Almecon Industries Ltd. v. Anchortek Ltd.

Almecon Industries Ltd. v. Anchortek Ltd.
Court (s) Database
Federal Court Decisions
Date
2001-12-19
Neutral citation
2001 FCT 1404
File numbers
T-992-92
Notes
Digest
Decision Content
Date :20011219
Docket: T-992-92
Neutral citation: 2001 FCT 1404
BETWEEN:
ALMECON INDUSTRIES LIMITED
Plaintiff
- and -
ANCHORTEK LTD., EXPLOSIVES LIMITED,
ACE EXPLOSIVES ETI LTD. AND
WESTERN EXPLOSIVES LTD.
Defendants
REASONS FOR JUDGMENT
GIBSON, J.
INTRODUCTION
[1] These reasons follow the trial of a consolidated action wherein the plaintiff seeks: first, a declaration of validity and infringement of Canadian Patent No. 1,220,134 (the "Almecon Patent"); second, a declaration of entitlement to damages for infringement or, in the alternative as the plaintiff may elect, an accounting of profits of the defendants; third, a reference for determination of the extent of infringement and the quantum of such damages or profits; and finally, pre- and post-judgment interest on such damages or profits and costs. During the trial, counsel for the plaintiff abandoned the plaintiff's claim for a permanent injunction against the defendants from infringing the Almecon Patent and from making, using, distributing, vending, offering for sale or selling or inducing the making, or using, distributing, vending, offering for sale or selling of the defendant Anchortek's "Energy Plug" in Canada.[1] I have presumed that, with the abandonment of the claim for an injunction, the plaintiff also abandoned a claim for delivery up or destruction that is contained in its Twice Amended Statement of Claim dated in its final format the 27th of January, 1999. A claim for exemplary, punitive and aggravated damages contained in the Twice Amended Statement of Claim, though not expressly abandoned, was not pursued in argument.
[2] Anchortek Ltd. ("Anchortek"), in the final iteration of its Statement of Defence and Counterclaim, and Explosives Limited, Ace Explosives ETI Ltd. and Western Explosives Ltd., in the final iteration of their Statement of Defence, seek dismissal of the plaintiff's action with costs. In addition, Anchortek , as plaintiff by counterclaim, seeks a declaration that each of the claims of the Almecon Patent is and always has been invalid, void and of no effect, a declaration that the plaintiff has made misleading statements to Anchortek's customers contrary to paragraph 7 (a) of the Trade-marks Act[2], damages suffered as a result of the alleged misleading statements, pre-and post-judgment interest on such damages and its costs of the counterclaim.[3]
[3] By order made on consent during the course of the trial, the issue of the quantum of any damages to which Anchortek might be entitled under its counterclaim was left for determination on a reference.[4]
[4] At the close of the trial, both counsel urged that determination with respect to the issue of costs be deferred until after they had an opportunity to consider the substantive judgment and related reasons herein. My judgment will so provide.
AGREED STATEMENT OF FACTS
[5] At the opening of trial, a reasonably extensive Agreed Statement of Facts was filed.[5] Its substance is incorporated here verbatim.
The Parties
1. The Plaintiff is a manufacturer of seismic hole plugs based in Edmonton, Alberta. Since September, 1984 the Plaintiff has made and sold seismic hole plugs, including the King Plug brand of seismic plug. The Plaintiff also manufactures and sells Prince and Queen brand plugs.
2. The Defendant Anchortek is also a manufacturer of seismic hole plugs, based in Calgary, Alberta. Since 1992, the Defendant Anchortek has made and sold seismic hole plugs. The three co-Defendants in this action buy seismic plugs from Anchortek and resell them to their respective customers.
3. The parties to the action are all incorporated under the laws of the Province of Alberta, except the Defendant Ace Explosives ETI Ltd. which is incorporated under the laws of Ontario. Each of the parties has an office and place of business in Alberta.
Seismic Hole Plugs
4. Seismic exploration is carried out to locate oil and gas deposits. A pattern of holes is drilled in a defined area and an explosive charge is detonated in each of the holes. Equipment located on the ground near the holes records signals from the explosive blasts and the data collected is used to help locate oil or gas.
5. It is common to insert a seismic bore hole plug (a shot hole plug) in a bore hole before the blast occurs and to put soil or some other type of fill on top of the plug. The plug is intended to stay in the hole and to keep the hole closed after the blast.
The Almecon Patent
6. The Plaintiff alleges infringement of its patent claiming a type of seismic bore hole plug.
7. Canadian Patent No. 1,220,134 ("the Almecon Patent") was applied for on January 25, 1985 and issued on April 7, 1987 to Almecon Industries Limited ("Almecon"). The Almecon Patent claims a "topping and tamping plug for use in a seismic bore hole." The alleged invention was made by at least August, 1984. The patent (unless held invalid) expires on April 6, 2004. The Almecon Patent names Jim Jackson and Paavo Luoma as co-inventors.
8. Anchortek is an "interested person" in respect of the Almecon Patent within the meaning of s. 60 of the Patent Act, R.S.C. 1985, c. P-4, as amended.
9. The Almecon King Plug is an embodiment of the Almecon Patent (and the initial design was generally as shown in Figures 1-4 of the Almecon Patent). The Almecon King Plug was introduced into the market in the winter of 1984-1985.
10. In July, 1985 the King Plug product was modified from its initial design (generally as shown in the Almecon Patent) to give the rear claws angled and sharpened tips and to give the front claws horizontally directed angled tips.
The Energy Plug
11. The Plaintiff alleges that the Energy Plug infringes claims 1 and 5 of the Almecon Patent.
12. The Energy Plug is used by inserting the plug into the top of a seismic bore hole (typically about 3.5 inches in diameter). The Energy Plug goes into the hole after an explosive charge is placed near the bottom of the hole and before the charge is detonated. The plug is intended to stay in the hole before and after detonation. Mud or soil is placed on top of the plug in the hole before the explosive charge is detonated.
13. The Energy Plug underwent a design change within the first 6 months of its introduction into the market. Examples of the two Energy Plug designs are marked as Exhibits D-9 and D-10 on the discovery of the Defendants.
Manufacture and Sale of the Energy Plug
14. Anchortek manufactured and sold Energy Plugs in the years 1992 to 1996, in Canada.
15. Anchortek sold Energy Plugs to the three co-defendants and to Austin Powder Co. Ltd. (collectively "The Distributors"). These four companies each distribute explosives, and related products, for the seismic exploration industry in Alberta.
16. The Distributors have each purchased the Energy Plug from Anchortek and resold the Energy Plug to their customers in Alberta between approximately January, 1992 and March, 1996.
17. The Plaintiff sued Austin Powder Ltd. in Court File No. T-609-96 which action has since been settled.
18. Anchortek has had knowledge of the Almecon Patent and the allegations of infringement of its Energy Plug since at least as early as February 21, 1992.
Previous Litigation Regarding the Almecon Patent
19. The Almecon Patent was the subject of litigation between the Plaintiff and Nutron Manufacturing Ltd. in Federal Court File No. T-762-88 resulting in the decision from the Federal Court Trial Division on February 26, 1996 and affirmed by the Federal Court of Appeal on February 6, 1997. As a result, claims 1 and 5 of the patent have been construed and the person skilled in the art to which the patent relates has been defined.
Sales by Anchortek Since 1996
20. Since approximately March, 1996, Anchortek has manufactured seismic hole plugs which are not alleged to infringe the Almecon Patent. These plugs have been sold by Anchortek to the remaining three co-defendants and to Austin Powder Ltd.
The Austin Powder Action
21. The plaintiff brought a lawsuit against Austin Powder Ltd. (Federal Court No. T-609-96) for infringement of the Almecon Patent by the sale by Austin Powder Ltd. of the Energy Plug products. This action was settled by an agreement executed in August 1999.
22. The settlement agreement between Almecon and Austin Powder Ltd. contained a provision that Austin Powder Ltd. purchase 70% of its plugs from Almecon. This provision was obtained from Austin Powder solely on the basis of the allegation by Almecon that the Energy Plug infringes the Almecon Patent.
23. The Plaintiff, prior to its execution of the settlement agreement with Austin Powder, was aware that Austin Powder was purchasing seismic hole plugs of the type identified in paragraph 20 from the Defendant, Anchortek.
24. Since the date of the execution of the settlement agreement, Austin Powder has commenced purchasing seismic hole plugs from the Plaintiff pursuant to that settlement agreement.
[6] Subsection 60(1) of the Patent Act, as referred to in paragraph 8 of the
Agreed Statement of Facts, read as follows at the relevant time:
60. (1) A patent or any claim in a patent may be declared invalid or void by the Federal Court at the instance of the Attorney General of Canada or at the instance of any interested person.
60. (1) Un brevet ou une revendication se rapportant à un brevet peut être déclaré invalide ou nul par la Cour fédérale, à la diligence du procureur général du Canada ou à la diligence d'un intéressé.
[7] Figures 1 to 4 of the Almecon Patent, as referred to in paragraph 9
of the Agreed Statement of Facts, are reproduced as Schedule 1 to these reasons.
[8] The modified King Plug referred to in paragraph 10 of the Agreed Statement of Facts is shown in Schedule 2 to these reasons.
[9] The two examples of the Energy Plug referred to in paragraph 13 of the Agreed
Statement of Facts are reproduced as Schedules 3 and 4 to these reasons.
[10] This action was originally commenced only against Anchortek. Separate actions were commenced against each of the co-defendants in 1996[6]. I therefore conclude that each of the co-defendants had knowledge of the Almecon Patent and the allegations of infringement of that patent by Anchortek's Energy Plug since at least as early as the time when the statements of claim in the actions by the plaintiff against each of the co-defendants was served.
[11] Prior decisions of this Court relating to infringement of the Almecon Patent, as
referred to in paragraph 19 of the Agreed Statement of Facts are reported, in the case of the decision by the Trial Division, at (1996), 65 C.P.R. (3d) 499 and, in the case of the decision by the Court of Appeal, at (1997), 209 N.R. 387. Leave to appeal to the Supreme Court of Canada from the decision of the Court of Appeal was denied.[7]
[12] Finally in relation to the Agreed Statement of Facts, the settlement agreement
referred to in paragraph 22 between Almecon and Austin Powder Ltd.[8] contains the following provisions, among others:
4. Austin agrees to purchase Almecon's seismic tamping and topping plugs on the terms listed below.
...
(7) This agreement to purchase Almecon Seismic Tamping and Topping Plugs terminates on the earlier of:
a) April 7, 2004, or
b) Should the Federal Court of Canada find that the Almecon Patent is either invalid or not infringed by the Anchortek Energy Plug in Federal Court Action No. T-992-92, then this agreement shall terminate on the date of expiry of any final appeal period in that action.
...
Apart from the foregoing, and I will return to this later in these reasons, no allegation of infringement appears on the face of the settlement agreement.
THE PATENT IN SUIT
[13] Under the heading "Background of the Invention", the following appears in the
Almecon Patent[9]:
In carrying out a seismic exploration, a standard procedure is to drill holes into the geologic formations of interest and to plant explosive charges in the bore holes. The charges are then detonated and appropriate measurements recorded to enable evaluation of the formation.
There are a number of problems associated with this seismic drilling. One of these occurs during the actual blast. Unless the hole is properly plugged prior to detonation, a large proportion of the energy of the blast escapes upwardly through the hole and is thus not properly directed through the formation of interest.
There is therefore a continuing need for a bore hole plug which is simple and inexpensive in construction yet sufficiently durable to remain in place for extended periods and to withstand the force of the blast. To date, a variety of plugs have been proposed and used, but these do not satisfactorily meet all of the criteria set out above.
In addition, plugs are required to be inserted into bore holes to support concrete, earth or other topping materials used to close the hole. Accordingly, a simple plug which could withstand the force of the blast and remain in the hole as a topping plug would be highly desirable. Such a plug could be used as a topping plug only if required.
The bore hole plug of the present invention is intended to alleviate the problems discussed.
[14] The function described in the second and third paragraphs of the foregoing
quotation is generally referred to as a "tamping" function although the term "tamping" is not used in the quoted paragraphs. The term does appear throughout the balance of the disclosure of the Almecon Patent and the claims.
[15] The claimed invention is summarized in the following terms in the disclosure of the Almecon Patent:
A simple molded plastic device has now been developed which is light, economical, of once [sic] piece construction; and which is very effective in tamping and plugging bore holes to confine the force of the blast to the hole.
The invention thus provides a tamping and topping plug for use in a seismic bore hole, comprising a body member having a forward and a rearward end, terminating at its forward end with a closed end part, a plurality of elongated members extending outwardly and rearwardly from at least one end of the body member, the members so arranged as to give the plug axial stability when inserted into a bore hole.
In a preferred embodiment the body member is cylindrical and the elongated members extend from the front and rear ends of the body member.
There is further provided a process for enhancing the information obtainable from seismic blasting comprising inserting into a seismic borehole in which an explosive charge has been placed, and above the said charge, a tamping plug comprising a body member having a forward and a rearward end and terminating at its forward end with a closed end part, a plurality of elongated members extending outwardly and rearwardly from at least one end of the said body member, said members so arranged as to give said plug axial stability when inserted into a bore hole: then exploding the charge and taking seismic readings.
[16] Under the heading "Detailed Description of the Preferred Embodiments", the
following appears in the specification of the Almecon Patent.
The plug 10 includes a body section 12 of cylindrical configuration. The plug is preferably formed of a resilient material such as elastomer or a plastic. The forward end 14 of the body section 12 terminates in the illustrated embodiment in a truncated conical end section 16.
The end section 16 may be profiled in a number of different configurations other than conical. For example, hemispherical, pyramidal or flat end sections 16 would also serve. It is basically only required that the end 14 be substantially closed.
The most preferred embodiment of end section 16, however, is the illustrated truncated cone.
A series of elongated members or claws 18 and 20 protrude outwardly and rearwardly from the front 14 and rear 22 of the body section 12. These members are integral with the body section 12.
While various configurations of the individual members 18 and 20 would be acceptable, it is preferred that the width and thickness both decrease from the base 24 to the outer extremity 26 of the said members. As illustrated, the forward members 18 are molded to smoothly taper to an edge 28; while the rearward members 20 are somewhat thicker and are bevelled at 30 toward the ends 32.
The front and rear claws 18 and 20 are as a group preferably arranged in a symmetrical fashion about the plug body 12. The plug 10 thereby has good directional stability in the bore hole and is prevented from becoming misaligned on insertion or with the force of the blast. In the preferred configuration the plug includes two forward claws 18 and four rear claws 20.
A pair of flange sections 34 and 36 extend around a major part of the rear end 38 of the body section 12. These flange sections leave spaces 40 and 42 behind the forward claws 18. The flange sections 34 and 36, when the plug is in use, fit closely to the sides of the bore hole to reduce blast leakage around the sides of the plug. In the preferred embodiment the flange sections are in part integral with the rear claws 20. In this situation the flange sections play an important reinforcing role in aiding the members 20 to withstand the force of the blast.
Reference numerals in the foregoing quotation are reflected in the drawings or figures of the patent which appear as figures 1 to 4 in Schedule 1 to these reasons.
[17] The disclosure continues with a description of the manner of use of the plug.
To facilitate an understanding of the description of the manner of use, Schedule 5 to these reasons is a reproduction of Figure 9 to the Almecon Patent. The disclosure to the Almecon Patent continues:
The manner of use of the plug is as follows. After a hole 43 has been drilled and the explosive charge planted in the hole, the plug of the present invention is inserted into the hole. The charge is then exploded. The force of the explosion causes a flexing of the plug and causes the plug to move up the hole slightly. This serves to set the claws 18 and 20 into the sides of the hole to confine the blast. A comparison of FIGURES 5 and 9 illustrates clearly the position before and after the blast.
The setting of the claws in this manner is aided by the extra force which is brought to bear on the plug by reason of the flat portion 44 of the truncated conical end 16. Thus a fairly flat such end portion is highly preferred.
In this way the force of the blast is substantially confined to the hole and so to the surrounding formations.
The plug 10 is then normally left in the hole as a topping plug and the filling material, such as concrete, then poured in on top. In use the upward force exerted by the plug during the blast looses [sic] a substantial amount of material from the walls 52 (FIGURE 9) of the hole which material then becomes topping fill.
[18] Claims 1 and 5 of the Almecon Patent, the claims alleged to be infringed, read
as follows:
1. A tamping and topping plug for use in a seismic bore hole, and comprising:
a body member having a forward and a rearward end and terminating at its forward end with a somewhat flattened end part;
a plurality of elongated members extending outwardly and rearwardly from at least one end of the said body member, said members so arranged as to give said plug axial stability when inserted into a bore hole.
...
5. The plug of claim 1 in which the configuration of the said end part is a truncated cone.
THE ISSUES
[19] At the opening of trial, counsel presented an agreed statement of the issues in
this action. By reason of earlier decisions of both Divisions of this Court with regard to the Almecon Patent, the issues regarding invalidity are substantially narrower than originally contemplated by the pleadings. The agreed statement of issues, not in the order in which it was presented to the Court, is nonetheless the following in substance.
1). Validity
a) Claims Broader
If the Almecon Patent claims 1 and 5 are found to include the Energy Plug, are the claims invalid for being broader than the invention made or disclosed in that the invention made or disclosed did not encompass a plug with a front end of the type found on the Energy Plug?
b) Inutility/Best Mode
Does the fact that there is no disclosure in the Almecon Patent of a plug having horizontally directed tips on the outwardly and rearwardly extending members render the patent invalid for inutility or failure to disclose the best mode? Is the front end of the embodiment shown in Figures 6 to 8 of the Almecon Patent too shallow to achieve the requisite axial stability and thus render the patent invalid for inutility?
2). Infringement
Assuming validity of the patent two issues arise.
a) "somewhat flattened end part"
Does the Energy Plug infringe claim 1 or 5 of the Almecon Patent in view of the construction given to the phrase "somewhat flattened end part" by Mr. Justice Wetston in his decision in Almecon Industries Ltd. v. Nutron Manufacturing Ltd.?
b) Is the Energy Plug a "tamping plug"?
Does the Energy Plug function differently from the plugs of the type described and claimed in the patent?
3). Counterclaim-False and Misleading Statements
The defendant Anchortek alleges that the statement by the plaintiff that the Energy Plug infringes the Almecon Patent is false and misleading. It is alleged that making such a statement to a customer of Anchortek makes the plaintiff liable under s. 7 (a) of the Trade-marks Act and under s. 52 of the Competition Act.
.
Is the statement false and misleading? Was the statement made?
If the statement is false and misleading, does a settlement agreement entered into by Almecon and Austin Powder in 1999 in a corresponding patent action in the Federal Court give rise to liability under s. 7 (a) of the Trade-marks Act or under s. 52 of the Competition Act?
Further
i. if a statement made in the settlement agreement repeats the allegation of the Statement of Claim can that statement give rise to potential liability under s. 7 (a) and/or s. 52? Is there an estoppel which prevents Almecon from taking the position that there can be no such liability?
ii. if made, did the statement tend to discredit the business or wares of Anchortek?
iii. if made, did the statement cause damage to Anchortek?
[20] As noted earlier in these reasons, the counterclaim in relation to the Competition Act is not being pursued. Also as noted earlier, pursuant to consent Orders of the Court, the issue of the extent of damages or profits if infringement is found or of damages if the counterclaim for false or misleading statements is successful, is deferred to a reference.
ANALYSIS
1) Persons Skilled in the Art and Construction of the Claims
a) The Judgments in Almecon Industries Ltd. v. Nutron Manufacturing Ltd.
[21] At trial, my then colleague, Mr. Justice Wetston, reached a conclusion regarding the persons who are skilled in the art to which the Almecon Patent relates and thus as to the eyes of the person through whom the claims of the Almecon Patent must be construed.[10] At page 424 of his reasons, he wrote:
...After considering all of the evidence, and the submissions of counsel, I find that the person skilled in the art to which the Almecon invention relates is an experienced seismic crew technician.
[22] Mr. Justice Wetston then went on to construe claims 1 and 5 of the Almecon
Patent, the claims here at issue, through the eyes of an experienced seismic crew technician. With regard to claim 1, he wrote at pages 425-6:
The Almecon plug's forward end terminates in a "somewhat flattened end part". In my view, this means that the forward end of the plug's body member is substantially closed, and has a surface area which is perpendicular to the longitudinal axis of the body member, so as to intercept the pressure wave resulting from the detonation of the charge. If the somewhat-flattened end part were not substantially closed, the force of the blast would be incapable of moving the plug slightly upward in the bore hole so that its elongated members could embed in the walls of the hole, as required by the Almecon patent.
[23] With regard to Claim 5, Mr. Justice Wetston wrote at pages 427-8:
...As discussed above, the Almecon plug terminates in a flattened end portion. I have interpreted this to mean that a flat surface closes off the forward end of the body of the plug. Since the plug terminates at the forward end in both a flattened end portion and a truncated cone, I interpret claim 5 to mean that the pointed tip of the conical end section has been replaced by a flat surface which is substantially or completely closed.
The Almecon patent also states that the plug's forward end section may be profiled in a number of different configurations other than a truncated cone, including hemispherical and pyramidal. Therefore, a variation in the shape of the closed end section is within the claims of the patent.
[24] Mr. Justice Wetston's decision was upheld on appeal by the Federal Court of Appeal.[11] Mr. Justice Strayer, for the Federal Court of Appeal, wrote at paragraph [6] of his reasons:
We perceive the trial judge as having undertaken the construction of the claims with "a mind willing to understand". From claims 1 and 5 he was able to deduce that the plug described, being both for tamping and topping, would have to fill all or most of the hole. This function would have to be performed by the body, as the elongated members would not present a continuous blocking surface. We cannot say that he erred in law in going to the disclosures for further clarification as to whether both the body and the elongated members would contribute to the axial stability; a fair reading of the claim would be ensured in that way....There was possible ambiguity at least in the words "said members" and "axial stability" in claim 1 which could be clarified by resort to the disclosures. The disclosures revealed how the plug would function, namely by the elongated members, referred to as "claws", being embedded into the walls of the hole upon explosion of the charge. This information, combined with the expert evidence as to what a skilled workman would understand from it, provided an adequate basis for the Trial Judge to conclude that relatively stiff claws would be required, and that the plug would function best if the body were nearly as large as the diameter of the hole. Thus he was able to construe the claims as he did. [citation omitted]
[25] Mr. Justice Wetston found the Almecon Patent not to be anticipated by any of
the prior art patents or industry products. Further, he found the Almecon Patent not to be rendered obvious by the prior art patents or the prior art industry products in existence in 1984. He found claims 1 and 5 not to be broader than the invention disclosed. Thus, Mr. Justice Wetston concluded at pages 445-6 with regard to the grounds for a claim of invalidity that were before him:
The onus is on the defendant to demonstrate that, on a balance of probabilities, the patent is invalid. I am not satisfied that the defendant has met this burden. The Almecon patent teaches an inventive step which represents an advance in the art regarding topping and tamping plugs. In my opinion, the patent is valid.
b) Persons Skilled in the Art
[26] I adopt Mr. Justice Wetston's conclusion regarding persons who are skilled in the art to which the Almecon Patent relates as referred to in paragraph [21] of these reasons.
c) c) Construction of the Claims
[27] It is worthy of note that in the quotations from his reasons in Almecon Industries Ltd v. Nutron Manufacturing Ltd. quoted in paragraphs [22] and [23], Mr. Justice Wetston adopts the terminology of claim 1 of the Almecon Patent, "...somewhat flattened end part..." while the expression "...substantially closed..." is adopted from the disclosure, not from the claims. Similarly, Mr. Justice Wetston's reference to alternative profiles of the forward end section is adopted from the disclosure and is not referenced in claims 1 and 5. He notes that those alternative profiles include hemispherical and pyramidal. I find it difficult to rationalize Justice Wetston's acknowledgment of alternative profiles for the forward end section that are hemispherical or pyramidal with the element of his construction of the claims to the effect that the forward end of the plug's body member has a surface area which is perpendicular to the longitudinal axis of the body member. This last element of his construction is consistent with a forward end that is a truncated cone but would appear not to be consistent with a profile of the forward end section that is hemispherical or pyramidal in circumstances where the hemisphere or the pyramid is not itself truncated. The disclosure of the Almecon Patent does not suggest that either such profile must be truncated.
[28] As noted by Mr. Justice Wetston, claim 1 speaks of the forward end of the tamping and topping plug having a "somewhat flattened end part". At least certain hemispherical or pyramidal end parts might fall within the concept of "somewhat flattened" but, as I have indicated, it is difficult to conceive of either as presenting a surface area which is "perpendicular" to the longitudinal axis of the body member.
[29] In Alsop Process Co. of Canada v. J. P. Friesen & Son[12], Mr. Justice Cassels wrote at page 355:
While the defendants in the present case may not be technically bound by the decisions in the cases to which I have referred, except as to questions of law, it would require a strong argument to induce me to come to a different view as to the construction of the specifications from that held by the House of Lords and these eminent Judges.
[30] I reach the same conclusion with regard to the construction of claims 1 and 5 of the Almecon Patent, as endorsed by the Federal Court of Appeal and, impliedly at least, endorsed when the Supreme Court of Canada refused to grant leave for an appeal to that Court. Thus, subject to the reservation that I have expressed above, I adopt the construction of claims 1 and 5 of the Almecon Patent provided by Justice Wetston. That reservation, I am satisfied, arises out of differences in the evidence that was before Mr. Justice Wetston and myself which may have been sufficient to not attract Justice Wetston's attention to a reality that I find particularly relevant on the facts before me.
2) Validity of the Almecon Patent
a) Presumption of validity and onus
[31] In Almecon Industries Ltd. v. Nutron Manufacturing Ltd.[13] Mr. Justice Wetston wrote at page 428:
According to ss. 45 and 46 of the Patent Act, ..., an issued subsisting Canadian patent is, absent evidence to the contrary, presumed to be valid during its full term of 17 years from the date of issue. A party attacking the patent must satisfy the court on a balance of probabilities, that the patent is invalid:...
The parties agreed that the court should consider whether the Almecon patent is invalid on the basis of anticipation, obviousness, over breadth of claims 1 and 5, and ambiguity. [citations omitted]
[32] In support of the first paragraph of the foregoing quotation, Mr. Justice Wetston cited Unilever PLC v. Procter & Gamble Inc.[14]. The decision of the Federal Court of Appeal in Diversified Products Corp. v. Tye-Sil Corp.[15] at pp. 357 - 359 is to the same effect.
[33] The issues with regard to the validity of the Almecon Patent that were raised by the defendants in this matter were not raised before Mr. Justice Wetston.
b) Claims broader than invention made or disclosed
[34] Claims 1 and 5 of the Almecon Patent relate to a "tamping and topping plug". The defendants urge that Anchortek's Energy Plug (the "Energy Plug") is simply not a "tamping" plug but rather a "venting" plug in that the forward end of the Energy Plug is not closed or "substantially closed" so as to deflect the explosive energy or force of an explosion in a seismic bore hole down the hole and into the surrounding formations when the energy or force encounters the forward end of the Energy Plug. Rather, it is alleged that the plug permits at least a significant proportion of that energy or force to pass through the plug into the topping that has been placed on top of the plug and thence to "vent" into the atmosphere without a related blowout. The defendants urge that if claim 1 or claim 5 of the Almecon Patent is construed to encompass a bore hole plug such as the Energy Plug, that is to say, a "venting plug" then the claim is invalid as being broader than the invention actually made by the inventors or disclosed in the Almecon Patent.
[35] In Noranda Mines Ltd. v. Minerals Separation North American Corp.[16], President Thorson wrote at page 146 as quoted in the reasons for decision of the Supreme Court of Canada:
By his claims the inventor puts fences around the fields of his monopoly and warns the public against trespassing on his property. His fences must be clearly placed in order to give the necessary warning and he must not fence in any property that is not his own. The terms of a claim must be free from avoidable ambiguity or obscurity and must not be flexible; they must be clear and precise so that the public will be able to know not only where it must not trespass but also where it may safely go. If a claim does not satisfy these requirements it cannot stand.
...
The inventor may make his claims as narrow as he pleases within the limits of his invention but he must not make them too broad. He must not claim what he has not invented for thereby he would be fencing off property which does not belong to him.
[36] In Leithiser v. Pengo Hydra-Pull of Canada, Ltd.[17], Mr. Justice Thurlow as he then was, after quoting from the evidence given on discovery by Leithiser, concludes at page 123:
In the light of this evidence it is, in my view, apparent that the appellant [Leithiser] never invented a cable tensioning machine having a single capstan wheel with a multiplicity of grooves and that such a device if made would not be workable and further that the appellant never invented or devised a single capstan wheel machine with a single groove or with a v-shaped groove. Moreover, no such machine is described in the specification. The claims which include such a single capstan wheel machine accordingly in my opinion claim more than the appellant invented and more than is described in the specification and they are on both accounts invalid.
In effect, Mr. Justice Thurlow adopted and applied the guidance provided in Noranda Mines in defining the impact of claiming more broadly than the invention made or disclosed.
[37] The decision of Madam Justice Reed in Reliance Electric Industrial Co. v. Northern Telecom Ltd.[18] is to the same effect.
[38] In excerpts from the examination for discovery of Mr. Luoma, one of the inventors named in the Almecon Patent and the President of the plaintiff, that were in evidence before me, the following exchanges occurred[19]:
Q. Mr. Garland: Yes. I was referring to the different drawings that you provided to us that we reviewed today with respect to the various embodiments of the Almecon Plug as well as to the Almecon Plug that's shown in the drawings of the patent.
And I asked you if, in fact, in all instances the plugs shown in those drawings comprise a forward end that was completely closed?
A. Yes.
Q. And that forward end that was completely closed obviously changed in configuration; in some cases, it was a truncated cone that was more smooth than in other cases; is that correct?
If you don't recall that, that's fine.
A. Can you repeat that?
Q. All I was saying is that you've indicated that in all the different drawing we've looked at today with respect to the Almecon Plug, in all instances, the forward end of that plug consisted of a completely closed surface.
I was just saying, in fact, that completely closed surface might have a variety of different configurations that we've seen today?
A. Yes.
Q. Yes. And some were truncated cones?
A. Yes.
Q. Some were, as I described them, more smooth?
A. Conical.
Q. What was that -
A. Conical.
Q. Conical, okay. And some were more, as I've described it, more smooth, curved surfaces?
A. Yes. Yes.
Q. Is it fair to say, then, that when you designed your plug which is the subject matter of the patent, you never contemplated a design that included a forward end that had openings; is that true?
MR. STRATTON: That's not what the patent says.
MR. GARLAND: I'm not asking what the patent says. I'm asking -
MR. STRATTON: Well, that's what we're here to discuss.
MR. GARLAND: No. We're here to discuss more than that. I'm asking the witness, who is one of the inventors, at the time when he was designing this device - - and we've looked through a variety of different drawings demonstrating the different embodiments that he's designed - - and I am putting to him, in fact, that he never contemplated as part of his design - -
A. I did.
Q. You did?
A. Yes.
Q. But we don't have any drawings showing such embodiments?
A. I rejected it.
Q. You rejected it.
A. Yes.
Q. And why would you have rejected it?
A. The preferred function of the plug is to perform a plugging function for which by far the majority of customers prefer a closed plug.
Q. So as I understand it, then, when you were in the design stage, you contemplated a version having openings, and, as you said, you rejected it?
A. I mentioned that I did the calculations and that I knew that the plug would not be able to withstand the forces. So I contemplated all kinds of designs.
We had this brainstorming session. Jim Jackson gave his ideas. I came up with everything. I looked at how I can harness the pressure of that charge to lock that plug in the formation and wondered about it about two weeks. Filled my garbage cans several times. And came with the preferred embodiment that, to me, would best do the job.
Q. And that's what ultimately led to the Patent Application, correct?
A. That is correct.
Q. As you say "that version that would best do the job" did not include embodiments with openings; you rejected those?
A. I didn't have an Energy Plug idea, no.
Q. I'm not referring to an Energy Plug per se. I'm just saying embodiments with openings; that's what - you rejected those?
A. That is correct. Yes.
MR. STRATTON: That's the best way to do it.
A. THE WITNESS: That's correct. The way to solve my problem, yes.
Q. MR. GARLAND: Is it fair to say at that stage when you were designing your plug and going through the mental processes, as you said, making the calculation and coming up with what was the subject matter of your invention, that you never contemplated a forward end of a plug which consisted of an opening such as we have here with the Energy Plug with a recessed conical portion?
A. I went through different routings to harness that explosion pressure to give me a plug that would function. And I don't remember exactly what kind of apparatus I was working for. But I could not find a functioning idea that would make any difference.
Q. But, again, you didn't - - well, let me ask you: Was, in fact, one of the embodiments you envisioned back then one such as what the Energy Plug looks like?
MR. STRATTON: I direct the witness not to answer. It's not relevant.
(OBJECTION TO A QUESTION)
MR. GARLAND: My question stands.
Q. Did you envision any embodiment that would permit the passing of some of the energy or material coming up?
A. Yes. I called it venting.
Q. You called it venting?
A. I considered that, yes.
Q. I have not seen any drawings with any embodiments?
A. Well, they didn't go beyond the brainstorming and think tank stage.
Q. Why was that?
A. Because the industry had open holes in 1984 and it was a large problem in the field, and nobody wanted anything to do with gases blowing or anything to do with open. Open holes were outlawed, and it was a big problem. An open plug, to me, is an open hole.
...
A. My statement about the - - rejecting the open plug. Just explain that I didn't - - that's too strong an impression, because I have added holes into my plugs. I knew that the - - that I wanted a plug that is substantially closed. So the opening is included in my patent, and I wanted to maintain that. And the rejection referred more into the preferred embodiment that at the time was solving a blow-out problem. And industry was very sensitive to it, so we preferred to have a plug with - - and plugs without openings to give any expression of - - into the direction that there would be any gases escaping or problems related to the problem prevailing.
So as far as the openings are concerned, I particularly wanted to have a substantially and not necessarily completely closed plug.
Q. MR. GARLAND: Okay. But you will agree with me that in all the design drawings that you provided to us, and in all the drawings in the patent that's in dispute, that in each and every embodiment, the front surface of those plugs is completely closed?
A. That is correct. Yes.
Q. And at the time that you were designing your plug that ultimately became the subject of the patent, I understood you to say that you may have thought of plugs initially that might have vents or holes in them, but you abandoned that in favour of plugs that had no holes?
A. In my development work I considered all avenues available to me to harness the pressure of that explosion in order to provide a Tamping Plug which, to me, was a plug that stays in the hole during detonation or explosion.
And at that point of time by opening it up and relieving pressures, I realized that I can't do significant improvement in my plug invention by that avenue, that I had to go into these mechanical things in locking and inventing the claws into the formation resulting from the forces from the explosion locking it in, and that the earth would carry the forces. I couldn't resort to an avenue where I vented the pressure away.
Q. And if I understood you correctly, when you commenced making your statement at the end here, the customers weren't looking for plugs with holes in them; is that correct?
And, indeed, I got the impression that they might, in fact, react adversely to such plugs?
A. The customers were concerned about blow-outs, and so they were looking for a plug that would prevent blow-outs or the plugs tilting in the hole. That was the problem that we - - got us going.
Q. Was I correct, though, in picking up from you that, in fact, the customers or potential customers might, in fact, have acted adversely to a plug that had holes or vents?
A. That was a fear that was there in the background, that we are in - - we have to develop a plug. And I was fed this information from the field with a limited knowledge at the time. [emphasis added]
[39] Mr. James Jackson, the other named inventor identified in the Almecon Patent, testified before me to the following effect[20]:
Q. You never contemplated the idea of the design with a plug with a front end with a hole or a vent in it; is that not correct, sir?
A. Yes.
Q. Okay. In fact, you never contemplated a design that was intended to permit the passing of some of the explosive force through any gaps or holes or vents in the plug and to allow that energy or force to pass up through the hole, did you?
A. Correct.
[40] By contrast, Mr. Luoma, in his testimony before the Court at trial, gave the following evidence[21]:
Q. At the time, before you filed your patent application on January 25, 1985, did you believe whether or not a plug with holes would work in the manner that you described for your invention?
A. Yes, I did.
Q. And why is that?
A. I had conceived several designs using holes....
....
A. Yes. This was January of '85, so the patent application included "substantially closed", and I contemplated holes as long as they were small enough so that the plug would be able to hold the top filling.
...
A. ...Those conceived designs contained holes and which were okay, as long as the holes was [sic] small enough so that the plug could still hold the topping fill; and that on the other hand, the resulting surface area of the plug would be large enough to intercept that blast coming up the hole.
[41] The disclosure of the patent clearly contemplates the tamping function as not only reducing the incidence of blowouts, but also reducing the loss of the energy of the explosion or blast upwardly through the bore hole. At the same time, it notes that it is "...basically only required that the [front] end... be substantially closed."[22] Further, it contemplates reduction of "...blast leakage"[23] and "substantially" confining the force of the blast "...to the hole and so to the surrounding formations."[24]
[42] Counsel for the Defendants urged that the reference to "substantially closed" in the specification of the Almecon Patent was a "stray phrase" that constitutes nothing more than a "favourable gloss" on the specification. He referred me to Whirlpool Corp. v. Camco Inc.[25] where Mr. Justice Binnie, for the Court, at page 1098, quoted with approval the following passage from Metalliflex Ltd. v. Rodi & Wienenberger Aktiengesellschaft[26]:
The claims, of course, must be construed with reference to the entire specifications, and the latter may therefore be considered in order to assist in apprehending and construing a claim, but the patentee may not be allowed to expand his monopoly specifically expressed in the claims "by borrowing this or that gloss from other parts of the specifications".
[43] I am satisfied based on the totality of the read-ins and testimony that I have cited, regarding "venting" and somewhat open fronted plugs, that the term "substantially closed" as it appears in the specification of the Almecon Patent is neither a stray phrase nor a gloss. Indeed, it is a phrase that was relied upon by Mr. Justice Wetston in his construction of claims 1 and 5 of the patent in Almecon Industries Ltd. v. Nutron Manufacturing Ltd.[27]. Taking into account the totality of the evidence before me, together with the construction of Claims 1 and 5 of the Almecon Patent that I have adopted, I conclude that those claims are neither invalid for being broader than the invention made by the inventors named in the Almecon Patent nor for being broader than the invention actually disclosed in that patent.
c) Inutility / Best Mode
i) Inutility
[44] By section 2 of the Patent Act as it read at the relevant time, "invention" was defined to mean any new or useful art, process, machine, manufacture or composition of matter or any new and useful improvement.
[45] In Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd.[28], at the trial level, Mr. Justice Collier, at page 216 of his reasons quoted with approval the following passage from Fox, Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed. (1969):
The true test of utility of an invention is whether it will, when put into practice by a competent person, do what it assumes to do, and be practically useful at the time when the patent is granted, for the purpose indicated by the patentee. "If when used in accordance with the directions contained in the specification, the promised results are obtained, the invention is useful in the sense in which that term is used in the patent law. The question to be asked is whether, if you do what the specification tells you to do, you can make or do the thing which the specification says that you can make or do." As Maugham L.J. observed in Mullard Radio Valve Co. Ltd. v. Philco Radio & Television Corpn. of Great Britain Ltd. et al.: "The meaning is - useful for the purposes indicated by the patentee, whether or not commercial utility is involved. It is sufficient if the invention in the hands of a competent person does what it purports to do, a thing sometimes expressed by the words that 'the wheels must go round'." Simonds J. put the matter even more succinctly when he observed: "There is real utility. The thing works."
The invention must, subject to the qualification above mentioned, be useful as specified and for the purpose stated in the specification and claims, under ordinary working conditions. It is not enough that it be useful in a modified form or in conjunction with something subsequently discovered. The invention must perform that which it assumes to perform, and, unless the invention is useful for the purpose for which the inventor intended it, the patent is void.
Following the above quotation in which Mr. Justice Collier added the emphasis, he concluded:
The plaintiff contends the changes, which all witnesses agreed should be made, could be routinely done by an ordinarily skilled workman. My answer is that usefulness in a modified form is no answer.
[46] Mr. Justice Dickson, as he then was, in the same matter when it came before the Supreme Court of Canada, wrote at page 525 by reference to the 3rd edition of Halsbury that:
It ["not useful"] means "that the invention will not work, either in the sense that it will not operate at all or, more broadly, that it will not do what the specification promises that it will do".
[47] Counsel for the defendants urged that the embodiment of the invention as illustrated by at least certain of the Figures of the Almecon patent, particularly Figures 6 to 8, as well as certain early embodiments of the invention, simply "did not work".
[48] The Almecon King Plug, as illustrated in Schedule 1 to these reasons, was first marketed in the late autumn of 1984. It was a commercial success. Generally speaking, on the evidence before me, "it worked"[29].
[49] Some problems were apparently incurred with the King Plug at least as early as the spring of 1986. In a letter dated the 19th of June, 1986, James Jackson, a co-inventor and marketing manager for Almecon wrote[30]:
Summer King Plug
We have developed a new type of King Plug called Summer King to combat the problems invol