Docket:
A-293-13
Citation: 2015 FCA 115
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CORAM:
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DAWSON J.A.
STRATAS J.A.
NEAR J.A.
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BETWEEN:
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ZERO SPILL SYSTEMS (INT’L) INC.,
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KATCH KAN HOLDINGS LTD., QUINN HOLTBY and KATCH KAN
RENTALS LTD.
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Appellants
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and
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BILL HEIDE dba CENTRAL ALBERTA PLASTIC PRODUCTS,
RAT PLASTIC LTD. and 1284897 ALBERTA LTD.
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Respondents
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REASONS FOR JUDGMENT
STRATAS
J.A.
[1]
Zero Spill Systems (Int’l)
Inc., Katch Kan Holdings Ltd., Quinn Holtby and Katch Kan Rentals Ltd.
(collectively, Zero Spill) appeal from the judgment dated June 7, 2013 and the
amended judgment dated July 18, 2013 of the Federal Court (per Justice
Barnes): 2013 FC 616.
[2]
Zero Spill is a
non-exclusive licensee of Canadian Patents 2,136,375 (’375 Patent) and
2,258,064 (’064 Patent) and Canadian Industrial Design 86,793 (’793 Design).
These patents and the design cover certain fluid containment apparatuses for
use in oil field operations.
[3]
In the Federal Court, Zero
Spill sued Bill Heide, Central Alberta Plastic Products and Rat Plastic Ltd.
(collectively, the Heide respondents) and 1284897 Alberta Ltd. (Lea-Der) for
infringing the patents by making and selling competing oil field fluid
containment products. Further, Zero Spill sued the Heide respondents for
infringing the ’793 Design by making and selling a product that is
substantially similar in appearance. Zero Spill also sought a declaration that
Canadian Industrial Design 102,346 (’346 Design), held by the Heide
respondents, was invalid.
[4]
Both the Heide respondents
and Lea-Der alleged that they did not infringe either the ’375 Patent or the
’064 Patent. Lea-Der further alleged that these Patents were invalid and sought
declarations to that effect. Lea-Der also sought a declaration that another
patent, Canadian Patent 2,166,265 (’265 Patent), at one time said to be
infringed, was invalid. The Heide respondents alleged that they did not
infringe the ’793 Design and that their ’346 Design was valid.
[5]
The Federal Court dismissed
the action. On infringement, it held that Lea-Der and the Heide respondents had
not infringed the ’375 Patent or the ’064 Patent. Further, the Heide
respondents had not infringed the ’793 Design. On invalidity, it held that the
’375 Patent was valid but both the ’064 and ’265 Patents were not. Both were
invalid on the basis of obviousness, and the ’064 Patent was also invalid on
account of anticipation. The Federal Court did not deal with the validity of
the ’346 Design.
[6]
Zero Spill appeals all of
the Federal Court’s findings of non-infringement and invalidity and also the
Federal Court’s failure to deal with the validity of the ’346 Design.
[7]
I would allow Zero Spill’s
appeal in part, remitting several issues to the Federal Court judge in
accordance with the following reasons.
[8]
Owing to the complexity of
this appeal, with multiple issues stemming from multiple pieces of intellectual
property, I propose to organize these reasons by addressing each piece of
intellectual property individually, dealing with issues as they arise.
A. The Industrial Designs
[9]
As described briefly above,
there are two industrial designs at issue in this appeal. Zero Spill is a
licensee of one of them, the ’793 Design, which it alleges that the Heide
respondents have infringed. The Heide respondents own the other, the ’346
Design, which Zero Spill seeks to invalidate.
(1) The ’793 Design
[10]
The Heide respondents are in
the moulded plastic fabrication and plastic welding business. They make line
pipe trays known as the “CAPP trays” for use in
an oilfield and sell them directly to customers. These trays are designed to
capture fluids that either leak or are spilled during oil field operations.
[11]
Before the Federal Court,
Zero Spill alleged that the Heide respondents had infringed the ’793 Design by
selling the CAPP tray. The Federal Court rejected this: Reasons of the Federal
Court at paragraph 135. As will be seen, its conclusions hinge on section 5.1
of the Industrial Design Act, R.S.C. 1985, c. I-9. Paragraph 5.1(a)
limits the protection available under the Industrial Design Act in
certain circumstances. Section 5.1 provides as follows:
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5.1. No protection afforded by this Act shall
extend to
(a) features applied to a useful article that
are dictated solely by a utilitarian function of the article; or
(b) any method or principle of manufacture or construction
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5.1. Les caractéristiques résultant uniquement de la fonction
utilitaire d’un objet utilitaire ni les méthodes ou principes de réalisation
d’un objet ne peuvent bénéficier de la protection prévue par la présente loi.
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[12]
The Federal Court noted that
there were many similarities between the ’793 Design and the CAPP tray and that
the Heide respondents had used Zero Spill’s product – covered by the ’793
Design – as a model for their own: Reasons of the Federal Court at paragraphs
125-26, 129, and 133. However, Zero Spill had failed to identify, in their
pleadings or evidence, the features of the ’793 Design that were protected
under paragraph 5.1(a) of the Industrial Design Act: Reasons of
the Federal Court at paragraphs 123, 125-27 and 129.
[13]
The Federal Court may also be
taken to have held that because many features of the ’793 Design were in some
way functional, those features were unprotectable under the Industrial
Design Act by virtue of paragraph 5.1(a) notwithstanding that they
might also appeal to the eye: Reasons of the Federal Court at paragraphs 130-32
and 134-35.
[14]
Zero Spill appeals these two
holdings. First, Zero Spill submits that, in law, it had no burden under
paragraph 5.1(a). In its view, the burden was actually on the Heide
respondents to show that paragraph 5.1(a) applied in this case. Second,
Zero Spill submits that paragraph 5.1(a) excludes from protection only
those features whose form is dictated solely by their function, rather than all
features which may have some coincident function, as the Federal Court may be
taken to have held.
[15]
Both of Zero Spill’s
submissions involve issues of statutory interpretation, matters on which the
Federal Court is required to be correct: Housen v. Nikolaisen, 2002 SCC
33, [2002] 2 S.C.R. 235. For the reasons that follow, I accept both of Zero
Spill’s submissions. Consequently, I would allow Zero Spill’s appeal on these
grounds and remit this issue to the Federal Court judge.
[16]
Statutes are to be
interpreted by considering the text of their provisions in light of the other
words in the Act and the greater context and purpose of the Act: Canada
Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601; Rizzo
& Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, 154 D.L.R. (4th) 193.
[17]
The right to sue for
industrial design infringement depends on the existence of a registered
industrial design: Industrial Design Act, sections 9 and 11. Under
subsection 7(3), if the certificate of registration is in evidence in an
infringement action, there is a presumption that the registered industrial
design complies with the Act. Subsection 7(3) reads as follows:
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7. (3) The certificate, in the absence of proof to the contrary, is
sufficient evidence of the design, of the originality of the design, of the
name of the proprietor, of the person named as proprietor being proprietor,
of the commencement and term of registration, and of compliance with this
Act. [emphasis added]
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7. (3) En l’absence de preuve contraire, le certificat est une
attestation suffisante du dessin, de son originalité, du nom du propriétaire,
du fait que la personne dite propriétaire est propriétaire, de la date et de
l’expiration de l’enregistrement, et de l’observation de la présente loi. [j’ai
souligné]
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[18]
Subsection 7(3) creates a
blanket presumption of compliance with the entire Act, including paragraph 5.1(a),
and places the burden to rebut this presumption squarely on the defendant
resisting an infringement claim. One way to rebut the presumption of validity
could be to successfully invoke paragraph 5.1(a). The Federal Court cited
subsection 7(3), but did not recognize that, on its face, it places the burden
to invoke paragraph 5.1(a) on the defendant: Reasons of the Federal
Court, at paragraph 126.
[19]
This interpretation is
further confirmed by the internal structure of the Industrial Design Act.
Paragraph 5.1(a) appears in a different sub-part of the Act than section
11. Paragraph 5.1(a) appears in the sub-part “Registration”;
section 11 appears in the sub-part “Exclusive Right”.
Other provisions in the “Registration” sub-part
establish the formal requirements of an application to register an industrial
design (subsection 4(1)), examination and correspondence concerning objections
(section 5), and registrability of industrial designs (section 6). Sandwiched
as it is within sections 4, 5 and 6, paragraph 5.1(a) creates a
substantive validity requirement for industrial designs, not an element of the
cause of action for the plaintiff to satisfy (section 11).
[20]
The Federal Court erred in
law when it required Zero Spill to lead evidence explaining which features of
its ’793 Design complied with paragraph 5.1(a). Rather, the Heide
respondents were required to plead that asserted features of the design were
unprotectable because they were dictated solely by function and were required
to adduce evidence to prove it. But they did not. In the Federal Court, the
sole defence pleaded by the Heide respondents was non-infringement: Reasons of
the Federal Court at paragraph 124; Heide’s Statement of Defence, at paragraph
7 (Appeal Book page 195).
[21]
It follows that the Federal
Court’s finding of non-infringement, based as it was solely on paragraph 5.1(a)
of the Industrial Design Act, cannot stand. The issue of infringement
must now be remitted to the Federal Court judge for redetermination.
[22]
Before leaving this issue, I
wish to examine the Federal Court’s apparent finding that all features of an
industrial design that are functional are unprotectable by virtue of paragraph
5.1(a) even though those features might also appeal to the eye: Reasons
of the Federal Court at paragraphs 130-32, 134-35. Here, too, I disagree with
the Federal Court.
[23]
The Federal Court’s
interpretation runs counter to both the ordinary meaning of paragraph 5.1(a)
and the purpose of the Industrial Design Act. Properly
understood, only features of an industrial design whose form are dictated
solely by function are excluded from protection by paragraph 5.1(a).
[24]
Looking first at the ordinary
meaning of paragraph 5.1(a), functional features of an industrial design
may be protected by the Industrial Design Act. Paragraph 5.1(a)
states that features “applied to a useful article that
are dictated solely by a utilitarian function of the article [my
emphasis]” are ineligible for protection. Features may be simultaneously
useful and visually appealing. In such a case, on its face, paragraph 5.1(a)
cannot apply.
[25]
Moreover, the very purpose
of the Industrial Design Act is to provide residual protection for
functional designs that would, but for section 64 of the Copyright Act,
R.S.C. 1985, c. C-42, be subject to copyright protection: Roger T. Hughes and
Susan J. Peacock, Hughes on Copyright and Industrial Design, loose-leaf
(consulted on April 7, 2015), 2d ed. (Markham, ON: LexisNexis, 2005) at §152;
Roger T. Hughes, Copyright Legislation & Commentary, 2015 ed.
(Markham ON: LexisNexis, 2015) at pages 360-61.
[26]
Under subsection 64(2) of
the Copyright Act, an article is exempt from copyright protection if two
conditions are met. First, there must have been more than 50 copies of the
article lawfully made. Second, the article must be functional. The Industrial
Design Act would serve no purpose if it did not protect functional features.
[27]
Together, the plain text of
paragraph 5.1(a) and the purpose underlying the Industrial Design Act
confirm that functional features of designs may be protected under the Act.
Only those features whose form are dictated solely by function are not
protected.
(2) The ’346 Design
[28]
The sole issue concerning the
’346 Design is whether the Federal Court ought to have addressed its validity.
[29]
In the Federal Court, Zero
Spill pleaded in its twice-amended Statement of Claim that the ’346 Design of
the Heide respondents was invalid for two reasons. First, the ’346 Design was
invalid under subsection 6(1) of the Industrial Design Act because it too
closely resembled Zero Spill’s own ’793 Design. Second, it was invalid because the
Heide respondents could not, at the date of application to register the ’346
Design, state in accordance with paragraph 4(1)(b) of that Act that to
their knowledge the ’346 Design was not already in use by another person.
[30]
In their Statement of
Defence, the Heide respondents resisted Zero Spill’s validity attack, stating
that the ’346 Design was valid and denying both grounds of invalidity alleged
by Zero Spill.
[31]
Zero Spill and the Heide
respondents had joined issue. The Federal Court referred to the ’346 Design
only once in a paragraph prefacing its analysis of whether the ’793 Design had
been infringed: Reasons of the Federal Court at paragraph 122. Following that
analysis, the Federal Court did not return to the validity of the ’346 Design. The
Federal Court should have determined the validity of the ’346 Design. However,
between the Federal Court’s amended judgment and the hearing of this appeal,
the ’346 Design expired. The validity of the ’346 Design is now moot.
Accordingly, this issue will not be remitted.
B. The Patents
[32]
In addition to the CAPP
trays, the Heide respondents also produce a set of upper and lower fluid
containment trays for use on well heads and drilling rigs. These are known as
the Rat trays, which the Heide respondents sell directly to customers and also
to Lea-Der for re-sale.
[33]
Lea-Der also re-sells a line
of carbon fibre upper and lower trays, known as the “Stealth
trays.” It purchases these from Stealth Environment Filtration Systems, which
is not a party to these proceedings.
[34]
Zero Spill says that these
activities infringed their patents.
[35]
Before the Federal Court,
Zero Spill asserted two patents – the ’375 and ’064 Patents – against both
Lea-Der and the Heide respondents. Lea-Der and the Heide respondents both
defended on the basis that they did not infringe. Lea-Der, for its part, also
counter-claimed for a declaration that both of these patents, as well as Zero
Spill’s ’265 Patent, were invalid for obviousness and anticipation. I shall
deal with each of the three Patents separately.
(1) The ’375 Patent
[36]
The ’375 Patent relates to
an upper containment tray that attaches to the top of the flow nipple of an
operating oil well drilling rig. The flow nipple is a pipe extending up from
the ground to just below the floor of the drilling rig. The flow nipple houses
the drill string that actually cuts the oil well hole. The drill string is
itself comprised of multiple lengths of pipe that connect at their ends to form
a long continuous length of pipe down into the well hole. During drilling, a
drilling fluid is circulated down the drill string around the drill bit and
back up to the surface where it is diverted and filtered to remove debris. Once
filtered, it is recirculated back down the drill string.
[37]
When it is time to remove
the drill string from the well hole, it is withdrawn and the sections of the
string are detached for ease of handling above ground. This process typically
discharges the drilling fluid that has accumulated above the joint between
lengths of drill string. Unless the discharged fluid is somehow captured, it
can soak the drilling crew and equipment.
[38]
The ’375 Patent is addressed
to this problem. When lengths of drill string are detached and drilling fluid
is discharged, the upper containment tray catches the discharge and directs it
back down the well hole.
[39]
The Federal Court held that
the ’375 Patent was valid but not infringed by either Lea-Der or the Heide
respondents. Zero Spill appeals the Federal Court’s finding of
non-infringement, alleging that the Federal Court misconstrued the ’375 Patent.
[40]
In the case of the Stealth
upper tray, Zero Spill says that the erroneous construction resulted in the
Federal Court finding non-infringement, a finding that can no longer stand. In
the case of the Rat upper tray, Zero Spill says that the Federal Court ought to
have weighed the expert evidence differently.
(a) Construction
[41]
Before us, the parties
broadly agreed on the operative principles for claims construction. The
well-accepted canons of construction are as follows:
•
Claims construction is the
first step in a patent suit.
•
The task of claims
construction rests with the court.
•
The court must read the
claims through the eyes of the person skilled in the art to which the patent
pertains.
•
The skilled reader comes to
the patent armed with all of the common general knowledge in the art.
•
The skilled reader construes
the claims as at the patent’s publication date.
•
The essential elements of
the claims must be sorted from the non-essential elements.
•
The claims are to be read
purposively with the object of obtaining a fair result as between the patentee
and the public.
•
The words of the claims are
to be considered with reference to the entire specification, but not with a
view to enlarging or contracting the claims’ language as written.
•
Expert evidence is
admissible to assist in placing the court in the position of the skilled
reader.
[42]
The Federal Court correctly
identified these canons of construction and the appropriate skilled reader:
Reasons of the Federal Court at paragraphs 70-73.
[43]
On appeal, the Federal
Court’s construction of a patent’s claims will be reviewed for correctness: Whirlpool
Corp. v. Camco Inc., 2000 SCC 67, [2000] 2 S.C.R. 1067 at paragraphs 61 and
76. However, the Federal Court is entitled to deference in its appreciation of
the evidence, particularly the expert evidence, that affects that construction:
Mylan Pharmaceuticals ULC v. Astrazeneca Canada Inc., 2012 FCA 109, 432
N.R. 292 at paragraph 20; Wenzel Downhole Tools Ltd. v. National-Oilwell
Canada Ltd., 2012 FCA 333, [2014] 2 F.C. 459 at paragraph 44; Bell
Helicopter Textron Canada Limitée v. Eurocopter, 2013 FCA 219, 449 N.R. 111
at paragraphs 73-74; see also Consolboard Inc. v. MacMillan Bloedel (Sask.)
Ltd., [1981] 1 S.C.R. 504 at page 537, 122 D.L.R. (3d) 203.
[44]
The ’375 Patent has only two
claims, a method claim and an apparatus claim. These claims read as follows:
1. A method for
retrofitting existing drilling rigs with a catch pan, comprising the following
steps:
firstly, providing a pan-like body consisting of two portions, each
portion including an interior edge having a semi-circular indentation with
depending semi-cylindrical collar, the semi-cylindrical collars having interior
surfaces, latching means being provided to secure the interior edges in
abutting relation such that the semi-cylindrical collars mate to form a
cylindrical collar with a cylindrical interior sealing surface; and
secondly, providing an annular seal;
thirdly, securing the annular seal to a flow nipple disposed below an
opening in a drilling platform;
fourthly, positioning the semi-circular indentations with depending
semi-cylindrical collars on opposed sides of the flow nipple with the
cylindrical interior sealing surface of the cylindrical collar engaging and being
telescopically movable relative to the annular seal, and using the latching
means to secure the interior edges in abutting relation, such that drilling
fluids from the drilling platform are caught in the pan-like body and directed
into the flow nipple and as the drilling platform settles such settling is
accommodated by movement of the cylindrical interior sealing surface of the
cylindrical collar relative to the annular seal.
2. A catch pan
for drilling rigs, comprising:
a shallow pan-like body consisting of two portions, each portion
including an interior edge having a semi-circular indentation with depending
semi-cylindrical collar, such that upon the interior edges of the portions
being abutted a generally circular opening with a depending cylindrical collar
is formed, the cylindrical collar providing a cylindrical interior sealing
surface;
latching means to secure the interior edges in abutting relation.
an annular seal having an interior attachment portion and an exterior
wiper portion, the attachment portion being adapted for attachment to a flange
of a flow nipple, the wiper portion engaging the interior sealing surface, the
cylindrical interior sealing surface of the cylindrical collar being
telescopically movable relative to the annular seal, thereby accommodating
movement of the pan-like body relative to the flow nipple when a downward force
is exerted upon the pan-like body by a settling drilling platform. [emphasis
added]
At trial, the parties
disputed several of the terms used in these two claims. On appeal, Zero Spill
takes issue with only one of those terms, “telescopically
movable”.
[45]
The Federal Court provided
two definitions of that term, a positive definition and a negative one.
Positively, the Federal Court held that “telescopically
movable” described the capacity for anticipated and controlled axial
movement of the tray within the limits or stops of the sealing area of the tray
collar. Negatively, it held that the term did not include the idea of some
minimal and unaccounted for movement of the tray at the onset of product
failure: Reasons of the Federal Court at paragraph 76.
[46]
In so holding, the Federal
Court relied on both the ’375 Patent specification, which described a specific
sealing arrangement which enabled the telescopic movement, and the evidence of
all three expert witnesses, including the Federal Court’s preferred expert in
the case, Thicke: Reasons of the Federal Court at paragraphs 40-41, 46, 49 and
76. This expert described that the skilled reader would understand “telescopic movement” with reference to the specific
sealing arrangement disclosed in the ’375 Patent.
[47]
Zero Spill appeals on the
basis that, correctly construed, “telescopic movement”
refers only to a type of movement, no matter how minimal, expected or
controlled. In support of its appeal, Zero Spill alleges that the Federal Court
impermissibly imported a claim limitation into its construction of “telescopic movement” by ignoring key evidence,
specifically that both of Zero Spill’s Expert, Wallace, and Lea-Der’s expert –
the preferred expert – Thicke: Appellant’s Memorandum of Fact at Law at
paragraphs 79-80.
[48]
Overall, I am of the view
that this ground of Zero Spill’s appeal must fail. The full record was before
the Federal Court and on appeal we must presume that all of it was reviewed: Housen
v. Nikolaisen, above at paragraph 46; Manitoba v. Canada, 2015 FCA
57 at paragraph 26. It is open to a trial judge to prefer certain evidence and
that weighing can only be set aside on the basis of palpable and overriding
error: Mylan Pharmaceuticals, Wenzel Downhole Tools, Eurocopter,
all above.
[49]
Palpable and overriding
error is a highly deferential standard. “Palpable”
means an error that is obvious. “Overriding”
means an error that goes to the very core of the outcome of the case. When
arguing palpable and overriding error, it is not enough to pull at leaves and
branches and leave the tree standing. The entire tree must fall: Canada v.
South Yukon Forest Corporation, 2012 FCA 165, 431 N.R. 286 at paragraph 46.
Zero Spill has not persuaded me that this standard has been met.
[50]
Finally, in support of its
appeal, Zero Spill argued that the Federal Court’s construction of the claims
of the ’375 Patent was incorrect because it impermissibly narrowed its
construction of “telescopic movement” with
reference to the prior art. In particular, Zero Spill cites the following
passage from the reasons of the Federal Court (at paragraph 76):
Furthermore, by choosing
a particular means to accomplish the advantage of tray movement and to
distinguish the invention from the prior art, it is not open to the
Plaintiffs to stretch these claims to monopolize anything that may achieve the
same result…” [emphasis added]
[51]
Zero Spill is correct that
claims cannot be construed with reference to the prior art: Whirlpool, above
at paragraph 49(a); Dableh v. Ontario Hydro, [1996] 3 F.C. 751 at pages
773-74, 199 N.R. 57 (C.A.).
[52]
However, this ground of Zero
Spill’s appeal must also fail.
[53]
An appellate court’s focus
must be on the substance of the reasons for judgment, discerned by a reading of
the reasons as an organic whole. It must disregard infelicitous modes of
expression and surplusage that do not bear on the substance of the matter. The
phrase, “to distinguish the invention from the prior
art,” an isolated phrase, follows after the Federal Court completed its
construction of the term “telescopic movement”.
It is surplusage. The Federal Court confirms it as surplusage by using the word
“[f]urthermore”.
[54]
Even if the Federal Court
did construe “telescopic movement” with an eye
to the prior art, Zero Spill’s appeal on this ground must still fail. Appellate
review is only concerned with legal errors that bear on the outcome of the
case. No matter what the applicable standard of review is, if the error would
not have affected the Federal Court’s judgment, the appeal must be dismissed.
Where, as here, the Federal Court offered other sustainable and overwhelming
reasons for holding as it did – namely its reliance on the wording of the
specification and the expert evidence – merely pointing to an inconsequential
legal error will not result in the appeal being allowed.
[55]
Moreover, in my view, the
Federal Court’s construction of the claims of the ’375 Patent was correct. In
describing the preferred embodiment, the description of the ’375 Patent takes
for granted that over time the drilling rig will settle and that, when it does,
the weight of the drilling rig will come to rest upon the catchment pan pushing
downward relative to the flow nipple: ’375 Patent at page 5. The invention of
the ’375 Patent addresses that very problem, ensuring the integrity of the
catchment pan despite rig settling. Anticipated and controlled axial movement
will accomplish that goal; minimal and unaccounted for movement of the tray at
the onset of product failure will not: Reasons of the Federal Court at
paragraphs 87, 89.
(b) Infringement
[56]
Patent infringement requires
that the defendant has misappropriated all of the essential elements of
a valid patent claim: Free World Trust v. Électro Santé Inc., 2000 SCC
66, [2000] 2 S.C.R. 1024, at paragraphs 68 and 75. If even one of the essential
elements is omitted from the defendant’s alleged infringing activities, there
is no infringement.
[57]
Once the claims have been
construed, infringement is a question of fact, reviewable only for palpable and
overriding errors: Whirlpool, above at paragraph 76, Monsanto Canada
Inc. v. Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 at paragraph 30. This
is nothing more than an expression of the general principle of appellate review
that factual holdings can only be set aside on the basis of palpable and
overriding error. As we have seen, this is a high standard: Housen v.
Nikolaisen, above; South Yukon, above at paragraph 46.
[58]
The Federal Court found that
the Rat upper tray did not infringe because it had not appropriated the
capacity for telescopic movement as the Federal Court had construed that term:
Reasons of the Federal Court at paragraph 91. On appeal, Zero Spill submits
that this finding ignored expert and documentary evidence.
[59]
In my view, Zero Spill has
not established palpable and overriding error on this point. The absence of
references to expert and documentary evidence does not automatically translate
to a finding of palpable and overriding error. As mentioned in paragraph 48
above, the full record was before the Federal Court and on appeal we must
presume that all of it was reviewed. On a point such as this, we must ask
whether the Federal Court grappled with the matter as a whole. To determine
this, as mentioned above, our focus must be on the substance of the reasons for
judgment, discerned by a reading of the reasons as an organic whole. On this,
the following paragraphs from South Yukon, above, are apposite:
[49] Immersed
from day-to-day and week-to-week in a long and complex trial such as this,
trial judges occupy a privileged and unique position. Armed with the tools of
logic and reason, they study and observe all of the witnesses and the exhibits.
Over time, factual assessments develop, evolve, and ultimately solidify into a
factual narrative, full of complex interconnections, nuances and flavour.
[50] When it comes time to
draft reasons in a complex case, trial judges are not trying to draft an
encyclopedia memorializing every last morsel of factual minutiae, nor can they.
They distill and synthesize masses of information, separating the wheat from
the chaff and, in the end, expressing only the most important factual findings
and justifications for them.
[51] Sometimes appellants
attack as palpable and overriding error the non-mention or scanty mention of
matters they consider to be important. In assessing this, care must be taken to
distinguish true palpable and overriding error on the one hand, from the
legitimate by-product of distillation and synthesis or innocent inadequacies of
expression on the other.
[60]
Overall, reviewing the
Federal Court’s reasons as a whole, I do not accept that the Federal Court
ignored expert and documentary evidence in making the finding it did. The
reasons show that the Federal Court did grapple with this matter, considering
all the evidence before it. Zero Spill has not persuaded me otherwise.
[61]
As for the Stealth upper
tray, Zero Spill properly conceded that this Court’s disposition of the issue
of infringement depended upon its disposition of the issue of claim
construction. In its words, “[i]f the appellants’
proposed construction is correct, the appellants submit that the finding by the
trial judge that the Stealth Tray will accommodate movement is determinative on
this issue of the infringement of claim 2”: Zero Spill’s Memorandum of
Fact and Law at paragraph 84. Since the Federal Court correctly construed the
claims of the ’375 Patent, the Stealth upper tray does not infringe the ’375
Patent.
(c) Validity
[62]
On appeal, Lea-Der attempted
to assert that the ’375 Patent was invalid: Lea-Der’s Memorandum of Fact and
Law at paragraphs 91-92.
[63]
However, this issue is not
properly before us. In its judgment, the Federal Court declared that the ’375
Patent was valid. If, in this Court, Lea-Der wished to set aside that
declaration and challenge the validity of the ’375 Patent, it had to bring a
cross-appeal. It has not done so. Therefore, the Federal Court’s declaration
that the ’375 Patent is valid stands.
(2) The ’064 Patent
[64]
The ’064 Patent relates to a
sectional fluid containment tray that is mounted low on the central stack of an
oil well. Its purpose is to capture fluid leaking from above and to drain it
away.
[65]
The Federal Court held that
the ’064 Patent was neither valid nor infringed by either Lea-Der or the Heide
respondents. In particular, the Federal Court held that the ’064 Patent was
both anticipated and obvious in its entirety: Reasons of the Federal Court at
paragraphs 117-18.
[66]
Zero Spill appeals all of
these findings. It submits that the Federal Court construed some of the claims
of the ’064 Patent but did so incorrectly, failed to construe all of the claims
of the ’064 Patent when it considered whether the ’064 Patent was anticipated
and obvious, and considered the obviousness of individual claim elements in the
abstract rather than the claimed invention as a whole.
[67]
I agree in part with Zero
Spill.
[68]
Those claim elements of the
’064 Patent that the Federal Court did construe were construed without
reversible error. This is sufficient to dispose of Zero Spill’s appeal on
infringement.
[69]
However, the Federal Court did
not construe completely the claims of the ’064 Patent. As a result, it was not
possible for it to properly assess the issues of anticipation and obviousness.
Thus, the Federal Court’s invalidity finding cannot stand and must be remitted to
the judge for reconsideration.
(a) Construction
[70]
The Federal Court held that
it was sufficient to consider only Claims 1 and 9 of the ’064 Patent: Reasons
of the Federal Court at paragraph 106. Those Claims read as follows:
1. An oilwell leak
containment apparatus for a completed oilwell, comprising:
a shallow tray-form body segmented into at least two segments, each of
the at least two segments having a non-mating edge and a mating edge,
the non-mating edge having an upstanding containment wall, when the at least
two segments are coupled together to form the body the upstanding containment
wall extending around a peripheral edge of the body and defining a liquid
containment cavity, the mating edge mates with an other of the at
least two segments, each mating edge having an arcuate portion, when the
at least two segments are coupled together to complete the body the arcuate
portions forming a circular collar adapted to be positioned around a christmas
tree [sic];
at least one of the two segments having a drainage aperture; and
couplers for clamping the mating edges together.
…
9. An oilwell leak containment apparatus for a completed
oilwell, comprising in combination:
an assemblage of components forming a christmas tree [sic]
secured to a wellhead:
a body segmented into at least two segments, each of the at least two
segments having a non-mating edge and a mating edge, the non-mating edge
having an upstanding containment wall, when the at least two segments are
coupled together to form the body the upstanding containment wall extending
around a peripheral edge of the body and defining a liquid containment
cavity, the mating edge mates with an other of the at least two
segments, each mating edge having an arcuate portion, when the at least
two segments are coupled together to complete the body the arcuate portions
forming a circular collar around the christmas tree [sic];
couplers for clamping the mating edges together;
the mating edge of the one of the at least two segments having a
projecting tongue and the mating edge of the other of the at least two
segments has a tongue receiving groove, with a seal positioned within the
tongue receiving groove; and
at least one of the segments forming the liquid containment cavity
having a drainage aperture. [emphasis added]
[71]
In considering Claims 1 and
9, the Federal Court focused on a few key claim elements – “mating edge,” “a liquid containment cavity,” “completed
oilwell,” and “christmas tree” [sic]
– holding that each was essential: Reasons of the Federal Court at paragraphs
109-12.
[72]
The Federal Court held that
the elements, “mating edge” and “a liquid containment cavity,” meant that the tray
segments would, when combined as described in Claims 1 and 9, create a single
liquid containment cavity with liquid-tight edges where the segments were
joined: Reasons of the Federal Court at paragraphs 109-10. In the Federal
Court’s view, these essential elements of Claims 1 and 9 referred to “a single divisible tray where the sections are sealed and
come together to form a single containment cavity”: Reasons of the
Federal Court at paragraph 110.
[73]
The Federal Court further
held that the elements, “completed oilwell” and “christmas tree” [sic], meant that the tray
claimed in Claims 1 and 9 was only claimed in conjunction with a production oil
well, a Christmas tree being a set of valves installed on a production oil
well, rather than a drilling rig: Reasons of the Federal Court at paragraphs
34, 111-12.
[74]
In construing Claims 1 and 9
as it did, the Federal Court relied on the plain meaning of the text of the
patent and the evidence of all experts in the case: Reasons of the Federal
Court at paragraphs 33-35, 44, 51, and 109-12. In particular, the Federal Court
noted that on most issues, all experts were essentially agreed, but that Zero
Spill’s expert, Wallace, had changed his opinion on the meaning of “completed oilwell” and “christmas
tree” [sic] mid-litigation to include use on a drilling rig, the
effect of which was to render the Rat and Stealth lower trays infringing.
Wallace attempted to explain his change in opinion by pointing to some of the
drawings of the ’064 Patent depicting a blow out preventer stack, which are
rarely present on production oil wells: Reasons of the Federal Court at
paragraph 111. The Federal Court preferred the evidence of Lea-Der’s expert,
Thicke, whose opinion did not change throughout the litigation and who was not
prepared to ignore the plain language of the patent based on drawings that
depicted a blow out preventer stack which was extraneous to the actual
invention: Reasons of the Federal Court at paragraph 112.
[75]
On appeal, Zero Spill argues
that the Federal Court erred in construing these elements. In particular, Zero
Spill alleges that a liquid-tight seal between tray sections is not essential
to Claim 1 because Claim 3 describes a tongue and groove connection without
reference to a seal while Claim 4 does include a seal. Therefore, says Zero
Spill, Claim 1, which is silent about a seal, also cannot require a liquid-tight
seal: Zero Spill's Memorandum of Fact and Law at paragraphs 97-98.
[76]
Zero Spill says that in the
absence of a liquid-tight seal between tray sections, the only way to create a
liquid-tight tray as required by the ’064 Patent would be by combining two
liquid-tight cavities to form a single liquid-tight tray: Zero Spill's Memorandum
of Fact and Law at paragraph 99. At the hearing of the appeal, Zero Spill
argued that this meant that “a containment cavity”
actually referred to any number of liquid containment cavities combined into a
single tray.
[77]
Regarding the construction
of “completed oilwell” and “christmas tree” [sic], Zero Spill essentially
repeats the argument it made to the Federal Court: that the inventor had
defined “christmas tree” [sic] in the
patent in relation to the drawings and that the skilled reader would have
understood that the presence of a blow out preventer stack in those drawings to
mean that the invention was claimed for use on a drilling rig: Zero Spill's
Memorandum of Fact and Law at paragraphs 95-96.
[78]
I reject these arguments. In
my view, the Federal Court did not err when it construed any of these elements.
The Federal Court relied heavily on both the text of the patent and the input
of the experts in the case, who were initially all agreed. I have not been
persuaded that the Federal Court committed palpable and overriding error in
preferring the experts it did and there are no other reversible errors in the
Federal Court’s construction of the patent.
(b) Infringement
[79]
Based on its construction of
these elements of the ’064 Patent, the Federal Court held that neither the Rat
nor the Stealth lower tray was infringing because the trays had not been
deployed in conjunction with a production oil well: Reasons of the Federal
Court at paragraph 121. The Federal Court also held that the Rat lower tray did
not infringe because it did not involve the mating of multiple tray segments to
form a single containment cavity. Rather, it brought two separate trays into
close proximity without requiring any liquid-tight seal being formed between
them: Reasons of the Federal Court at paragraph 120.
[80]
Again, Zero Spill has
properly conceded that its appeal on the issue of infringement hinges on the Federal
Court’s construction of Claims 1 and 9: Zero Spill's Memorandum of Fact and Law
at paragraph 125. Given that I have found no reversible error in the Federal
Court’s construction of these elements of Claims 1 and 9, I would also dismiss
Zero Spill’s appeal on the issue of infringement.
(c) Validity
(anticipation and obviousness)
[81]
The requirement that claimed
inventions not be anticipated or obvious is set out in sections 28.2 and 28.3
of the Patent Act, R.S.C. 1985, c. P-4. Both of these sections begin
with “[t]he subject-matter defined by a claim in
an application for a patent in Canada…” [emphasis added] and then go on
to establish formal and substantive criteria for a finding of anticipation or
obviousness. Both of these sections focus a reviewing court on the subject
matter “defined by a claim”.
[82]
Section 58 of the Patent
Act also bears upon this. Under section 58, individual claims stand or fall
independently and have no direct effect on the validity of the patent overall.
Section 58 reads as follows:
|
58. When, in any action or proceeding respecting a patent that
contains two or more claims, one or more of those claims is or are held to be
valid but another or others is or are held to be invalid or void, effect
shall be given to the patent as if it contained only the valid claim or
claims.
|
58. Lorsque, dans une action ou procédure relative à un brevet qui
renferme deux ou plusieurs revendications, une ou plusieurs de ces
revendications sont tenues pour valides, mais qu’une autre ou d’autres sont
tenues pour invalides ou nulles, il est donné effet au brevet tout comme s’il
ne renfermait que la ou les revendications valides.
|
[83]
Together, sections 28.2,
28.3 and 58 of the Patent Act establish that invalidity for anticipation
or obviousness must be assessed claim-by-claim.
[84]
Although sections 28.2 and
28.3 prohibit claims that are anticipated or obvious, these sections offer
little help to distinguish between claims that are valid and invalid. In short,
these sections establish a standard (novelty or inventiveness, respectively)
and certain conditions for their application (including the correct date for
determination), without prescribing any test for determining whether that
standard is met. To determine whether a given claim is anticipated or obvious,
one must apply common law tests.
[85]
The leading Canadian
authority on both anticipation and obviousness is Apotex Inc. v.
Sanofi-Synthelabo Canada Inc., 2008 SCC 61, [2008] 3 S.C.R. 265. That case affirmed
two common law tests, each of which confirms that invalidity for anticipation
or obviousness must be established claim-by-claim.
[86]
On anticipation, Sanofi-Synthelabo
prescribes two necessary conditions to a finding of invalidity: disclosure and
enablement by a single piece of prior art: at paragraphs 28, 31-37. In
discussing the second requirement, enablement, the Supreme Court stated that,
to be enabling, “[t]he prior [art] must provide enough
information to allow the subsequently claimed invention to be performed
without undue burden” [emphasis added]: at paragraph 37(3).
[87]
On obviousness, Sanofi-Synthelabo
prescribes a four-step test, step two of which is to “[i]dentify
the inventive concept of the claim in question or if that cannot readily
be done, construe it” [emphasis added]: at paragraph 67.
[88]
Apparent in both of these
passages, binding on the Federal Courts, is that each allegedly anticipated or
obvious claim must be considered individually.
[89]
In this regard, the Federal
Court erred.
[90]
As already described, the
Federal Court held that it was sufficient for the purposes of its analysis to
consider the meaning and scope of Claims 1 and 9 because all of the remaining
claims were dependent: Reasons of the Federal Court at paragraph 106.
[91]
In considering anticipation,
rather than construing Claims 2-8 and 10-14, the Federal Court merely listed
some of the elements of Claims 2-8 (at paragraph 113):
The 064 Patent describes
a divisible fluid containment tray that is mechanically fitted and sealed to a
Christmas tree where it passively collects fluids falling from above. The captured
fluids are then drained away through a drainage aperture. Included in the
claims are features such as quick release couplers, tongue and groove joints
that can be sealed, cascading containment trays that may be interconnected and
upstanding and descending collars with or without a seal.
[92]
The Federal Court then held
that the ’064 Patent was entirely anticipated by two patents, Shuyler
(US1,507,628) and Gayaut (US5,377,748), that both describe divisible and
drained fluid containment trays fixed to a wellhead pipe beneath a well floor
with a sealed flange, and lower trays described by industry witnesses: Reasons
of the Federal Court at paragraphs 117-18.
[93]
Next, the Federal Court held
that the ’064 Patent was entirely obvious because changes in tray sizing or
methods of tray joinder including the use of quick-release couplers are the
kinds of routine adaptations that the skilled reader would readily recognize
and adopt to suit the installation context: Reasons of the Federal Court at
paragraph 114. Therefore, there was nothing about the lower tray of the ’064
Patent that would not have been obvious to the skilled reader: Reasons of the
Federal Court at paragraph 118.
[94]
The Federal Court was
obliged to consider the validity of the ’064 Patent claim-by-claim. Not doing
so was a legal error. Notwithstanding that Claim 13 is actually an independent
claim, the nature of dependent cascading claims is to narrow the claims upon
which they depend: Purdue Pharma v. Pharmascience Inc., 2009 FC 726, 77
C.P.R. (4th) 262 at paragraph 10. The practical effect of this on anticipation
or obviousness is that eventually a claim may be sufficiently narrow to escape
these prior art-based attacks, even though the broader claims may be invalid.
[95]
Further, on the issue of
anticipation, the Federal Court did not consider enablement. And on
obviousness, the Federal Court did not consider that the ’064 Patent may have
claimed a combination invention. Assuming without deciding that the various
elements claimed were known at the relevant time, the task of the Federal Court
became to assess the inventiveness of each claim, asking whether the claimed
combination of known elements was nonetheless inventive. It is not fair to a
person claiming to have invented a combination invention to break the combination
down into its parts and find that, because each part is well known, the
combination is necessarily obvious: Bridgeview Manufacturing Inc. v. 931409
Alberta Ltd., 2010 FCA 188, 87 C.P.R. (4th) 195 at paragraph 51.
[96]
Also I note that the Federal
Court may have employed different constructions of Claims 1 and 9 for its
infringement and validity analyses. The claims are to be construed once, and
for all purposes: Whirlpool, above at paragraph 49(b); Purdue Pharma
v. Canada (Attorney General), 2011 FCA 132, 93 C.P.R. (4th) 186.
[97]
The identification of the
proper legal approach to anticipation and obviousness is a matter of law
subject to correctness review: Eurocopter, above at paragraph 117; Easton
Sports Canada Inc. v. Bauer Hockey Corp., 2011 FCA 83, 92 C.P.R. (4th) 103
at paragraph 35. Since I have held that the Federal Court’s approach to
anticipation and obviousness was incorrect, the Federal Court’s finding that
the ’064 Patent was anticipated and obvious cannot stand. These issues will be
remitted to the judge for determination in accordance with these reasons.
(3) The ’265 Patent
[98]
The ’265 Patent relates to
the capture of fluid from a leaking wellhead. The specification describes an
annular ring with an outer flange that is bolted directly into the central
stack of the wellhead. A catch pan is attached and sealed to the outer edge of
the annular ring. This way, fluids leaking from above are caught and drained
away.
[99]
The Federal Court found that
the ’265 Patent was entirely invalid because it was obvious: Reasons of the
Federal Court at paragraph 140.
[100]
Zero Spill appeals this
finding on multiple bases, including that the Federal Court did not assess
obviousness claim-by-claim and considered the obviousness of individual claim
elements in the abstract rather than considering the claimed invention as a
whole. I agree that the Federal Court’s finding that the ’265 Patent was
entirely invalid because it was obvious cannot stand.
(a) Construction
[101]
The Federal Court construed
the entire ’265 Patent – nine claims in all – in a single brief paragraph (at
paragraph 136):
There are no terms in
the 265 Patent claims that are in dispute. The claims describe a fluid
containment system incorporating a catchment pan attached to an annular ring
and flange that is bolted to the central stack of a wellhead. The catchment pan
includes a drain. The disclosure is essentially silent on the inventive concept
and there are no references to any prior art. The problem addressed by the
patent is simply the capture and containment of fluids leaking from a wellhead.
[102]
On appeal, Zero Spill takes
no issue with this passage, other than to say that the Federal Court did not
really construe the claims of the ’265 Patent at all. Focusing on the substance
of the reasons for judgment, discerned by a reading of the reasons as an
organic whole, I agree with Zero Spill’s submission.
(b) Validity
[103]
As described briefly above,
the Federal Court held that the entire ’265 Patent was obvious. Because none of
the terms of the claims were in dispute, the Federal Court held that the ’265
Patent universally claimed only a well-known method for collecting wellhead
leaks. With this universal construction of the ’265 Patent in mind, the Federal
Court considered the variously claimed attachment methods for the catchment pan
in the abstract, holding that each was a routine adaptation that was well-known
and involved no inventive ingenuity: Reasons of the Federal Court at paragraphs
138-39.
[104]
In my view, the Federal
Court adopted the same approach as it did concerning the ’064 Patent, an
approach that I have found to be in error. Whether or not the claim language
was disputed, the Federal Court was required to construe or determine the
inventive concept of each of the nine claims at issue and thereafter to assess
the combinations of the various elements claimed to determine whether they were
inventive: Bridgeview Manufacturing, above.
[105]
Therefore, the Federal
Court’s finding that the ’265 Patent was obvious cannot stand and so this issue
must be remitted to the Federal Court for redetermination.
C. Proposed disposition
[106]
For the foregoing reasons, I
would allow Zero Spill’s appeal in part and set aside the judgment and the
amended judgment of the Federal Court, except to the extent that the latter
found that Canadian Patent 2,136,375 was valid and not infringed.
[107]
I would remit the following
issues to the Federal Court judge for redetermination in accordance with these
reasons:
•
Infringement of Zero Spill’s
Canadian Industrial Design 86,793 by the Heide respondents; and
•
Validity of Zero Spill’s
Canadian Patents 2,258,064 and 2,166,265.
[108]
The Federal Court set out
its award of costs in a separate judgment dated September 19, 2013. Formally,
this was not appealed. No notice of appeal specific to that judgment has been
placed before us. However, Zero Spill’s notice of appeal from the other
judgments did seek costs of the appeal and in the court below. As is apparent
from their memoranda and oral submissions before us, the parties have proceeded
on the basis that the issue of costs in this Court and below is indeed before
us.
[109] Zero Spill has been substantially successful on
appeal, but not entirely. Therefore, I would grant it 70% of its costs both
here and below.
“David Stratas”
“I agree
Eleanor R. Dawson J.A.”
“I agree
D.G. Near J.A.”
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