Urea Casale S.A. v. Stamicarbon B.V., 2002 FCA 10

Date: 20020115

Docket: A-512-00

Neutral citation: 2002 FCA 10

CORAM:        STONE J.A.

SEXTON J.A.

EVANS J.A.

BETWEEN:

                                                                UREA CASALE S.A.

                                                                                                                                                       Appellant

                                                                                 and

                                                               STAMICARBON B.V.

                                                                                                                                                   Respondent

                                            Heard at Toronto, Ontario, December 11, 2001.

                                  Judgment delivered at Ottawa, Ontario, on January 15, 2002.

REASONS FOR JUDGMENT BY:                                                                                        STONE J.A.

CONCURRED IN BY:                                                                                                         SEXTON J.A.

                                                                                                                                                   EVANS J.A.

Date: 20020115

Docket: A-512-00

Neutral citation: 2002 FCA 10

CORAM:        STONE J.A.

SEXTON J.A.

EVANS J.A.

BETWEEN:

                                                                UREA CASALE S.A.

                                                                                                                                                       Appellant

                                                                                 and

                                                               STAMICARBON B.V.

                                                                                                                                                   Respondent

                                                        REASONS FOR JUDGMENT

STONE J.A.

[1]                 This is an appeal and cross-appeal from an order of the Trial Division dated July 27, 2000, granting the respondent leave to discontinue its action and allowing its motion for summary judgment to dismiss the appellant's counterclaim. The main issue in the appeal concerns the decision of the learned Motions Judge to dismiss the appellant's counterclaim. The cross-appeal is chiefly concerned with the Motions Judge's award of costs in the action. The parties are agreed, however, that if the order under appeal is sustained in its entirety, neither of them will seek a variation of the disposition of costs by the Motions Judge.

                                                           FACTUAL BACKGROUND

[2]                 The action, commenced by the respondent on May 16, 1997, alleges that the appellant's Canadian Patent No. 2,141,886 (the "Patent") was invalid on a number of grounds. On October 10, 1997, the appellant filed a Statement of Defence denying the allegations contained in the Statement of Claim and alleging by way of Counterclaim infringement of the Patent by the respondent. The appellant alleged in the Counterclaim that the respondent had made, used, sold and offered for sale the invention claimed in claims 14 and 15 of the Patent through modernization of two urea reactors in the provinces of Alberta and Saskatchewan. In its prayer for relief the appellant sought injunctive relief and damages or, alternatively, a full accounting of revenues and profits received by the respondent by reason of the infringing activities.

[3]                 Application for the Patent was filed on February 6, 1995. It was issued on January 24, 1997 and is titled "Reactor Four Two-Phase Reactions, in Particular for Use Synthesis at High Pressure and Temperature". Priority was claimed from two Swiss patent applications filed in May and December 1994.

[4]                 One of the grounds of invalidity relied upon by the respondent is based on prior art found in Japanese Patent No. 38813 issued in December 1970. Apparently as a consequence of that attack, on December 16, 1998, the appellant filed an application for reissue of the Patent pursuant to section 47 of the Patent Act, R.S.C. 1985, c. P-4 (the "Act"). The respondent was advised of this filing on December 10, 1999. The Reissued Patent was granted on October 12, 1999 (the "Reissued Patent").

[5]                 In February 2000, the respondent moved for the dismissal of the counterclaim by way of summary judgment on the ground that the cause of action therein alleged had "ceased to exist".

                                                                THE ORDER BELOW

[6]                 The Motions Judge granted the motion. In his view, by surrendering the Patent in favour of the Reissued Patent, the appellant could no longer sue for infringement of the Patent because the claim said to have been infringed by the respondent was not, as required by section 47 of the Act, "identical" to the corresponding claim of the Reissued Patent. He based this conclusion on a construction of the language found in section 47 of the Act and the comparative language appearing in the relevant claims of the Patent and the Reissued Patent. A reading of the Motions Judge's reasons suggests that he regarded the construction of section 47 of the Act and the patent claims in issue as raising questions of law capable of resolution on the motion itself without the need for a full trial. The Motions Judge was of the view, at paragraph 16 of his reasons, that: "The surrender of the original patent results in the abatement of any existing causes of action at the time of surrender except to the extent that the reissued patent contains claims that are identical to the original patent."

                                                                         THE ISSUES

[7]                 The main issue on this appeal is whether the cause of action asserted by the appellant in the Counterclaim was extinguished by reason of the surrender of the Patent on October 12, 1999. A subsidiary issue is whether, even if the cause of action was extinguished on surrender of the Patent, the applicant is entitled to recover damages for any infringement of the Patent prior to the date of surrender. A second such issue is whether subsection 55(2) of the Act creates an independent cause of action which is unaffected by the surrender of the Patent. These issues are, of course, to be addressed in the context of the motion for summary judgment and, specifically, whether the Motions Judge erred in dismissing the counterclaim at that early stage.

                                                                 THE LEGISLATION

[8]                 Section 47 of the Act reads as follows:

                                                                         (emphasis added)

                                                          PATENT CLAIMS IN ISSUE

[9]                 The claims that require comparison in the light of the requirements of subsection 47(2) are Claim 14 of the Patent and Claim 21 of the Reissued Patent. These claims read as follows:

                                                                         (emphasis added)

                                                                          ANALYSIS

The main issue

[10]            The main issue breaks down into three sub-issues. The first is the construction of subsection 47(2) and, in particular, the word "identical". Second, allied to the first, is whether American jurisprudence touching the meaning of that word in United States patent legislation may properly be consulted by this Court in construing that word in subsection 47(2) of the Act. The third sub-issue is the construction to be placed on language appearing in Claim 21 of the Reissued Patent as compared with language in Claim 14 as the Patent.

[11]            At the outset of his analysis, the Motions Judge pointed out, at paragraph 8 of his reasons, that the purpose of the summary judgment provisions in Rules 213-216 of the Federal Court Rules, 1998, "is to allow the Court to summarily dispose of cases which ought not to proceed to trial because there is no genuine issue to be tried". Among these rules is Rule 216(2)(b), which provides that where the only issue on the motion for summary judgment is "a question of law, the Court may determine the question and grant summary judgment accordingly". The construction of section 47 of the Act was, of course, a "question of law". It was not one that necessitated a trial and, in my view, the Motions Judge was in as good a position as a trial judge to resolve that particular question. This is not to suggest that the answer to the question was straightforward, but only that it was not such a question as required a trial of the issue before it could be resolved. On the other hand, the issue of patent construction is not of the same nature as construction of the statute. Considerations inherent in patent construction must be kept in mind before a court determines whether the Counterclaim should have been disposed at the summary judgment stage.

[12]            I shall turn first to construction of subsection 47(2) of the Act. The relevant language of the subsection as quoted above has been emphasized.

[13]            In construing the reissue provisions in section 24 of the Patent Act R.S.C. 1906, c. 61, the Supreme Court of Canada, per Duff C.J., stated in [1936] S.C.R. 649">Northern Electric Company Ltd. v. Photo Sound Corporation, [1936] S.C.R. 649, at 652-53:

It is to be noted that the section is retroactive in an important respect. The amendment speaks from the date of the original patent as regards causes of action arising after the date of the new patent. Even on the strictest construction, a serious injustice may arise from the operation of this provision where people have made arrangements and expended money on the faith of the specification in the patent between the date of the original patent and of the re-issue patent... It is our duty, I think, in the circumstances, not to extend the language of the section beyond cases clearly within its intendment.

In my view, this caution remains valid despite the subsequent changes to the reissue provisions of the Act. It must be acknowledged that these changes are substantial and that it is the current language of the statute that requires construction.

[14]            The parties agree that the portion of subsection 47(2) italicized in paragraph 8 above was intended to operate retrospectively while the first part of the subsection, except for the opening phrase, was intended to operate prospectively. As I read subsection 47(2), the surrender of a patent pursuant to subsection 47(1) "takes effect only on the issue of the new patent", the surrender does not affect any action pending at the time of reissue or abate any cause of action then existing "in so far as the claims of the original and reissued patents are identical", and that to the extent that such claims are identical "the reissued patent...constitutes a continuation" of the claims in the original patent and "has effect continuously from the date of the original patent".

[15]            The crucial question, therefore, is whether Claim 21 of the Reissued Patent is "identical" to Claim 14 of the Patent within the meaning of subsection 47(2). If it is, the cause of action pleaded in the Counterclaim is not affected by the surrender of the Patent. If, on the other hand, the claims are not identical, that cause of action could no longer be pursued in the courts. The Motions Judge turned to a dictionary source for assistance in construing the word "identical" in subsection 47(2). Thus The Canadian Oxford Dictionary (Oxford University Press: Toronto, 1998), defines that word as meaning things that are "exactly the same in every detail". At the same time, the Motions Judge found American jurisprudence touching the meaning of "identical" in the corresponding provisions of United States patent legislation to be of no assistance. He concluded that the patent claims in issue had to be exactly the same in every detail in order for the cause of the action pleaded in the Counterclaim to survive the surrender of the Patent. Nevertheless, in the course of his analysis the Motions Judge determined as well that the two claims were different both in scope and the language in which they were cast.

[16]            The appellant invited the Court to compare the relevant language of subsection 47(2) with that contained in section 252 of the United States legislation, 35 U.S.C. "Patents" and, as well, to have regard to American case law decided under that section. It would appear that the language of section 252 of the United States patent legislation with respect to the reissue of a defective patent may be traced at least to 45 Stat. 730 (May 24, 1928). By that statute, section 4916 of the Revised Statutes of the United States was amended by including the following language:

Such surrender shall take effect upon the issue of the reissued patent, but in so far as the claims of the original and reissued patents are identical, such surrender shall not affect any action then pending nor abate any cause of action then existing, and the reissued patent shall to the extent that its claims are identical with the original patent constitute a continuation thereof and have effect continuously from the date of the original patent.

As we shall see, this language is virtually identical with that which appears in section 252 of the current American patent statute

.

[17]            I accept that section 47 of the Act, while not in all respects the same, bears some resemblance to the corresponding section of the United States legislation. That view was expressed by Martland J. in [1966] S.C.R. 604">Farbwerke Hoechst Aktiongesellschaft v. The Commissioner of Patents, [1966] S.C.R. 604, at 613, although, as he also pointed out, differences exist. There appears to have been a long standing tendency in Canada to model patent legislation on corresponding United States statutes rather than on those of the United Kingdom although Canada has not adopted the entire United States patent system: see W.L. Hayhurst, "Intellectual Property Laws in Canada: The British Tradition, the American Influence and the French Factor", 10 Intellectual Property Journal (Toronto: 1995-96), at 275. More specifically, as was pointed out by Maclean J. in [1936] S.C.R. 649">Northern Electric Company Ltd. v. Photo Sound Corporation, [1936] Ex. C.R. 75, at 88-89: "The provisions of the Canadian Patent Act in respect of reissue of patents is much the same as in the United States Patent Act, and probably that was the source of the provisions in the Canadian Act". In Hunter v. Carrick (1884), 10 O.A.R. 449 (Ont. C.A.), Patterson J.A. in construing the reissue provisions in section 19 of the Patent Act, 35 Vict. c. 26, noted at 468 that the clause "seems to have been suggested by a section of the Patent Law of the United States" and that section 19 "follows in a general way the language and the provisions of the American model...". Again in a reissue case, Detroit Fuse and Manufacturing Company v. Metropolitan Engineering Company of Canada, Ltd. (1922), 21 Ex. C.R. 276, at 279, Audette J., relying on Hunter, supra, noted that the general similarity of the Canadian and American patent statutes "will be a justification to seek support upon that ground from the American authorities". In Van Heusen Inc. v. Tooke Bros. Limited, [1929] Ex. C.R. 89, Audette J. also observed, at 100: "Canadian courts, like the English courts, are accustomed to treat the decisions of the American courts with great respect, although they are in no manner bound by them". Given the apparent derivation of the reissue provisions of the Act, it would seem appropriate to consider American jurisprudence construing the word "identical" in the United States statute for assistance in construing the same word in subsection 47(2).

[18]            Before examining that jurisprudence, it will be useful to compare the relevant language of subsection 47(2) with the corresponding language of the current United States statute with respect to reissue of a patent.    Sections 251 and 252 of 35 U.S.C. read as follows:

251.      Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Commissioner shall, on the surrender of such patent and the payment of the fee required by law, reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.

     The Commissioner may issue several reissued patents for distinct and separate parts of the thing patented, upon demand of the applicant, and upon payment of the required fee for a reissue for each of such reissued patents.

     The provisions of this title relating to applications for patent shall be applicable to applications for reissue of a patent, except that application for reissue may be made and sworn to by the assignee of the entire interest if the application does not seek to enlarge the scope of the claims of the original patent.

     No reissued patent shall be granted enlarging the scope of the claims of the original patent unless applied for within two years from the grant of the original patent.

252.      The surrender of the original patent shall take effect upon the issue of the reissued patent, and every reissued patent shall have the same effect and operation in law, on the trial of actions for causes thereafter arising, as if the same had been originally granted in such amended form, but in so far as the claims of the original and reissued patents are identical, such surrender shall not affect any action then pending nor abate any cause of action then existing, and the reissued patent, to the extent that its claims are identical with the original patent, shall constitute a continuation thereof and have effect continuously from the date of the original patent

     No reissued patent shall abridge or affect the right of any person or his successors in business who made, purchased or used prior to the grant of a reissue anything patented by the reissued patent, to continue the use of, or to sell to others to be used or sold, the specific thing so made, purchased or used, unless the making, using or selling of such thing infringes a valid claim of the reissued patent which was in the original patent. The court before which such matter is in question may provide for the continued manufacture, use or sale of the thing made, purchased or used as specified, or for the manufacture, use or sale of which substantial preparation was made before the grant of the reissue, and it may also provide for the continued practice of any process patented by the reissue, practiced, or for the practice of which substantial preparation was made, prior to the grant of the reissue, to the extent and under such terms as the court seems equitable for the protection of investments made or business commenced before the grant of the reissue.

                                                                                                                             (emphasis added)

[19]            A 1999 amendment to the statute, 113 Stat. 1501 (November 29, 1999), which took effect in 2000, added the word "substantially" in two places in the first paragraph of section 252 before the word "identical". In D.S. Chisum, Chisum on Patents, Cumulative Supplement (Matthew Bender, 2001), Vol. 4, the learned American author expresses the view, at 349, that this amendment "codified the case law..., which reads ‘identical' in section 252 as meaning identical in substance, not verbally identical". It is to be noticed that the provisions in the first paragraph of section 252, emphasized above, are virtually the same as the emphasized language of subsection 47(2). While differences remain in the reissue provisions of the two statutes none in the emphasized language of section 252 appears to be material to the present discussion.

[20]            I shall turn next to consider the American jurisprudence. The construction of the word "identical" in the United States statute has attracted the attention of the courts of that country for more than three decades. Reference to some of the decided cases is illustrative. Thus in Austin v. Marco Dental Products, Inc., 560 Fed. 2d 966 (9^th Cir. 1977), at paragraph 12, the court did not speak in terms of a literally exact requirement in order for claims to be "identical" but only that the claims be "substantially identical". Subsequently, in Seattle Box Company, Inc. v. Industrial Crating & Packing, Inc., 731 F. 2d 818 (Fed. Cir. 1984), the meaning of the word "identical" was again addressed. In referring to the requirements of section 252, the court stated at paragraph 7:

Congress, in this statute, has explicitly limited claim continuity to claims in the reissued patent identical to claims in the original patent. The statute does not allow the claims of the original patent some other form of survival. The original claims are dead. The statute permits, however, the claims of the reissue patent to reach back to the date the original patent issued, but only if those claims are identical with claims in the original patent. With respect to new or amended claims, an infringer's liability commences only from the date the reissue patent is issued.

The court went on to state, at paragraph 8, that while it was not asked to decide exactly what "identical" meant in section 252, it was clear "that ‘identical' means, at most, ‘without substantive change' ".

[21]            In Kaufman Company, Inc. v. Lantech, Inc., 807 F. 2d 970 (Fed. Cir. 1986), the court agreed with the test enunciated in Seattle Box, supra. In Slimfold Manufacturing Company, Inc. v. Kinkead Industries, Inc., 810 F. 2d 1113 (Fed. Cir. 1987), the court was of a similar view. After referring to earlier cases, it concluded at 1115-1116:

In essence, courts have held that it is the scope of the claim that must be identical, not that the identical words must be used. In Seattle Box Co. v. Industrial Crating & Packing, Inc., 731 F. 2d 818, 221 USPQ 568 (Fed. Cir. 1984), the court held it unnecessary to define "identical" as applied to that case, but expressed the view that it means "at most, without substantive change". Id. at 827-28, 221 USPQ at 575 (emphasis in original). In Kaufman Co. v. Lantech, 807 F. 2d 970, 977 (Fed. Cir. 1986) this court discussed section 252 as applied to reexamination and held that "‘identical' within the meaning of § 252 first paragraph, means ‘without substantive change'".

In The Laitram Corporation v. NEC Corporation, 952 F. 2d 1357 (Fed. Cir. 1991), the court expressed a substantially similar view, at 1361:    "‘Identical' does not mean verbatim". The court then went on to adopt the "no substantive change in scope" test of Kaufman and Slimfold, supra. To the same effect is Bloom Engineering Company, Inc. v. North American Manufacturing Company, Inc. 129 F. 3d 1247 (Fed. Cir. 1997), at 1250.

[22]            It seems to me that the approach taken by the American courts to the construction of the word "identical" is to be preferred to a strict literal interpretation of that word in subsection 47(2) of the Act. The focus should be on whether the scope of the reissue claim has been changed over that of the original claim because of use of different language in the reissue claim.    If the language of Claim 21 did not work a substantive change of the scope of Claim 14, the former claim must to be viewed as "identical" to the latter claim even though the language of the one is not in all respects the same as the other. The problem remains, however, of whether in the circumstances the construction of the claims in issue is such as to permit its resolution at the motion stage without the necessity of a full trial. This raises questions of patent claims construction, a matter raised by the third sub-issue.

[23]            The relevant language of Claim 14 of the Patent and in Claim 21 of the Reissued Patent has now to be compared in the light of the "identical" requirement of subsection 47(2). As was noted by the Motions Judge, the wording of Claim 21 differs in one respect only from that of Claim 14. In Claim 21 the phrase "said method comprising" was substituted for the phrase "said method being characterized in that it comprises" in Claim 14. In the Motions Judge's view, at paragraph 19 of his reasons, relying on [1976] 1 S.C.R. 555">Burton Parsons Chemicals Inc. v. Hewlett-Packard (Canada) Ltd., [1976] 1 S.C.R. 555 at 566, the word "‘comprising'...has a meaning in claim language similar to the word ‘includes'", a word which was regarded as "vague". Indeed the respondent maintains that the effect of substituting the word "comprising" in the place of "characterized in that" was to broaden the scope of Claim 21 over that of Claim 14 and so render the former claim not "identical" to the latter. As we have seen, the Motions Judge was of the view that the deletion of the phrase "characterized in that" had this effect because it suggested to him that the features of Claim 21 following immediately after the word "comprising" "may no longer be essential".

[24]            The respondent argued that by employing the vague word "comprising" in Claim 21, the appellant had sought to broaden the original claim so as to include things expressed and not expressed and, accordingly, that the features of the invention described in the language of Claim 21 following after the word "comprising" were no longer essential. This, of course, is a substantive argument which requires close examination before the litigation can be concluded.

[25]            The difficulty I have with this argument, and the corresponding view of the Motions Judge, is in resolving the issue at the summary judgment stage. It is well understood that construction of patent claims is for the court and that, in general, the language used must receive its ordinary natural meaning as that language would be understood at the date of issuance by those knowledgeable in the relevant sphere. The Motions Judge found assistance in two published articles: D.S. Johnson, "The Language of the Claim" (1955), 23 C.P.R. 76, at 79-81; R.F. Delbridge, "Preparation and Prosecution of Canadian and Foreign Patent Applications" (1969), 58 C.P.R. 251, at 258-59. These articles are both to the effect that the word "characterized" in the phrase "characterized in that" has the function of separating known features of the claim from new and inventive ones. On that analysis, employing the word "comprising" in Claim 21 indicates a change in its scope over that of Claim 14. It must not be overlooked, however, that the language of Claim 21 is to receive a purposive construction in harmony with the approach of the House of Lords in Catnic Components Ltd. v. Hill & Smith Ltd., [1982] R.P.C. 183.

[26]            In my view, it would seem inadvisable to attempt to resolve this dispute at the summary judgment stage. If Claim 21 is not "identical" with Claim 14, the Counterclaim would utterly fail short of a full trial. If, on the other hand, the two are identical in scope the way would be cleared to advance the Counterclaim towards trial. The absence of expert evidence in the record before us could be rectified at a trial if, indeed, the parties should choose to adduce such evidence. At paragraph 23 of his reasons, the Motions Judge alluded to the absence of such evidence from the appellant's side. In my view, however, the burden of adducing evidence to establish that the claims were not "identical" and, therefore, that there was "no genuine issued to be tried" was on the respondent as the moving party and not on the appellant under the summary judgment rules: Kirkbi AG v. Ritvik Holdings Inc. (1998), 81 C.P.R. (3d) 289 (F.C.T.D.), at 309. While expert evidence in patent litigation is more commonly addressed to technical terms appearing in the specification, it may also be directed towards explaining terms contained in the claims in order that the court may fully understand the language used: see e.g. McPhar Engineering Company of Canada Limited v. Sharpe Instruments Limited, [1956-60] Ex. C.R. 467, at 533-34. As Lord Justice Lindley put it in Brooks v. Steele and Currie (1896), 14 R.P.C. 46 (C.A.), at 73: "The Judge may, and indeed generally must be assisted by expert evidence to explain technical terms, to show the practical working of machinery described or drawn, and to point out what is old and what is new in the Specification". The point was made most recently with even greater emphasis by the Supreme Court of Canada in Whirlpool Corp. v. Camco Inc., [2000] 2 S.C.R. 1067 where, after referring to the guidance on patent construction to be gathered from Burton Parsons, supra, and Catnic, supra, Binnie J. stated at 1100:

Burton Parsons is a pre-Catnic instance of purposive construction where, as in Catnic itself, the skilled addressee made sense and purpose of the words used in the claim by deploying the common knowledge of someone in that position. It is through the eyes of such a person, not an etymologist or academic grammarian, that the terms of the specification, including the claims, must be read.

[27]            The need for expert evidence is all the more evident here, where the parties dispute what is old and what is new in Claim 21 as well as whether essential features of that claim have been deleted and its scope so changed as to render it non-"identical" to the original claim. Allowing the matter to proceed to trial in order to resolve this issue would seem consistent with the caution of Duff C.J. in Northern Electric, supra, that the language of the subsection ought not to be extended beyond cases clearly within its intendment. A full trial of the issue will better enable the Court to decide whether the cause of action pleaded in the Counterclaim has or has not been extinguished as a result of the surrender of the Patent.

Subsidiary issues

[28]            The appellant argues that, even if the cause of action pleaded in the Counterclaim was extinguished on surrender of the Patent, the appellant is nevertheless entitled to a trial for determination of damages for infringement occurring between January 24, 1997 when the Patent issued and December 10, 1999 when it was surrendered upon the grant of the Reissued Patent. The submission here is that the Patent is by subsection 47(2) deemed to have been valid until the effective date of its surrender and, accordingly, that the rights granted to the appellant by the Patent did not disappear retroactively upon its surrender.

[29]            The respondent counters by asserting that permitting the action to proceed for determination of damages would be contrary to the language of subsection 47(2) itself. The respondent submits, further, that the word "surrender" in that subsection means that any cause of action existing under the original patent ceased to exist.

[30]            Canadian jurisprudence interpreting the effect of surrender and reissue of patents pursuant to earlier versions of subsection 47(2) suggests that surrender and reissue results in the disappearance of the original patent and its replacement by the reissued patent: see e.g. [1967] S.C.R. 514">Detroit Fuse, supra. Curl-Master Manufacturing Co. Ltd. v. Atlas Brush Ltd., [1967] S.C.R. 514, at 533-34, is relied upon by the respondents as of similar effect but I am not satisfied that the issue was fully explored or what was said there is strictly relevant. The appellant, on the other hand, relies on a statement of this Court in Imperial Tobacco Ltd. v. Rothmans, Benson & Hedges Inc. (1993), 47 C.P.R. (3d) 188, at 196 with respect to a claim for damages sought for infringement of the original patent after it had been reissued, and where the Court stated that the "original patent remains an issue for damages only". While that statement, on its surface, might lend some support to the appellant's argument on the point, in my view it is of little value in that it appears to be no more than an obiter comment on a point that was not fully argued, or was perhaps a recapitulation of counsel's argument.

[31]            It seems to me that whether the cause of action pleaded in the Counterclaim continued after the Patent was surrendered depends primarily on the construction of the relevant language of subsection 47(2). As has been seen, the language of the English text reads in part:

(2) The surrender referred to in subsection (1) takes effect only on the issue of the new patent...but, insofar as the claims of the original and reissued patents are identical, the surrender does not affect any action pending at the time of reissue or abate any cause of action then existing, and the reissued patent to the extent that his claims are identical with the original patent constitutes a continuation thereof and has effect continuously from the date of the original patent.

[32]            The appellant's cause of action was pending at the time of reissue when the surrender of the original patent became effective. Subsection 47(2) would appear to preserve a pending cause of action only "in so far as the claims of the original and reissued patents are identical". In my view, therefore, if it is found at trial that the claims in issue are identical the appellant should be entitled to recover damages for infringement but not otherwise. This view is consistent with the approach taken by the American courts in construing similar language in section 252 of the corresponding United States patent statute. Thus in Bloom Engineering, supra, the Federal Circuit Court stated, at 1249:

Sections 307 and 252 shield those who deem an adversely held patent to be invalid; if the patentee later cures the infirmity by reissue or re-examination, the making of substantive changes in the claims is treated as an irrebutable presumption that the original claims were materially flawed. Thus the statute relieves those who may have infringed the original claims from liability during the period before the claims are validated.

                                                                                                                             (emphasis added)

[33]            A second subsidiary issue arises from the appellant's reliance on subsection 55(2) of the Act as adopted by section 48 of the Intellectual Property Law Improvement Act, S.C. 1993, c. 15. Subsection 55(1) renders an infringer of a patent liable to the patentee and to all persons claiming under the patentee "for all damages sustained". Subsection 55(2) reads:

[34]            According to the appellant's submission, this subsection gives a patentee the right to claim reasonable compensation for "infringing" activities between the date of publication and the date a patent is granted. The right to recover depends only on the grant. I am not persuaded that this argument applies with respect to a reissue patent. The true import of subsection 55(2) need not be addressed. I agree with the respondent, however, that to accept the argument would lead to an illogical result. If the owner of an invalid patent could not recover damages for conduct occurring after issuance of the patent, he should not be entitled to recover compensation for conduct occurring before the reissue of the patent simply because the patent had at one time been issued. Moreover, it seems to me that the appellant's right to recover for infringement of the Patent depends on the construction of subsection 47(2). If the view I have already expressed is correct, damages for infringement of the Patent may be recovered only if the two claims in issue are found at trial to be identical.

                                  COSTS OF THE MOTION

[35]            As I would not sustain the order under appeal in its entirety, it becomes necessary to address the issue of costs on the motion. The Motions Judge disposed of the issue in his order as follows:

The Defendant's counterclaim is dismissed. The Plaintiff is granted leave to discontinue its action. Costs to the Plaintiff on a solicitor and client scale with regard to the counterclaim of the Defendant. Costs to the Defendant with respect to all matters relating to the breach of a 1992 Agreement for the period from the commencement of the action until September 24, 1998. No costs with respect to the Plaintiff's action except as aforesaid.

Because the matter must be returned to the Trial Division for a full trial, the order as to costs should be varied. As the appellant should succeed on the main issue, it should have its costs on that issue in the Trial Division. I would not disturb the award of costs by the Motions Judge in the action, which was a matter for his discretion.

                                             DISPOSITION

[36]            In the result, I would allow the appeal with costs to the appellant. I would vary the order of the Trial Division dated July 27, 2000 by deleting therefrom the sentences, "The Defendant's counterclaim is dismissed" and "Costs to the Plaintiff on a solicitor and client scale with regard to the counterclaim of the Defendant", and would substitute the following: "The motion for summary judgment to dismiss the Defendant's counterclaim is dismissed with costs". In all other respects I would affirm the said order.

                                                                                         "A.J. STONE"     

                                                                                                              J.A.

"I agree

   J. Edgar Sexton J.A."

"I agree

   John M. Evans J.A."