Date: 20100928
Docket: T-1327-05
Citation: 2010
FC 966
Ottawa, Ontario, September 28, 2010
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
WENZEL DOWNHOLE TOOLS LTD
and WILLIAM WENZEL
Plaintiffs
and
NATIONAL-OILWELL CANADA LTD.,
NATIONAL OILWELL NOVA SCOTIA COMPANY,
NATIONAL OILWELL VARCO INC.,
DRECO ENERGY SERVICES LTD.,
VECTOR OIL TOOL LTD. and FREDERICK W.
PHEASEY
Defendants
AND
BETWEEN:
NATIONAL-OILWELL CANADA LTD.,
NATIONAL OILWELL NOVA SCOTIA COMPANY,
NATIONAL OILWELL VARCO INC.,
DRECO ENERGY SERVICES LTD.,
VECTOR OIL TOOL LTD. and FREDERICK W.
PHEASEY
Plaintiffs by Counterclaim
and
WENZEL DOWNHOLE TOOLS LTD.
and WILLIAM WENZEL
Defendants by Counterclaim
REASONS FOR ORDER AND ORDER
(Motion for Summary Judgment)
I. Background
[1]
The motion
now before the Court relates to a patent infringement action brought by the
Plaintiffs, William Wenzel and Wenzel Downhole Tools Ltd. (Wenzel Tools)
against the Defendants. Mr. Wenzel claims that he is the inventor of Canadian
Patent No. 2,206,630 ('630 Patent). Wenzel Tools claims to be the owner of the
'630 Patent by way of assignment. In their Statement of Defence and
Counterclaim, the Defendants: (a) deny that Mr. Wenzel is the true inventor of
the subject matter of the claims in the '630 Patent; and (b) claim that the
'630 Patent is invalid on the grounds of obviousness, anticipation, and lack of
inventiveness and utility.
[2]
The
proceeding has been specially managed, under the competent oversight of
Prothonotary Lafrèniere, since the close of pleadings in 2006, and has been the
subject of numerous interlocutory motions and orders. Finally, the parties came
to a pre-trial conference, as provided for in Rule 258 of the Federal Courts
Rules, SOR/98-106, on July 17, 2009. The Minutes of the Pre-Trial
Conference reflect the extensive discussions that took place at that meeting.
Under the heading “Outstanding Motions”, no mention is made of any outstanding
motions other than those that might relate to further discovery, or to a
potential motion for summary judgment.
[3]
An Order
resulting from the pre-trial conference was signed on October 13, 2009. The
Order permits the Plaintiffs to bring a motion regarding further discovery and
permits the Defendants to bring a motion regarding the examination of Douglas
Wenzel. The Order is silent with respect to any other motions. In an Order
dated February 4, 2010, the matter was set down for a 30-day trial commencing
in September 2011.
[4]
On
December 14, 2009, the Defendants served and filed a motion for summary
dismissal of the Plaintiffs' action. The Defendants claim in their notice of
motion that the subject matter defined by the claims in the '630 Patent was
disclosed before the claim date in the patent by persons other than the named inventor,
namely in U.S. Patent No. 1,643,338 filed March 16, 1921 (Halvorsen Patent).
The grounds for summary dismissal are that the '630 Patent was obvious in light
of, or anticipated by the Halvorsen Patent and, accordingly, is invalid.
[5]
In
response to the Defendants’ motion, the Plaintiffs brought a motion requesting
that the Court decline to hear the Defendants’ motion for summary judgment in
light of the Defendants’ representations at the pre-trial conference that
obviousness and anticipation were issues for trial.
[6]
Prothonotary
Lafrèniere dealt with the Plaintiffs’ motion in a decision dated June 21, 2010
(Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2010 FC 669,
[2010] F.C.J. No. 802 (QL)). The learned prothonotary was very critical of the
Defendants in bringing this motion after the pre-trial conference.
Nevertheless, he determined that he would refer the motion for summary judgment
to the trial judge.
[7]
As I am
currently scheduled to be the trial judge, the summary judgment motion was brought
to my attention. After a teleconference with the parties, I directed that
further written submissions be made on the question of whether the Defendants’
motion for summary judgment should be heard prior to trial or at all. I have
now had an opportunity to review the file and the submissions of the parties
and have determined that I will refuse to consider the motion for summary
judgment.
II. Overview - Motion for
Summary Judgment
[8]
On
December 9, 2009, amendments to Rules 213-219 of the Federal Courts Rules
relating to motions for summary judgment and summary trials came into effect
(SOR/2009-331, s.3). The most significant change in these amendments is that
the Federal Court now has the ability to hear summary trials. The new rules,
modeled after British
Columbia’s Rule 18-A
(now 9-7), allow the Court to call for and assess evidence in a summary manner.
[9]
The motion
of the Defendants for summary dismissal was brought on December 14, 2009, and
is subject to the new provisions of the Federal Courts Rules. In
particular, the Defendants rely on Rule 213(1) which provides that:
213. (1) A
party may bring a motion for summary judgment or summary trial on all or some
of the issues raised in the pleadings at any time after the defendant has
filed a defence but before the time and place for trial have been fixed.
|
213.
(1) Une partie peut présenter une requête en jugement sommaire ou en procès
sommaire à l’égard de toutes ou d’une partie des questions que soulèvent les
actes de procédure. Le cas échéant, elle la présente après le dépôt de la
défense du défendeur et avant que les heure, date et lieu de l’instruction
soient fixés.
|
[10]
Rule 215 speaks to
the nature of summary judgment and the powers of the Court.
If no genuine
issue for trial
215. (1) If on
a motion for summary judgment the Court is satisfied that there is no genuine
issue for trial with respect to a claim or defence, the Court shall grant
summary judgment accordingly.
Genuine issue
of amount or question of law
(2) If
the Court is satisfied that the only genuine issue is
(a) the
amount to which the moving party is entitled, the Court may order a trial of
that issue or grant summary judgment with a reference under rule 153 to
determine the amount; or
(b) a
question of law, the Court may determine the question and grant summary
judgment accordingly.
Powers of
Court
(3) If
the Court is satisfied that there is a genuine issue of fact or law for trial
with respect to a claim or a defence, the Court may
(a) nevertheless
determine that issue by way of summary trial and make any order necessary for
the conduct of the summary trial; or
(b) dismiss
the motion in whole or in part and order that the action, or the issues in
the action not disposed of by summary judgment, proceed to trial or that the
action be conducted as a specially managed proceeding.
|
Absence de véritable question litigieuse
215. (1) Si, par suite d’une requête en
jugement sommaire, la Cour est convaincue qu’il n’existe pas de véritable
question litigieuse quant à une déclaration ou à une défense, elle rend un
jugement sommaire en conséquence.
Somme d’argent ou point de droit
(2) Si la Cour est convaincue que
la seule véritable question litigieuse est :
a) la somme à laquelle le
requérant a droit, elle peut ordonner l’instruction de cette question ou
rendre un jugement sommaire assorti d’un renvoi pour détermination de la
somme conformément à la règle 153;
b) un point de droit, elle peut
statuer sur celui-ci et rendre un jugement sommaire en conséquence.
Pouvoirs de la Cour
(3) Si la Cour est convaincue
qu’il existe une véritable question de fait ou de droit litigieuse à l’égard
d’une déclaration ou d’une défense, elle peut :
a) néanmoins trancher cette
question par voie de procès sommaire et rendre toute ordonnance nécessaire
pour le déroulement de ce procès;
b) rejeter la requête en tout ou
en partie et ordonner que l’action ou toute question litigieuse non tranchée
par jugement sommaire soit instruite ou que l’action se poursuive à titre
d’instance à gestion spéciale.
|
III. Defendants’ Submissions
[11]
The
Defendants argue that there are entitled to bring a motion pursuant to Rule 213
of the Federal Courts Rules for summary dismissal of the action. The
Defendants rely on three main points to support their position that this motion
should be heard as soon as possible:
1)
the motion
is very simple, as it entails the plain English-language comparison by the
Court of the '630 Patent with the Halvorsen patent, which renders the '630
Patent obvious and anticipated;
2)
the motion
will only take a single day of Court’s time, as compared with 30 days of trial
time currently scheduled; and
3)
there
would be sufficient time for the matter to be heard, and appealed (if
necessary) before the commencement of the trial in September 2011.
[12]
The
Defendants further argue that their motion for summary dismissal was not
contemplated at the time of the pre-trial conference of July 17, 2009, and Rule
213 clearly states that “a party may bring a motion for summary judgment on all
or some of the issues raised in the pleadings at any time after the
defendant has filed a defence but before the time and place for trial have been
fixed.”
[13]
The
Defendants argue that there is no basis for the Plaintiffs to dispute the
entitlement of the Defendants to bring the motion for summary dismissal under
Rules 213, 214 and 215. The Defendants refer to two cases to substantiate their
argument: Chesters v. Canada, 2001 FCT 1374, [2001] F.C.J. No.
1849 (QL) and Bourque, Pierre & Fils Ltee v. Canada (1998),
150 F.T.R. 140, [1998] F.C.J. No. 908 (QL) (T.D.).
[14]
The
Defendants submit that they are ready to proceed with the motion and that six
weeks would be sufficient for the Plaintiffs to prepare and file an Affidavit
prior to the hearing of the motion.
[15]
The
Defendants have filed the Affidavit of Frederick W. Pheasey, sworn December 7,
2009 and suggest that this is the only evidence that will be led with respect
to the issue of prior art. Mr. Pheasey is not an expert witness. Rather,
he is a named Defendant in the action.
[16]
The
Defendants submit that a total of one day of time would be required for the
hearing of the motion.
IV. Plaintiffs’ Submissions
[17]
The
Plaintiffs argue that the Defendants’ motion for summary judgment is
egregiously late, without excuse, and should be dismissed. The Plaintiffs rely
on three main points to substantiate their argument. The Plaintiffs argue that:
1)
summary
judgment is only available where there is no issue to be tried, which is not
the case here since: (a) there is contradictory evidence as to the construction
of the '630 Patent: and (b) the Defendants argue that the patent is invalid due
to obviousness and anticipation which are two separate legal tests, and
therefore would require separate expert evidence; and
2)
the
Plaintiffs would incur additional costs to obtain expert reports to respond to
the summary judgment motion (possibly up to four reports). It would be a heavy
burden to prepare these reports at the same time as preparing for expert trial
reports; and
3)
allowing
the summary judgment motion to go forward would unnecessary delay the scheduled
September 2011 trial date.
[18]
The
Plaintiffs argue that it would be most efficient to dispose of the Defendants
motion for summary dismissal and proceed with the scheduled trial.
[19]
The
Plaintiffs state that they will require at least 6 months to prepare for a
motion for summary judgment. This includes:
·
two months
to prepare for and schedule cross-examination of Messrs, Pheasey, Wooley,
Miller and Nelson; and
·
one day
for each of those cross-examinations; and
·
one half
month to obtain transcripts of those cross-examinations; and
·
one month
to obtain a responding expert’s report, from the date cross-examination
transcripts are obtained; and
·
one month
to schedule the cross-examination of responding expert and one half month to
obtain the transcript of it; and
·
one month
to prepare a memorandum of fact and law, from the date the transcript of the
cross-examination of the responding expert is obtained.
V. Analysis
[20]
The
determinative issue in this case is whether a motion for summary judgment
should be allowed to go forward.
[21]
The major
issues with respect to allowing the motion going forward are:
·
proximity
to the scheduled trial;
·
efficient
use of judicial resources;
·
expense of
the parties; and
·
lack of
expert evidence in the current motion record.
[22]
It is
trite law that a summary judgment motion should address whether there is a
“genuine issue” for trial. In addition to this, the Court must weigh the many
competing interests involved before determining whether the motion should go
forward. In the case at hand, the interests include:
1)
the
interests of the Defendants who wish to expeditiously dispose of specific
issues which may prevent the necessity of a trial;
2)
the
interests of the Plaintiffs in having their “day in court”, as well as and the
additional economic burden of preparing for a summary proceeding while
concurrently undergoing trial preparations;
3)
the
interests of the Court in not wasting judicial resources where the trial date
is set and less than one year away; and
4)
the
interests of the Court in expeditiously disposing of a lengthy trial.
[23]
As noted,
Rule 213(1) directs that “a party may bring a motion for summary judgment or
summary trial on all or some of the issues raised in the pleadings at any time
after the defendant has filed a defence but before the time and place for a
trial have been fixed”. In this case, the trial date was not communicated to
the parties until February 4, 2010. I would have expected the Defendants, who
were aware of the Halvorsen Patent, to have raised the possibility of this
motion much earlier. Nevertheless, the Defendants were technically within the
time permitted for bringing the motion.
[24]
I will
briefly address the current case law pertaining to summary judgments, and the
jurisprudence from British
Columbia on
summary trials, to determine whether this Court should allow the Defendants’
motion for summary dismissal to move forward.
A. Summary judgment
[25]
The
amendments to the Federal Courts Rules attempts to alleviate any
inflexibility that the old Rules had which prevented expedited disposition of
cases that did not require a full trial. However, this provision only pertains
to cases that do not require a full trial. It is not in the interests of
justice (or economics) for parties to be subject to an additional burden of
preparing for a summary judgment motion when a full trial on the merits is
necessary.
[26]
Justice Phelan
in Society of
Composers, Authors & Music Publishers of Canada v. Maple Leaf Sports &
Entertainment Ltd.,
2010 FC 731, [2010] F.C.J. No. 885 (QL) (Socan) was one of the first in
this Court to consider a motion for summary judgment in light of the amended
rules. As Justice Phelan highlights, a motion for summary judgment is to
determine whether there is a “genuine issue for trial”, and not to litigate the
merits of the trial. After hearing the motion in Socan, Justice Phelan
states “one wonders if the same time, efforts and client expense would have
been better spent getting this case ready for trial” (para. 3). The additional
time and cost burden to the parties must be balanced against the efficiency of
providing an expedited disposition of a case that does not require a full
trial.
[27]
The
Supreme Court had the opportunity to comment on the basic principles of summary
judgments in Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R.
372 at paragraph 10. The Court commenced with this comment as to their purpose
and limitations:
…The summary judgment rule serves an
important purpose in the civil litigation system. It prevents claims or
defences that have no chance of success from proceeding to trial. Trying
unmeritorious claims imposes a heavy price in terms of time and cost on the
parties to the litigation and on the justice system. It is essential to the
proper operation of the justice system and beneficial to the parties that
claims that have no chance of success be weeded out at an early stage.
Conversely, it is essential to justice that claims disclosing real issues that
may be successful proceed to trial.
[28]
The
Federal Court and Court of Appeal have adopted some basic principles which
govern summary judgments. The general principles in the Federal Court context,
which were later adopted by the Court of Appeal, were set out by Justice
Tremblay-Lamer in Granville Shipping Co. v.
Pegasus Lines Ltd. S.A., [1996] 2 F.C. 853, [1996] F.C.J.
No. 481 (QL) (Fed. T.D.) (Granville Shipping) at paragraph 8 [with
emphasis added]:
I have considered all of the case law
pertaining to summary judgment and I summarize the general principles
accordingly:
1.
the
purpose of the provisions is to allow the Court to summarily dispense with
cases which ought not proceed to trial because there is no genuine issue to be
tried (Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al);
2.
there is
no determinative test (Feoso Oil Ltd. v. Sarla (The)) but Stone J.A.
seems to have adopted the reasons of Henry J. in Pizza Pizza Ltd. v.
Gillespie. It is not whether a party cannot possibly succeed at trial,
it is whether the case is so doubtful that it does not deserve consideration by
the trier of fact at a future trial;
3.
each case
should be interpreted in reference to its own contextual framework (Blyth
and Feoso);
4.
provincial
practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, [R.R.O. 1990,
Reg. 194]) can aid in interpretation (Feoso and Collie);
5.
this Court
may determine questions of fact and law on the motion for summary judgment if
this can be done on the material before the Court (this is broader than Rule 20
of the Ontario Rules of Civil Procedure) (Patrick);
6.
on the
whole of the evidence, summary judgment cannot be granted if the necessary
facts cannot be found or if it would be unjust to do so (Pallman and
Sears);
7.
in the
case of a serious issue with respect to credibility, the case should go to
trial because the parties should be cross-examined before the trial judge (Forde
and Sears). The mere existence of apparent conflict in the evidence does
not preclude summary judgment; the court should take a "hard look" at
the merits and decide if there are issues of credibility to be resolved (Stokes).
[29]
Finally,
one of the most recurring principles in the jurisprudence on summary judgments
is the need for caution. As stated by Justice Mactavish in Canada (Minister of Citizenship and
Immigration) v. Laroche
2008 FC 528, [2008] F.C.J. No. 676 at para. 18:
In making this determination, a motions
judge must proceed with care, as the effect of the granting of summary judgment
will be to preclude a party from presenting any evidence at trial with respect
to the issue in dispute. In other words, the unsuccessful responding party will
lose its "day in court": see Apotex Inc. v. Merck & Co.,
248 F.T.R. 82, at para. 12, aff'd [2004] F.C.J. No. 1495.
[30]
The Court
must consider the competing objectives of a summary judgment when deciding
whether a motion on the fact of the case should proceed. In the case at hand, I
must carefully weigh the importance of efficiently expediting the disposition
of a complex patent infringement action, and the equally important objective of
ensuring that the Plaintiffs have their “day in Court” to present evidence with
respect to “genuine” issues in the dispute.
[31]
I would
conclude that in the current proceeding, there are several factors that weigh
against allowing the motion for summary judgment to proceed (Granville Shipping).
·
Purpose:
The purpose
of the Rule 213 is to allow the Court to summarily dispose of cases when there
is no genuine issue, and ought not to be allowed to proceed to trial. The Defendants
argue that this is a case with no genuine issue, as they only have one expert
who they would be required to satisfy the Court that the '630 patent is both
anticipated and obvious. There are a few errors in their argument. Firstly,
anticipation and obviousness are two separate legal tests which need to be
addressed separately. Moreover, before anticipation and obviousness can be
considered, the Court must construe the '630 patent, an exercise that requires
the assistance of expert witnesses. Finally, in this case, the Defendants have
only put forward the opinion of Mr. Frederick Pheasey, a named Defendant in the
action; no expert evidence has been provided.
·
Determinative
Test: There
is no determinative test as to whether there is a “genuine issue” for trial.
The Court must not consider whether a party cannot possibly succeed at trial,
but whether the case is so doubtful that it does not deserve consideration by a
trier of fact at a future trial. In the context of patent infringement actions,
the issues and facts are often complex and interwoven. In this case, there are at
least two issues which need to be determined: (1) what is the construction of
the patent; and (2) was the patent, as construed, anticipated by the prior art?
On both of these issues, there is contradictory evidence presented by the
Plaintiffs and Defendants which needs to be weighed.
·
Credibility: As in the case at hand, where
there will be expert witness testimony, there are often issues with respect to
credibility, and contradictory evidence. This requires a Court to assess and
weigh the opinions of all of the experts. Cross-examination is an essential
feature in these cases.
[32]
In
considering and weighing all of the factors above, I conclude that a motion for
summary judgment ought not to proceed, as there are genuine issues which need
to be examined at trial.
B. Summary Trial
[33]
While
neither party directly advanced an argument that these issues could be
determined by summary trial pursuant to Rule 216, the Court has a duty to
consider the matter (Socan, at para. 40).
[34]
There is
little jurisprudence on the whether a Court should direct that a summary trial proceed
pursuant to Rule 216 of the Federal Courts Rules. However, guidance can
be found in the jurisprudence from British Columbia pursuant to what is now
Rule 9-7 (previously Rule 18A) of the British Columbia Supreme
Court Civil Rules, B.C. Reg. 168/2009, where there is a similar mechanism in
place.
[35]
British
Columbia’s Rule 9-7
provides a Court with procedures to conduct a “summary trial”, including
providing power for the Court to order that a deponent “attend for
cross-examination ...before the Court”.
[36]
The
leading case on the extent of a Court’s discretion to grant judgment pursuant
to the Rule 9-7 summary trial procedure is Inspiration Management, (1989)
36 B.C.L.R. (2d) 202, 36 C.P.C. (2d) 199 (BCCA). In that case, the British
Columbia Court of Appeal, at paragraph 48, set out a number of factors to be
considered:
In deciding whether it will be unjust to
give judgment the chambers judge is entitled to consider, inter alia, the
amount involved, the complexity of the matter, its urgency, any prejudice
likely to arise by reason of delay, the cost of taking the case forward to a
conventional trial in relation to the amount involved, the course of the
proceedings and any other matters which arise for consideration on this
important question.
[37]
In
subsequent cases, additional factors have been considered when deciding whether
a matter is suitable for determination pursuant to Rule 9-7. The Court in Dahl
v. Royal Bank, 2005 BCSC 1263, 46 B.C.L.R. (4th) 342, at paragraph
12, stated:
… The additional factors trial judges
take into account in determining whether a case is suitable include:
·
is the
litigation extensive and will the summary trial take considerable time;
·
is
credibility a crucial factor — and have the deponents of the conflicting
affidavits been cross examined;
·
will the
summary trial involve a substantial risk of wasting time and effort, and
producing unnecessary complexity; and
·
does the
application result in litigating in slices.
[38]
I conclude
that, for the case at hand, there are several factors that weigh against
directing the parties towards a motion for summary trial (Inspiration,
Dahl):
·
Complexity
of the Matter: Patent
infringement trials and issues are inherently complex, and technical. The
technical nature of the '630 Patent requires review by expert witnesses to
assist the Court in construing the patent, in addition to the fact that
contradictory evidence will be presented by both the Defendants and the
Plaintiffs on the subject.
·
Cost: As a consequence of the
technical nature, a summary trial would require a substantial amount of time
and cost in preparation.
·
Time: It is apparent that a summary
trial would take a considerable amount of time, as the parties estimate that between
two and six months of preparation would be required.
·
Lack of
Expert Opinions: At
this stage, it appears that the Defendants intend to rely on Mr. Pheasey to
provide his opinions on claims construction and the issue of anticipation and
obviousness. It is a basic principle of the law of evidence that a fact witness
cannot provide opinion evidence. Mr. Pheasey appears to be relying on the
opinions of Messrs, Wooley, Miller and Nelson. However, these “experts” are not
before the Court in this motion. The problem cannot be remedied by merely
ordering cross-examination of Mr. Pheasey.
·
Urgency/
Wasted Time: Time
could be wasted that would better be spent preparing for the September 2011
trial; and
·
Litigation
in Slices:
Severing off the issue of anticipation would not conclusively dispose of the
trial if, on considering the motion, this Court made a determination against
the Defendants. In that event, the issue of obviousness – based on much of the
same evidence – would still be considered at trial.
[39]
It is
possible that a summary trial could be found to be efficient and effective
procedure in a patent infringement proceeding. However, based on the amount of
time required to prepare the summary trial, the proximity of the actual trial
date, and the lack of independent expert evidence available at the moment, I
would conclude that allowing this motion for summary judgment to proceed would
not be in the interest of justice.
[40]
Accordingly,
the motion for summary judgment will not be heard. Of course, it follows that
the issues of anticipation and obviousness will be matters to be fully explored
at trial, in the presence of proper expert and fact evidence. In addition, most
of the procedural steps required prior to trial will remain in the very capable
hands of Prothonotary Lafrèniere.
[41]
I would
assess costs against the Defendants, fixed in the amount of $5000 plus
reasonable disbursements, in respect of this motion.
ORDER
THIS COURT ORDERS that:
1.
The Defendants’
motion is dismissed; and
2.
Costs, fixed in the
amount of $5000 plus reasonable disbursements, are payable by the Defendants to
the Plaintiffs, in any event of the cause.
“Judith
A. Snider”