Date: 20110607
Docket: A-278-09
Citation: 2011 FCA 193
CORAM: BLAIS
C.J.
SHARLOW
J.A.
TRUDEL
J.A.
BETWEEN:
HELI TECH
SERVICES (CANADA) LTD. and
CORPORACION
LA CAMPANA DE LA VILLA S.A. and
PHILIP
JARMAN
Appellants
and
WEYERHAEUSER
COMPANY LIMITED/
COMPAGNIE
WEYERHAEUSER LIMITÉE
DOING
BUSINESS AS
CASCADIA FOREST
PRODUCTS and
DOING
BUSINESS AS ISLAND
TIMBERLANDS and
CASCADIA
FOREST PRODUCTS LTD. and ISLAND TIMBERLANDS GP LTD. and
TIMBERWEST
FOREST CORP. and
BRASCAN
TIMBERLANDS MANAGEMENT GP INC. and
550777
B.C. LTD. OPERATING AS “R.E.M. CONTRACTING” and
CANADIAN
AIR-CRANE LIMITED and VIH LOGGING LTD. and
INTERNATIONAL
FOREST PRODUCTS LIMITED
Respondents
REASONS FOR JUDGMENT
SHARLOW J.A.
[1]
This
appeal involves a patent infringement action commenced in the Federal Court by
the filing of a statement of claim on January 11, 2006. The appellants
(referred to collectively as “Heli Tech”) are the plaintiffs in the action.
They are appealing the order of Justice O’Reilly issued June 8, 2009, for
reasons reported as Heli-Tech Services (Canada) Ltd. v. Weyerhaeuser Co.,
2009 FC 592. In that order, Justice O’Reilly reviewed de novo, and
upheld, the order of Prothonotary Lafrenière dated November 21, 2008, which granted
the motions of the respondents Brascan Timberlands Management GP Inc. (“Brascan
Timberlands MGP”) and Island Timberlands GP Ltd. (“Island Timberlands GP”) to
strike all allegations against them in the “Second Further Amended Statement of
Claim” (the “SFA”) without leave to amend, and to dismiss the action against
them. For the reasons that follow, I would dismiss the appeal.
Preliminary
observations
[2]
The
SFA has not been filed. It was submitted in the Federal Court in response to a
direction of Prothonotary Lafrenière giving Heli Tech a “last chance to propose
further amendments to their claim” (recorded entry for September 8, 2008 in
Federal Court file T-56-06). The SFA was the subject of argument on the motions
in the Federal Court that have resulted in this appeal. Accordingly, I have
considered these appeals on the basis that the issues relate to the pleadings
in the SFA only.
[3]
The
phrase “Island Timberlands” is used in the SFA to refer to the respondent Island
Timberlands GP. At the same time, there are allegations in the SFA that the
patent in issue was infringed by certain things done by another respondent,
Weyerhaeuser Company Limited/ Compagnie Weyerhaeuser Limitée (“Weyerhaeuser”),
while carrying on business as “Island Timberlands”. I understand those
allegations to be against Weyerhaeuser only. Therefore, they are not relevant
to this appeal and I have ignored them.
The patent in
issue
[4]
The
patent in issue, Canadian Patent No. 2,251,236, is entitled “Helicopter Single
Stem Harvesting System”. A copy of the letters patent is included in the record
of this appeal. It is intended to be appended to the SFA as Schedule A. In the
pleadings, Heli Tech sometimes refers to this patent as the “Harvesting
Patent”, and I will do the same in these reasons.
[5]
The
abstract of the Harvesting Patent reads as follows:
A method of logging a tree includes the steps of cutting the
tree part way through the trunk near the bottom with two cuts lying in
generally the same plane to leave a connecting portion (holding wood) between
the resulting two generally parallel cut edges, and driving support wedges or the
like into both said cuts to stabilize the tree trunk. A helicopter above the
tree is connected to a point near the top of the trunk. The helicopter is moved
away from the tree, thereby breaking the connecting portion (holding wood) and allowing
the upper portion of the tree to be carried away by the helicopter. The method
utilizes a grapple connected to the helicopter by two cables, one connected to
the helicopter below the pilot's seating position and another bellow [sic]
the center of gravity.
[6]
Paragraph
29 of the SFA alleges that the Harvesting Patent “relates to a new and useful
method of preparing and harvesting a lot by helicopter, an apparatus for
grasping and securing the log, and an apparatus comprising a helicopter with
certain features.”
[7]
There
are 35 patent claims in the Harvesting Patent. Claims 1 to 16 and claims 27 to
35 are claims for methods of harvesting logs or preparing logs for harvesting.
Each claimed method conforms generally to the description in the abstract but
with variations. Claims 17 to 25 are claims for a helicopter grapple, with
claims 18 to 25 being dependent on claim 17. Claim 26 is a claim for a
helicopter logging apparatus, including a helicopter with certain
characteristics and attachments.
Relevant paragraphs of
the SFA
[8]
In
February of 2006, Brascan Timberlands MGP and another respondent, Cascadia
Forest Products Ltd., filed a notice of motion seeking, inter alia, an
order striking all allegations against them and dismissing the action against
them. A number of other motions by other respondents were filed at the same
time. In an order dated March 1, 2006, Prothonotary Lafrenière, dealt with many
of the motions. Among other things, he ordered that the action be case managed,
granted Heli Tech leave to file an amended statement of claim, and set dates
for the hearing of many of the motions. On March 26, 2006, Chief Justice Lutfy
named Justice Hugessen and Prothonotary Lafrenière as the case managers.
[9]
Heli
Tech filed its amended statement of claim on March 2, 2006. It was before
Prothonotary Lafrenière when he heard the remaining motions, along with a “Further
Amended Statement of Claim” submitted by Heli Tech. The hearing of the
remaining motions resulted in the order dated April 27, 2006 of Prothonotary
Lafrenière which required certain amendments to be made to the Further Amended
Statement of Claim.
[10]
The
Further Amended Statement of Claim included two paragraphs that are relevant to
this appeal. They are quoted in the table below. In the left column are the relevant
paragraphs as they appear in the Further Amended Statement of Claim submitted
by Heli Tech. In the right column are the same paragraphs, amended as required
by Prothonotary Lafrenière’s order of April 27, 2006:
|
Further
Amended Statement of Claim
as submitted
by Heli Tech
|
Further
Amended Statement of Claim
as amended
by the April 27, 2006 order
|
|
60. The Defendants and each of them, with the exception of
the Defendant, VIG Logging Ltd., have induced infringement of method Claims
#1-16 and #26-35 of the Harvesting Patent by inducing others to infringe the
Harvesting Patent by using the methods of claims #1-16 and #26-35.
|
60. The Defendants and each of them, with the exception of
the Defendant, VIG Logging Ltd., have induced infringement of method Claims
#1-16 and #26-35 of the Harvesting Patent by inducing others to infringe
the Harvesting Patent by using the methods of claims #1-16 and #26-35. doing
the following:
|
|
61. The Defendants, Weyerhaeuser, Brascan [Timberlands
Management GP Inc.], [Cascadia Forest Products Ltd.], and Island Timberlands
[GP Ltd.] have induced other persons, including Select Air and Husby Forest
Products (“Husby”), to employ the methods of the invention set out in
paragraphs 31 and 34 herein by hiring them to harvest timber in this manner.
The Defendants provided instruction and direction to these persons, including
providing necessary holding wood tables, and were aware or acted recklessly
knowing that Select Air and Husby would employ the methods of the invention,
either themselves or through sub-contractors, and thereby infringe the
Plaintiff’s patent rights.
|
(a) The Defendants, Weyerhaeuser, Brascan [Timberlands
Management GP Inc.], [Cascadia Forest Products Ltd.], and Island Timberlands
[GP Ltd.] have induced other persons, including Select Air and Husby
Forest Products (“Husby”), to employ the methods of the invention set out in
paragraphs 31 and 34 herein by hiring them to harvest timber in this manner.
The Defendants provided instruction and direction to these persons, including
providing necessary holding wood tables, and were aware or acted recklessly
knowing that Select Air and Husby would employ the methods of the invention,
either themselves or through sub-contractors, and thereby infringe the
Plaintiff’s patent rights.
|
[11]
The
April 27, 2006 order of Prothonotary Lafrenière also required Heli Tech to
provide security for costs, and adjourned the motions of Brascan Timberlands
MGP and Cascadia Forest Products Ltd. Heli Tech’s appeal of the order for
security for costs was dismissed by Justice Campbell (2006 FC 1169).
[12]
Heli
Tech complied with the order for security for costs, and Prothonotary
Lafrenière scheduled the motions of Brascan Timberlands MGP and Cascadia Forest
Products Ltd. for hearing. By that time, the parties had agreed that Island
Timberlands GP would replace Cascadia Forest Products Ltd. as a moving party.
For the hearing of the adjourned motions, Heli Tech submitted the SFA, which as
explained above has been treated as the subject of the motions to strike.
[13]
Of
the 70 paragraphs in the SFA, nine paragraphs refer directly or indirectly to Brascan
Timberlands MGP or Island Timberlands GP. Of those nine paragraphs, three are allegations
as to the corporate status and nature of the business of Brascan Timberlands MGP
and Island Timberlands GP, and the relationships between them (paragraphs 7, 9
and 14).
[14]
The
other six paragraphs are the true targets of the motions of Brascan Timberlands
MGP and Cascadia Forest Products Ltd. Five of the six paragraphs are intended
to allege direct infringement by Brascan Timberlands MGP and Island Timberlands
GP (paragraphs 53, 57.1, 57.2, 58 and 59), and one is intended to allege that Brascan
Timberlands MGP has induced infringement (subparagraph 60(e)).
[15]
Paragraph
53 of the SFA reads as follows:
53. The Defendant Brascan [Timberlands
Management GP Inc.], in the Elsie Lake area of Vancouver Island, has used the
helicopter single stem harvesting system in its logging of timber since at
least as early as 2005, with the Defendants Cascadia [Forest Products Ltd.] and
Island Timberlands [GP Ltd.], which is the method covered by one or more of the
claims of the Harvesting Patent.
[16]
Paragraphs
57.1 and 57.2 of the SFA contain allegations against “the Defendants”, which I
infer is intended to be read as allegations against each of the respondents to
this appeal, including Brascan Timberlands MGP and Island Timberlands GP. Those
paragraphs read as follows:
57.1. The Defendants used the helicopter
single stem harvesting system covered by the Harvesting Patent by employing a
method for preparing and harvesting logs by means of a helicopter equipped with
a suspended grapple, removing trees from the forest by lifting them off of
their stumps rather than harvesting them after they have been felled. Under the
method employed by the Defendants, a standing tree is topped, the branches
removed, and the trunk cut near ground level on at least two sides, leaving
holding wood connecting the log to the stump to stabilize it. When the
helicopter is above the log and the grapple is beside the top of the log, the
grapple is engaged to secure the log and a generally horizontally directed
force is applied to the top of the log so as to rupture the holding wood and
flying the helicopter with the suspended log to a selected collection area.
57.2. Further particulars of the use by
the Defendants of the standing stem harvesting system covered by the Harvesting
Patent include:
(a) In relation to the first aspect of
the invention, the Defendants employed a method of harvesting a log using an
airborne vehicle equipped with a suspended grapple comprising topping and
disbranching the tree, cutting the tree near ground level on at least two sides
of the tree trunk leaving holding wood connecting the log to the stump, stabilizing
the trunk with select described methods, moving the airborne vehicle to a
position above the log with the grapple beside the top of the log, applying a
generally horizontally directed force to the top of the log to rupture the
holding wood, flying the airborne vehicle with the suspended log to a
collection area, and releasing the log at that collection area.
(b) In relation to the second aspect of
the invention, the Defendants used a tree harvesting grapple for helicopters
comprising: a support member having a top and two sides, a wing connected to
each side of the support member and extending outwardly therefrom forming a
tree receiving recess between the wings and the support member, and a grapple
pivotally connected to each wing with the arms being movable from an open
position to a closed position extending across the recess to retain trees in
the grapple.
(c) In relation to the fourth aspect of
the invention, the Defendants employed a method of preparing a tree for
standing-stem harvesting directly from the stump comprising: topping the tree,
cutting through the trunk to make a pair of horizontal saw cuts parallel to one
another and separated by holding wood, and driving in support wedges to
stabilize the trunk.
[17]
Paragraph
58 of the SFA alleges that the “foregoing activities of the Defendants” have
been without the license, permission or consent of Heli Tech. Paragraph 59
alleges that “the use by the Defendants of the helicopter single stem
harvesting system” is an infringement of claims 1 to 35 of the Harvesting
Patent. I infer that these two paragraphs are intended to include, inter
alia, the alleged activities of Brascan Timberlands MGP in paragraph 53, as
well as all alleged activities of all of the respondents, including Brascan
Timberlands MGP and Island Timberlands GP, as described in paragraphs 57.1 and
57.2.
[18]
The
opening words of paragraph 60 of the SFA allege that the respondents except VIH
Logging Ltd. have “induced infringement of method claims #1-16 and #26-35 of
the Harvesting Patent [sic] doing the following”. Those opening words
are followed by subparagraphs 60(a) to (e), each alleging that a specific
respondent has induced infringement. Brascan Timberlands MGP is not mentioned
in any of the subparagraphs, but Island Timberlands GP is mentioned in subparagraph
60(e), which reads as follows.
60 (e). The Defendant, Island Timberland[s
GP Ltd.], induced an unknown contractor to employ the methods of the inventor
as set out in paragraphs 31, 32, 34 and 57.1, by hiring them to harvest timber
in a manner, or acting recklessly knowing that they would employ the methods of
the inventor, that they would infringe on the Plaintiffs’ patent rights.
Paragraphs 31, 32 and 34 of the SFA, as
referred to in subparagraph 60(e) of the SFA, describe aspects of the patented
invention as described in the disclosure. Paragraph 57.1 is quoted above.
[19]
Prothonotary
Lafrenière heard the motions of Brascan Timberlands MGP and Island Timberlands
GP on November 13, 2008, and on that same date made an order reflecting the
following conclusions:
1. Reading the
SFA as a whole and as generously as possible, the allegations in the SFA do not
disclose a reasonable cause of action against Brascan Timberlands MGP and
should be struck.
2. The
allegations against Island Timberlands GP as stated in the SFA, taking into
consideration the evidence submitted by Heli Tech in response to the motion, do
not provide a factual basis for a claim and should be struck.
3. Heli Tech
should be denied leave to amend, principally for two reasons. First, Heli
Tech’s own submissions demonstrate that the allegations of infringement and
inducement are speculative, and that Heli Tech is simply hoping that evidence
will be obtained through discovery to “buttress unfounded allegations or cure
deficiencies in the pleadings”. Second, Heli Tech has been aware of the
objections to the allegations for over two years, and has had ample opportunity
to amend them to allege material facts but has failed to do so.
[20]
This
order was appealed to the Federal Court. The appeal was heard by Justice
O’Reilly. He considered the matter de novo, as he was required to do
because the issues put an end to Heli Tech’s claims against Island Timberlands
GP and Brascan Timberlands MGP. He reached the same conclusions as Prothonotary
Lafrenière, substantially for the same reasons, and dismissed the appeal. Heli
Tech now appeals to this Court.
Issues on
appeal
[21]
Heli
Tech raises three issues on appeal:
1. whether the SFA
discloses no reasonable cause of action against Brascan Timberlands MGP;
2. whether the
SFA fails to allege a factual basis for a claim against Island Timberlands GP;
and
3. whether Heli
Tech should have been granted leave to amend the statement of claim in so far
as it relates to the claims against Brascan Timberlands MGP and Island
Timberlands GP.
[22]
Two
groups of respondents appeared on the appeal. One group was comprised of Island
Timberlands GP and Brascan Timberlands MGP, the parties whose motion was the
subject of the order under appeal. The second group was comprised of the respondents
Cascadia Forest Products Ltd., International Forest Products Limited and
Timberwest Forest Corp. who have an interest in the issue of the sufficiency of
the pleadings relating to inducement to infringe. Their submissions added
nothing substantive to the arguments on appeal.
[23]
After
carefully considering the written and oral submissions of Heli Tech at the
hearing, the panel was unable to detect any error of law, or any other error
warranting the intervention of this Court, in the conclusion of Justice
O’Reilly that the SFA is fatally deficient in so far as it asserts claims
against Brascan Timberlands MGP and Island Timberlands GP. The respondents appearing
on the appeal were asked for oral submissions only on the third ground of
appeal.
Whether Justice
O’Reilly should have granted Heli Tech leave to amend
[24]
An
order granting or denying leave to amend pleadings is a discretionary decision
that must stand in the absence of an error of law or principle, or a failure to exercise the
discretion judicially in the sense that there has been a failure to properly
consider a relevant factor, or that an irrelevant factor has been taken into
consideration. This is well explained by Chief Justice Richard, speaking for
this Court in Elders Grain Co. v. Ralph Misener (The),
[2005] 3 F.C.R. 367 (F.C.A.), at paragraph 13:
An appellate court is not at liberty
merely to substitute its own exercise of discretion for the discretion already
exercised by the trial judge. However, if the decision was based on an error of
law or if the appellate court reaches the clear conclusion that there has been
a wrongful exercise of discretion in that no weight, or no sufficient weight,
has been given to relevant considerations or that the trial judge considered
irrelevant factors or failed to consider relevant factors, then an appellate
court is entitled to exercise its own discretion: R. v.
Carosella, [1997] 1 S.C.R. 80, at paragraph 49. See also Canadian Pacific Ltd. v. Matsqui Indian Band, [1995] 1
S.C.R. 3, at paragraph 39; Reza
v. Canada, [1994] 2 S.C.R. 394, at pages 404-405; Friends of the Oldman River
Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at pages
76-77.
[25]
When a plaintiff seeks leave to amend deficient pleadings, it is
relevant for the motions judge to consider all of the relevant circumstances,
which may include (a) the history of the pleadings in issue, particularly with
regard to past amendments (or past attempts to amend) those pleadings, (b) any
formal particulars provided by the party whose pleadings are challenged, and (c)
any other evidence submitted by that party to establish that the pleadings are
capable of being amended to cure the deficiency.
[26]
The
record in this case includes a lengthy pleadings history, as well as a
considerable body of evidence presented by Heli Tech as a basis upon which the
deficiencies in the SFA could be cured. It is also significant that the SFA was
intended to represent Heli Tech’s “last chance” to produce sufficient
allegations against Brascan Timberlands MGP and Island Timberlands GP.
[27]
As
I understand the reasons of Justice O’Reilly (and the reasons of Prothonotary
Lafrenière whose decision he upheld), all of the evidence offered by Heli Tech
to justify its request for leave to amend the SFA was taken into consideration.
Heli Tech submits that Justice O’Reilly’s reasons contain no analysis of the
evidence. That is true, but in my view a detailed analysis was not required. The
reasons expressed by Justice O’Reilly, considered in light of the record before
him, explain his conclusions well enough.
[28]
Heli
Tech argues that the evidence it submitted was capable of establishing that the
SFA could be amended to clarify that the alleged infringement by Brascan
Timberlands MGP and Island Timberlands GP consists of harvesting logs using the
patented methods, and also to clarify that the allegation of inducement by Island
Timberlands GP is based on the presumed existence of contracts under which
Island Timberlands GP directed or required others to harvest logs using the
patented methods.
[29]
This
argument of Heli Tech fails to address the deficiencies in the SFA identified
by Justice O’Reilly, and by Prothonotary Lafrenière. As I understand their
decisions, the problem is not that Brascan Timberlands MGP and Island
Timberlands GP have not been told clearly enough that Heli Tech accuses them of
using the patent methods to harvest logs, and accuses Island Timberlands GP of
inducing infringement by hiring others to use the patented methods harvest
logs. Rather, the problem is that the allegations in the SFA relating to Brascan
Timberlands MGP and Island Timberlands GP purport to describe log harvesting
methods used by them or their contractors, but the descriptions merely quote or
paraphrase key parts of the patent disclosure and claims, leaving only
speculation and inferences with no factual foundation. Further, the clarifying
evidence offered by Heli Tech does not link the alleged wrongful acts to Brascan
Timberlands MGP or Island Timberlands GP.
[30]
In
my view, it was reasonably open to Justice O’Reilly to conclude, on the basis
of the record before him, that (a) the allegations in the SFA against Brascan Timberlands MGP and Island
Timberlands GP are not based on any evidence or knowledge of Heli Tech as
to the log harvesting methods employed by or for the benefit of Brascan
Timberlands MGP or Island Timberlands GP; (b) in pleading as it did, Heli Tech
hoped to fill in the gaps in its knowledge of the log harvesting methods of Brascan
Timberlands MGP and Island Timberlands GP through discovery; and (c) the
evidence submitted by Heli Tech in relation to the motions is not capable of
curing the deficiencies in the SFA. In my view, in the face of those
conclusions and the pleadings history, Justice O’Reilly exercised his
discretion judicially when he refused to give Heli Tech leave to amend the SFA.
Conclusion
[31]
I
would dismiss the appeal. The respondents have asked for the matter of costs to
be deferred pending further written submissions. In the event that the parties
cannot agree on the costs of this appeal, the judgment will fix deadlines for
written submissions on costs.
“K. Sharlow”
“I
agree
Pierre
Blais C.J.”
“I
agree
Johanne
Trudel J.A.”
Email this Content