Ottawa, Ontario, this 29th day of April , 2005
PRESENT: THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE
BETWEEN:
ESCO LIMITED
- and -
REASONS FOR ORDER AND ORDER
O'KEEFE J.
[1] This is a motion brought pursuant to Rule 51 of the Federal Court Rules 1998, SOR/2004-
283, s.2 wherein the plaintiffs, Esco Corporation and Esco Limited (the "appellants") appeal against the order of the Prothonotary dated October 25, 2004, in which Quality Steel Foundries Ltd.'s cross-motion as it relates to the request for delivery up of samples of the appellants'new "as built" products was granted. The defendant, Quality Steel Foundries Limited (the "respondent") filed a cross-appeal as it relates to the Prothonotary's dismissal of the request for delivery up of samples of the appellants' worn "as used"products.
Summary of the Background Facts
[2] The appellant, Esco Corporation is a corporation organized and existing under the laws of
the United States and the owner of Canadian Patents ("019", "818" and "644") specified in the statement of claim, related to attachments for excavating equipment (replaceable edge and tooth components for buckets used on large digging machines employed in mining and tar sands extraction). The appellant, Esco Limited, is a wholly owned Canadian subsidiary corporation organized and existing under the laws of Canada which carries on business as a distributor of Esco Corporation's attachments for excavating equipment.
[3] The respondent, Quality Steel Foundries Limited is a corporation incorporated under the
laws of Alberta, and manufactures and sells accessories and replacement parts for mining and excavating equipment. In the statement of claim, the appellants claim that the respondent's equipment infringes the appellants' patents in question. The respondent has denied this and counterclaimed that the patents are invalid.
[4] The respondent filed a cross-motion requesting an order (i) requiring the appellants to
deliver up for inspection and examination by the respondent both new, "as built" and worn, "as used" samples of its S-Posilok product; (ii) for costs; and (iii) compelling the appellants to answer specific questions resulting from examinations for discovery.
[5] The Prothonotary granted the request for new "as built" parts, but dismissed the request
for the production of worn "as used" used parts for the same reasons she dismissed that aspect of the appellant's motion for the production of the worn "as used" used parts manufactured by the respondent. The appellants are appealing the order of the Prothonotary as it relates to the delivery up of the new "as built" parts. The dismissal of the request to compel answers is not in issue here.
[6] The respondent has cross-appealed the order as it relates to the dismissal of its request for
the delivery up of samples of the appellants' used parts. The respondent has stated that if the appellant's separate appeal of the order of the Prothonotary as related to the delivery up of samples of the respondent's used parts is dismissed, this cross-appeal may be taken as abandoned.
Summary of the Appellants' Submissions
[7] The appellants submitted that the Prothonotary erred in law and proceeded upon a wrong
principle in concluding that commercial parts of the patentee (the appellant) are relevant to the issue of validity of the patents in suit.
[8] The appellants submitted that the parts of the patentee are irrelevant to the issues of
infringement; the infringing device is to be compared with the patent, not the patentee's parts (see Pro-Vertic (1987) Inc. v International Diffusion Consummateur S.A. (1989), 26 C.P.R. (3d) 528 (F.C.T.D.), Airseal Controls Inc. v. M & I Heat Transfer Products (1993), 53 C.P.R. (3d) 259 (F.C.T.D.)). The appellants have decided not to rely on commercial success and therefore the appellants' parts do not become relevant for that reason.
[9] The appellants submitted that the question of validity of the patent is determined by
comparing the patent at the date of publication with the prior art. Determining that the appellants' product is not within what the patent designates, as the respondent seeks to do is irrelevant to the question of patent validity. In other words, commercial embodiment is irrelevant for the purpose of invalidating a patent.
Summary of the Respondent's Submissions
[10] The respondent submitted that the respondent is entitled to an inspection of the commercial
embodiment of the patent in suit where the validity of that patent is in issue. The appellants admitted the S-Posilok product was the embodiment of the invention disclosed in the patent in issue here (the "644 patent").
[11] The respondent submitted that if the commercial embodiment of the invention disclosed in
the patent in fact works for reasons or in a way other than, or despite, those disclosed in the specification of the 644 patent, then the specification is prima facie, incorrect, misleading, and /or inoperable (see Free World Trust v. Electro-Sante Inc.(2000), 9 C.P.R. (4th) 168 (F.C.T.D.)). In that event, the 644 patent is invalid. An inspection will, therefore, produce evidence which is relevant to an issue in this case.
[12] Where a defendant alleges that the patent is invalid as a result of deficiencies in the patent
specification, the defendant is entitled to an inspection of the product or process said to be embodied by the patent (see Davenport v Jepson (1863), New Reports 307, Glaxo Group Ltd. v. Novopharm, [1999] F.C.J. No. 381)).
[13] The respondent submitted that it is not improper to compare the product which is the
commercial embodiment of the invention disclosed in the patent, with the specifications in the patent itself, in order to determine whether the disclosure in the specification correctly or misleadingly describes the invention admitted to be embodied in the product.
Issues
[14] The issues are:
1. What is the appropriate standard of review to be applied to the decision of the Prothonotary?
2. Did the Prothonotary commit a reviewable error?
Relevant Statutory Provisions
[15] Rule 249(1) of the Federal Court Rules, 1998, supra states:
| 249. (1) On motion, where the Court is satisfied that it is necessary or expedient for the purpose of obtaining information or evidence in full, the Court may order, in respect of any property that is the subject-matter of an action or as to which a question may arise therein, that
(a) a sample be taken of the property;
(b) an inspection be made of the property; or
(c) an experiment be tried on or with the property. |
|
249. (1) La Cour peut, sur requête, si elle l'estime nécessaire ou opportun pour obtenir des renseignements complets ou une preuve complète, ordonner à l'égard des biens qui font l'objet de l'action ou au sujet desquels une question peut y être soulevée:
a) que des échantillons de ces biens soient prélevés;
b) que l'examen de ces biens soit effectué;
c) que des expériences soient effectuées sur ces biens ou à l'aide de ceux-ci. |
Analysis and Decision
[16] Issue 1
What is the appropriate standard of review to be applied to the decision of the Prothonotary?
The Federal Court of Appeal in Merck & Co. Inc. v. Apotex Inc. 2003 FCA 488, at paragraph 19, stated that discretionary orders of a Prothonotary ought not to be disturbed on appeal to a judge unless:
1. the questions raised in the motion are vital to the final issue of the case; or
2. the orders are clearly wrong, in the sense that the exercise of discretion by the Prothontary was based upon a wrong principle or upon a misapprehension of the facts.
[17] The appellant in this case submitted that the Court should exercise its discretion de novo
on the basis that the Prothonotary's exercise of discretion was based upon a wrong principle. The respondent submitted that the Prothonotary exercised her discretion based upon the right principle, relevance, and the appellant is asking this Court to apply the same principle but substitute its discretion for that of the Prothonotary. In the present case, the Prothonotary exercised her discretion to refuse part of a motion for inspection and delivery up of parts which is not a question vital to the final issue of the case. I must now determine whether the Prothonotary was "clearly wrong in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts." On the basis of the reasoning below, I would find that the Prothonotary did not err in her determination that an analysis of the commercial embodiment of the 644 patent might result in evidence arguably relevant to the issue of invalidity. Accordingly, I should not exercise my discretion de novo.
[18] Issue 2
Did the Prothonotary commit a reviewable error?
The defendant's cross-motion before the Prothonotary requested the following:
1. an order in the form attached to the motion as Schedule "A", requiring that the plaintiff deliver up for inspection and examination by the defendants both new "as built" and used samples of its S-Posilok product;
2. an order compelling the plaintiff to answer listed questions;
3. an order directing that the plaintiff shall pay the defendant's costs.
[19] The grounds for the motion were:
1. the plaintiffs' claims that the defendant had infringed each of the three patents in question (the 019 patent, the 818 patent, and the 644 patent);
2. the plaintiffs admitted in discovery that the 644 patent is embodied in its S-Posilok product;
3. in relation to the 644 patent the defendant has alleged that the patent claims are invalid in relation to issues involving load-bearing and non load bearing faces;
4. production for inspection and testing of new and used samples of the S-Posilok product is necessary in order to determine whether faces other than those designated as "bearing faces" in fact bear load;
5. evidence that faces other than those which the 644 patent designates as "bearing faces" in fact bear loads is evidence which supports the defendant's claim that the 644 patent is invalid;
6. the plaintiffs have refused a request to produce 'as built" drawings of the S-Posilok product;
7. the inspection and testing would involve minimal inconvenience and no financial burden to the plaintiff. Moreover, the inspection and testing of samples will facilitate obtaining and leading evidence about infringement at trial and thereby simplify the trial.
[20] In granting the respondent's cross-motion in part, the Prothonotary stated:
For the same reasons given in the disposition of the plaintiff's motion for production by the defendant of used product samples, that part of the defendant's motion seeking production by the plaintiffs of used samples is dismissed.
With respect to the defendant's motion for production by the plaintiffs of new "as built"parts, although tenuous, examination of these parts may lead to arguably relevant evidence for the purposes of the defendant establishing invalidity of the plaintiffs' patents, and which is better left to the trial judge hearing the action
[21] The Prothonotary then ordered the appellants to deliver up one S-Posilok point and
adaptor and one S130 nose embodying the specified claims and patent.
[22] The appellants submitted that the Prothonotary erred in law and proceeded upon a wrong
principle in concluding that commercial parts of the patentee (the appellant) are relevant to the issue of validity of patents in suit. The parts of the patentee are irrelevant to the issues of infringement; the infringing device is to be compared with the patent, not the patentee's parts. Further, commercial embodiment is irrelevant for the purpose of invalidating a patent.
[23] I do not agree with the appellants.
[24] During the examination for discovery of their representative, Carl Goeth confirmed that
certain aspects of the S-Posilok commercial product are covered by the 644 patent. The following exchange took place:
Q: Okay. And that's actually my next question, sir. Which patent is it allegedly covers this product, which of the patents in suit.?
Mr. Stratton: It's the 644.
Mr. LaRoche: The 644, and only the 644?
Mr. Stratton: Well, for purposes of commercial success, it's the 644?
Mr. LaRoche : Well that kind of begs the question: Is the S-Posilok, in Esco's mind, covered, if you will, by any patent other than the 644, regardless of whether it's for commercial success or not?
Mr. Stratton: In this action?
Mr. LaRoche: Yes.
Mr. Stratton: Well, we'll consider your request. My current understanding is it is not.
[25] The respondent has categorized this as the appellants confirming that the S-Posilok is the
commercial embodiment of the 644 patent. Thus, they want to examine the "commercial embodiment" of the patent to determine whether the commercial embodiment works for reasons or in a way other than, or despite those, disclosed in the specification. If it does, then the specification is prima facie, incorrect, misleading and/or inoperable.
[26] I agree with the Prothonotary's determination that an examination of the parts for that
purpose, although tenuous, might lead to relevant evidence for the purpose of the respondent establishing the invalidity of the appellants' patents. I also agree with the Prothonotary's conclusion that this is a determination better left to the trial judge hearing the action.
[27] The appellant also submitted that as the respondent has acknowledged that the appellants'
product is being sold and used for the purpose intended, there is no factual foundation for the allegation of inoperability. The Prothonotary therefore erred in granting the production of the new "as built" sample.
[28] I do not agree. Whether the S-Posilok is used for the purpose intended is not in issue. As
already noted, if the "commercial embodiment" of the patent, to the extent it truly represents the actual patent, does not function in the manner, and on the basis described by the patent, it is an issue potentially going to the validity of the patent in question.
[29] The appellants further submitted that as they are not arguing commercial success at this
stage, the Prothonotary erred in granting the respondent's motion for production of new "as built" parts.
[30] I do not agree. For the purpose of the respondent's defence and counter-claim as it
relates to the validity of the patents, the issue of whether the appellants are arguing commercial success at this stage in this case is not relevant to whether or not the respondent should have been granted an order for production. The respondent is entitled to make its case.
[31] I therefore dismiss this appeal, with costs to the respondent. As the related appeal was
also dismissed, the respondent's cross-appeal is deemed abandoned in accordance with the respondent's submissions to the Court.
ORDER
[32] IT IS ORDERED that the appeal is dismissed, with costs to the respondent. As the
related appeal was also dismissed, the respondent's cross-appeal is deemed abandoned in accordance with the respondent's submissions to the Court.
J.F.C.
Ottawa, Ontario
April 29, 2005
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-238-03
STYLE OF CAUSE: ESCO CORPORATION and
ESCO LIMITED
- and
QUALITY STEEL FOUNDRIES LTD.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: November 22, 2004
REASONS FOR ORDER AND ORDER OF: O'KEEFE J.
APPEARANCES:
Mr. Bruce Stratton
Mr. Kevin Laroche
FOR DEFENDANT
FOR PLAINTIFFS
Borden Ladner Gervais LLP
Ottawa, Ontario
FOR DEFENDANT