Bombardier Recreational Products Inc. v. Arctic Cat, Inc.

Bombardier Recreational Products Inc. v. Arctic Cat, Inc.
Court (s) Database
Federal Court Decisions
Date
2020-06-15
Neutral citation
2020 FC 691
File numbers
T-2025-11
Decision Content
Date: 20200615
Docket: T-2025-11
Citation: 2020 FC 691
Ottawa, Ontario, June 15, 2020
PRESENT: The Honourable Mr. Justice Roy
BETWEEN:
BOMBARDIER RECREATIONAL PRODUCTS INC.
Plaintiff/
Defendant by Counterclaim
and
ARCTIC CAT, INC. AND ARCTIC CAT SALES, INC.
Defendants/
Plaintiffs by Counterclaim
PUBLIC JUDGMENT AND REASONS
(Confidential Judgment and Reasons issued June 15, 2020)
[1] A ten-week trial resulted in a 607-paragraph judgment (2017 FC 207). Bombardier Recreational Products Inc. (BRP) alleged infringement of four of its patents by Arctic Cat., Inc., and Arctic Cat Sales, Inc. (AC). The four patents (2,293,106, 2,485,813, 2,411,964 and 2,350,264) all relate to snowmobiles. The first three patents claim a new configuration for a snowmobile, bringing the rider in a more forward position when sitting on a snowmobile. The fourth patent (2,350,264 or the 264 Patent) relates to a frame assembly to be used for vehicles, including snowmobiles. It is said that the design and construction of a frame will facilitate the construction of vehicles with an improved rider position.
[2] Out of 247 claims in the four patents in suit, 49 claims remained asserted at the end of the trial. In the result, the Court concluded that the asserted claims of patents 2,293,106, 2,485,813, and 2,411,964 are, and have been, invalid and are therefore void. As for the 264 Patent, the Court found that AC did not infringe the claims asserted by BRP because its snowmobiles did not have one of the essential constituent elements, the engine cradle.
[3] This Court’s decision was appealed to the Federal Court of Appeal. The Court of Appeal (2018 FCA 172) did not disrupt this Court’s judgment concerning the three patents concerned with the so-called “Rider Forward Position” patents. However, it found fault with the part of the judgment concerning the 264 Patent, the one relating to the frame construction. The Court of Appeal disagreed with this Court that the AC snowmobiles did not include an “engine cradle”, as required in the 264 Patent. As a result, the Court of Appeal remitted the matter back to this Court for a decision on whether the 264 Patent is valid (given this Court’s decision that the AC snowmobiles did not infringe the 264 Patent because they did not comprise the required “engine cradle”, the issue of the validity of the 264 Patent was not reached) and, if it is, what are the appropriate remedies.
[4] AC sought leave to appeal the Federal Court of Appeal decision. Leave was denied by the Supreme Court of Canada in May 2019.
[5] It follows that this Court must now address the issue of the validity of the 264 Patent. If the patent is valid, then the Court will determine what remedies are appropriate in the circumstances.
I. The initial Federal Court decision
[6] In December 2011, Bombardier Recreational Products Inc. (Bombardier), a manufacturer of snowmobiles with its headquarters in Canada, commenced an action for infringement under the Patent Act (RSC, 1985, c P 4) against Arctic Cat, Inc. and its wholly-owned subsidiary, Arctic Cat Sales, Inc. (Arctic Cat), with respect to Canadian Patents 2,293,106 (the 106 Patent), 2,485,813 (the 813 Patent), 2,411,964 (the 964 Patent) and 2,350,264 (the 264 Patent).
[7] There were two types of patents in play in the case. Patent 264 is concerned with the frame assembly to be used in the construction of vehicles such as snowmobiles and all-terrain vehicles, while Patents 106, 813 and 964 (collectively referred to as the Rider Forward Position Patents or RFP Patents) relate to similar purported inventions, essentially resulting in new configurations for a snowmobile, bringing the rider in a more forward position when sitting on the snowmobile.
[8] On February 24, 2017, in Bombardier Recreational Products Inc v Arctic Cat Inc, 2017 FC 207, the Federal Court dismissed Bombardier’s action for infringement of patents. The Court concluded that the 264 Patent was not infringed by Arctic Cat because the accused snowmobiles have not been shown to have one of the essential elements of the invention as claimed, the “engine cradle” of the 264 Patent. As for the RFP Patents, the Federal Court concluded that although Bombardier established that various models of snowmobiles sold by Arctic Cat infringed some claims of each of these three Patents, the claims were invalid. In fact, the Court held that the 106 Patent, the 813 Patent and the 964 Patent do not comply with s. 27(3) of the Patent Act in that their disclosure does not meet the conditions that they describe the invention and define the way they are produced or built. It followed that the Federal Court issued a declaration of invalidity of the asserted claims.
[9] The Court found that although the disclosure in the 264 Patent is broad enough to include vehicles other than snowmobiles, the claims are limited to the frame assembly of snowmobiles. Given that the invention seeks to enhance the ruggedness of vehicles that operate across a wide variety of different terrains and under a variety of conditions, but that the claims that fence the monopoly sought are restricted to snowmobiles, the Court found that the 264 Patent is addressed at persons of skill who must understand the type of vehicle that is to be improved through this invention. Therefore, it would be appropriate for the person of skill in the art (POSITA) to have experience in the field of snowmobile design, at least; the person of skill will certainly have mechanical engineering expertise or the equivalent expertise acquired through many years of experience in the design of snowmobiles.
[10] Following the determination of the characteristics of the POSITA, the Federal Court had to establish what would have been their common general knowledge. The Court held that the POSITA knows that snowmobiles have seats of a straddling nature, sideboards of various configurations used by riders to set their feet and steering device connected to the skis. Also, the POSITA would have known about two commonly used terms, “engine cradles” and “tunnels”, and about the snowmobile using a seat that is of the straddling variety. The POSITA would know that snowmobiles do not use rear engines: the rider will have the engine in front of him. Furthermore, the fact that the design of most snowmobiles in the 1980’s and 1990’s was quite similar would have been common knowledge. The differences were more stylistic than anything else. The POSITA would also know about the laws of physics as part as the general knowledge; the concepts of center of gravity, mass centralization and moment of inertia are not new and would have been well known to mechanical engineers. The POSITA would also be familiar with chassis rigidity, and with various methods to increase rigidity. Given the POSITA’s experience with the operation of snowmobiles, the Court determined that she is familiar with snowmobile riding, and accordingly knows about active riding. The POSITA must have an understanding of human factors or biomechanics in designing a new vehicle such as a snowmobile because the position of the rider changes, from ride to ride and during rides.
[11] With these considerations in mind, the Federal Court interpreted a number of terms that were seen as being essential to the Patent. A number of terms found in the 264 Patent required that they be interpreted. They were (a) “engine cradle forward of the tunnel”, (b) “sub-frame”; “sub-frame forward of the engine cradle”; “a frame including a sub-frame at the front of an engine cradle”, (c) “upper column extending upwardly from the frame”, (d) “pyramidal brace assembly”, (e) “form an apex not forward of the engine” and (f) “legs”. This Court gave the terms “snowmobile” and “straddle seat disposed on the tunnel” the same meanings as presented in the other three Patents.
[12] Following the construction of the claims, the Federal Court examined the possible infringement of the four Patents-in-suit. Upon its review of the 264 Patent, the Court concluded that it considers exclusively a walled engine cradle. In the Federal Court’s view, that distinguished the AC snowmobiles that did not use walled engine cradles; as a result, Bombardier had not discharged its burden on a balance of probabilities that the engines of the Arctic Cat snowmobiles are located in an “engine cradle” in accordance with the 264 Patent. That was sufficient to dispose of the issue. The Court of Appeal disagreed.
[13] With regard to the three other patents, the argument brought forward by Arctic Cat was that the RFP Patents are invalid by reason of insufficiency and ambiguity. In the Court’s view, the Patents lack the details and parameters to know what the invention is and to put the invention into practice. In fact, the weight of the evidence favoured clearly the proposition that the disclosure does not tell the skilled person how to reconfigure the snowmobile or even what that reconfiguration might be. The absence of indication as to how the new snowmobile is constructed in order to facilitate the new position leads to the RFP Patents claiming a result. The actions in infringement of the four patents were dismissed with costs.
II. The appeal
[14] Bombardier argued before the Federal Court of Appeal that the Court erred: (1) in finding that the disclosure of the RFP Patents was insufficient and (2) by limiting the ordinary meaning of the term of the art “engine cradle” to the type of engine cradle described in the preferred embodiments section of the 264 Patent.
[15] The Appellate Court dismissed the argument on insufficiency, determining that portion of the appeal on the basis of whether or not the disclosures of the RFP Patents were sufficient to enable the POSITA to practice the invention covered in the claims at issue. The Federal Court of Appeal found that the conclusions reached by this Court “were open to it on the evidentiary record” and that this Court did not make “a palpable and overriding error in concluding that, to practice the invention claimed in each of the RFP Patents, the POSITA would have to undertake a major research project (i.e. undue efforts) because of the lack of sufficient instructions in the disclosures of the RFP Patents” (at para 95).
[16] On the other hand, the Appellate Court did find that there was ground to allow the appeal in respect of the meaning of the term of the art “engine cradle”. The Federal Court of Appeal disagreed with the Federal Court’s interpretation of the claims at issue.
[17] First, the Appellate Court stated that in interpreting the language of the claims in the 264 Patent, “a frame including a tunnel and an engine cradle forward of the tunnel”, and more specifically the term “engine cradle”, “one must seek to determine the objective intention as it was expressed in the patent itself, and as would be understood by the person to whom it is addressed (Free World Trust at paras 58-67; Whirlpool Corp. at para 49)” (FCA decision at para 23). Thus, a Court should only consider “proper evidence as to how the POSITA would understand it in light of his or her relevant common general knowledge in the context of the specification as a whole” (FCA decision at para 24). Extrinsic evidence, such as other patents, patent applications or the testimony of the inventors are not considered “proper evidence” and cannot inform the construction of the claims. Given that the Federal Court defined the POSITA with respect to the 264 Patent as a person with “experience in the field of snowmobile design” and “mechanical engineering expertise or the equivalent expertise acquired through many years of experience in the design of snowmobiles” (FC decision at para 283), the Federal Court of Appeal considered that the evidence of an expert in mechanical engineering and vehicle design, including the design of vehicle frames, on whom the trial judge relied could not be given any weight. During cross-examination, the expert confirmed that he never worked on snowmobiles and that his understanding of what an “engine cradle” is was acquired early on during the 33 years he worked on tractors and large equipment in the agricultural field (FCA decision at para 32). In the Federal Court of Appeal’s view, “[the expert] may well have been provided with prior art by Arctic Cat’s counsel, but this could not in any way qualify him to speak to the common general knowledge of the POSITA in 2000 including the meaning of a term of the art used in the claims” (para 33).
[18] The Federal Court of Appeal found that this Court “could only conclude that the term of the art [“engine cradle”] would refer to any rigid structure which acts as a receptacle or compartment to receive the engine, which can also be a component of the frame” and that, as stated in BRP Expert Report, the term could be a structure delimited by solid walls, or alternatively an open structure (para 34). The Federal Court of Appeal stated that the ordinary meaning of “engine cradle” was not limited by any definition in the disclosure of the 264 Patent and that the disclosure “made clear that the preferred embodiments did not exhaust the invention claimed” (para 43). In addition, the Appellate Court stated that paragraph 00112 of the disclosure, which “explains that an advantage of the pyramidal frame assembly included in all the claims of the 264 Patent is that it adds strength and rigidity to the overall frame, so that the panels that make up the tunnel and engine cradle need not be as strong”, supports “the view that other commonly known configurations for the engine cradle, whether with lower or thinner walls, walls with very large openings or no walls at all, could also be included in the claims as worded” (para 48).
[19] In sum, the Federal Court of Appeal found that the term “engine cradle” is not limited to a variety that included walls. As such, the term could not be limited to the preferred embodiments described and depicted in the specification because those limitations were not written into the claims. The conclusion of the Federal Court to the effect that Arctic Cat did not infringe the 264 Patent was therefore quashed. The Federal Court was asked to deal with the remanded issue of the validity of the 264 Patent and potential remedies arising from its infringement.
[20] Arctic Cat sought leave to appeal the decision of the Federal Court of Appeal on infringement to the Supreme Court of Canada, but leave was denied on May 16, 2019.
[21] Before addressing the two issues remanded to this Court by the Federal Court of Appeal, a preliminary issue must be addressed: Arctic Cat seeks to amend its statement of defence and counterclaim. The motion was evidently resisted by BRP. The issues of the validity of the 264 Patent and the appropriate remedy for the infringement of the Patent, or some of its claims, if ruled valid will follow.
III. Motion to amend the statement of defence and counterclaim
[22] After a ten-week trial, an appeal that went in part against AC and an unsuccessful leave application before the Supreme Court of Canada, AC now seeks to amend its statement of defence and counterclaim.
[23] In its motion, Arctic Cat seeks to deliver a Fresh as Amended Statement of Defence and Counterclaim. More specifically, Arctic Cat “seeks to amends [sic] its Fresh as Amended Stated [sic] of Defence and Counterclaim, dated January 9, 2015, prior to the remand hearing before this Court, to include an allegation that Bombardier is estopped from arguing that the T/S Mod snowmobile, which was prior art that Arctic Cat had relied in the Canadian proceeding, fails to disclose all elements claimed in claim 1 of the 264 Patent” (Notice of Motion, p 2 at para 5). That, argues AC, renders it anticipated and obvious. Issue estoppel applies to preclude re-litigation of an issue which has been conclusively and finally decided in previous litigation between the same parties or their privies. Arctic Cat argues that issue estoppel applies because of a final decision of the United States District Court for the District of Minnesota, where in Arctic Cat’s view, the same substantive issue was litigated. This appears to be quite a novel proposition in its scope. A Canadian Court would be prevented from deciding an issue before it under Canadian law because a foreign court, in foreign proceedings under a foreign law, would already have decided the issue. To make the matter even more unusual, that matter has been decided by a jury in the state of Minnesota, without the jury having given a clear understanding of the reasons for so doing, given that juries do not give reasons.
Motion to amend
[24] It is not disputed that motions to amend are governed by rule 75 of the Federal Courts Rules, SOR/98-106. Given that the motion comes after the hearing of the case has concluded, rule 75(2) would apply. It reads:
Limitation
Conditions
75(2) No amendment shall be allowed under subsection (1) during or after a hearing unless
75(2) L'autorisation visée au paragraphe (1) ne peut être accordée pendant ou après une audience que si, selon le cas:
(a) the purpose is to make the document accord with the issues at the hearing;
a) l'objet de la modification est de faire concorder le document avec les questions en litige à l'audience;
(b) a new hearing is ordered; or
b) une nouvelle audience est ordonnée;
(c) the other parties are given an opportunity for any preparation necessary to meet any new or amended allegations.
c) les autres parties se voient justice is done on the facts of a particular casede prendre les mesures préparatoires nécessaires pour donner suite aux prétentions nouvelles ou révisées.
[25] Canderel Ltd. v Canada, [1994] 1 FC 3 continues to be the authority for the proposition that amendments ought to be authorized “at any stage of an action for the purpose of determining the real question in controversy between the parties, provided, notably, to do so would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice” (p. 10) (see Enercorp Sand Solutions Inc. v Specialized Desanders Inc., 2018 FCA 215 [Enercorp Sand Solutions], at para 19). However, before reaching that stage, there is a threshold issue that must be crossed by AC. An amendment must first be shown to have a reasonable prospect of success. As the Federal Court of Appeal put it so eloquently in Teva Canada Limited v Gilead Sciences Inc., 2016 FCA 176 [Gilead Sciences Inc.], “it makes no sense for a court to allow an amendment that is doomed to fail” (para 28).
[26] The reasonable prospect of success has become a threshold issue. That threshold issue examination requires more than a mathematical chance of success. In Gilead Sciences Inc., the Court states that “(i)n deciding whether an amendment has a reasonable prospect of success, its chances of success must be examined in the context of the law and the litigation process, and a realistic view must be taken” (para 30, authorities omitted). In my view, AC failed to satisfy that threshold.
[27] It will therefore not be necessary to consider the balancing of various factors in determining what will better serve the interests of justice. Nevertheless, it is not without interest to note what some of these factors may be. In Janssen Inc. v Abbvie Corporation, 2014 FCA 242, 131 CPR (4th) 128, and later in Enercorp Sand Solutions (supra), the Court of Appeal agreed with the Tax Court:
[3] On a motion to amend, the applicable test is that taught by the case of Continental Bank Leasing Corp. v. R., [1993] T.C.J. No. 18, (1993) 93 DTC 298 at page 302, [Continental], cited by our Court in Merck & Co. Inc. v. Apotex Inc., 2003 FCA 488, [2004] 2 F.C.R. 459 leave to appeal to S.C.C. refused, 30193 (May 6, 2004) (see Judge’s reasons in A-380-13 at paragraph 10):
[…] I prefer to put the matter on a broader basis: whether it is more consonant with the interests of justice that the withdrawal or amendment be permitted or that it be denied. The tests mentioned in cases in other courts are of course helpful but other factors should also be emphasized, including the timeliness of the motion to amend or withdraw, the extent to which the proposed amendments would delay the expeditious trial of the matter, the extent to which a position taken originally by one party has led another party to follow a course of action in the litigation which it would be difficult or impossible to alter and whether the amendments sought will facilitate the court’s consideration of the true substance of the dispute on its merits. No single factor predominates nor is its presence or absence necessarily determinative. All must be assigned their proper weight in the context of the particular case. Ultimately, it boils down to a consideration of simple fairness, common sense and the interest that the courts have that justice be done. [Emphasis added.]
B. AC’s argument
[28] An examination of the prospect of success must start with an understanding of the motion and its context.
[29] On December 15, 2011, the same day that Bombardier commenced the action for infringement against Arctic Cat in Canada, it also commenced an action in the United States, with respect to four patents. At issue, among other things, was the validity and infringement of United States Patent No. 7,124,847 (the US 847 Patent). The litigation was filed in the District Court for the Northern District of Illinois, but Arctic Cat successfully brought a motion to transfer the case to the District Court of Minnesota. The United States proceedings went to trial before a jury of the Minnesota District Court in late 2017 and after a three-week trial, on December 6, 2017, the jury returned a verdict in Arctic Cat’s favour.
[30] According to AC, BRP is now estopped in Canada by the jury verdict because the issue of the validity of claim 1 of the 264 Patent has been decided by a jury verdict in the case of a US Patent equivalent to the Canadian 264 Patent, the jury having found, in the view of AC, that it had been anticipated and obvious in light of the T/S Mod snowmobile.
[31] In support of its motion, AC offered the evidence of two witnesses. Niall A. MacLeod is an American lawyer involved in the litigation in Minnesota as lead counsel on behalf of AC. He provided information about the trial, including motions by BRP and AC for partial summary judgment (AC’s motion was denied). After a three-week trial, the jury found that claims 1 and 6 to 8 of the US Patent were invalid on grounds of anticipation or obviousness. The witness is careful to state only that an actual T/S Mod snowmobile was available to view and inspect. Following the verdict, both BRP and AC moved post-trial motions for judgment as a matter of law; they were both denied. In particular, the District Court found that there “was sufficient evidence from which a jury could have found by clear and convincing evidence that claims 1 and 6 of the ‘847 Patent are anticipated by the T/S Mod snowmobile” (US District Court judgment, P. 20-21, Exhibit “D” of the MacLeod affidavit). I note that the witness never goes beyond what was stated in the judgment: “sufficient evidence from which a jury could have found by clear and convincing evidence that …”. The Court never substitutes itself for the jury or endorses the finding.
[32] The same language is used for obviousness, except that it relates to claims 1 and 6 to 8 of the ‘847 Patent.
[33] Mr. MacLeod contends that BRP did not challenge the finding of anticipation of claim 1 which, in his view, constitutes a concession.
[34] The second affidavit is that of John Whealan, the Intellectual Property Advisory Board Associate Dean for Intellectual Property Law Studies at the George Washington University Law School. He testifies as to the US Patent law on anticipation and the finality of the decision, and finding that claim 1 of the US 847 Patent is anticipated. He says so at paragraph 47 of his affidavit because the District Court found that “every element of claim 1 was disclosed in the T/S Mod snowmobile”. He further states that the “District Court’s determination of anticipation is a question of fact, and is not a question of law”. Indeed, that was the determination made by the jury.
[35] AC’s motion boils down to arguing that the US Patent and the Canadian Patent are “equivalent”. At the US trial, they contended that claims of US Patent 847 were anticipated by the T/S Mod snowmobile. The District Court judge having ruled after the trial that there was sufficient evidence from which the jury could have found by clear and convincing evidence that claim 1 was anticipated (AC refers to some terms having been constructed, such as “pyramidal brace assembly”, “apex”, “upper column”, but some that were not constructed such as “snowmobile” and “skis” were left to the jury to appreciate), AC appears content to argue the Canadian issue estoppel framework applies on that basis.
[36] In the view of AC, it does not seem to matter that the decision it invokes is that of a jury which does not explain how the verdict was arrived at, in a foreign jurisdiction that applies its own law (defined by its witness Whealan as “statutes, regulations, and case law decisions by the federal courts (and in particular the US Supreme Court and the Federal Circuit)” (Whealan affidavit, para 50). As is well known, the issue estoppel framework in Canada was confirmed in Danyluk v Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 460 [Danyluk], at para 25.
25 The preconditions to the operation of issue estoppel were set out by Dickson J. in Angle, supra, at p. 254:
(1) that the same question has been decided;
(2) that the judicial decision which is said to create the estoppel was final; and,
(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies
[37] At its highest, AC contends that the law of anticipation in the US mirrors that in Canada. Surprisingly, it cannot refer to any patent case in Canada where the issue estoppel argument has been successful. It has to rely on one Canadian case, Connaught Laboratories Limited v Medeva Pharma Limited, (1999) FTR 200 (FCTD), aff’d (2000) 256 NR 393 (FCAD), Federal Court Trial Division, T-1578-96, December 17, 1999 [Connaught] for the proposition that issue estoppel may apply. In that case, the Court referred to an obiter of Aldous L.J. of the England and Wales Court of Appeal who left open the possibility that issue estoppel might be viable in appropriate cases, which appear to be in relatively narrow appropriate circumstances:
[…] I envisage cases where issue estoppel will arise in patent actions. For instances, the same issue can arise in different countries of the world, for example whether a particular scientific effect occurs when the invention or a manufacturing process is carried out or how an infringing product is made, or the properties of a product or its composition. Thus this judgment should not be taken as concluding that issue estoppel has no place in patent actions. To the contrary, I believe that it does in appropriate cases.
(Kirin-Amgen Inc. v Boehringer Mannheim GMBH, [1997] FSR 289, at p. 314)
[My emphasis.]
Lord Reid, in the House of Lords, had rung a similar caution bell thirty years earlier in Carl-Zeiss-Stiftung v Rayner and Keeler, Ltd and others (No. 2), [1966] 2 All ER 536 [Carl-Zeiss-Stiftung], at p. 555:
I can see no reason in principle why we should deny the possibility of issue estoppel based on a foreign judgment, but there appear to me to be at least three reasons for being cautious in any particular case. In the first place, we are not familiar with the modes of procedure in many foreign countries, and it may not be easy to be sure that a particular issue has been decided or that its decision was a basis of the foreign judgment and not merely collateral or obiter.
[My emphasis.]
Connaught agrees that the issue estoppel plea may be available. But the circumstances in which the plea may be available appear to be narrow. Thus, in the final analysis, it seems that the Connaught decision relates to a narrow set of circumstances where the plea might be considered. One reads at paragraph 25:
[25] I accept that inconsistent results may be inevitable due to differences in the substantive and procedural laws relating to patents. In the final analysis, the validity of a patent granted by the laws of Canada cannot be determined by the legal regime in another country.
[My emphasis.]
It is thus not surprising that there does not appear to be one patent case that can be cited in support of the broad proposition advanced by AC, since the authorities on which AC relies stopped well short. In effect, they are not authorities that could support an argument that a jury decision in a foreign jurisdiction could prevent a Canadian court from considering a matter under Canadian law. In the following paragraph, the Court seems to limit significantly the ambit of what was considered in the case:
[26] However, I do not understand why inconsistencies in findings of fact made by different tribunals should be tolerated if they can be avoided without offending the substantive law or procedural norms. Connaught is simply attempting to argue in this case that it is wrong in principle for Medeva to be permitted to take inconsistent position on specific questions of fact that are in issue in this case and that have already been litigated elsewhere.
[My emphasis.]
[38] Given the limited scope of these authorities on which AC relies, what does AC argue, how does it thread the needle? In effect, AC simply claims that Canadian courts have repeatedly held that issue estoppel is available in patent litigation. It does not address the prospect of success threshold, but rather argues that it is not plain and obvious, the test for a motion to strike, that the allegation of issue estoppel will fail.
[39] Considering the plea itself, AC addresses the Danyluk three-prong test. That the parties are the same in the Canadian and the American proceedings is not disputed. AC also appears to be concerned that there was an appeal pending before the US Court of Appeal for the Federal circuit. However, BRP did not appeal the decision on claim 1 of the US Patent 847 and that makes that decision final. AC also suggests that there is a precedent that an appeal alone does not turn a final decision into something else.
[40] The more difficult issue is whether or not the same question has been decided. AC’s argument is to plead a common ancestry to 817 (and 264), and the alleged similarity of the law of anticipation in Canada and the US. That should be enough, it argues, to disallow BRP from arguing that claim 1 of the 264 Patent is not anticipated. Finally, AC suggests that the American case required a higher level of burden of proof because of the clear and convincing evidence requirement. On this front, that argument can be disposed of quickly as it does not account for the Supreme Court of Canada decision in Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, [2016] 2 SCR 720 [Fairmont], where the Court confirms again that there is one civil standard of proof (balance of probabilities) in Canada. However, the burden should not be confused for the quality of the evidence required for the burden to be discharged. The Court in Fairmont re-asserts, at paragraph 36, that “evidence must always be sufficiently clear, convincing and cogent” (F.H. v McDougall, 2008 SCC 53, [2008] 3 SCR 41, at para 46) to satisfy the balance of probabilities test. It is less than clear that the American standard is in any way different from ours. The “clear and convincing evidence” requirement would appear to be common to the jurisdictions.
[41] AC did not address either the admonition in Danyluk that the “rules governing issue estoppel should not be mechanically applied” because the purpose of the plea “is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case” (para 33).
C. BRP’s argument
[42] As was to be expected, BRP does not see eye to eye with AC. In a rhetorical flourish, it starts by declaring it “astonishing that an American company would suggest that a federally-appointed Canadian judge must defer to a jury of lay people in Minnesota who assessed anticipation under American law” (Memorandum of Fact and Law, para 1). BRP then proceeds to offer legal arguments in what appears to be a cascading way.
[43] BRP offered the affidavit evidence of Robert Groethals, a counsel for BRP in the American litigation. He explained that the parties submitted to the Court 31 terms for construction. However, the number of terms was reduced to a total of 10 with respect to all patents in suit, not only US Patent 847: as a result, the terms “skis” and “snowmobile” were not construed by the District Court judge. In his instructions to the jury, the trial judge asked the jurors to apply their common meaning to words in claims for which a definition was not otherwise provided.
[44] The witness testified that the summary judgment motion of AC sought a judgment that the US frame patent claims were invalid due to anticipation and obviousness by the T/S Mob snowmobile: one reason given for rejecting the motion was that the testimony of one witness behind the T/S Mob snowmobile was “ “far from uncontroverted” and did not constitute clear and convincing evidence of anticipation” (Goethals’ affidavit, para 29).
[45] At trial, the jury was not charged on foreign law. In fact, counsel were instructed by the Court not to refer to the “status or substance” of the Canadian litigation.
[46] On anticipation and obviousness, it is not only the T/S Mob snowmobile that was left as prior art with the jury, but four more prior art snowmobiles. BRP was denied by the Court the ability to have listed in the verdict which prior art was the basis for the verdict of invalidity.
[47] The post-trial Motions for judgment as a matter of law are limited to ascertaining if there is legally sufficient evidence to sustain the verdict. In response to BRP’s argument that there was insufficient evidence to reach a conclusion that the US frame patent was anticipated, AC contended that either the T/S Mob snowmobile or the Blade could support the verdict. BRP argues that no one knows how the jury reached its verdict and what prior art was factored in.
[48] BRP has not appealed the finding that claim 1 of the US Patent 847 is anticipated, but it appealed the finding that claim 6 was anticipated. Moreover, the finding that claims 1 and 6 to 8 are obvious was appealed.
[49] It is asserted that neither one of the AC witnesses on the motion to amend was qualified as an expert in Canadian comparative law: there is therefore no evidence on the equivalence of Canadian and US patent law.
[50] For BRP, the threshold issue of whether the amendments sought by AC have a reasonable prospect of success should be resolved with a resounding “no”. For starters, it is not the same question that is to be decided. The issue estoppel based on a US jury verdict cannot apply to an anticipation of claim 1 of the Canadian 264 Patent. A US verdict concerning the validity of a US patent under US law, where Canadian law is prohibited from even being mentioned, cannot be the same question that must be determined pursuant to Canadian law as per the evidence led, and admissible, in a Canadian court.
[51] Our courts, claims BRP, have long held that foreign patent litigation does not create a plea of issue estoppel with respect to the validity of a Canadian patent. The Court is referred to Lubrizol Corp. v Imperial Oil Ltd., [1992] FCJ No 1110 (FCA); Apotex Inc. v Wellcome Foundation Ltd., [1998] FCJ 382 (TD). The Supreme Court in that case (2002 SCC 77, [2002] 4 SCR 153) found that “given the differences in our respective patent laws, the outcome of the US litigation on this patent is of limited interest” (para 40). That appears to reflect the general attitude in Canada.
[52] The attitude is not really displaced by Connaught, a decision of this Court now more than twenty years old, on which AC relies. First, the Connaught Court recognized that “the validity of a patent granted by the laws of Canada cannot be determined by the legal regime in another country” (Connaught, para 25). What Connaught authorizes is issue estoppel regarding purely factual findings. In Connaught, the Court found support for that kind of an overture in English case law (Ardous L.J.) discussing only factual findings, and not claims construction and more generally national patent law, whether that be concerning infringement or validity.
[53] BRP then goes on to refer to cases since Connaught which have all refused to be bound by foreign courts dealing with corresponding patents (Eli Lilly Canada Inc. v Apotex Inc., 2007 FC 455; Johnson & Johnson Inc. v Boston Scientific Ltd., 2008 FC 552; Eli Lilly Canada Inc. v Mylan Pharmaceuticals ULC, 2015 FC 17). Of particular interest, in the view of BRP, is E. Mishan & Sons, Inc. v Supertek Canada Inc., 2015 FCA 163:
[7] Just as the case before the Court in Australia was to be decided based on the evidence presented to that Court and the applicable law of Australia, the decision of the Federal Court Judge was to have been made based on the evidence presented in the proceeding before him and the applicable law of Canada. Therefore, the decisions rendered in Australia and the United Kingdom are of little assistance in this appeal.
[54] That appears to coincide with the view expressed by American authorities. A foreign decision addressed a different question, thus running afoul of Danyluk. In Stein and Associates Inc v Heat and Control Inc, 748 F. 2d 653, the Federal Circuit found, at para 7:
Only a British court, applying British law, can determine validity and infringement of British patents. British law being different from our own, and British and United States courts being independent of each other, resolution of the question of whether the United States patents are valid could have no binding effect on the British court’s decision.
Similarly, if the decision in the District Court can constitute issue estoppel in Canada, that would plainly mean that an American Court would be ruling on a Canadian patent. The policy considerations at play are the same as what was found in Voda v Condis Corp, 476 F3d 887 where the Federal Circuit, under the subtitle Comity And Relations Between Sovereigns, wrote:
… First, Voda has not identified any international duty, and we have found none, that would require our judicial system to adjudicate foreign patent infringement claims. As discussed supra Part III.A.2.a, while the United States has entered into the Paris Convention, the PCT, and the Agreement on TRIPS, nothing in those treaties contemplates or allows one jurisdiction to adjudicate the patents of another. ... Third, with respect to the rights of our citizens, Voda has not shown that foreign courts will inadequately protect his foreign patent rights. Indeed, we see no reason why American courts should supplant British, Canadian, French, or German courts in interpreting and enforcing British, Canadian, European, French, or German patents. Cf. Empagran, 542 U.S. at 165, 124 S.Ct. 2359 (finding no reason to allow "American [antitrust] law [to] supplant, for example, Canada's or Great Britain's or Japan's own determination about how best to protect Canadian or British or Japanese customers from anticompetitive conduct").
[55] BRP claims that the differences between the Canadian and American jurisdictions, rele