Dispill Colour Scheme
has a purely functional purpose, which is to allow a patient, or those
administering medication to a patient, to more easily identify which medication
to take at a specific moment of the day. I agree. Richards did not present
convincing evidence demonstrating an intention to use the Dispill Colour Scheme
as a trade-mark, or that the Dispill Colour Scheme has acquired trade-mark
recognition among the relevant public. As such, Richards has failed to
establish that the Dispill Colour Scheme is a trade-mark.
[285] It is
worth remembering that the Trade-marks Opposition Board allowed Distrimedic’s
opposition and refused to register the Dispill Colour Scheme as a trade-mark.
In its decision, the Opposition Board found that Richards or its predecessor in
title did not provide sufficient evidence to demonstrate an intention to use
the Dispill Colour Scheme as a trade-mark. In the case at bar, both Mr.
Filiatrault and Mr. Poirier testified that, in the late 1990s when the Dispill
product was launched, they never contemplated using the Colour Scheme as a trade-mark,
but rather always viewed it as a utilitarian feature of their product.
[286] Moreover,
it appears from the cross-examination of Mr. Glynn that no suggestion was made
that the Dispill Colour Scheme was a trade-mark when Dispill was acquired by
Richards, and there is no mention of any Dispill Label Form as a trade-mark in
the schedule listing the intellectual property forming part of the share
purchase agreement of July 2005 whereby Richards acquired Dispill from Mr.
Bouthiette. While Richards submits that the Agreement contemplated a transfer
of all intellectual property associated with the business and that the lack of
reference to the trade-mark in the schedule is not determinative, its absence nevertheless
lends support to the conclusion I have reached.
[287] Finally,
Richards has not pointed to any symbol or reference, be it on the product
itself or elsewhere, suggesting that trade-mark rights have attached to the
Dispill Colour Scheme. I recognize that there is no requirement to mark a TM
symbol in connection with a trade-mark; however, in light of the fact that other
Richards products bear indications of trade-mark or patent rights, this is
certainly an additional indicia in support of a finding that neither Richards
nor Dispill Inc. intended to use the Dispill Colour Scheme as a trade-mark.
[288] There
is no dispute between the parties that trade-mark protection does not extend to
marks which are purely or primarily functional. This is a corollary to the requisite
distinctiveness of a trade-mark: Parke, Davis & Co v Empire Laboratories
Ltd, [1964] S.C.R. 351, at 354. If it were otherwise, a trade-mark could be
used to perpetuate a patent monopoly that would otherwise have expired. As a
result, one cannot obtain a trade-mark right in the functional structure of the
wares themselves; as the Supreme Court ruled in Kirkbi, above, at
paras 42-43, a trade-mark is meant to protect the distinctiveness of a product,
and not its function. As stated by the Court at paragraph 67 of that decision,
“[t]he doctrine of passing off did not develop to protect monopolies in respect
of products but of guises, get-ups, names and symbols which identify the
distinctiveness of a source”. Conversely, a mark which displays some functional
features is not excluded from trade-mark protection, so long as protection of
the functional features do not create a monopoly over the function: Crocs
Canada Inc v Holey Soles Holdings Ltd, 2008 FC 188, at para 18. This
doctrine of “functionality” applies both to registered and unregistered trade-marks.
[289] In
the case at bar, the evidence is to the effect that the Dispill Colour Scheme
is primarily functional. Specifically, the colour code appears to have been
adopted primarily or entirely to identify a specific moment of the day when the
pill(s) contained in a blister must be taken. The resulting arrangement does
not serve as a “get up”, nor does it distinguish Richards’ product. It was
always clear in the minds of Dispill’s executives, Messrs. Filiatrault and
Poirier, that the Dispill Colour Scheme was just a colour code whose function
was to indicate periods of the day, and in no way was it intended to be used as
a trade-mark (Examination-in-chief of Claude Filiatrault at Trial, April 5,
2013, at pp 77-79; Examination-in-chief of Robert Poirier at Trial, April 11,
2013, at pp 171-173).
[290] France
Morissette also testified that the colour code reinforces the safety and
efficiency of pill dispensing, especially with the non-professional staff in
nursing homes.
[291] Once
more, I find myself in agreement with the Opposition Board when it stated that
“[a]ll of this evidence reinforces the fact that the Mark operates as a colour
code indicating the time of the day for taking the medication contained in the
pill dispenser rather than as a trade-mark identifying the source of the Wares”
(Distrimedic Inc v Richards Packaging Inc, 2012 TMOB 199, [2012] TMOB No
5199 (QL), at para 40).
[292] Mr.
Glynn himself, in his testimony, does not seem to contest that the colours do
contain a certain functionality to the extent that they facilitate use of the
product. He claims, however, that the particular colours used for the Dispill
label were selected randomly, that they have no particular advantage over any
other four colours, that they are well-known in the marketplace as being
Richards’ colours, and that these colours are not used by any other company.
In other words, Richards’ argument is that the Dispill Colour Scheme has
acquired distinctiveness, or a secondary meaning, through use and public
recognition.
[293] To
assess this argument, one must first delineate the relevant group of customers
to which the product is marketed and offered. Obviously, some groups of
customers are more sophisticated and will be less easily deceived by
misrepresentation than others.
[294] Even
if the residents of nursing homes are the ultimate consumers of the pills and
other pharmaceutical products which have been prescribed to them by their
doctors, it is clear that they are not the target clientele of the pill
dispensers in dispute. The evidence shows that patients generally do not
purchase or even use the pill dispensers as such. Autonomous patients may be
given the individual small blister at the appropriate time of the day, but they
generally will not see the pill dispenser in its complete form and thus rarely come
into contact with the complete Dispill Colour Scheme. Patients are therefore
not the relevant customers of the Dispill and Distrimedic products when it
comes to determining whether the alleged trade-mark is distinctive. Indeed,
Mr. Glynn stated in his testimony that marketing and instructional materials
are directed at pharmacies and nursing homes, and this is entirely consistent
with how the product is presented in Dispill’s advertisements.
[295] The
relevant public, therefore, are the pharmacists, since they are the one who
purchase the pill dispensers, and to a lesser extent the administrators of
nursing homes. Obviously, these people are far less influenced by colours than
would be the general public, and far less likely to be confused between one
product and another because of the use of a similar colour coding scheme. As
professionals, Richards’ primary customers care about safety. To the extent
that a colour scheme can improve safety and effectiveness in distribution of
medication it will obviously be of value, but this is a far cry from saying
that customers have come to associate the Dispill Colour Scheme with Dispill
Inc. or Richards.
[296] The
only evidence presented by Richards to demonstrate that the Dispill Colour Scheme
was recognized by the relevant public as a trade-mark, or that it has acquired
a secondary meaning, was that of Ms. Morissette. The testimony of this one
fact witness is clearly insufficient to establish that the Dispill Colour Scheme
has acquired a secondary meaning or distinctiveness of any kind. It is quite
telling that Richards did not introduce the evidence of any pharmacists in that
respect, and did not see fit to present surveys or studies demonstrating that
the relevant public has come to associate the Dispill Colour Scheme with
Dispill Inc. or Richards.
[297] Moreover,
Ms. Morissette did not opine on the distinctiveness of the trade-mark per se,
but only mentioned in her report that the Dispill Colour Scheme is
“well-known”. That does not make it a distinctive trade-mark within the meaning
of the Trade-marks Act. At best, this colour scheme may have helped
identify the product, but this was more as a result of the fact that Dispill
was for many years the only pill dispenser to use a pattern of colours on its
pill dispensers. The fact that a particular product has been in use for many
years as the only product of its category doesn’t necessarily transform its
features into trade-marks, particularly where, as in the Kirkbi case,
those features are primarily functional.
[298] In
short, I have not been convinced that the four colours on the Dispill product serve
as an identifier of Richards as the source of the product. The colour scheme
was adopted first and foremost for functionality reasons, and even if it may
have come to be somewhat linked with the Dispill product in the mind of some
people (a proposition for which there is scant evidence), it was more as a
result of being the only product of its type on the market than as a result of
an active or deliberate marketing effort aimed at creating an association with
the Dispill product in the minds of pharmacists. To that extent, the colour
scheme was not “used” by Richards to distinguish its product; it is the trade
name Dispill that fulfilled that function.
[299] Counsel
for the Defendants to the Counterclaim also relied on cases such as Apotex
Inc v Registrar of Trade-marks, 2010 FC 291 [Apotex Inc, FC 2010],
aff’d 2010 FCA 313, leave to appeal to the SCC refused, [2011] SCCA No 11 and Eli
Lilly and Co v Novopharm Ltd (1997), 73 CPR (3d) 371, aff’d (2000), 10 CPR
(4th) 10, to suggest that an attempt to have the shape, colour and/or form of
pharmaceutical products recognized as trade-marks will in most cases be
denied. This may well be true, for the obvious reason that shape, colour and
form are usually not the primary characteristics or features by which the
manufacturers of these products wish to distinguish them from the products of
their competitors. The same is not necessarily true of other pharmaceutical
paraphernalia, the main characteristic of which may not be their effectiveness
to treat or cure a medical condition and whose appearance may be more relevant
in helping the customer to choose the products of one manufacturer in
preference to another. Be that as it may, I do not need to say more on this
topic as I have already found that Richards did not use the Dispill Colour Scheme
primarily, if at all, to identify its product. Paragraph 7(b) of the Trade-marks
Act is therefore not available to Richards.
[300] Even
if I were to accept that the Dispill Colour Scheme was a trade-mark at the time
Distrimedic entered the market in 2005, there is a second reason why paragraph 7(b)
of the Trade-marks Act has not been infringed. Not only must the
Plaintiff by Counterclaim show that it owned a trade-mark on the Dispill Colour
Scheme, but it must demonstrate that the Defendants to the Counterclaim used that
trade-mark within the meaning of the Trade-marks Act. After all, paragraph
7(b) is inextricably linked to the overall scheme of the Trade-marks Act.
Contravention of paragraph 7(b) hinges on the proof of confusion in connection
with a trade-mark, which in turn stems from the “use” by a defendant of a
trade-mark within the meaning of section 4 of the Trade-marks Act: see Positive
Attitude Safety System Inc v Albian Sands Energy Inc, 2005 FCA 332, at paras
31-32.
[301] The
definition of “use” of a trade-mark in association with wares is found at
section 4 of the Trade-marks Act:
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4.
(1) A trade-mark is deemed to be used in association with wares if, at the
time of the transfer of the property in or possession of the wares, in the
normal course of trade, it is marked on the wares themselves or on the
packages in which they are distributed or it is in any other manner so
associated with the wares that notice of the association is then given to the
person to whom the property or possession is transferred.
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4.
(1) Une marque de commerce est réputée employée en liaison avec des
marchandises si, lors du transfert de la propriété ou de la possession de ces
marchandises, dans la pratique normale du commerce, elle est apposée sur les
marchandises mêmes ou sur les colis dans lesquels ces marchandises sont
distribuées, ou si elle est, de toute autre manière, liée aux marchandises à
tel point qu’avis de liaison est alors donné à la personne à qui la propriété
ou possession est transférée.
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[302] The
expression “in the normal course of trade” has been interpreted as “requiring
that the transfer of the property in or of the possession of the wares be a
part of a dealing in the wares for the purpose of acquiring goodwill and
profits from the marked goods” (Cast Iron Soil Pipe Institute v Concourse
International Trading Inc (1988), 19 CPR (3d) 393, at 395 (TMOB) [Cast
Iron Soil Pipe]). Such a dealing requires some payment or exchange, which
excludes the use of a trade-mark in situations where the wares are given away
for free or donated. In situations where samples have been distributed for
free, without any subsequent sales of this same product on the market, courts
have consistently held that the alleged trade-mark was not used “in the normal
course of trade”: see, for example, Cast Iron Soil Pipe, above, at 395; Renaud
Cointreau & Cie v Cordon Bleu International Ltd (1993), 52 CPR (3d)
284, at 287, aff’d [2000] FCJ No 1414 (QL), 188 FTR 29 (FCTD); Royal Bank of
Canada v Canada (Registrar of Trade Marks), [1995] FCJ No 1049, at para 13,
63 CPR (3d) 322 (FCTD); Professional Gardener Co v Canada (Registrar of Trade
Marks) (1985), 5 CPR (3d) 568, at 571-572 (FCTD).
[303] It
follows that the handing out of free samples of a product without subsequent
distribution of said product on the market does not amount to “use” of the
affixed mark as a trade-mark, and therefore does not trigger the application of
paragraph 7(b) of the Trade-marks Act. This is precisely what the
Defendants to the Counterclaim allege was done in 2005 when they temporarily
distributed the Distrimedic original colour scheme. The evidence before this
Court is that approximately 100,000 sheets with the same colour scheme as the Dispill
Colour Scheme were printed. Both Mr. Filiatrault and Mr. Poirier testified
that only a few batches of 500 sheets were distributed for free to
approximately eleven pharmacies for testing purposes and to receive feedback on
their product. This was apparently done over a period of several weeks in
November and December 2005. Subsequently, these sheets are said to have been
destroyed and never to have been sold by the pharmacists to their clients.
[304] It is
true that the circumstances surrounding the printing and subsequent destruction
of these initial sheets are far from clear, and that no evidence was produced
to corroborate the testimonies of Messrs. Filiatrault and Poirier.
Conversely, the Plaintiff has not adduced any evidence, be it in the form of
pharmacists’ testimonies or otherwise, sufficient to undermine the credibility
of Messrs. Filiatrault and Poirier.
[305] The
only argument put forward by the Plaintiff by Counterclaim in that
respect is that the same product codes (ETCA-500 and ETCP-500) were used by
Distrimedic for labels bearing different colour schemes (the original
Distrimedic colour scheme and a new design with different colours), thereby
making it difficult to determine whether and when Distrimedic stopped using the
Dispill Colour Scheme. This is far from sufficient to rebut the testimony of
Messrs. Filiatrault and Poirier. There could be any number of reasons why the
same product codes were used for the same product before and after the colour
change.
[306] Finally,
I note that Distrimedic suffered a loss on the sales of ETCP-500 and ETCA-500
labels, according to Richards’ own accounting expert. Therefore, even if one
were to assume that the labels were not destroyed and that all of the ETCP-500
and ETCA-500 labels bore the original Distrimedic colour scheme, these figures
would tend to confirm that the labels were not used in the normal course of
trade, and would not warrant an award of damages for passing off.
[307] Richards
alleged that the use of the Distrimedic original colour scheme in association
with the Distrimedic products “is likely to lead members of the public to the
inference that either the business or wares of […] the […] Defendants
to the Counterclaim are associated with [Richards’ container-sealing
sheets dispenser, or] that Richards endorses or otherwise approves of the
business, services and wares of […] the […] Defendants to the
Counterclaim” [underlining in original] (Three Times Amended Statement of
Defence and Counterclaim, at para 46). In the present case, there has been no
evidence of actual confusion. As previously mentioned when summarizing the
evidence, Mr. Thibault is the only witness presented by Richards who met a
Distrimedic representative during the period when the alleged misrepresentation
occurred, and his evidence did not establish misrepresentation or confusion.
Even if he may have thought that Dispill and Distrimedic relied on the same
external supplier for their accessories, he was clearly aware that Dispill and
Distrimedic were two different companies. He knew exactly who he was dealing
with when he met Distrimedic’s representative, and the representative did not
misrepresent himself or his products in any way. When asked specifically
whether or not he thought that Richards’ and Distrimedic’s products were linked,
Mr. Thibault said no.
[308] As
for Ms. Glaude, her testimony was far from satisfactory due to significant
reliance on hearsay and double hearsay. Her descriptions were not very
specific, and records of alleged misrepresentations were not kept by Richards
prior to the commencement of the present lawsuit. If, in any event, there was
any confusion among pharmacists when Distrimedic entered the market, it was
quickly dispelled as a result of Richards sending them a notice to make sure they
were aware that the new competitor on the market was not Dispill or authorized
by Dispill; when asked about the effectiveness of this notice, Ms. Glaude answered
that she believed it worked.
[309] Richards
having failed to show actual confusion, it had to demonstrate that confusion
was likely to occur. Such demonstration was not made.
[310] As
previously mentioned, the customers of the container-sealing sheets bearing the
Dispill Colour Scheme are pharmacists and, indirectly, administrators of
nursing homes. According to the parties’ submissions, the container-sealing
sheets are rarely, if ever, sold to individual patients. Typically,
pharmacists supply nursing homes directly, and nursing homes in turn distribute
the medication to patients. Often the patient never sees the colour
arrangements at issue, as individual doses are prepared by nurses or staff
outside of the patient’s view. Pharmacists and other health professionals are
less likely than other customers to confuse products that they have the professional
duty to use carefully and, as a result, the burden to show confusion is
significantly higher than for mass consumption goods.
[311] Moreover,
the pharmacist’s decision to adopt a brand of pill dispensers is not a decision
made in a hurry, as changing or adding brands involves many changes to the
organization and affects client nursing homes. Going with a new supplier of
pill dispensers involves numerous steps, such as ordering and paying for supply
which involves calling a different phone number or writing to a different
address, contacting the pharmacy software company and paying to have the
Dispill or Distrimedic application installed on the pharmacy computer, training
staff to use a new system of mounting pill dispensers, possibly reorganizing
work stations to adapt to the new system and accessories, and informing clients
of the change or addition to existing products. According to Mr. Thibault, a
pharmacist may take anywhere from a few days to months to make a decision to
switch after first being presented with a new pill-dispensing system. In
addition, it has been recognized that health professionals are in no way
influenced by the shape or colour of health products when choosing one product
over another: Apotex Inc FC 2010, above, at para 33. For all of these
reasons, pharmacists are unlikely to be confused into thinking that Dispill and
Distrimedic pill dispensers both come from the same source, or that one is
endorsed by the supplier of the other.
[312] The
same is true for the nursing homes and their administrators. The choice and
use of pill dispensers in those facilities is monitored and analyzed by health
professionals. Absent any proof to the contrary, it is difficult to imagine
that such professionals, whose responsibility is to ensure the smooth running
of healthcare facilities, might be confused by a colour scheme, especially when
the Dispill or Distrimedic trade names are printed clearly on the reverse side
of the container-sealing sheet.
[313] In
light of the above, and of the fact that no actual instance of confusion was
put in evidence by Richards, it is obvious that none of the Defendants to the
Counterclaim directed public attention to Distrimedic’s wares, services or
business in such a way as to cause or be likely to cause confusion in Canada within
the meaning of paragraph 7(b) of the Trade-marks Act. Richards’ claim
under that provision must therefore fail, as it has not demonstrated any of the
elements necessary for an action in passing off to succeed: i.e., a trade-mark
with a reputation, a misrepresentation causing or likely to cause confusion,
and damages resulting from such misrepresentation and confusion. Allowing
Richards to succeed in its passing off claim would not only be contrary to
trade-marks legislation, but also to healthy competition in the Canadian
market.
[314] The
questions raised by Prothonotary Morneau in connection with Richards’ copyright
claim are whether copyright subsists in the “Dispill Label Form”, whether
Richards can be said to be the owner of any such copyright and, if so, whether
Distrimedic has infringed any copyright owned by Richards in the Dispill Label
Form.
[315] Copyright
in Canada is a creation of statute. The Copyright Act has the dual
objective of promoting the public interest in the encouragement and
dissemination of works and obtaining a just reward for the creator. In
interpreting the Act, courts must strive to maintain an appropriate balance
between these goals: Théberge v Galerie d’Art du Petit Champlain Inc,
[2002] 2 S.C.R. 336, 2002 SCC 34, at paras 30-31.
[316] It is
well established in Canadian law that what is protected by copyright is not the
idea itself, but the expression of that idea: CCH Canadian Ltd v Law Society
of Upper Canada, 2004 SCC 13, [2004] SCR 339, at para 8 [CCH]; Moreau
v St Vincent, [1950] Ex CR 198, 12 CPR 32, at para 11 [Moreau]; Tri-Tex
Co v Ghaly et al, [1999] QJ No 4123 (QL) at paras 38-39 (Que CA). This is
made clear by the opening words of paragraph 5(1) of the Copyright Act,
which read as follows:
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5.
(1) Subject to this Act, copyright shall subsist in Canada, for the term hereinafter mentioned, in every original literary, dramatic, musical and
artistic work (…)
|
5.
(1) Sous réserve des autres dispositions de la présente loi, le droit
d’auteur existe au Canada, pendant la durée mentionnée ci-après, sur toute
oeuvre littéraire, dramatique, musicale ou artistique originale (…)
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[317] The Copyright
Act, in turn, gives the following definition of such works:
|
2.
“every original literary, dramatic, musical and artistic work” includes every
original production in the literary, scientific or artistic domain, whatever
may be the mode or form of its expression, such as compilations, books,
pamphlets and other writings, lectures, dramatic or dramatico-musical works,
musical works, translations, illustrations, sketches and plastic works
relative to geography, topography, architecture or science;
|
2.
« toute oeuvre littéraire, dramatique, musicale ou artistique originale »
S’entend de toute production originale du domaine littéraire, scientifique ou
artistique quels qu’en soient le mode ou la forme d’expression, tels les
compilations, livres, brochures et autres écrits, les conférences, les
oeuvres dramatiques ou dramatico-musicales, les oeuvres musicales, les
traductions, les illustrations, les croquis et les ouvrages plastiques
relatifs à la géographie, à la topographie, à l’architecture ou aux sciences.
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[318] Because
copyright only protects the expression of ideas, a work must also be expressed
in some way or be in a fixed material form, in order to attract copyright
protection: CCH, above, at para 8; Goldner v Canadian Broadcasting
Corp (1972), 7 CPR (2d) 158 (FCTD). Ideas or schemes per se are
public property as soon as they are disclosed, however good and valuable they
may be. As John S. Mckeown puts it in Fox- Canadian Law of Copyright and
Industrial Designs, 4th ed, vol 1 (Toronto: Carswell, 2004), at 4-3:
There is no requirement for originality in the idea
of a work, and a novel idea, as distinct from the form in which it is
expressed, is not the subject of copyright protection. Copyright is confined
to the form in which the ideas are expressed. The ideas are public property,
the work is the author’s.
(…)
Similarly, copyright does not extend to schemes,
systems, or methods, even if they are original, but is confined to their
expression; nor does it extend to a method of communicating information if it
is not original. However good and valuable an idea, plan, scheme or system is,
the moment it is disclosed to the public, in so far as copyright is concerned,
it becomes public property.
[319] Finally,
it is a well-known and undisputable principle of copyright law that works need
to be original to attract copyright protection. The Supreme Court defined
“originality” as follows in CCH, above, at para 16:
For a work to be “original” within the meaning of
the Copyright Act, it must be more than a mere copy of another work. At
the same time, it need not be creative, in the sense of being novel or unique.
What is required to attract copyright protection in the expression of an idea
is an exercise of skill and judgment. By skill, I mean the use of one’s
knowledge, developed aptitude or practised ability in producing the work. By
judgment, I mean the use of one’s capacity for discernment or ability to form
an opinion or evaluation by comparing different possible options in producing
the work. This exercise of skill and judgment will necessarily involve
intellectual effort. The exercise of skill and judgment required to produce
the work must not be so trivial that it could be characterized as a purely
mechanical exercise.(…)
[320] In
coming to that conclusion, the Court purported to strike a middle ground
between two prior competing views on the meaning of “original” in copyright
law. According to some, an author deserved to have his or her efforts in
producing a work recognized so long as it was not a mere copy of another work.
Others favoured a more restrictive view, requiring a work to be creative to be
original. The Court decided to opt for a position that falls between these two
extremes. In other words, it will not be sufficient, as suggested by the
Plaintiff by Counterclaim, to demonstrate industriousness or “sweat of
the brow” to make a work copyrightable: see, for example, U & R Tax
Services Ltd v H & R Block Canada Inc (1995), 62 CPR (3d) 257 (FCTD) [U&R
Tax Services Ltd]. Conversely, the bar should not be set so high so as to
exclude every work that is not creative in the sense of being novel or unique.
What is required, at the end of the day, is not creativity per se, but
at least some sort of intellectual effort. For copyright to subsist, skill and
judgment must be exercised in the expression of an idea: see CCH, above,
at para 18.
[321] Compilations
and forms, therefore, must be subject to the same threshold of originality as any
other work. The CCH decision defined “compilation” as a form of
expression that arises when an individual (the “arranger”) takes existing
material and casts it in a different form. It is not the individual components
that are the subject of the copyright but the overall arrangement of them,
which the arranger has produced: see CCH, above, at para 33.
[322] In CCH,
the plaintiff publishers were claiming copyright in headnotes, case summaries, a
topical index and compilations of reported judicial decisions. The Supreme
Court concluded that the headnotes, case summaries and topical index were
original works in which copyright subsisted, on the basis that there had been
an exercise of skill and judgment required to create them. As for the reported
decisions, they were considered as a compilation of the headnotes and of the
edited judicial decisions and were afforded protection. However, the Supreme
Court found that the publishers could not claim copyright in the edited
judicial decisions in and of themselves without the headnotes, as the addition
to the judicial decisions of factual information such as the date of the
judgment, the court and the panel hearing the case, counsel for each party,
lists of cases, statutes and parallel citations, were trivial and not requiring
judgment or skill.
[323] It
follows that the alignment of factual data in a non-original way is not
sufficient to attract copyright protection: Tele-Direct (Publications) Inc v
American Business Information Inc (1997), 76 CPR (3rd) 296 (FCA), leave to
appeal refused, [1997] SCCA No 660. Moreover, when an idea can be expressed in
only a limited number of ways, then the expression of that idea is not
protected, as protecting it would grant a monopoly on the idea itself. In those
situations, therefore, the threshold of originality is not met and there is no
copyright protection: Delrina Corp v Triolet Systems Inc (2002), 17 CPR
(4th) 289, at paras 48-52 (Ont CA), leave to appeal refused, (2002), 305 NR
398.
[324] Similarly,
when the content and layout of a form is largely dictated by utility and/or
legislative requirements, it is not to be considered original. A good
illustration of this principle is found in the case of Bonnette c Entreprise
Dominion Blueline Inc, 2005 QCCA 342 (CanLII) [Bonnette]. In that
case, Bonnette was suing a competitor for infringement of his copyright in
wages and payroll ledgers. The Court of Appeal reiterated the basic principle
that the idea of compiling information required by legislation in one place is
not susceptible to protection under the Copyright Act, as it is the
expression of an idea which is protected, and not the idea itself. The only remaining
question was whether the wages books revealed an original expression of the
idea of compiling such mandatory information into one document. The Court concluded
that it was not the case, as there is only one way of calculating the net
revenue of an employee and the disposition of the data in table form was not a
copyrightable form of expression but rather a method. On the other hand, the
Court of Appeal conceded that the general appearance of the payroll ledger was
not devoid of originality, as there were more options open to the author to
exercise some originality in the disposition of the information on the
document, and that such disposition was not dictated purely by utility, as was
the case for the wages books.
[325] In
conclusion, I agree with the Defendants to the Counterclaim that forms and
other works resulting from the compilation of elements will not be considered
to have a sufficient degree of originality when the selection of the elements
entering into the work are dictated by function and/or law, and where their
arrangement into a tangible form of expression is not original. Only the visual
aspect of the work is susceptible to copyright protection, if original.
[326] There
has been some confusion as to what element of the software used in association
with Richards’ product is actually claimed as being protected by copyright.
While there is no doubt that this is not a software infringement case, it is
much less clear what Richards means when referring to the Dispill Label Form.
[327] In
its broadest form, Richards’ claim appears to be that the “Dispill Label
Form” that should be protected by copyright is the selection and use of
information to be printed onto a container-sealing sheet and aligned in the
cells of the columns on the container-sealing sheet (Pre-Trial Conference Memorandum
of the Defendants and Plaintiff by Counterclaim, at paras 18-19; Trial Written
Representations, at para 314). Such a broad characterization of the Dispill
Label Form would obviously fail to attract any copyright protection. As
previously shown, copyright does not protect ideas, schemes, methods or
selection in the abstract, but rather the original expression of them. As such,
the selection of information or fields of information is not a “work” susceptible
of copyright protection. In my view, this finding is entirely obvious and this
version of Richards’ claim need not be discussed any further. Allowing
Richards to monopolize the business of printing basic patient and prescription
information on the sealing sheet of a pill dispenser, as Mr. Glynn seemed at
time to claim in cross-examination and in examination for discovery, would be
anti-competitive and against the spirit of copyright law.
[328] Despite
the ambiguity in Richards’ pleadings and representations, I am prepared to
accept that what Richards really seems to be referring to by the term “Dispill
Label Form” is a series of entry screens from a software program written in the
DOS language, which was used in the 1990s and screenshots of which are reproduced
at paragraph 145 of these reasons. In its Three Times Amended Statement of
Defence and Counterclaim (at para 30), Richards defines the Dispill Label Form
as “(…) a form for use in a computer program wherein patient information is
inputted and then printed onto a permanent container-sealing sheet or
replaceable container-sealing sheet” and qualifies it as a “literary work” (see
also para 312 of Richards’ Written Representations). It appears, therefore,
that what is claimed to be copyrighted is the layout, appearance or aesthetics
of the entry screens and the arrangement of the information selected.
[329] While
Distrimedic has apparently never used the Dispill DOS program as its
abandonment predated the incorporation of Distrimedic Inc., it is Richards’
submission that this program survived in the Windows version of the Mentor pharmacy software and its entry screens, reproduced at paragraph 147 of these
reasons. Richards therefore seems to be claiming copyright on these Windows
entry screens as well. Richards finds support for this proposition in Dr.
Abdelrahman’s affidavit and testimony, according to whom the information
provided in the form of the Richards’ DOS program is necessary for the Mentor
Windows program to print label sheets.
[330] As
helpful as were the report and testimony of Dr. Aldelrahman in helping the
Court to better understand the two generations of operating systems used to print
the Dispill labels, his evidence is of little relevance to the questions which
this Court has been asked to answer; namely, whether any aspect of the Distrimedic
application found in current versions of the computer software used by
pharmacists in association with the Distrimedic product infringes Richards’
alleged copyright in the Dispill Label Form. To be sure, Dr. Abdelrahman is
not to be faulted on the relevance of his evidence as this was not the mandate
he was given by Richards.
[331] There
is no dispute between the parties that a form does not have to be on a paper
support and that a computer screen (which in any event can be printed) falls
within the definition of a “work” for the purposes of the Copyright Act,
and can therefore be protected. Similarly, the Defendants to the Counterclaim
do not dispute that the DOS Dispill Label Form is a literary work.
[332] There
are, however, two problems preventing the recognition of copyright in the
Dispill Label Form. First, the selection of the information for the DOS Dispill
Label Form bears a very low degree of originality, as it is mostly dictated by
provincial legislation on the labelling of prescription drugs, both in Quebec and Ontario, where the parties’ products are mainly sold. In Quebec, the legal
requirements regarding information that must appear on a prescription label is
governed by section 2.01 of the Regulation respecting the labelling of
medications and poisons, RRQ 1981, c P-10, r 15. According to section 2.01
of that Regulation, a pharmacist must enter on a prescription label the name of
the patient, the medication prescribed (including, where applicable, the date
of dispensing and number of the prescription, generic or trade name, quantity
and concentration of the medication, dosage, directions for use of the
medication, special directions for preservation of the medication, authorized
renewal, special precautions and expiration date of the medication), the name
of the prescribing physician, and the name, address and telephone number of the
pharmacy.
[333] It is
true, as submitted by the Plaintiff by Counterclaim, that there is nothing in
the Regulation referring to some elements of the information collected by the
DOS Dispill Label Form, such as the DIN, the time of day and the medication
format, which appear in the Medication Management screen, as well as the
patient location, the number of days and the file number, which appear in the
Label Printing screen. Most of these elements, however, are specific to pill
dispensers and to patients living in nursing homes, and are therefore
essentially dictated by utility.
[334] The
decision of the Quebec Court of Appeal in Bonnette c Entreprise Dominion
Blueline Inc, above, is quite interesting in this respect. The Court
considered the fact that the author had added spaces in the document to include
some additional information, such as information regarding a person’s previous
employment, whether the employee was affiliated with a union, her family
situation, etc. The Court recognized that some judgment had been exercised,
but found that it was not sufficient to confer on the overall document the
required level of originality, as the elements had been integrated in a logical
way into the document, and the ways in which the information could be presented
were limited:
Il paraît clair que la majorité des données
inscrites dans les tableaux relatifs aux gains et déductions des employés n’ont
pas été sélectionnées grâce au jugement et au talent de l’auteur, mais
simplement parce qu’elles constituent des données qu’un employeur a
l’obligation légale de conserver. Au surplus, le choix des données ou éléments
inscrits découle de l’objectif à atteindre, celui-ci étant de conserver les
données relatives au calcul du revenu net des employés, il résulte que les
éléments inscrits dans les tableaux sont nécessairement l’ensemble des gains et
déductions susceptibles d’entrer dans ce calcul. Cette portion de la
conception des livres de paye n’a pas nécessité que l’auteur fasse appel à des
connaissances ou à une compétence particulières ni qu’il utilise son
discernement afin de parvenir au résultat exprimé.
(Bonnette, above, at para 34)
[335] Similarly,
it cannot be said that Mr. Bouthiette, the alleged author of the DOS Dispill
Label Form, exercised much originality with regards to the selection of the
information on the form. Nor can it be seriously argued that this Form is
susceptible of protection because of the originality of its layout, appearance
or aesthetics. No evidence has been filed tending to demonstrate that the
arrangement of the user interface on the DOS Dispill Label Form differs in any
significant way from the DOS interface generally in use during the relevant
years.
[336] In
short, I am unable to find in favour of the Plaintiff by Counterclaim.
Copyright protects originality of form or expression. As the Supreme Court
reminded us in CCH:
…an original work must be the product of an author’s
exercise of skill and judgment. The exercise of skill and judgment required to
produce the work must not be so trivial that it could be characterized as a
purely mechanical exercise…
(CCH, above, at para 25).
[337] In
the case at bar, I have not been convinced that the selection of information
and its arrangement in the DOS Dispill Label Form required of its author the
type of skill and judgment deserving of copyright protection. It may be, as
suggested by counsel for Richards, that Dispill was the first to create a
method of generating the necessary patient information for printing on each
cell of a pill dispenser. This cannot be the subject of copyright protection,
however, as it would amount to creating a monopoly on an idea or method, which
the law does not permit.
[338] The
Plaintiff by Counterclaim submits that the original DOS program licensed by
Dispill Inc. survives in the Windows version. In fact, what the Plaintiff
seems to be arguing is that the information printed using the DOS program containing
the DOS Form is similar to the information printed using the Windows program
containing the Windows Form. The implication is that Richards, by virtue of
its alleged ownership of the copyright in the DOS Form, also owns rights in the
Windows Form.
[339] There
is no doubt that the inputted data provided to the form of the DOS program is
necessary for the Windows program to print Dispill or Distrimedic label sheets,
as indicated by Dr. Abdelrahman in his report (at para 11). After all, two software
programs may perform the same function and allow for the printing of the same
form as a result of retrieving the same information from a database. This is a
far cry from saying that one program is a copy of the other, or more specifically
that the Dispill Label Form (or the DOS Form) is equivalent to the Windows
version of the Mentor software.
[340] It
must be stressed that the first and second screen shots of the Mentor software (reproduced at para 147 of these reasons) are not specific to the operation
of printing onto a Dispill container-sealing sheet. In fact, these screens are
part of the Mentor pharmacy software and exist independently from the
software’s capacity to allow a user to print information on a Dispill sheet.
It is only the third entry screen that is specific to Dispill and over which
Richards could conceivably claim copyright.
[341] It is
also interesting to note that of the fifteen fields available on the DOS Form,
only three are specific to the Dispill section of the larger Mentor software.
The remaining twelve fields appear to be available for completion in modules
other than the Windows Form for printing on Dispill (i.e., in the first
two screen shots), and therefore are found in the Mentor software for reasons
other than or in addition to printing on Dispill labels. There appear to be
only two elements of the DOS Form (the start date of the label sheet and the number
of days) that are also found in the Dispill-specific section of the Windows
Mentor software (i.e., in the third screen shot). This means that what Richards
presents as being the Windows version of the DOS Form has only two basic
elements in common with the original form.
[342] If
the original DOS Dispill Label Form is not original within the meaning of the Copyright
Act because the selection of information is mostly dictated by legislation,
utility and common sense, the same must be said for the Dispill section of the Windows
Mentor program. The information that is specific to Dispill is minimal, and
there is no greater originality in the layout or aesthetics of the third screen
of the Windows Form. The screen is no more than a list of legislatively
required or common sense fields for printing, expressed in a non-original
manner, and no evidence has been brought to suggest that it is the product of
an author’s exercise of skill and judgment. I find, therefore, that neither
the DOS nor the Windows version of the Dispill Label Form can be protected by
copyright under the Copyright Act.
[343] The
Defendants to the Counterclaim also challenge Richards’ standing to sue them
for copyright infringement, arguing that even if copyright subsists in the DOS
Form or the WINDOWS Form, Richards does not own the copyright in either one.
Richards retorts that there was a transfer of copyright in the Dispill Label
Form from Bouthiette to Dispill, and refers to the following chain of titles: (a)
Agreement regarding the purchase of the assets by Dispill Inc. from Bouthiette
dated January 1, 1998 (JBD 68); (b) Share purchase agreement dated July 29,
2005 (Confidential, JBD 244 and JBD 245); and (c) Winding-up Agreement
transferring all assets of a corporation to its shareholder dated July 29, 2005
(JBD 135).
[344] Despite
the mention “DISPILL Copyright 1996 – Tous Droits Réservés” appearing on the
first page of the computer software program from which the Dispill Label Form
was printed (JBD 149), I agree with the Defendants to the Counterclaim that
there are a number of holes in Richards’ alleged ownership in the copyright of
the Dispill Label Form, assuming that it could be protected by copyright.
[345] Paragraph
13(1) of the Copyright Act states that, subject to other provisions of
that Act, the author of a work is the first owner of the copyright therein. In
a proceeding where the title of a plaintiff is in issue, paragraph 34.1(1)
indicates that the author is presumed to be the owner of the copyright unless
proven otherwise:
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13.
(1) Subject to this Act, the author of a work shall be the first owner of the
copyright therein.
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13.
(1) Sous réserve des autres dispositions de la présente loi, l’auteur d’une
oeuvre est le premier titulaire du droit d’auteur sur cette oeuvre.
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Presumptions
respecting copyright and ownership
34.1
(1) In any civil
proceedings
taken under this Act in which the defendant puts in issue either the
existence of the copyright or the title of the plaintiff to it,
(a)
copyright shall be presumed, unless the contrary is proved, to subsist in the
work, performer’s performance, sound recording or communication signal, as
the case may be; and
(b)
the author, performer, maker or broadcaster, as the case may be, shall,
unless the contrary is proved, be presumed to be the owner of the copyright.
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Présomption
de propriété
34.1
(1) Dans toute procédure civile engagée en vertu de la présente loi où le
défendeur conteste l’existence du droit d’auteur ou la qualité du demandeur :
a)
l’oeuvre, la prestation, l’enregistrement sonore ou le signal de
communication, selon le cas, est, jusqu’à preuve contraire, présumé être
protégé par le droit d’auteur;
b)
l’auteur, l’artiste-interprète, le producteur ou le radiodiffuseur, selon le
cas, est, jusqu’à preuve contraire, réputé être titulaire de ce droit
d’auteur.
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[346] In
the case at bar, Richards is clearly and admittedly not the author of the DOS
Form or of the Windows Form. Therefore, Richards was required to prove that it
is now the rightful owner of the alleged copyright in these alleged works, by
establishing a valid chain of title linking it to the author(s) or to the first
owner of the copyrights therein. This has not been done satisfactorily.
[347] First
of all, the identity of the author(s) of the DOS Form has not been established.
This would be a crucial first step in proving any valid chain of command.
Richards identified Mr. Bouthiette as the author of the DOS Form. Messrs.
Filiatrault and Poirier, on the other hand, testified that Mr. Bouthiette’s
nephew, Francis Pelletier, programmed the DOS software and that some input was
also received from pharmacists and software companies as to the selection of
fields and operation of the DOS software.
[348] Mr.
Bouthiette could have been called as a witness by Richards, as he is alive and
reachable by Ms. Glaude’s own admission. Nevertheless, Richards chose not to
produce him as a witness. It is well established that, absent a reasonable
explanation, an adverse inference may be drawn if a party fails to adduce
evidence available to him or her which could have resolved the issue: see Milliken
& Co v Interface Flooring Systems (Canada) Inc (1998), 83 CPR(3d) 470,
at para 26, aff’d (2000), 5 CPR(4th) 209. No explanation having been provided
to explain why Mr. Bouthiette could not testify, I therefore draw an adverse
inference and come to the conclusion that Mr. Bouthiette is not the author of
the copyrightable part of the DOS Form, or at least that he is not its sole
author.
[349] Moreover,
the evidence of a proper assignment of copyright to Richards is deficient in at
least two respects; even assuming that Mr. Bouthiette was in fact the author of
the DOS Form. By virtue of sections 13(4) and 41.23 (previously 36(1)) of the Copyright
Act, Richards was required to produce a chain of signed written assignments
from Mr. Bouthiette to Richards. It has failed to do so.
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13.
(4) The owner of the copyright in any work may assign the right, either
wholly or partially, and either generally or subject to limitations relating
to territory, medium or sector of the market or other limitations relating to
the scope of the assignment, and either for the whole term of the copyright
or for any other part thereof, and may grant any interest in the right by
licence, but no assignment or grant is valid unless it is in writing signed
by the owner of the right in respect of which the assignment or grant is made,
or by the owner’s duly authorized agent.
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13.
(4) Le titulaire du droit d’auteur sur une oeuvre peut céder ce droit, en
totalité ou en partie, d’une façon générale ou avec des restrictions
relatives au territoire, au support matériel, au secteur du marché ou à la
portée de la cession, pour la durée complète ou partielle de la protection;
il peut également concéder, par une licence, un intérêt quelconque dans ce
droit; mais la cession ou la concession n’est valable que si elle est rédigée
par écrit et signée par le titulaire du droit qui en fait l’objet, ou par son
agent dûment autorisé.
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41.23
(1) Subject to this section, the owner of any copyright, or any person or
persons deriving any right, title or interest by assignment or grant in
writing from the owner, may individually for himself or herself, as a party
to the proceedings in his or her own name, protect and enforce any right that
he or she holds, and, to the extent of that right, title and interest, is
entitled to the remedies provided by this Act.
Copyright
owner to be made party
(2) If
proceedings under subsection (1) are taken by a person other than the
copyright owner, the copyright owner shall be made a party to those
proceedings, except
(a) in
the case of proceedings taken under section 44.1, 44.2 or 44.4;
(b) in
the case of interlocutory proceedings, unless the court is of the opinion
that the interests of justice require the copyright owner to be a party; and
(c) in
any other case in which the court is of the opinion that the interests of
justice do not require the copyright owner to be a party.
Owner’s
liability for costs
(3) A
copyright owner who is made a party to proceedings under subsection (2) is
not liable for any costs unless the copyright owner takes part in the
proceedings.
Apportionment
of damages, profits
(4) If
a copyright owner is made a party to proceedings under subsection (2), the
court, in awarding damages or profits, shall, subject to any agreement
between the person who took the proceedings and the copyright owner,
apportion the damages or profits referred to in subsection 35(1) between them
as the court considers appropriate.
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41.23
(1) Sous réserve des autres dispositions du présent article, le titulaire
d’un droit d’auteur ou quiconque possède un droit, un titre ou un intérêt
acquis par cession ou concession consentie par écrit par le titulaire peut,
individuellement pour son propre compte, en son propre nom comme partie à une
procédure, soutenir et faire valoir les droits qu’il détient, et il peut
exercer les recours prévus par la présente loi dans toute l’étendue de son
droit, de son titre et de son intérêt.
Partie
à la procédure
(2)
Lorsqu’une procédure est engagée au titre du paragraphe (1) par une personne
autre que le titulaire du droit d’auteur, ce dernier doit être constitué
partie à cette procédure sauf :
a)
dans le cas d’une procédure engagée en vertu des articles 44.1, 44.2 ou 44.4;
b)
dans le cas d’une procédure interlocutoire, à moins que le tribunal estime
qu’il est dans l’intérêt de la justice de constituer le titulaire du droit
d’auteur partie à la procédure;
c)
dans tous les autres cas où le tribunal estime que l’intérêt de la justice ne
l’exige pas.
Frais
(3)
Le titulaire du droit d’auteur visé au paragraphe (2) n’est pas tenu de payer
les frais à moins d’avoir participé à la procédure.
Répartition
des dommages-intérêts
(4)
Le tribunal peut, sous réserve de toute entente entre le demandeur et le
titulaire du droit d’auteur visé au paragraphe (2), répartir entre eux, de la
manière qu’il estime indiquée, les dommages-intérêts et les profits visés au
paragraphe 35(1).
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[350] The
asset purchase agreement whereby Mr. Bouthiette sold his business to his
company Dispill Inc., dated January 1, 1998, makes no mention of any copyright
in the Dispill Label Form (JBD 68). Of course, when interpreting an assignment
or license, the Court may look at the context of the contract and the intent of
the parties to determine its scope; however, care must be taken not to give too
wide an interpretation to an assignment or a license, given the clear objective
of copyright law to protect creators (see Tamaro, Normand, The 2012
Annotated Copyright Act (Toronto: Thomson Carswell, 2012), at 419).
[351] In
the present case, I do not think that the Clause 1 of that Agreement, stating
that “[l]e vendeur vend à l’acquéreur, qui l’achète, son entreprise
de vente d’un système de dispensateur de médicaments, connue sous le nom de
DISPILL…”[emphasis in original], explicit enough to encompass the alleged
copyright in the Dispill Label Form. This is made even clearer by the
description that is given of that enterprise in that same clause, which
explicitly refers in Section C to the invention in the patent. It doesn’t
appear, therefore, that the parties to the agreement had the Dispill Label Form
and the copyright possibly attaching thereto in mind, particularly as they made
no reference to it despite referring explicitly to the patent. That Mr.
Bouthiette did not assign his copyright in the Dispill Label Form to Dispill
Inc. is also confirmed to a certain extent by another document, entitled
“DISPILL - Interface Reference – Dispill Dosette and Unidose”, dated March 31,
1998, which contains a copyright notice “Copyright Michel Bouthiette 1998”.
[352] It is
worth mentioning that the DOS Dispill Label Form is alleged by Richards to have
been created by Mr. Bouthiette “around 1996” (see Pre-Trial Conference
Memorandum, para 17). At that point in time, Dispill Inc. was not yet in
existence, as it was incorporated on November 11, 1997 (Agreed Statement of
Facts, at para 3). Therefore, Dispill Inc. could not have acquired the
copyright in the Dispill Label Form unless it was assigned to it by Mr.
Bouthiette, and the fact that Mr. Bouthiette was an employee of Dispill Inc. is
immaterial in that context.
[353] On
the basis of the foregoing, I find, on a balance of probabilities, that there
was no valid assignment of copyright between Bouthiette and Dispill Inc., so
that Dispill Inc. could not, later, properly assign the alleged copyright in
the DOS Form to Richards.
[354] As a
result, it is no answer for Richards to rely on section 5.1(ee) of the Share
Purchase Agreement dated July 29, 2005 (JBD 244) between Richards Packaging
Holdings Inc. and 9120-0493 Québec Inc, Chantal Hebert, Étienne Bouthiette,
Martin Bouthiette and Michel Bouthiette (collectively referred to as
“Bouthiette” or “Guaranteeing Party”) whereby Richards Packaging Holdings Inc.
acquired, among other things, the shares owned by the Vendors in Dispill Inc.
and all its intellectual property. Even assuming that this particular clause
would have been broad enough to encompass any alleged copyright in the Dispill
Label Form, Mr. Bouthiette and the other sellers could not transfer to the
Plaintiff by Counterclaim more than what they owned in Dispill Inc.
[355] Finally,
neither Mr. Bouthiette nor any employee of Richards is the author of the
Windows Form. Richards did not present any evidence to the effect that DLD
assigned its copyright in the Mentor software or in the Windows Form to Dispill
Inc. or to Richards. As such, Richards cannot claim to be the owner of any
copyright in the Windows Form.
[356] From
2005 to 2006, DLD created an application in its Mentor software allowing users
to print the necessary information onto Distrimedic container-sealing sheets.
This is done by selecting the “Imprimer” (“Print”) button in the second screen
shot of the Windows Form (reproduced at para 147) then selecting the
Distrimedic icon that appears in the pop-up menu screen directly below Dispill
Laser. According to Richards, the creation by DLD and the use by pharmacists
of the function in the Mentor software that allows one to print onto
Distrimedic container-sealing sheets is an infringement of its copyright, and
the Defendants to the Counterclaim authorized that infringement.
[357] The Copyright
Act defines infringement as follows:
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27.
(1) It is an infringement of copyright for any person to do, without the
consent of the owner of the copyright, anything that by this Act only the
owner of the copyright has the right to do.
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27.
(1) Constitue une violation du droit d’auteur l’accomplissement, sans le
consentement du titulaire de ce droit, d’un acte qu’en vertu de la présente
loi seul ce titulaire a la faculté d’accomplir.
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[358] In
the case of a work, the copyright owner’s exclusive rights are listed in
section 3 of the Copyright Act:
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3.
(1) For the purposes of this Act, “copyright”, in relation to a work, means
the sole right to produce or reproduce the work or any substantial part
thereof in any material form whatever, to perform the work or any substantial
part thereof in public or, if the work is unpublished, to publish the work or
any substantial part thereof,
…
and
to authorize any such acts.
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3.
(1) Le droit d’auteur sur l’oeuvre comporte le droit exclusif de produire ou
reproduire la totalité ou une partie importante de l’oeuvre,
sous
une forme matérielle quelconque, d’en exécuter ou d’en représenter la
totalité ou une partie importante en public et, si l’oeuvre n’est pas
publiée, d’en publier la totalité ou une partie importante
…
Est
inclus dans la présente définition le droit exclusif d’autoriser ces actes.
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[359] The alleged
infringer must therefore have reproduced the work itself or a
substantial part thereof, or have authorized a third party to effect such
reproduction, in order to be liable for copyright infringement by
“reproduction”.
[360] The
determination of what constitutes a “substantial” part of an original work is a
question of fact, and will depend on the quality of what was taken from the
original rather than on the quantity. In U&R Tax Services Ltd, above,
at 268, this Court listed some of the factors that will be taken into consideration
in assessing whether the copied part of a work is “substantial”:
a) the quality and quantity of the material
taken;
b) the extent
to which the defendant’s use adversely affects the plaintiff’s activities and
diminishes the value of the plaintiff’s copyright;
c) whether the
material taken is the proper subject-matter of a copyright;
d) whether the
defendant intentionally appropriated the plaintiff’s work to save time and
effort; and
e) whether the
material taken is used in the same or a similar fashion as the plaintiff’s.
[361] In
the case of works containing elements not protected by copyright, only
similarities with respect to copyright-protected elements must be looked at, as
it is not copyright infringement to copy ideas, arrangements or systems (Moreau,
above, at paras 14-15). In the same vein, similarities between two works will
not ground a finding of infringement if these similarities are in the public
domain (Philip Morris Products S.A. v Marlboro Canada Ltd, 2010 FC 1099,
at para 320, aff’d on copyright issues at 2012 FCA 201 [Philip Morris
Products S.A.]). Access to the work by the alleged infringer must also be
established; if the second work was created independently, there will be no
infringement (U&R Tax Services Ltd, above, at 268; Philip Morris
Products S.A., above, at para 320). Finally, “to authorize”, for the purposes
of copyright law, must be interpreted restrictively as “to sanction, approve
and countenance”. Accordingly, courts will presume that a person who
authorizes something does so “only so far as it is in accordance with the law”
(CCH, above at paras 37-38, 43).
[362] Even
if this Court were to find that copyright subsists in one or many versions of
the Dispill Label Form and that Richards owned such copyright, there is no
evidence that the Defendants to the Counterclaim illegally reproduced any of
these versions, or that they authorized someone else to make such a reproduction.
[363] Counsel
for the Plaintiff by Counterclaim submitted that when Distrimedic first
launched its product, toward the end of 2005, it had not yet entered into an
agreement with DLD to print the Distrimedic labels (which was subsequently
signed on September 6, 2006), and therefore “it appears the DLD software
pointed their applications to the Dispill laser to print the Distrimedic
labels”, at least during that period of time. This, however, is pure
speculation. It appears that Dispill initially sold an 8½ x 10 label only, but
later sold an 8½ x 11 label as well (Agreed Statement of Facts, para 38),
whereas Distrimedic sold only the A4 (8½ x 11) format in the relevant period. Even
if the Distrimedic sheets that were sold during that period were the same size
as that of the Dispill sheets, Dr. Abdelrahman said that they would have to be
exactly the same to print properly using the Dispill module. He also said that
he could not, not having reviewed the source codes of the Windows Form and
Distrimedic Module, confirm whether or not the program module that executes
when the Dispill option is selected was made to execute the Distrimedic Module
as well. Finally, Richards presented no evidence at all of what occurs if one
chooses the Distrimedic option in the printing menu of the Mentor software.
[364] There
is evidence that the DOS Form was abandoned long before Distrimedic was
incorporated and entered the market. Consequently, Distrimedic cannot be said
to have used, reproduced or authorized the reproduction of the DOS Form. Even
if some elements of the DOS Form found their way into the Distrimedic Module,
these elements did not constitute a substantial part of the DOS Form and were
not the expression of an author’s original or literary work, as discussed
above. As for the Windows Form itself, Richards does not own any copyright in
it. Consequently, the programming, presumably by employees of DLD, of a
Distrimedic Application in the Mentor software (that not surprisingly uses the
same interface as the Windows Form and pops up in the same manner prior to
printing), cannot be said to constitute infringement of any of Richards’
alleged copyrights.
[365] Richards
has presented no tangible evidence of Distrimedic having authorized anyone to
reproduce any portion of the DOS Form or Windows Form, or to otherwise infringe
upon Richards’ allegedly copyrighted material. If Distrimedic instructed DLD
to create the Distrimedic Module, which allows users of the Mentor software to
print onto Distrimedic’s container-sealing sheets, using similar fields to
those used for the Dispill product, that is simply because those fields are
required by law and/or are obvious fields to be displayed on a pill dispenser.
Even if there were infringement of Richards’ alleged copyright by the
programmers of the Windows program, the Defendants to the Counterclaim cannot
be said to have authorized such infringement, as none of the Defendants to the
Counterclaim have a sufficient degree of control over the activities of DLD so
as to be said to have “sanctioned, approved or countenanced” any infringement.
In any event, it must be presumed that a person who authorizes an activity does
so only to the extent that it is in accordance with the law.
[366] For
all of the foregoing reasons, Richards’ copyright claim must fail as it is not
substantiated by the evidence and finds no support in the applicable legal
principles.
[367] Having
found that the Defendants to the Counterclaim have not infringed any patent or
copyright of Richards, and have not misrepresented their wares, services or
business, or passed off such wares, services or business as being in any way
associated with Richards’ business or products, Richards’ counterclaim must be
dismissed entirely. As a result, there is no need to make any finding with
respect to liability.
[368] The
Defendants to the Counterclaim are entitled to their costs. In the event that
the parties cannot agree on the amount of costs within 30 days from the
issuance of this judgment, they may make submissions to this Court. The parties
will have a further 15 days to make reply submissions, if they so choose.
JUDGMENT
THIS
COURT’S JUDGMENT is that the counterclaim be dismissed in its
entirety, with costs. In the event that the parties cannot agree on the amount
of costs within 30 days from the issuance of this judgment, they may make
submissions to this Court. The parties will have a further 15 days to make
reply submissions, if they so choose.
"Yves de
Montigny"
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