Jim Scharf Holdings Ltd. v. Sulco Industries Ltd., docket T-2653-96

Date: 19971103

Docket: T-2653-96

BETWEEN:

     JIM SCHARF HOLDINGS LTD.,

     Plaintiff,

     - and -

     SULCO INDUSTRIES LTD.,

     MARK SULLIVAN and MICHAEL SULLIVAN,

     Defendants.

     REASONS FOR ORDER

MULDOON, J.

[1]      Before the Court are opposed motions for summary judgment in the present patent infringement action.

[2]      This present action is the second such action which the plaintiff has brought against the defendants since June 1, 1995. The previous action was commenced by the plaintiff (also Scharf, hereinafter) on June 1, 1995 in this Court (file No. T-1157-95) against the present Sullivan defendants and against Sulco Industries and Price Costoco Canada Inc. for patent infringement. Sulco is now Sulco Industries Ltd., since June 6, 1995.

[3]      The previous action, as the parties admit, was settled by way of an agreement in writing among Sulco, Mark Sullivan, Michael Sullivan, Price Costoco Canada Inc., Scharf and James Scharf. The terms of that agreement provided, inter alia, that:

[4]      The plaintiff now alleges and the defendants deny that commencing at least as of May 14, 1996, Sulco, in breach of the agreement and in infringement of the patent, has sold plastic film wrap dispensers with bases which (i) are not flat (i.e. having no ridges or protrusions) and (ii) do not have the same base texture as had the base of its previous dispenser. Scharf does not allege only a breach of the agreement, but also again alleges infringement of the patent.

[5]      The defendants in their defence aver that they did not admit liability in the settlement agreement, and deny that the previous (old) dispenser infringed the patent which they say is, in any event, irrelevant for the following reasons, stated as being expressed in paragraphs 11, 12 and 13 in their statement of defence.

[6]      According to the plaintiff, an irregular surface on the dispenser base repels the plastic wrap, i.e. it will not cling. This is denied by the defendant. Mr. Mark Sullivan deposed in his reply affidavit that he "tested the base of the Third Sulco Dispenser and the modified Sulco dispenser for clinging by pulling the food wrap across the base many times in the usual fashion for which it is designed. There was no significant difference between the two. The food wrap clung to the bottom from time to time in each dispenser in roughly equal proportions." The Court notes that Mr. Sullivan's mention of the "Third Sulco Dispenser" is in reference to Mr. Sullivan's deposition that the defendants have had an entirely new mold made for their dispenser. According to Mr. Sullivan, the defendants are no longer using the modified first mold. He swore that "All future dispenser [sic] sold by Sulco will come from this or a similar mold".

[7]      The Court notes that the settlement is not an admission of infringement. The question before the Court is purely factual, and forms the issue in these motions for summary judgment: does the base of the defendant's dispenser infringe the plaintiff's patent?

[8]      In Granville Shipping Co. v. Pegasus Lines Ltd. S.A., [1996] 2 F.C. 853 (F.C.T.D.), Madam Justice Tremblay-Lamer considered the case law pertaining to summary judgment and aptly summarized the general principles:

[9]      In Milliken & Co. v. Interface Flooring Systems (Canada) Inc., T-3016-92 (December 2, 1996), Madam Justice Tremblay-Lamer stated that on a motion for summary judgment it is for the moving party to establish that the other party's statement of claim, statement of defence or counterclaim discloses no genuine issue to be tried.

[10]      For this case, these principles boil down to one proposition: to grant summary judgment in favour of either party, the Court must be able to determine from the affidavits whether or not the allegedly infringing plastic wrap dispenser has a flat base with the same texture as the product which the defendants made prior to the settlement agreement. If this fact does not rise in a rather obvious manner from the affidavits, then there is a genuine factual issue for trial. (The allegedly infringing dispenser was marketed for only a relatively short period of time before being replaced by a new (third) model which is said not to infringe at all.)

[11]      In support of their motion for summary judgment the defendants filed five affidavits, the plaintiff four. There was no cross-examination on the affidavits. The least one could say is that the affidavits give conflicting evidence. It is exactly this sort of evidence which needs to undergo the scrutiny of a trial. In order to demonstrate how unobvious the facts are, a brief summary of the affidavits' content - only those affidavits which go to the questions of flatness and texture - is warranted.

[12]      The plaintiff tendered two affidavits which appear to be intended as expert. Mr. Kim Kanigan is in the business of high pressure injection mold building. He swore that he examined two plastic film wrap dispensers, called WRAPPIT-UP and SULCOWRAP, and determined that they appear to have been produced by injection molding. The WRAPPIT-UP dispenser was the defendant's product which was the subject of the settlement. The SULCOWRAP dispenser is the defendants' dispenser made after the settlement. Mr. Kanigan describes the WRAPPIT-UP dispenser thus:

He described the SULCOWRAP as dispenser which was

[13]      Mr. Kanigan found that his observations accorded with Mr. Neil Gurney's (the President of Chiltern Tooling Inc., the firm which modified the defendant's molds to take the ribs off) statement that Chiltern Tools Inc. removed the ribs on the bottom of the WRAPPIT-UP by welding the depressions in the mold which formed the ribs, grinding it smooth and then lightly sandblasting the surface.

[14]      Mr. Kanigan also measured the finish of the surface using the surface roughness gauge, which provides a numerical value as to the degree of roughness of a surface, and by visually and tactilely comparing the bases in accordance with The Moldmakers Division of the Society of Plastics Industry Inc.'s "Mold Finish Guide". His opinion was that the base of the SULCOWRAP dispenser does not have the same texture as that of the WRAPPIT-UP.

[15]      The affiant whom the plaintiff tenders is Mr. Orville Olm, who is the product design adviser for the product and design development of the small industries division of the Saskatchewan Research Council. He also compared the bases. Mr. Olm's description of the two dispensers' bases and conclusion with respect to Mr. Gurney's statement is identical to Mr. Kanigan's. Mr. Olm conducted a test to verify the degree of low frequency roughness on the surface of the base of the two bases, and found that the SULCOWRAP deviated from its place by 508 microns, and the WRAPPIT-UP by 305 microns. Mr. Olm was also present when Mr. Steinmetz, the head of the machine shop and materials testing laboratory for the mechanical engineering department at the University of Saskatchewan, conducted a high frequency surface roughness test with a "Mitutoyo Surftest 211, series 178 surface roughness testing apparatus". The result of this test is that "the surface of the base of the SULCOWRAP is more than three times as rough as the surface of the base of the WRAPPIT-UP. The base of the SULCOWRAP dispenser does not have the same texture of the WRAPPIT-UP".

[16]      Mr. George Garrett swore an affidavit on behalf of the defendants. He measured the flatness of the film dispensers using a dial indicator micrometer and a reference plate guaranteed flat to within +/- .0005". Mr. Garrett "found the base to be flat within +/- .005", which for all practical purposes, is flat". The defendants also tendered affidavits from Mr. Neil Gurney (mentioned above as the president of Chiltern Tooling Inc.) and Dieter Frees, who is vice-president and general manager of Plastmade Industries Ltd. Plastmade built the defendants' dispensers. After the settlement agreement the mold-making companies were asked by the defendants to modify their plastic wrap dispenser mold so as to have a "flat base with no ridges or protrusions and of the same texture as the original dispenser". Basically, the point of the Gurney and Frees affidavits is that the defendant asked Plastmade to modify the mold to accord with the settlement: i.e., a dispenser with a flat, smooth base. Plastmade retained Chiltern to do so, and this was done by "welding the depressions in the mold that formed the ribs, grinding smooth and then lightly sandblasting to give surface consistency" (affidavit of Neil Gurney).

[17]      The only thing which is obvious arising from the affidavit evidence is that this case needs to be tried. It will take a trial to determine which base is flat and textured, and which is not. There will have to be an assessment of credibility and expertise. Viva voce testimony would be inestimatebly helpful. An additional fact which could not be clearly found in the affidavits is whether plastic wrap actually does cling to a flat (whatever that is) surface. This certainly seems to be a relevant consideration which goes to the heart of the infringement issue. At best, there are conflicting affidavits which have not been processed by that great engine of truth, cross-examination.

[18]      For these reasons, both parties motions are dismissed.

[19]      The feud between the parties appears to concern the short time span between the introduction of Sulco's second (the modified) model and the introduction of its third utterly newly molded model. The litigation could be savagely expensive for one or both sides. Their respective counsel talked virtually solidly during a day-and-half hearing on their allegedly "summary" motions. It might, of course, be a case of corporate executive ego which plunges the parties into this uncertain-of-outcome, costly grief. Both counsel expressed concern over the costs to be awarded - or not - on these "summary" motions. They sought to make written submissions - the "winner's" counsel to go first. Given the outcome, where there is no winner, the Court rejects counsels' submissions on yet more submissions on costs. Both motions are dismissed without costs being awarded. Each side can simply bear its own costs of these motions.

Judge

Ottawa, Ontario

November 3, 1997