Hollick Solar Systems Ltd. v. Matrix Energy Inc.

Hollick Solar Systems Ltd. v. Matrix Energy Inc.
Court (s) Database
Federal Court Decisions
Date
2011-10-31
Neutral citation
2011 FC 1213
File numbers
T-1791-07
Decision Content
Federal Court
Cour fédérale
Date: 20111031
Docket: T-1791-07
Citation: 2011 FC 1213
Ottawa, Ontario, October 31, 2011
PRESENT: The Honourable Mr. Justice Scott
BETWEEN:
HOLLICK SOLAR SYSTEMS LTD. and CONSERVAL ENGINEERING INC.
Plaintiffs
and
MATRIX ENERGY INC.
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1] The plaintiffs, Hollick Solar Systems Limited (HOLLICK) and Conserval Engineering Inc. (CONSERVAL), claim that the defendant, Matrix Energy Inc. (MATRIX) has infringed their Canadian Patent No 1,326,619 (the ‘619 patent), more particularly claims 1 and 10, by selling a solar air heating system known as the MatrixAir system (MatrixAir). The plaintiffs also claim the infringement and depreciation of the value of the goodwill of the Trade-mark TMA 371,622 (SOLARWALL Trade-mark). Finally, the plaintiffs claim that the defendant has passed-off its solar air heating systems for those of CONSERVAL. Their action is based on section 55 of the Patent Act (RSC, 1985, c P-4) (Patent Act) and the Trade-marks Act (RSC, 1985, c T-13) (Trade-marks Act). For ease of reference, the relevant articles of both Patent Act and Trade-marks Act have been appended hereto as Appendix A and B.
[2] Initially the defendant disputed the validity of the patent. Subsequently, it amended its pleading and took the position that the MatrixAir system is a variant outside the scope of the ‘619 patent, as a result the patent cannot be infringed. The defendant filed an amended statement of defence and counterclaim on January 11, 2008. The defendant also asserts it did not use the SOLARWALL Trade-mark outside the scope of the Distributorship Agreements that were in place between 1991 and March 31st, 2007.
[3] At the beginning of trial on September 6th, 2011, the Statement of claim in all proceedings was amended on consent to remove from the style of cause all parties that were no longer parties in the present instance that is: Enerconcept Technologies Inc., Solutions Énergétiques Enerconcept Inc., 9153-1103 Quebec Inc. and Christian Vachon.
II. FACTS
A. The parties
(1) The plaintiffs
[4] HOLLICK is a corporation incorporated in 1976 pursuant to the laws of Ontario. HOLLICK is a holding company; therefore it does not have any manufacturing, distributing or selling activities (Agreed Statement of Facts and Documents, volume I, tab 1).
[5] CONSERVAL is a corporation incorporated in 1977 pursuant to the laws of Ontario (Agreed Statement of Facts and Documents, volume I, tab 2). It designs, markets and sells solar heating systems in Canada, under the SOLARWALL Trade-mark (Agreed Statement of Facts and Documents, volume I, tab 3).
[6] CONSERVAL and HOLLICK are associated companies. The president of the plaintiffs is Mr. John Hollick.
[7] CONSERVAL has been delivering renewable energy solutions for 30 years, such as solar air heating systems and more recently hybrid PV/thermal systems. It has been involved in numerous solar air heating systems projects throughout the years.
[8] CONSERVAL does not manufacture solar air heating systems. Rather, it purchases key components from suppliers and resells them at a profit.
2. The defendant
[9] MATRIX is a corporation incorporated in 1995 pursuant to the laws of Canada. The President of MATRIX is Brian Wilkinson (transcript, volume 5, page 176, testimony of Brian Wilkinson).
[10] MATRIX offers a range of solar electric air heating, solar heating, solar thermal, wind energy, micro hydro products and systems since 1985 (transcript, volume 5, pages 177 to 179, testimony of Brian Wilkinson).
B. Relationship between the parties and their sales
(1) Distributor Agreements
[11] MATRIX distributed solar air heating systems designed by CONSERVAL from 1991 until about March 31, 2007, at which time the terms of the latest Distribution Agreement dated January 14, 2005 between the parties expired. Notwithstanding the expiration of the contract, the parties continued to conduct some business together until September 2007 as MATRIX was permitted to complete six projects that were already signed on March 31, 2007 (transcript volume 1, September 6, page 157, lines 18 to 20, testimony of John Hollick and plaintiffs’ Exhibit P-29, list of SOLARWALL permitted projects).
[12] The first Distributor Agreement between CONSERVAL and MATRIX was concluded on August 13, 1991 (Agreed Statement of Facts and Documents, volume III, tab 57).
[13] A second Distributor Agreement between CONSERVAL and MATRIX was concluded on August 11, 1994 (Agreed Statement of Facts and Documents, volume III, tab 58). Upon expiry of the second Agreement, John Hollick proposed to Brian Wilkinson to continue the same agreement (Agreed Statement of Facts and Documents, volume III, tab 60).
[14] A third Distributor Agreement between CONSERVAL and MATRIX was concluded on August 13, 1999 and was to remain in full force for 5 years (Agreed Statement of Facts and Documents, volume III, tab 61).
[15] The last Distributor Agreement between CONSERVAL and MATRIX was concluded on January 14, 2005 and was set to expire on March 31, 2007 (Agreed Statement of Facts and Documents, volume III, tab 62).
[16] At different times over the years, MATRIX expressed a desire to obtain a license to manufacture SOLARWALL cladding in Quebec.
[17] A disagreement arose between the parties over the purchase of components (transcript, volume 1, page 151, lines 4 to 14, testimony of John Hollick) and over the terms of a revised distributor agreement that led them not to renew their agreement or continue their relationship (transcript, volume 1, page 155, lines 1 to 25, testimony of John Hollick). Discussions took place between the parties (E-mails exchanged between Brian Wilkinson and Duncan Coutts between March 16, 2007 and June 4, 2007) regarding continued distributorship after the expiry of the last Distributor Agreement, but no agreement was reached or executed between the parties (Agreed Statement of Facts and Documents, volume III, tab 71).
[18] After the expiration of its Distributorship Agreement with CONSERVAL, MATRIX began quoting and selling a solar air heating system known as the MatrixAir system, which is the subject of this litigation (Agreed Statement of Facts and Documents, volume IV, tabs 92.1 to 92.55).
(2) The plaintiff’s alleged rights
(a) The SOLARWALL Trade-mark
[19] CONSERVAL is the recorded owner in Canada of Trade-mark registration number TMA371,622 for the SOLARWALL Trade-mark (Agreed Statement of Facts and Documents, volume I, tab 3).
(b) The ‘619 patent
[20] Patent 619 entitled “Improved method and apparatus for pre-heating ventilation air for a building” was issued on February 1, 1994. Patent 619 expired on February 1, 2011 (Agreed Statement of Facts and Documents, volume I, tab 4). The invention in patent 619 is described as follows on pages 2 and 3:
“GENERAL DESCRIPTION OF THIS INVENTION
We now have a new devised method and apparatus for accomplishing the desired goal at low cost and without the above efficiency limitations for high panels.
More specifically, this invention provides a method of preheating ventilation air for a building having a sun-facing outer surface through which heat from the interior of the building escapes, the method comprising the steps:
a) providing on the sun facing outer surface of the building a solar radiation-absorbent collector panel having an inside surface and an outside surface, the collector panel defining an air collection space between its inside surface and said sun-facing outer surface, said outside surface being exposed to the ambience, the panel having substantially uniformly distributed over the panel, a plurality of air inlet openings communicating with said air collection space;
b) heating outside air with solar heat from the collector panel and with heat being lost from the interior of the building, and passing the heated air upwardly in laminar flow along the panel; and
c) withdrawing heated outside air through the air inlet openings of the collector panel and into the air collection space behind the panel, using air-moving means having an inlet at the top of the air collection space and having an outlet within the interior of the building, the air-moving means establishing a negative pressure differential across the collector panel with respect to the ambience.”
[Emphasis added]
[21] Further, this invention provides an apparatus for preheating ventilation air for a building having a sun facing outer surface through which heat from the interior of the building escapes, comprising:
“A sunlight absorben collector panel on the sun-facing surface, the panel having an inside surface and an outside surface, the collector panel defining an air collection space between its inside surface and the outer surface of the building, said outside surface being exposed to the ambience, the panel being provided with a plurality of air inlet openings substantially uniformly distributed over the panel and communicating with the said space between the panel and the wall, and air-moving means having at the top of the panel an inlet which communicates with the air collection space between the panel and said outer surface for receiving air that has been heated during upward passage and drawn in through the plurality of air inlet openings, and having an outlet within the interior of the building, the air-moving means establishing a negative pressure differential across the panel with respect to the ambience.”
[Emphasis added]
[22] The plaintiffs assert that defendant’s MatrixAir system infringes claims 1 and 10 of the ‘619 patent. These claims read as follows:
THE EMBODIMENTS OF THE INVENTION IN WHICH AN EXCLUSIVE PROPERTY OR PRIVILEGE IS CLAIMED ARE DEFINED AS FOLLOWS:
1. A method of preheating ventilation air for a building having a sun-facing outer surface through which heat from the interior of the building escapes, the method comprising the steps:
a) providing on the sun-facing outer surface of the building a solar radiation –absorbent collector panel having an inside surface and an outside surface, the collector panel defining an air collection space between its inside surface and said sun-facing outer surface, said outside surface being exposed to the ambience, the panel having, substantially uniformly distributed over the panel a plurality of air inlet openings communicating with said air collection space;
b) heating outside air with solar heat from the collector panel and with heat being lost from the interior of the building, and passing the heated air upwardly in laminar flow along the panel; and
c) Withdrawing heated outside air through the air inlet openings of the collector panel and into the air collection space behind the panel, using air-moving means having an inlet at the top of the air collection space and having an outlet within the interior of the building, the air-moving means establishing a negative pressure differential across the collector panel with respect to the ambience.
[Emphasis added]
10. An apparatus for preheating ventilation air for a building having a sun-facing outer surface through which heat from the interior of the building escapes, comprising:
A sunlight-absorbent collector panel on the sun-facing surface, the panel having an inside surface and an outside surface, the collector panel defining an air collection space between its inside surface and the outer surface of the building, said outside surface being exposed to the ambience, the panel being provided with a plurality of air inlet openings substantially uniformly distributed over the panel and communicating with the said space between the panel and the wall, and air moving means having at the top of the panel an inlet which communicates with the air collection space between the panel and said outer space for receiving air that has been heated during upward passage and drawn in through the plurality of air inlet openings, and having an outlet within the interior of the building, the air-moving means establishing a negative pressure differential across the panel with respect to the ambience.
[Emphasis added]
[23] On November 6, 1991, SOLARWALL International Limited granted an exclusive license to CONSERVAL to make, construct, manufacture, use and sell to others to be used the method and apparatus forming the subject matter of the ‘619 patent in Canada (Agreed Statement of Facts and Documents, volume I, tab 5).
[24] SOLARWALL International Limited assigned the entire right, title and interest in and to the ‘619 patent to Hollick Solar Systems Limited as of December 15, 2003 (Agreed Statement of Facts and Documents, volume I, tab 6).
C. Scope of alleged infringing activities
(1) Alleged Infringement and Passing-off of the SOLARWALL Trade-mark
[25] The expression SOLARWALL appears on specific documents of MATRIX (Agreed Statement of Facts and Documents, volume II, tabs 37 to 44). Quotes were produced, invoices were issued, plans and drawings were provided by MATRIX to its clients after March 31, 2007, in which the words “mur solaire” appeared (Agreed Statement of Facts and Documents, volumes IV, V and VI, tabs 92.7 to 92.53).
(2) Alleged Infringement of the ‘619 patent
[26] Between June 2007 and January 2011, MATRIX sold several solar air heating systems and issued a great number of quotes for which no purchase order were received by MATRIX to this day (Agreed Statement of Facts and Documents, volumes IV, V and VI, tabs 92.1 to 92.55 and volume VII, tabs 93 to 139).
D. Evolution of the Canadian market for solar air heating and incentives
[27] According to the evidence adduced, solar air heating systems have been gaining in popularity and the Canadian thermal industry has grown over the years (transcript, volume 1, September 6, pages 133 and 134, testimony of John Hollick).
[28] Through the Renewable Energy Deployment Initiative [REDI] program, Natural Resources Canada offered a 25% subsidy starting in 1998. However, the initiative has not been continuous and the subsidy has changed over the period. SOLARWALL solar air heating system was accredited as a solar collector eligible under the REDI program (transcript, volume 4, pages 18-20, testimony of Al Clark).
[29] The EcoENERGY for Renewable Heat program from Natural Resources Canada ran from April 1, 2007 to March 31, 2011 (not continuously). Incentives were offered to the industrial/commercial/institutional/agricultural sectors to install active energy-efficient solar air and/or water heating systems (transcript, volume 4, page 19, testimony of Al Clark).
[30] Over the relevant years, SOLARWALL, MATRIXAIR, Luba Solar, Unitair and VTP were solar collectors eligible for subsidy under the EcoENERGY program (Exhibit P-61).
[31] The Energy Efficiency Fund [EEF] for Gaz Metro Customers program offers a financial assistance for energy efficiency work done on the building envelope, such as solar heating, since 2001. The EEF offers financial assistance towards the purchase and installation of solar air or water heating system. All the panels which were recognized by the old EcoENERGY Renewable Heat program at its closure, on October 1, 2010, are accepted for the EEF program. In total 21 projects installing the Unitair and Luba solar heaters received grants between March 31, 2007 and December 31, 2010 (transcript, volume 4, page 13, testimony of Benoît Paillé).
[32] The Quebec Government also ran an energy efficiency program for which SOLARWALL and MatrixAir were eligible for grants.
III. ISSUES
1. Did MATRIX infringe the ‘619 patent by promoting, offering for sale and selling the MATRIXAIR solar air heating systems?
2. If the answer to question 1 is affirmative, what are the damages to which the plaintiffs are entitled?
3. Did MATRIX infringe the SOLARWALL Trade-mark that is the object of CanadianTrade-mark registration TMA371,622 or pass-off in any manner its solar air heating systems for those of CONSERVAL?
4. If the answers to question 3 are affirmative, what are the remedies (damages, injunction) to which CONSERVAL is entitled?
5. Are the plaintiffs entitled to exemplary and punitive damages?
IV. ANALYSIS
Preliminary objections
[33] At trial, counsel for the defendant objected to the production of the following documents in the Agreed Statement of Facts and Documents, that is volume I, tabs 14 to 23, CONSERVAL Sales Journal between April 2001 and March 2011; and volume I, tabs 24 to 31, the unaudited financial statements of CONSERVAL for years ending March 31, 2003 to March 31, 2010, inclusively, on the basis that they could not be introduced at this later date because they were requested during discoveries and refused by acting counsel for the plaintiffs at the time. Counsel for defendant therefore argued that pursuant to the rules of the Court they could not be introduced in the Agreed Statement of Facts and Documents. Me Lauzon, who is now representing the plaintiffs, submitted to the Court that the documents in question were properly introduced on the basis of the March 26, 2010 Order issued by Prothonotary Tabib (the Order), based upon the parties agreement as to the further steps to be taken in the proceedings. The Order set the timelines for the parties to file all documents and amended affidavits if necessary. The Court took the objection under reserve. Having reviewed the documents, the transcript from the examination of John Hollick which was read in the record, and the Order, it is clear to this Court that the documents are admissible. The Order rendered was based on the mutual agreement of parties. Paragraphs 8 to 10 of the Order clearly addressed the documents and set a timeline for filing which plaintiffs abided by. The objection is therefore dismissed.
[34] Counsel for plaintiffs objected during trial to the production of an expert report entitled in the Matter of Claims by Matrix Energy Inc. with Respect to the Performance of the MatrixAir Solar Heating Device vis-à-vis other Similar Devices and particularly the Solar Wall ® Device dated August 25, 2010 and signed by Dr. K.G. Terry Hollands. That report was prepared for the litigation between Conserval Engineering Inc v Matrix Energy Inc and Brian Wilkinson, before the Superior Court of Quebec, Montreal district, in file No 500-17-056428-108. The Court took the objection under reserve. Clearly, the document is admissible under rule 291 of the Federal Courts Rules, SOR/98-106, since it was introduced by counsel for the defendant to establish that the plaintiffs’ expert witness was contradicting himself in his testimony and was deviating from previous statements he made in the past. Exhibit D-7 is therefore admitted in the record.
1. Did MATRIX infringe the ‘619 patent by promoting, offering for sale and selling the MATRIXAIR solar air heating systems?
Position of the plaintiffs
[35] The plaintiffs allege that the present case concerns one sole issue that is whether the limitation “at the top” found in claims 1 and 10 is essential or not . A finding that said limitation is not essential according to plaintiffs means that it can be omitted and consequently all MatrixAir systems offered for sale and sold by defendant have infringed Canadian Patent 619.
[36] The plaintiffs further assert that the expression “at the top” is not ambiguous but the question is to how the Court must purposively interpret the term in an informed way, taking into consideration the teachings of the patent as would have the skilled addressee in 1994.
[37] The plaintiffs submit that both the ‘619 patent and the MatrixAir system fundamentally perform the same function in that they
(1) preheat outside air on the sun facing surface of a transpired air collector;
(2) withdraw the heated air through the openings on the collector on the basis of a negative pressure behind the plate; and
(3) further duct the heated air into the building through an inlet using a ventilation fan.
[38] The plaintiffs contend that the position of the air intake in the plenum, in the MatrixAir device, is not “at the top” simply has no material effect on how the invention works.
[39] The plaintiffs submit that MATRIX’s contention that its system performs less efficiently due to the effects of buoyancy forces in the plenum is irrelevant. They also claim that this assertion is unsupported by the evidence and contrary to MATRIX’s own representation and admissions.
[40] With respect to the second question, that is on the understanding of the relevant person of ordinary skill in the art of solar heating, on February 1, 1994, plaintiffs allege that Dr. Hollands’ testimony that it would have been obvious to the person of ordinary skill in the art, at the relevant time, that to place the air inlet at the bottom or below the middle rather than at the top would not have had a material effect on the way the ‘619 system works. Rather, what was relevant to the person of ordinary skill in the art, at the relevant time, was what was occurring on the outside of the plate, not in the plenum as plenum design was very well known.
[41] Finally, on the third question, plaintiffs refer to Dr. Hollands’ assertion that the reader skilled in the art nevertheless would have understood from the wording of the claims that the patentees had not intended strict compliance with the primary meaning of the words used. According to Dr. Hollands, the patentees had clear knowledge of plenum design. Therefore, they knew that the height of the air intake did not have a material effect on the way the system would work. Furthermore, the patentees did suggest that the ventilation fan could be ducted at various levels.
Position of the defendant
[42] The defendant asserts firstly that plaintiffs bear the burden of proof. They must establish on a balance of probabilities that the MatrixAir system sold after March 31st 2007 infringes at least one claim of patent 619.
[43] With respect to claim 1, MATRIX takes the position that it did not use a “method of preheating ventilation air for a building”. Therefore, in order to find infringement, the Court will have to conclude that MATRIX induced the use of said method described in claim 1.
[44] The defendant also claims that since March 31, 2007, it has been selling the MatrixAir system with an intake in the air collection space (between the solar panel and the exterior wall of the building), located at the bottom of the panel. According to defendant this constitutes a “variant”of the system described and claimed in patent 619.
[45] The defendant submits that the words used in claims 1 and 10 are clear and unambiguous and that no evidence was adduced to establish that MATRIX ever sold, installed or induced the installation of a MatrixAir system with an air intake located at the top of the panel.
[46] The defendant further affirms that plaintiffs’ contention with respect to infringement can be summarized as follows: on a purposive construction of claims 1 and 10, the location of the air intake at the top of the panel was clearly not intended to be an essential element of the invention and that in any event the skilled addressee would have understood that locating the air intake at the bottom part of the panel would have no material effect on the performance of the invention.
[47] The defendant relies on the principles established by the Supreme Court with respect to patent construction in paragraph 31 and where a variant exits between the features of the device and the limitations of the asserted claims in paragraph 55 of Free World Trust v Électro Santé Inc, [2000] 2 SCR 1024, [2000] SCJ No 67 [Free World Trust].
[48] Accordingly the defendant submits that three questions must be answered:
(1) Does the variant have a material effect upon the way the invention works? If the answer is in the affirmative then the variant is outside the claim.
(2) If the answer is in the negative would the fact that it has no material effect have been obvious at the date of publication of the patent to a reader skilled in the art? If the answer to this last question is also negative then the variant is also outside the claim.
(3) Should the answer be affirmative then a third and final question should be answered. Would the reader skilled in the art have nevertheless understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention?
[49] Finally, the defendant asserts that the location of the air intake in the MatrixAir system has a material effect on the way the invention works and points to testimony provided by one of the patentees, Mr. Hollick, and to Dr. Rice, defendant’s expert report and testimony, and thirdly to the lesser performance factor attributed to the MatrixAir system by Natural Resources Canada based on the Bodycote report.
Analysis
[50] Infringement is not defined in the Patent Act. The patentee bears the onus of proving that its patent has been infringed (Lightning Fastener Co v Colonial Fastener Co, [1936] ExCR 1, [1936] 2 DLR 194; Monsanto Canada Inc v Schmeiser, 2004 SCC 34, [2004] 1 SCR 902 at para 29 [Schmeiser]). Any act that prevents the enjoyment of the monopolistic rights granted by the patent has been held to constitute infringement (Schmeiser at para 34; Lishman v Erom Roche Inc, [1996] FCJ No 560, (1996), 68 CPR (3d) 72 at para 16). This Court must therefore define the scope of the rights granted in the ‘619 patent in order to determine whether the defendant’s MatrixAir system infringes claims 1 and 10 as alleged by the plaintiffs.
[51] The Supreme Court of Canada defined the approach to claim interpretation in Free World Trust. Justice Binnie, at paragraph 31 of the decision, states that:
…
(a) the Patent Act promotes adherence to the language of the claims.
(b) Adherence to the language of the claim in turn promotes both fairness and predictability
(c) The claim language must, however be read in an informed and purposive way.
(d) The language of the claims thus construed defines the monopoly. There is no recourse to such vague notions as the “spirit of the invention” to expand it further.
(e) The claims language will, on a purposive construction, show that some elements of the claimed invention are essential while others are non-essential. The identification of elements as essential or non-essential are made:
(i) on the basis of the common knowledge of the worker skilled in the art to which the patent relates;
(ii) as of the date the patent is published;
(iii) having regard to whether or not it was obvious to the skilled reader at the time the patent was published that a variant of a particular element would not make a difference to the way in which the invention works; or
(iv) according to the intent of the inventor, expressed or inferred from the claims, that a particular element is essential irrespective of its practical effect;
(v) without however, resort to extrinsic evidence of the inventor’s intention.
(f) There is no infringement if an essential element is different or omitted. There may still be infringement, however, if non-essential elements are substituted or omitted.
[52] The Supreme Court also affirmed the primacy of the language of the claims since it defines the monopoly to which the patentee is entitled and the boundaries that cannot be crossed.
[53] The Supreme Court in paragraphs 50, 51 and 54 of the Free World Trust decision provided further guidance to determine the essential and non-essential elements of a patent which must be determined from the language used in the claims as follows:
(i) On the basis of the common knowledge of the worker skilled in the art to which the patent relates.
(ii) What constitutes an “essential element” is to be interpreted in light of the knowledge of the art at the date of publication of the patent specification.
(iii) Regard is to be had to whether it was obvious at the time the patent was published that substitution of a different variant would make a difference to the way in which the invention works.
[54] Justice Binnie went on, in paragraph 55 of the Free World Trust decision, to consider the following three precise questions identified by J. Hoffman in Improver Corp v Remington (Consumer Products Ltd), [1990] FSR 181, that should be answered to determine if the missing element of the asserted claims is essential to the patent:
…
(i) Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no:--
(ii) Would this (i.e. that the variant has no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art? If no, the variant is outside the claim. If yes:--
(iii) Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If yes, the variant is outside the claim.
[55] Furthermore, “the patentee[s] [have] the burden of proving, [on the balance of probabilities], the known and obvious substitutability of a variant in the scope of the claim at the date of publication of the patent” (Lapierre v Équipements d’Érablière C.D.L. Inc, [2004] FCJ No 1091, 33 CPR (4th) 402 at para 35).
[56] The location of the air intake in the MatrixAir systems sold after March 31, 2007 is at the bottom or at least below the midpoint in the air collection space between the solar panel and the outside wall of the buildings where such systems were installed. This constitutes, according to the defendant, the variant from the system described and claimed in patent 619. This Court must therefore determine, on a purposive construction of that patent, whether the position of the air inlet inside the plenum at the top is an essential element of claims 1 and 10 of the ‘619 patent or not.
[57] Plaintiffs argue that the location of the air inlet is not an essential element since it has no material effect on how the invention works. Dr. Hollands, the plaintiffs’ expert, was qualified as an expert in heat transfer, solar heating and fluid mechanics by the Court (transcript, volume 2, pages 66 to 68). Dr. Hollands is the only witness who testified to the effect that locating the air intake at the bottom of the panel would have no material effect upon the way the invention works and that it was not essential (Exhibit P-52, page 7, Dr. Hollands’ expert report).
[58] When examined on this point by plaintiffs’ counsel, Dr. Hollands explained his understanding of the Free World Trust decision, at para 55, and more precisely the extract “It would be unfair to allow a patent monopoly to be breached with impunity by a copycat device that simply switched belles and whistles to escape the literal claims of the patent.” “Now, in this context I would say with the new … with the variant, it would … if we are to take efficiency as being the criteria here, where does that lead us? The device can either be an improvement, improve the efficiency, or it can actually decrease the efficiency. Now, if it’s an improvement and improves the efficiency, this is a moot point whether … I believe that is undecided, as far as I’m concerned. I just want to deal with if it has a negative effect on the efficiency, if it detracts from the efficiency. It if detracts from the efficiency, why is the copycat or … why is the other person … why is he bringing it in if it doesn’t add to the efficiency, if it’s negative on the efficiency. It seems to me the only reason would be is that he just wants to have a device that escapes the literal claims of the patent. So I think there’s a conflict between the first question and the spirit of the paragraph, particularly the first sentence, because I think it could be interpreted, if one just looks at the sentence, that if the variant decreases the efficiency … and efficiency is the criteria to be used here … that, therefore, you can’t get by the first question. I think that may be being argued here; I don’t know. And I don’t believe that that interpretation is what the authors implied. I’m not … of course, forgive me for arguing law here, but … at any rate, for this reason, I did not interpret the effect on efficiency as being the criteria on when we’re talking about a material effect, the way the invention works” (transcript, volume 2, page 71, lines 8 to 25 and page 72, lines 1 to 18).
[59] In this context Dr. Hollands was clearly applying a criterion that is not accepted by the jurisprudence of this Court. The criteria is not whether the variant improves the performance of the invention but rather does it have a significant effect on how the device functions, be it positive or negative.
[60] Dr. Rice, defendant’s expert, was recognized by the Court as an expert in the field of fluid dynamics and heat transfer, qualified to assist the Court in understanding the apparatus and method described in patent ‘619 and the workings of the SOLARWALL and MatrixAir devices. He opines that the variants identified in the MatrixAir Sytems have a material effect on the way the invention works. He attributes this difference to the presence of both buoyancy and pressure forces in the plenum. “In the 619 collector” according to Dr. Rice “the buoyancy and pressure forces are in the same direction as the flow, while in the Matrix collector the buoyancy and pressure forces are in opposing directions with the buoyancy force opposing the flow” (Exhibit D-16, pages 14 and 15).
[61] Dr. Hollands did not consider the direction of the buoyancy and pressure forces in the plenum chamber. He simply states that “The details of the airflow in the plenum will depend in a modest way on where the air is taken off the plenum, but these differences in flow pattern will not have a material effect on the overall operation of the device, provided the plenum is properly sized to maintain a uniform pressure” (Expert report of Dr. K.G. Terry Hollands, page 7). By omitting to do so, he did not discuss the role of the air inlet at the top of the panel which is specifically mentioned in claims 1 and 10 of the ‘619 patent.
[62] Yet when cross examined by defendant’s counsel on this very point and when confronted with an opinion previously given, albeit in a different case before the Superior Court of Quebec when comparing the ‘619 patent and the MatrixAir system, he acknowledged that buoyancy and pressure forces are both at work in the plenum. On page 5 of his report dated August 25, 2010 (Exhibit D-7), he writes:
“The effect of collector height is to lower the efficiency, sometimes drastically, most especially if air is withdrawn from the bottom of the collector, as in the case of the Matrix collector. Thus it is my opinion that if the collectors had been tested at full height, the MatrixAir performance would have performed even less well vis-à-vis SOLARWALL.
The reason is something called the buoyancy effect, the chimney effect or the stack effect.’”
[63] In his expert report dated March 9, 2010 at pages 8 and 9, Dr. Hollands writes: “it is preferred that the duct 34 [be] located at the ceiling level for the sake of convenience in industrial and commercial buildings. Other levels and routings for duct 34 may be chosen in apartment buildings” (‘619 patent, page 6, lines 15 to18). According to Dr. Hollands’ perspective and his interpretation of the words of the ‘619 patent, having the air flowing out of the plenum at the top is a matter of convenience and is not an essential variant. This is somewhat contradictory to the conclusions found in D-7, where Dr Hollands writes, in his concluding paragraph at page 9:
“Based on physical reasoning using well-known laws and supported by thermographic images of systems with low and high intakes, the full-scale systems with low air intake will be more subject to loss flow (flow of air actually leaving the collector and returning to the ambient) and to non uniform air-heating than full scale versions of the systems with high air intake. This will reduce their performance vis-à-vis systems with high air intake even further than the thermal testing had indicated.”
[64] On the other hand, Dr. Rice opines that the role of buoyancy forces in a convection process is generally considered to be of “fundamental importance and has a material effect on the resulting flow and heat transfer processes by those of skill in the art” (Exhibit D-16, para 31). Further, on page 17 of his expert report he underlines that “it is interesting to observe that Dr. Hollands makes no mention whatsoever in his report of the role buoyancy forces play in the performance of the UTP collector.” According to Dr. Rice, having an air intake near the top of the wall, such as the ‘619 patent, changes the performance of a system. In his opinion, the variants between claims 1 and 10 of the ‘619 patent and the MatrixAir system collector have a material effect on the way the invention works.
[65] With respect to both expert reports the Court finds that the probative value of Dr. Hollands’ report is seriously undermined and lessened by the contradictions and misinterpretations identified above.
[66] While Dr. Hollands states that there is no variant because of the terms used in the disclosure of the ‘619 patent. Dr. Rice clearly demonstrates that having the air inlet at the top of the panel would result in a better flow distribution.
[67] Other evidence clearly establishes the inferior performance of the MatrixAir system vis-à-vis the ‘619 patent because of the location of the air inlet at the bottom or below the midpoint of the panel. Mr. John Hollick stated, in examination on discovery, that there is a benefit lost in the MatrixAir system compared to the CONSERVAL system (the ‘619 patent) because “he is not collecting as much of the solar heat as he could be collecting had it been properly” (Exhibit D-15, page 46, lines 23 to 25). When asked where to place the inlet in the CONSERVAL system he replied near the top in order to have the benefit (Exhibit D-15, page 47, lines 5 to 10). During the same examination, when questioned on the performance of one system vis-à-vis the other and more precisely on their essential difference, Mr. Hollick stated that the essential difference is the positioning on the air intake and that this provides an essential benefit: “Well according to the EcoEnergy program, our system is rated 1.0 and the matrix system is rated at .86 so there’s the federal government recognized that we get at least 14 percent more energy that the Matrix system does” (Exhibit D-15, page 49, lines 20 to 25).
[68] Mr. Clark, the Manager of the EcoENERGY Program at Natural Resources Canada which provided an incentive of 25 percent of the installation and capital costs of solar energy collectors in commercial and institutional buildings, explained how the performance factors were attributed to the MatrixAir system and to the ‘619 patent system. The latter received a rating of 1.0 whereas the MatrixAir system received a rating of .86. The rating is based on the report by Bodycote which rated the performance factor of different systems (transcript, volume 4, pages 21 to 23). The difference of 14% is significant.
[69] The plaintiffs questioned the reliability of Dr. Rice’s testimony, arguing that his report is based solely on a theoretical model and not the actual system. According to the plaintiffs, the evidence presented showed systems where the air intake was actually closer to the middle. The Agreed Statement of Facts and Documents contained drawings for different installations. There was no evidence adduced by any witness on the actual physical location of an air intake in an installed MatrixAir system after March 31, 2007. The only testimony related to an existing installation was the Starbu