Western Oilfield Equipment Rentals Ltd. v. M-I LLC

Western Oilfield Equipment Rentals Ltd. v. M-I LLC
Court (s) Database
Federal Court of Appeal Decisions
Date
2021-02-09
Neutral citation
2021 FCA 24
File numbers
A-481-19
Notes
Reported Decision
Decision Content
Date: 20210209
Docket: A-481-19
Citation: 2021 FCA 24
CORAM:
GLEASON J.A.
LOCKE J.A.
MACTAVISH J.A.
BETWEEN:
WESTERN OILFIELD EQUIPMENT RENTALS LTD. and FP MARANGONI INC.
Appellants
and
M-I L.L.C.
Respondent
Heard at Ottawa, Ontario, on September 9, 2020.
Judgment delivered at Ottawa, Ontario, on February 9, 2021.
REASONS FOR JUDGMENT BY:
LOCKE J.A.
CONCURRED IN BY:
GLEASON J.A.
MACTAVISH J.A.
Date: 20210209
Docket: A-481-19
Citation: 2021 FCA 24
CORAM:
GLEASON J.A.
LOCKE J.A.
MACTAVISH J.A.
BETWEEN:
WESTERN OILFIELD EQUIPMENT RENTALS LTD. and FP MARANGONI INC.
Appellants
and
M-I L.L.C.
Respondent
REASONS FOR JUDGMENT
LOCKE J.A.
I. Background
[1] This decision concerns an appeal of a decision of the Federal Court (2019 FC 1606, per Justice O’Reilly (the Decision)) which found that certain claims of the respondent’s Canadian Patent No. 2,664,173 (the 173 Patent) were valid and had been infringed by the appellants.
[2] The 173 Patent relates to shale shakers, which were described as follows at paragraph 6 of the Decision:
[…] Shale shakers are used in the oil and gas industry to remove solids from the drilling fluid that emerges from an active well, so that the fluid can be reused. The solids are the product of the drill bit cutting through rock. They are often referred to as “cuttings.” Drilling fluid provides a medium for sending the cuttings to the surface, and helps lubricate the drilling equipment. The combined solid and fluid mixture that comes to the surface at the drill site is called “slurry.”
[3] The Decision went on at paragraph 7 as follows:
In essence, a shale shaker operates like a vibrating sieve, receiving the slurry and screening out the cuttings within it, leaving the fluid to be captured by tanks below. Since drilling fluid is expensive, the more proficient a shaker is in removing solids, the lower the cost of the drilling operation. The more reusable drilling fluid recovered, the better.
[4] The 173 Patent describes a desire to improve the rate and efficiency at which shakers remove liquid from cuttings or other solids. It is known that introducing a pressure differential across the screen can increase the fluid capacity of the shaker, but doing so may result in solids sticking to the screen, thereby interfering with the passage of fluids through the screen. This is called “stalling” of the slurry. The 173 Patent describes “a continuing desire for shakers having increased fluid capacity, increased fluid flow-through rates across the screens, and/or improved fluid removal efficiencies.”
[5] The 173 Patent comprises 23 claims, of which the Federal Court found claims 2, 4, 9, 10, 20, 21 and 22 were valid and infringed by the appellants’ Vac Screen System (VSS). The Federal Court also noted that the parties had agreed that claims 1, 11, 16 and 19 of the 173 Patent are invalid. Elements of the claims in issue include:
A first screen and a second screen having different pressure differentials applied across each (all claims),
Controlling air flow under at least a portion of the first screen to prevent stalling of the slurry (claims 2, 10),
The pressure differential across the first screen generated by a vacuum external to the shaker (claim 9),
The pressure differential across the first screen pulls vapors and drilling fluid through the first screen to a degassing chamber external to the shaker (claims 10, 20) (Throughout this decision, “vapor” is spelled without a “u” (as is done in the 173 Patent), except when quoting another source),
A first screen for separating drill cuttings and drilling fluid within a shaker (claims 20, 21, 22),
A pressure differential generator configured to pull air or vapor through the first screen to enhance the flow of drilling fluid through the first screen with respect to a second screen within a shaker (claims 20, 21, 22),
A sump located below the first screen and configured to collect the air or vapor and the drilling fluid that passes through the first screen (claim 20),
A degassing chamber in fluid communication with the pressure differential generator and the sump and located external to the shaker for collecting all of the air or vapor and the drilling fluid in the sump (claim 20),
The air or vapor pulled through the first screen is adjustable to prevent stalling of drill cuttings on the first screen (claim 22).
[6] The appellants are Western Oilfield Equipment Rentals Ltd. (Western) and FP Marangoni Inc. (FPM). FPM is a wholly-owned subsidiary of Western, but FPM has not carried on business since 2014. Both appellants were found to have infringed the 173 Patent.
II. Issues
[7] The appellants raise a number of issues which may be usefully classified as follows:
Construction of claim elements, including:
Infringement, including:
Invalidity, including:
Derrick Patent Application,
Derrick Prior Use,
Vasshus Patent,
Hensley Patent Application, and
Logue, Bongert, Erris, Cook and Fast Patent Publications,
Procedural fairness, and
Remedies.
a) “First screen”,
b) “Controlling air flow”,
c) “Vapor”,
d) “Degassing chamber”,
e) “All”,
f) “Or” and,
g) “Within a shaker”;
a) By FPM,
b) Inducement by Western,
c) Whether VSS pulls vapor, and
d) Gillette defence,
a) Anticipation, including by:
b) Obviousness,
c) Insufficiency,
d) Ambiguity,
e) Inutility,
f) Overbreadth, and
g) Addition of new subject matter,
[8] As explained below, I have found no reviewable errors by the Federal Court.
[9] Before continuing, I feel compelled to say a few words about the lack of wisdom of raising so many issues on appeal, especially so many issues that are so factually suffused, without due attention to the standard of review on such issues. Firstly, the appellants’ approach suggests that they themselves cannot identify any issues that are particularly strong. This suggestion was compounded at the hearing of the appeal when, despite the Court’s suggestion that the appellants focus on their strongest points, the appellants insisted on addressing all of the issues raised in their memorandum of fact and law. Not only did this approach miss an opportunity to highlight certain of the issues, but it also prevented the appellants from delving deeper into points that might have merited more discussion. In addition to hurting the appellants’ own case on appeal, this approach also made unnecessary additional work for the Court and delayed the release of this decision. I have additional comments below about the appellants’ treatment of the standard of review.
III. Standard of Review
[10] The appellants pay scant attention to the standard of review in their submissions, and therefore it is important to state the applicable standard here.
[11] As indicated in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (Housen), the standard of correctness applies to questions of law (see para. 8), but findings of fact or of mixed fact and law are reviewable only where the Federal Court has made a palpable and overriding error (see paras. 10 and 36). The standard of palpable and overriding error is not easily met. As stated by this Court in South Yukon Forest Corp. v. R., 2012 FCA 165, 4 B.L.R. (5th) 31 at para. 46, and quoted with approval by the majority of the Supreme Court of Canada in Benhaim v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352 at para. 38:
Palpable and overriding error is a highly deferential standard of review. ...“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.
[12] The deference given to the Federal Court on issues of fact is warranted for several reasons, not least because the judge at first instance was present throughout the trial to hear all the witnesses and see all the evidence on the many issues in this case, and was hence in a much better position than members of this Court to consider and weigh the evidence: see Housen at para. 12.
[13] Though the parties do not seem to disagree on the applicable standard of review, it will be necessary to address its application to certain of the issues discussed below. As a general comment, I note that the appellants could not hope to be successful on any issue in which the standard of review is palpable and overriding error applies without identifying the alleged error by the Federal Court, and explaining why the error should be considered palpable and overriding. Even after this reality was noted at the hearing, most of the appellants’ arguments failed to focus on the appropriate points, and were instead misguided attempts to have this Court re-weigh the evidence and re-characterize the facts. That is not our role.
IV. Construction of claim elements
[14] Because of the importance of claim construction to subsequent issues of infringement, validity and remedies, the analysis in this section is determinative of many such issues.
[15] A patent is not addressed to an ordinary member of the public, but to a worker skilled in the art to which it pertains. As stated in Catnic Components Ltd. v. Hill & Smith Ltd., [1982] R.P.C. 183 at 243, [1981] FSR 60 (U.K.H.L.) (Catnic), and quoted by the Supreme Court of Canada in Whirlpool Corp. v. Camco Inc., 2000 SCC 67, [2000] 2 S.C.R. 1067 (Whirlpool) at para. 44:
[…] A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind of meticulous verbal analysis in which lawyers are too often tempted by their training to indulge. […]
[16] The Supreme Court in Whirlpool went on to state as follows at paragraph 49(g):
While “purposive construction” is a label introduced into claims construction by Catnic, supra, the approach itself is quite consistent, in my view, with what was said by Dickson J. the previous year in Consolboard [Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 SCR 504, 56 C.P.R. (2d) 145], on the topic of claims construction, at pp. 520-21:
We must look to the whole of the disclosure and the claims to ascertain the nature of the invention and methods of its performance, (Noranda Mines Limited v. Minerals Separation North American Corporation, [1950] S.C.R. 36), being neither benevolent nor harsh, but rather seeking a construction which is reasonable and fair to both patentee and public. There is no occasion for being too astute or technical in the matter of objections to either title or specification for, as Duff C.J.C. said, giving the judgment of the Court in Western Electric Company, Incorporated, and Northern Electric Company v. Baldwin International Radio of Canada, [1934] S.C.R. 570, at p. 574, "where the language of the specification, upon a reasonable view of it, can be so read as to afford the inventor protection for that which he has actually in good faith invented, the court, as a rule, will endeavour to give effect to that construction".
Not only is “purposive construction” consistent with these well-established principles, it advances Dickson J.'s objective of an interpretation of the patent claims that “is reasonable and fair to both patentee and public”.
[17] On standard of review, the appellants argue that claim construction is a question of law to which the standard of correctness applies. For its part, the respondent notes correctly that claim construction is typically assisted by expert evidence, and the weighing of such evidence by the trial judge is reviewed on a standard of palpable and overriding error: see Tearlab Corporation v. I-MED Pharma Inc., 2019 FCA 179, 166 C.P.R. (4th) 367 at para. 29. Accordingly, even if I would not have reached the same conclusions on the expert evidence heard by the Federal Court, I must defer to its weighing of the evidence unless I find an error that meets this high standard.
[18] Before beginning my review of the specific issues of claim construction to be addressed, I must comment on an argument raised by the appellants at the hearing of this appeal (though not mentioned in their memorandum). They argue that this Court may consider section 53.1 of the Patent Act, R.S.C. 1985, c. P-4, in dealing with construction of the claims. The key part of this provision, subsection 53.1(1) reads as follows:
Legal Proceedings in Respect of Patents
Procédures judiciaires relatives aux brevets
Admissible in evidence
Admissibilité en preuve
53.1 (1) In any action or proceeding respecting a patent, a written communication, or any part of such a communication, may be admitted into evidence to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim in the patent if
(a) it is prepared in respect of
(i) the prosecution of the application for the patent,
(ii) a disclaimer made in respect of the patent, or
(iii) a request for re-examination, or a re-examination proceeding, in respect of the patent; and
(b) it is between
(i) the applicant for the patent or the patentee; and
(ii) the Commissioner, an officer or employee of the Patent Office or a member of a re-examination board.
53.1 (1) Dans toute action ou procédure relative à un brevet, toute communication écrite ou partie de celle-ci peut être admise en preuve pour réfuter une déclaration faite, dans le cadre de l’action ou de la procédure, par le titulaire du brevet relativement à l’interprétation des revendications se rapportant au brevet si les conditions suivantes sont réunies :
a) elle est produite dans le cadre de la poursuite de la demande du brevet ou, à l’égard de ce brevet, d’une renonciation ou d’une demande ou procédure de réexamen;
b) elle est faite entre, d’une part, le demandeur ou le titulaire du brevet, et d’autre part, le commissaire, un membre du personnel du Bureau des brevets ou un conseiller du conseil de réexamen.
[19] Though the appellants refer to this provision as the “file wrapper estoppel” provision, it is important to note that it does not refer to an estoppel. Rather, it provides that certain communications between a patentee or applicant and the Patent Office pertaining to a patent or a patent application are admissible in a patent action or proceeding as evidence “to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim in the patent.” This provision appears to have been enacted to address a prior prohibition against considering the prosecution history of a patent when construing its claims (see Free World Trust v. Électro Santé Inc., 2000 SCC 66, [2000] 2 S.C.R. 1024 at para. 66 (Free World Trust); Pollard Banknote Limited v. BABN Technologies Corp., 2016 FC 883, 141 C.P.R. (4th) 329 at paras. 79-81). For a broader discussion of this provision, see Canmar Foods Ltd. v. TA Foods Ltd., 2021 FCA 7 at paras 48-77.
[20] Section 53.1 came into force in December 2018, upon enactment of the Budget Implementation Act, 2018, No. 2, S.C. 2018, c. 27. According to section 201 thereof, section 53.1 of the Patent Act applies “in respect of any action or proceeding that has not been finally disposed of on the coming into force of that section 53.1.” Though the trial had finished prior to the coming into force of section 53.1, the Federal Court did not release the Decision until December 2019. Regardless of whether an action is considered “finally disposed of” upon release of a Federal Court decision or a final decision on appeal, it appears that the action in this case had not been finally disposed of when section 53.1 came into force, and therefore section 53.1 applies in the present case.
[21] That said, I note that the Federal Court heard no argument related to section 53.1, even after it came into force following the trial. Therefore, it would be difficult to find any error to ascribe to the Federal Court on this point. Further, though the appellants argue that this Court should construe the claims of the 173 Patent in view of the claims as they appeared in the original patent application, they do not identify any representation made by the respondent before the Federal Court that they seek to rebut. The appellants’ main complaint seems to be that the original claims were broadened during prosecution of the patent application to encompass the appellants’ VSS. Each of the claim construction and patent validity issues raised by the appellants is dealt with in the following paragraphs. However, as I said in Camso Inc. v. Soucy International Inc., 2019 FC 255, 165 C.P.R. (4th) 1 at para. 197, aff’d 2020 FCA 183 (Camso):
[…] A patent applicant is perfectly entitled, and indeed is well-advised, to draft patent claims with an eye on competitors’ products. The limitation is that the applicant must respect all of the requirements for valid claims.
[22] Therefore, the respondent’s motivation in amending the claims is not, by itself, telling in terms of claim construction or patent validity.
A. First Screen
[23] The essence of this issue is the appellants’ argument, before both the Federal Court and this Court, that the term “first screen” refers to the screen closest to the input end of the shaker, and excludes the screen at the discharge end of the screen. The appellants cite common general knowledge of the use of this term.
[24] The Federal Court disagreed with this construction. In doing so, the Federal Court noted the disagreement between the experts on this point (Peter Matthews and Bernard Murphy for the appellants, and Robert Palmer for the respondent), but favoured the evidence of Mr. Palmer. The Decision noted that Mr. Murphy reached his interpretation without having read anything in the 173 Patent, and ultimately accepted that, in the context of the 173 Patent, the first screen could be any screen (see paragraph 60). Mr. Matthews also accepted that the 173 Patent makes clear that a pressure differential can be applied to the screen at the discharge end of the shaker (see paragraph 61).
[25] For his part, Mr. Palmer opined that there is no requirement that the first screen be closest to the inlet, and a skilled reader of the 173 Patent would understand that the key difference between the first and second screens is not location but function. The Federal Court agreed and noted that, where it is necessary to make clear which screen is which, the patent specifically tells the reader (see paragraph 65).
[26] The Federal Court did not misunderstand the evidence and was entitled to weigh it in this way. I see no error.
B. Controlling Air Flow
[27] The principal challenge in construing the term “controlling air flow” is that the manner most discussed in the 173 Patent for addressing the problem of pressure differential causing stalling of slurry on the screen is pulsing of the pressure. This pulsing is also referred to in the 173 Patent as toggling or intermittent interruption of the vacuum. The appellants argue that construction of the term “controlling air flow” should be limited to such pulsing, and should not encompass simply adjusting a continuous pressure differential. They argue that a broader construction would render claims using this term obvious, since adjustment of a continuous pressure differential to prevent stalling of slurry was part of the common general knowledge of a skilled person prior to the 173 Patent.
[28] The obviousness argument is addressed later in these reasons. However, claim construction is a separate exercise.
[29] As with the term “first screen,” I am of the view that the Federal Court understood the expert evidence and explained why it reached a conclusion that it was entitled to reach. At paragraph 77 of the Decision, the Federal Court noted that the 173 Patent refers not just to toggling or pulsing of pressure differential, but also to “manipulating the valve,” and that the experts agreed that some of the valves mentioned in the patent were designed for controlling air flow (and not just for on/off applications). This supports the Federal Court’s conclusion at paragraph 76 of the Decision that the term “controlling air flow” is broader than toggling or pulsing the pressure differential.
C. Vapor
[30] The appellants argue that the experts agreed that the term “vapor” in the claims is confusing, but that the Federal Court disagreed, finding that vapor is a mist, not a gas. I do not accept that the Federal Court disagreed with the experts’ view that the term “vapor” in the claims is confusing. Paragraph 69 of the Decision acknowledged the experts’ agreement, and the subsequent discussion addressed the confusion. At paragraph 70, the Federal Court indicated that “[o]n its own, the term ‘vapour’ has a fairly uncomplicated meaning – air or gas containing suspended liquids.” The subsequent discussion left that definition substantially unaltered. At paragraph 72, the Federal Court stated, “[a] vapour is not an entrained gas. Nor is a gas a vapour.” (N.B. an entrained gas is a gas that is trapped within a fluid)
[31] The appellants appear to draw an important distinction between vapor and mist. I find that there is no such important distinction. Either term can refer to a gas containing suspended liquids. The Federal Court also does not draw such a distinction. The appellants seem to suggest that a mist is different because it is created when the drilling fluid is pulled through the screen, and therefore the suspended liquid is drilling fluid. However, this view is not supported in the Decision, nor did the evidence cited by the appellants compel the Federal Court to accept that view.
[32] The appellants also build arguments based on the Federal Court’s use of the word “gases” and not “vapor” in paragraphs 102, 108 and 115 of the Decision. First, they point to the statement at paragraph 72 of the Decision that a gas is not a vapor. Then they point to the Federal Court’s language in the above-listed paragraphs. I will address each of these, but I agree with the respondent’s argument that the Federal Court’s language is infelicitous, but unimportant.
[33] The difference between a gas and a vapor is simply that the latter contains suspended liquids and the former, technically speaking, does not. In paragraph 102 of the Decision the tray under the screen of the appellants’ VSS was described as collecting “fluid, fine particles, and gases that pass through the screen.” The appellants infer that the Federal Court intended to exclude gases containing suspended liquids (vapor). Having read the Decision in detail, I do not believe that this was the Federal Court’s intention. Nor do I accept that the Federal Court misunderstood the evidence on this issue in any significant way.
[34] At paragraph 108, the Decision stated that a true degasser (one as understood in the common general knowledge, not as construed in the context of the 173 Patent) is “used to recover gases entrained within the drilling fluid.” I see no problem with the use of “gases” here, even following the appellants’ strict interpretation of “gases.”
[35] Finally, paragraph 115 of the Decision described the appellants’ VSS as having a tray below the screen “to collect liquid and gases.” This is consistent with paragraph 102, and my view is the same.
D. Degassing Chamber
[36] The appellants argue that the term “degassing chamber” used in some of the claims in issue refers to a degasser, which is well-known to the skilled person and refers to a device that removes entrained gases from drilling fluid. The appellants point to repeated references in the 173 Patent to entrained gases. The appellants object to the Federal Court’s broader construction of this term to encompass any chamber that separates air or vapor from drilling fluid.
[37] The Federal Court accepted the evidence of the respondent’s expert Mr. Palmer (and the other experts) that the degassing chamber described and claimed in the 173 Patent is not a true degasser as understood by the skilled person. The Federal Court was entitled to accept the evidence of Mr. Palmer concerning the meaning of “degassing chamber” in the 173 Patent. I see no reviewable error in the Federal Court’s conclusion in this respect. Even though the 173 Patent refers to entrained gases, the element described as a degassing chamber in Figure 6 of the 173 Patent is simply a holding tank for liquid in which air is exhausted, much like a household wet-vac. The appellants’ expert Mr. Murphy acknowledged this. The 173 Patent does not describe any means for removing entrained gases.
[38] At the hearing, the appellants added an argument that the Federal Court erred in construing the term “degassing chamber” in claims 10, 17 and 20 as having the same scope as the term “chamber” in claims 12 and 16. The appellants argue that this conclusion failed to recognize the principle of claim differentiation and claim 17, which differs from claim 12 only in defining the chamber to be a degassing chamber. This argument cannot succeed. Firstly, the principle of claim differentiation is not absolute. Rather, it contemplates a rebuttable presumption: where one claim differs from another in only a single feature it is difficult to argue that the different feature has not been made essential to the claim: Whirlpool at para. 79; Camso at para. 103. Moreover, the appellants’ argument conflicts with the opinion of their own expert Mr. Murphy who construed the two terms as consistent with one another (see paragraph 72 of the Murphy Invalidity Report, Appeal Book vol. 33, tab 302, p. A6567).
E. All
[39] Claims 12 and 20 of the 173 Patent specify that “all” the air or vapor and drilling fluid that passes through the first screen is conveyed to a degassing chamber (or chamber). The appellants object to the Federal Court’s characterisation of the word “all” in these claims as essential. The appellants argue that the Federal Court provided no purposive analysis of the word “all.”
[40] It is not clear to me precisely what the appellants found missing in the Federal Court’s analysis here. It considered Mr. Murphy’s assertion concerning the possibility of hazardous gases being present in the slurry, but dismissed this assertion on the basis that the 173 Patent has no claims concerning treatment of such gases. The Federal Court also noted the absence of the word “all” in claim 10 as a basis for concluding that this word in claims 12 and 20 is essential. I see no flaw in this analysis.
[41] I note also the principle that elements of patent claims are presumed to be essential: Free World Trust at para. 57. The appellants make no reasonable argument as to why the word “all” in claims 12 and 20 should be treated as non-essential.
F. Or
[42] The appellants argue that the word “or” in the expression “air or vapor” in claims 19 and 20 should be construed conjunctively, and that the Federal Court erred in concluding that the expression contemplates air or vapor or a combination of the two. The expression “air or vapor” refers to what is pulled through the first screen and then conveyed to the degassing chamber. The appellants argue, on the one hand, that vapor cannot be pulled through the first screen without also pulling through air. The appellants also argue that vapor must be sent to the degassing chamber, because the degassing chamber would be unnecessary if it received only air.
[43] The Federal Court considered this argument but reached its conclusion based on the opinion of Mr. Palmer. In my view, it was open to the Federal Court to favour Mr. Palmer’s evidence. The appellants’ argument assumes that the purpose of the claimed degassing chamber is to recover liquids suspended in a vapor. It is not. Its purpose is instead to remove air or vapor from the drilling fluid recovered from the slurry.
G. Within a Shaker
[44] Claims 20, 21 and 22 of the 173 Patent depend from claim 19, which defines “a second screen within a shaker.” The appellants argue that these claims require that the second screen be located within the shaker, and that it is not enough for the second screen to be attached to the outside of the shaker.
[45] The Federal Court did not explicitly construe the expression “within a shaker.” However, it is implicit in the Decision that the Federal Court was satisfied that a second screen is “within a shaker” if it is firmly attached to, or integrated into, the shaker: see paragraphs 16 and 87 of the Decision. The evidence of Mr. Palmer supported this conclusion; paragraph 40 of his Reply Report stated that a screen “mounted externally onto the shaker and becoming part and parcel of the shaker […] effectively becomes part of the shaker, extending the shaker bed,” and is therefore considered “within” the shaker (Appeal Book vol. 21, tab 83, p. A4211). It was open to the Federal Court to reach this conclusion.
V. Infringement
[46] This section addresses those non-infringement arguments raised by the appellants that are not defeated by the claim construction discussion in the previous section of these reasons.
[47] It is useful to preface the analysis in this section with a few words concerning the claims that are in issue in this appeal. They are not limited to those that were found to infringe. Because the appellants’ invalidity arguments concern all of the claims of the 173 Patent that the respondent does not admit are invalid, these claims are also in issue.
[48] Claims 1 to 18 concern a method comprising certain steps. These claims are directly infringed where one performs all of the steps of the claimed method. One who omits an essential step in a claimed method does not directly infringe the claim. However, one who knowingly induces another to perform all of the steps of the claimed method (i.e. to directly infringe) may be liable for inducing infringement: Corlac Inc. v. Weatherford Canada Inc., 2011 FCA 228, 95 C.P.R. (4th) 101 at para. 162.
[49] Claims 19 to 23 of the 173 Patent concern a system. These claims are directly infringed where one makes, constructs, uses or sells a system that comprises all of the essential claim elements. As with method claims, there is no direct infringement of a system claim where one omits an essential element thereof, but one may be liable for inducing infringement if one knowingly induces another to infringe.
[50] The issue of inducing infringement is particularly relevant in this case in relation to the method claims. This is because all of the method claims in issue include the step of introducing (or delivering) a slurry to a shaker. Typically, this step is performed by the appellants’ customer rather than by the appellants themselves.
[51] It is also useful to preface the infringement analysis with a brief discussion of the issue of liability to a patentee for activities prior to the issuance of the patent. Subsection 55(1) of the Patent Act provides for liability for all damages sustained resulting from infringement of an issued patent. But subsection 55(2) also contemplates liability for certain activities prior to issuance of the patent. The current version of subsection 55(2), which differs insubstantially from the text that was in force before the Federal Court, reads as follows:
Infringement
Contrefaçon
Liability damage before patent is granted
Indemnité raisonnable
55 (2) A person is liable to pay reasonable compensation to a patentee and to all persons claiming under the patentee for any damage sustained by the patentee or by any of those persons by reason of any act on the part of that person, after the specification contained in the application for the patent became open to public inspection, in English or French, under section 10 and before the grant of the patent, that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection, in English or French, under that section.
55 (2) Est responsable envers le breveté et toute personne se réclamant de celui-ci, à concurrence d’une indemnité raisonnable, quiconque accomplit un acte leur faisant subir un dommage après la date à laquelle le mémoire descriptif compris dans la demande de brevet est devenu accessible au public, en français ou en anglais, sous le régime de l’article 10 et avant la date de l’octroi du brevet, dans le cas où cet acte aurait constitué une contrefaçon si le brevet avait été octroyé à la date où ce mémoire descriptif est ainsi devenu accessible.
[52] Though activities of the kind contemplated in subsection 55(2) are not true patent infringement because they take place in a time when no patent yet exists, I will refer to them in these reasons as “pre-issuance infringement” for the sake of simplicity. The following aspects of subsection 55(2) are notable:
Liability for pre-issuance infringement is not for “all damage sustained” (as it is in cases of true patent infringement), but rather for “reasonable compensation […] for any damage sustained”;
The period of liability is from the date the patent application became open to public inspection until issuance of the patent; and
Liability arises from activities “that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection.”
[53] An important fact is that the application for the 173 Patent, which has a filing date of October 1, 2007 and a publication date (the date the application became open to public inspection) of April 10, 2008, was amended on October 2, 2013 to introduce, among other things, new claims. Prior to that date, all of the claims in the application defined toggling the pressure differential across the screen. The appellants’ activities therefore did not fall within the scope of the prior claims. These facts are not in dispute, and there is no argument that either of the appellants is liable for any of its activities prior to October 2, 2013.
[54] I now consider the specific arguments raised by the appellants.
A. By FPM
[55] The appellants argue that FPM stopped doing business in 2014, prior to the issuance of the 173 Patent, and hence cannot be liable for infringement. The appellants argue that a party is not liable under the Patent Act for pre-issuance infringement if it discontinues the activities in question prior to issuance of the patent. The appellants also argue that, regardless of its activities after issuance of the patent, a party cannot be liable for pre-issuance infringement by inducement. The appellants acknowledge that there is no authority in support of these arguments, but they note that there is also no authority that contradicts their position.
[56] I note first that, even accepting the appellants’ argument that FPM stopped doing business in 2014, this stoppage occurred after the October 2, 2013 claims amendment. Accordingly, some of FPM’s pre-issuance activities in issue took place while the amended claims were on record. This means that FPM could not avoid liability based on its activities being entirely prior to the amendment, even if that were a basis for avoiding liability. I express no opinion here as to whether that would be a basis for avoiding liability.
[57] The more important questions here are (i) whether one who engages in pre-issuance infringement can avoid liability under subsection 55(2) by discontinuing the activities in question prior to issuance of the patent, and (ii) whether liability under subsection 55(2) extends to one whose pre-issuance infringement is by inducement. These questions require an interpretation of subsection 55(2).
[58] The Supreme Court of Canada, in Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601 at para. 10, has provided the following guidance in interpreting statutory provisions:
It has been long established as a matter of statutory interpretation that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: see 65302 British Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, at para. 50. The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole.
[59] Beginning with the text of subsection 55(2) (reproduced at paragraph 51 above), I note that nothing therein suggests that a pre-issuance infringer can avoid liability by discontinuing its activities prior to issuance of the patent. The text is concerned with the period from publication of the patent application until issuance of the patent, and with activities during that period that would have constituted an infringement if the patent had already been granted. There is no indication in the text that the infringing activity must continue after issuance of the patent.
[60] As regards the question of inducing infringement, I note that this is merely a form of patent infringement, not a distinct tort: Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research, 2020 FCA 30 at para. 45, leave to appeal to SCC refused, 39099 (23 December 2020) (Hospira 2020); Bauer Hockey Corp. v. Easton Sports Canada Inc., 2010 FC 361, 366 F.T.R. 242 at para. 199, aff’d 2011 FCA 83, 92 C.P.R. (4th) 103 (Bauer). There is no reason to treat pre-issuance infringement by inducement differently from direct pre-issuance infringement.
[61] The context of subsection 55(2) does not suggest that a pre-issuance infringer can avoid liability therefor by discontinuing its activities prior to issuance of the patent. The concept of pre-issuance infringement was added to Canada’s patent regime when Canada adopted the practice in place in most of the rest of the world, and began (i) publishing patent applications prior to issuance, and (ii) counting the life of the patent from the date of filing rather than the date of issuance. Given that the life of the patent was counting during the pendency of the application, and that the public had access to the invention once the application was published (usually 18 months after the priority date of the application), it was decided that the patent system would impose liability for “reasonable compensation” on those who use inventions without permission during this pre-issuance period. No cause of action exists under subsection 55(2) until the patent has issued (see Premier Tech Ltée v. Équipements Tardif Inc. (1993), 63 F.T.R. 114, 48 C.P.R. (3d) 42 (F.C.T.D.)), but liability relates to the period from publication to issuance. The concern remains that an invention that has been made public but has not yet issued will be exploited by a third party during this period when the inventor cannot prevent such exploitation. The discontinuance of that exploitation prior to issuance of the patent does not reduce the inventor’s loss resulting from third party exploitation during the pre-issuance period.
[62] Similarly, the context of subsection 55(2) does not suggest that pre-issuance infringement by inducement should be treated differently from direct pre-issuance infringement. In either case, the concerns for the unlicensed use of an invention prior to issuance of the patent are present.
[63] The discussion in the previous two paragraphs concerning the context of subsection 55(2) also explains its purpose: to compensate inventors