Bauer Hockey Corp. v. Easton Sports Canada Inc.

Bauer Hockey Corp. v. Easton Sports Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2010-08-26
Neutral citation
2010 FC 361
File numbers
T-237-02
Notes
Digest
Decision Content
Date: 20100826
Docket: T-237-02
Citation: 2010 FC 361
Ottawa, Ontario, August 26, 2010
PRESENT: The Honourable Justice Johanne Gauthier
BETWEEN:
BAUER HOCKEY CORP.
and NIKE INTERNATIONAL LIMITED
Plaintiffs/
Defendants by Counterclaim
and
EASTON SPORTS CANADA INC.
Defendant/
Plaintiff by Counterclaim
AMENDED REASONS FOR JUDGMENT AND JUDGMENT
[1] The two Plaintiffs in this action claim that their rights under “Quarter for Skate Boot”, Can. Patent No. 2302953, PCT Patent No. PCT/CA9800845 (4 September 1998) (the ‘953 Patent) were infringed by Easton Sports Canada Inc. (Easton) by the manufacture and sale in Canada of a number of skate models. Further, they claim that Easton has induced others to infringe the ‘953 Patent.
[2] The Plaintiff, Bauer Hockey Corp., is the owner of the ‘953 Patent.[1] It is a company specializing in the manufacture and marketing of hockey equipment, including ice hockey skates.[2] The company underwent many corporate changes and has been formerly known under several corporate names since the 1930s, including Greb Industries, Gamebridge, Warrington, Canstar, Bauer Nike, Nike Bauer and Bauer (generally referred to as “Bauer”).[3] In 1995, Nike, Inc. became the owner of Bauer.
[3] The ‘953 Patent application (PCT) was filed on September 4, 1998 and was issued to Bauer Nike Hockey Inc. on November 20, 2001. It expires on September 4, 2018.
[4] On October 31, 2002, the patent was assigned from Bauer Nike Hockey Inc. to an affiliate of Nike Inc., Nike International Limited, the second Plaintiff in this suit. Bauer’s predecessors-in-title, namely Bauer Nike Inc., Nike Bauer Hockey Inc., Nike Bauer Hockey Corp. were, successively, the exclusive licensees under the ‘953 Patent. On April 16, 2008, the ‘953 Patent was assigned from Nike International Limited to Nike Bauer Hockey Corp.
[5] On October 1, 2008, following a series of corporate changes, Nike Bauer Hockey Corp. became Bauer Hockey Corp. On October 13, 2009, the Plaintiffs were granted leave to amend their Further Amended Statement of Claim in the current proceeding to reflect the recent corporate changes of Bauer.
[6] Easton was incorporated under the laws of Canada in 1986. It is the subsidiary of the American company Easton Sports, Inc. (Easton U.S.), which was founded in the 1920s.[4] Easton is a manufacturer and distributor of sports equipment, including hockey equipment.[5] Easton was particularly successful with their innovative composite hockey stick. In 1997, Easton decided to get into the skate business and their first skate was launched in time for the 1998 season.
[7] The invention described in the patent-in-suit was made during what will be referred to as the Vapor Project, a research and development (R&D) project at Bauer which led to the development of their Vapor line of skates, including particularly the Vapor 8. This skate was launched in the middle of the 1997-1998 hockey season.
[8] Following the launch of Bauer’s Vapor skate line, at least one element of the ‘953 Patent, namely the one-piece quarter, was incorporated into other models of Bauer skates as well as roller skates including Mission[6] roller skates.[7]
[9] Bauer alleges that there are 38 Easton skate models that infringed on its rights under the ‘953 Patent. On December 2, 2001, the Plaintiffs’ counsel sent a cease and desist letter to Easton. The present proceedings were instituted on February 14, 2002.
[10] Pursuant to a Bifurcation Order of Justice Frederick E. Gibson dated December 17, 2002, questions about the quantum of damages, accounting of profits or reasonable compensation, if any, are to be determined after trial. Similarly, as will be mentioned later on, any question regarding apportionment is also a matter to be determined by the reference judge.
[11] On June 6, 2007, the parties filed a Joint List of Issues to be determined at trial, which included: determination of the proper construction of the claims of the ‘953 Patent, whether any of the Defendant’s skates infringe the claims; whether the Defendant induced or procured Les Chaussures Rock Forest Inc. (Rock Forest) and/or Sakurai Sports MFG. Co., Ltd. (Sakurai) to infringe the ‘953 Patent;[8] and whether any of the claims were invalid for a variety of reasons which during the final arguments the Defendant narrowed down to include only: anticipation, obviousness, lack of clarity, inutility and misleading statements.[9]
INDEX
Heading Para. No.
I. The Evidence 12
II. General Background
A. The Hockey Skate Market 74
B. Types of Skates 83
C. Skate Components 88
D. Evolution of the Hockey Skate Construction 93
E. Easton Skates 103
III. Patent Construction
A. The Legal Test 110
B. Person Ordinarily Skilled in the Art 112
C. Common General Knowledge Principles 123
D. Analysis 124
IV. Infringement
A. Burden 169
B. Analysis 172
V. Invalidity
A. Standard of Review and Burden of Proof 210
B. Anticipation 211
C. Obviousness
(1) The Legal Test 222
(2) The Person Ordinarily Skilled in the Art 224
(3) Relevant Common General Knowledge 225
(4) Climate in the Industry 237
(5) Prior Art 241
(6) Inventive Concept 250
(7) The Differences between the Common General Knowledge and the
Above-Mentioned Prior Art and the Inventive Concept 252
(8) Would the Difference be Obvious to the Ordinary Person Skilled in the Art? 253
D. Lack of Utility 285
E. Misleading Representations subsection 53(1) of the Patent Act 323
VI. Remedies, Interest and Costs 337
I. The Evidence
[12] Bauer relied on the evidence of eight lay witnesses: Tim Pearson, Ken Covo, François Chênevert, Chris Langevin, Stephen Murphy, Marc Gagnon, Lawrence Weber and Lorraine Banton.
[13] Tim Pearson is currently the Director of Business Process at Bauer; he has been an employee of the company since 1990. Prior to joining Bauer, he worked in a large hockey and golf retailer, Gus Maue, from 1977 to 1990, where he held the position of manager and buyer for about 10 years.
[14] Mr. Pearson discussed the main brands of hockey skates as well as their historical and current sales and market shares, both on the consumer market and in the National Hockey League (NHL). He also discussed returns of skates by the consumers at Gus Maue and at Bauer and introduced into evidence a series of spreadsheets showing the number of returns for different Bauer skates for the years 1999, 2000, 2001 and 2002 (exhibits TX-487[10] to TX-494). Other confidential exhibits relating to sales, skate distribution, skate returns and skate weights were also put into evidence during the course of his testimony.
[15] Ken Covo obtained his Bachelor of Engineering from McGill University in 1982 and studied part-time a Masters in Arts in Educational Technology from Concordia University around 1990. He is Bauer’s Senior Director of Research and Development, a position he has held since 2003. He has been working at Bauer since January 1995, and has occupied various management positions in product development or R&D. He had no previous experience with skates or footwear in general prior to joining the company.
[16] Mr. Covo’s testimony mainly concerned the R&D Department at Bauer as well as the Super Light and the Vapor Project. Specifically, he discussed the Vapor 8 skate and the importance of the one-piece quarter in subsequent Bauer skate models.
[17] On cross-examination, Mr. Covo was questioned on the difficulties encountered with the Vapor 8 skate. He discussed the Bauer Athlete’s Event, including the existence of confidentiality agreements as well as the handling of the tested products. The purpose of the Athlete’s Event was to show NHL players and get them to try new products and gather their feedback. The two industrial designs that were filed by Bauer under no. 88047 and no. 88048 to protect the skate designs developed as part of the Vapor Project were introduced in evidence during his cross-examination (TX-624 and TX-625 respectively).
[18] François Chênevert graduated in industrial design from the University of Montreal in 1990. He is the inventor listed in the ‘953 Patent. When he joined Bauer in 1994, he had no previous experience in skates or in footwear. At first, for a period of about six months, he worked with Alain Renaud, a very experienced skate patternmaker, who taught him the techniques of patternmaking. Thereafter, he worked on different R&D projects, including a project relating to inline skates. In September 1996, he became involved in the Vapor Project on which he worked almost exclusively until August 1997. He worked on this project with a large team that included Gaétan Champagne, Jean-Claude Lefebvre, Chris Langevin, Gerry Black and Ken Covo. He left Bauer in 2001 to work at BRP[11] where he began his employment in the snowmobile accessories department.
[19] Mr. Chênevert testified about the process that led him to the conception of the invention covered by the patent-in-suit. He explained how he came up with the idea of using a one-piece quarter starting with prototypes having an articulated cuff. He described in some detail the various steps of the Vapor Project, namely its objectives, the field testing done on skates that were already available on the market, the autopsies made on about 30 skates,[12] the research of materials, the making of several prototypes, the field testing as well as the issues encountered with the Vapor 8 skate.
[20] Mr. Chênevert was also questioned on a series of documents that were found in his Vapor Project file at Bauer (TX-476/TX-476a). However, it quickly became apparent that this file was not complete. He explained that he was not involved in the preparation and compiling of the documents in the present proceedings.
[21] Also, on cross-examination, Mr. Chênevert was led to explain the timeline of the Vapor Project in order to establish more precisely the date of the invention of a skate having a one-piece quarter. An internal memo called Formulaire de divulgation d’invention (TX-605a) explaining the specification of the design as well as the construction of the skate was entered into evidence during his testimony. This document is dated September 4, 1997 and indicates that the date of the invention is April 2, 1997. He also testified that many iterations were prototyped and that, from about February to April 1997,[13] testing was performed simultaneously on one-piece and two-piece quarter skates which otherwise had identical features.
[22] Chris Langevin is currently Director of Advanced Development Project at Bauer. He also worked in field testing for four years (including 1996-1997 when he tested the prototypes made by Mr. Chênevert and Mr. Lefebvre) before starting as a skate developer for high-end skates in 1998. In 1997, he was also consulting on skates. For example, Mr. Langevin was consulted with regard to the Vapor Project on how to change the profile of the boot in order to improve the breaking period. Prior to joining Bauer, Mr. Langevin was a professional hockey player from 1981 to 1986.
[23] First, Mr. Langevin testified about the Bauer Test League, namely its purpose, its operation and its players. The Test League was an internal league that comprised both Bauer employees and players from outside the company and where equipment in development at Bauer was tested in game conditions. He explained that he was in charge of collecting all the material at the end of every game and that non-Bauer employees were all asked to sign a contract or non-disclosure agreement before joining the league. He personally ensured that each new player signed a confidentiality agreement.[14] It is of note that such documents were not put into evidence as they were not located by Bauer.
[24] Second, Mr. Langevin testified that the one-piece quarter with separate tendon guard attached side-by-side and in some cases with a slight overlap was incorporated in subsequent models. He explained how the invention triggered improvements in the Bauer skates, including the use of rib shaped quarters, the use of new materials and the removal of internal reinforcement pieces. Also, it allowed Bauer to pursue their objective of developing lighter and stiffer high performance skates. Lastly, he testified about the Athlete’s Event.
[25] On cross-examination, Mr. Langevin was questioned on his visit to Nike’s facility in Portland, Oregon, including his tour of Nike’s prior art material library as well as its “advanced lab kitchen”. He also confirmed that the last prototype he tested with the Test League looked very similar to the final look of the Vapor 8 (TX-234). However, he did not know or realize at the time that these prototypes had a one-piece quarter construction.
[26] Finally, an affidavit by Mr. Langevin was filed at trial, on consent of the parties (P-43).[15] The content of the affidavit relates to the tests done by Bauer, in the context of this litigation, to evaluate the rigidity of a one-piece quarter in comparison to a two-piece quarter, both as an independent component and as part of finished skates. The affidavit further explains the methodology and the materials used to perform the said experiments.
[27] Stephen Murphy obtained a Ph.D. in biomechanics from the University of Waterloo in 2001. He is currently completing an MBA at Concordia University. He started at Bauer in 1993 as a developer of hockey sticks and helmets. In January 1998, he was promoted to the position of product manager for Bauer skates and in 2000, he became Director for the Bauer brand of skates and helmets. This position entailed being attentive to the market’s needs, understanding the new opportunities of R&D, establishing the retail price points, understanding the competitive analysis, establishing cost targets and doing market research. After he left Bauer, Mr. Murphy was employed in R&D by CCM[16] for about four years starting in February 2002.
[28] Mr. Murphy mainly testified about the marketing of the Vapor 8 skate, including the Athlete’s Event, and the adoption of the Vapor 8 skate by NHL players. He also briefly discussed the construction of certain CCM skates, namely the Vector and the Champion 90.
[29] When Mr. Murphy arrived at CCM, their skates were constructed using a two-piece quarter or a three-piece quarter. The decision to go with a one-piece quarter was made by Mr. Murphy. The first skate that had such construction was the Vector skate, which was launched in 2004. This skate had no rear sewing line and the tendon guard was integrated. With respect to the tendon guard, Mr. Murphy testified that he put in a deep scallop, which shortened the height of the tendon guard and provided sufficient flexibility to allow a full foot extension.
[30] The Defendant’s counsel noted that they were surprised by Mr. Murphy’s testimony relative to the CCM Vector and the CCM Champion 90 stating that these topics were not included in the brief description of the subject matter to be covered by his testimony. Bauer’s counsel advised the Court that they became aware of this information about two days prior to Mr. Murphy’s testimony. It was made clear that Mr. Murphy was presented solely as a factual witness in this respect and that Easton’s right to cross-examine Mr. Murphy at a later date would be reserved. That said, the Defendant did not exercise its right to call back Mr. Murphy.
[31] All of the abovementioned witnesses were credible, including Mr. Murphy. The Court finds no good reason to give less weight to his testimony as suggested by Easton in its reply memorandum. As noted, the fact that Easton chose not to exercise its right to cross-examine Mr. Murphy cannot have an impact on his credibility or the weight given to his testimony.
[32] Marc Gagnon was President of Rock Forest during the period the company was manufacturing Easton skates. He testified about Rock Forest and the relationship between Rock Forest and Easton as well as the modus operandi of the parties in the manufacturing of Easton skates.
[33] Although Mr. Gagnon was credible, the Court prefers the testimony of Mr. Laferrière[17] when it comes to the daily operations at Rock Forest with respect to the manufacturing of Easton skates.
[34] Lawrence Weber is the Director of Risk Management and Compliance. He has been an employee of Bauer since 1996. He occupied the position of Risk Manager from 1998 to 2007, which entailed, amongst other things, the handling of litigated matters.
[35] The main purpose of Mr. Weber’s testimony was to explain Bauer’s failure to keep all of the relevant files. He explained that there was no policy or direction in force with respect to document retention during the relevant period. While the factory was once certified under the International Organization for Standardization (ISO), it stopped being certified around 2000. Mr. Weber also spoke about the relocation of Bauer’s head office from Montreal to Greenland, New Hampshire. He explained that some of the company’s documents were sent to Greenland or St. Jerome, but that he had a feeling that others were simply destroyed or lost in the relocation process. Similarly, he testified about the various changes and reduction in space in the R&D Department at the St. Jerome factory.
[36] Lorraine Banton is currently Bauer’s Human Resources Director in Canada. She testified about a series of layoffs at Bauer, both at the Cambridge (Ontario) and St. Jerome factories, which occurred in the 1990s and 2000s. She also testified that the Cambridge plant closed in 1998. She explained that key employees, at the St. Jerome site, that would have been in charge of archiving documents in the R&D Department, were laid off.
[37] It is evident that the documentation produced by Bauer with respect to the development and testing carried out, particularly in the context of the Vapor Project, was not complete. For example, Mr. Chênevert was very clear that he kept many documents and drawings in his computer and that many tests carried out were not documented in his file. The Court notes, however, that Easton also failed to produce documentation, prototypes or drawings relating to the development of their allegedly infringing skates.
[38] Like Bauer, Easton tried to explain this by the closure[18] of the Rock Forest site and by the fact that its archiving system was pretty rudimentary at that time as no minutes were taken at meetings and no development files were kept.
[39] In either case, the Court is satisfied that it would not be appropriate to make a negative inference in that respect. The Court does not believe that either party tried to conceal evidence. In fact, some of the documentation produced by Bauer has been heavily relied upon by Easton as supporting its case.
[40] As I said, generally the lay witnesses were credible and the weight of their testimony will not be diminished by their employers’ inability to locate all the documents to support their evidence.
[41] Easton produced only two factual witnesses, namely Ned Goldsmith and Michel Laferrière. It is unfortunate that Mr. Yang, the inventor listed in “Utility Model”, German Patent No. 050194, (6 January 1994) (the Chin Patent) (TX-577),[19] did not testify at trial, even though he was on Easton’s initial witness list. Mr. Yang works at Sakurai; he has been involved in the production of the CCM’s Champion 90 and, since 2003, in the production of Easton skates. His testimony would have shed light on the Champion 90 skate and would have avoided many objections during the trial. It would also have been useful to get more information as to how skates were developed and manufactured in China at the relevant time.
[42] Ned Goldsmith is the Senior Vice President of Easton U.S. He has been working at Easton U.S. since December 1996, and successively occupied the position of Product Manager, Director and VP Hockey, before being promoted to his current position. His current position as well as his previous positions included product development in relation to skates.
[43] Mr. Goldsmith testified in detail about the development of Easton skate lines. He testified that in April 1997, Easton wanted to enter the market and wanted something unique. He recalled that the team at Easton looked at competitors’ skates, namely CCM, Bauer and Graf International (Graf) skates, during a meeting held early in the development of their skates that came out in 1998-1999. Easton delegated the design of the outsole of their skates to an outside firm.
[44] Mr. Goldsmith also discussed Easton skates that came out in 2000 (2000 skates). At that time, he was in a new position, VP Hockey, which he started in April 1998, and he was busier than he had been in the past. Mr. Goldsmith hired Neil Wensley, a former employee of CCM, as product manager for Easton skates. He explained that Michel Laferrière and Neil Wensley were key players in the development of the 2000 skates. Upon the recommendation of Mr. Wensley, Easton hired an external design firm, ADC, to work on the look of the skate.[20] Mr. Wensley knew this firm from his time at CCM, when he worked with them on the CCM Tacks 952. He testified that, during a meeting with ADC, Easton discussed the market trends along with the good and the bad of the existing Easton skates and other skates on the market. Even though Mr. Goldsmith could not recall if they discussed the Vapor 8, the Court notes that it is likely that this skate was addressed at this meeting.
[45] Mr. Goldsmith explained that ADC’s drawings influenced the look of the Easton Z-Air 2000 skate. In fact, he recalled that Mr. Laferrière was provided with the drawings and was asked to create a skate with a similar look. Mr. Goldsmith was involved in a meeting with ADC and in some of the discussions relative to the Z-Air. He also provided ideas for the development of the skate but, as mentioned, it was Mr. Wensley and Mr. Laferrière who were really in charge of the actual development of Easton’s first allegedly infringing skates.
[46] Mr. Goldsmith also discussed the development of Easton’s subsequent skate models and Easton’s sales with regard to their skates. Furthermore, Mr. Goldsmith was questioned on the compendium (P-14), a document that lists all of Easton skates for the years 1999 to 2009, inclusive, and provides information on their construction as well as their place of manufacture. Finally, he testified about the business relationship that existed between Rock Forest and Easton.
[47] On cross-examination, Mr. Goldsmith was led to explain the reasons why Easton switched from a side-by-side to an overlapping construction in 2004 and the reasons why it never switched back to a two-piece quarter construction, especially when it realized that Sakurai had switched to such a construction in 2003 without any apparently noticeable impact on their sales.
[48] Mr. Goldsmith was a passionate witness who, having been present during all the previous testimonies, had a tendency to argue rather than to simply relate the facts. That said, he was generally a credible witness, although as mentioned, there are areas where it is clear that he does not have first hand knowledge of all that went on. This explains, in my opinion, some of the contradictions between his testimony and that of Mr. Laferrière. With respect to the other contradictions, the Court did prefer the testimony of Mr. Laferrière.[21]
[49] Michel Laferrière is currently the Manager of Custom Products and Product Development at Easton. He started working in the footwear industry in 1965 at Brown Shoe Company, where he was primarily involved in shoe production. In 1976, he started working at Jean-Paul Corbeil, a shoe manufacturer that also manufactured low-end figure skates, mid to low-end hockey skates and moulded skates.[22] By the end of 1982-1983, Jean-Paul Corbeil got out of the shoe industry and started developing a high-end skate that was eventually picked up by the NHL. When the company was bought by CCM in 1984, Mr. Laferrière continued to work in R&D at CCM. His job involved, amongst other things, doing special make-ups (SMUs) and downgrading skates, meaning making skates at a cheaper price but keeping the same look as the high-end models.[23] In 1997, Mr. Laferrière left CCM to work for Easton.
[50] First, Mr. Laferrière testified about his experience at CCM and at Jean-Paul Corbeil as well as about CCM’s skate construction. With respect to Easton, he discussed the development of Easton skates, the manufacturing process used for the first Easton skates and the assembly of Easton skates at Rock Forest. He also addressed the respective involvement of Easton and Rock Forest in the manufacturing of skates.
[51] On cross-examination, Mr. Laferrière was questioned on his involvement with, and the facts surrounding, the decision of Easton to switch to an overlapping tendon guard and to maintain a one-piece quarter in 2004. He was also led to testify about the discussions at Easton regarding the possibility of going back to a two-piece quarter construction after the lawsuit was initiated. As a whole, the Court found Mr. Laferrière to be a straightforward and credible witness.
[52] The parties also presented six experts that collectively filed 15 expert reports dealing with the infringement, invalidity and commercial success allegations. They are listed in Chart A attached hereto with the names of the experts, exhibit numbers and a brief summary of their biographies.
[53] Bauer relies on the evidence of four experts, namely Dr. T. Blaine Hoshizaki, Dr. Mario Lafortune, Guy Beaudoin and Jim Rennie.
[54] Dr. Hoshizaki was qualified as an expert in the field of the biomechanics of performance sports, R&D pertaining to skates, skate design, development and manufacturing and its relationship to performance, and skate commercialization. At trial, the Court endorsed Dr. Hoshizaki’s qualification, but expressed some reservation with respect to the witness’ expertise with respect to skate commercialization.
[55] Dr. Hoshizaki filed three expert reports. His first report (P-1) deals with the claim construction and infringement[24] of the ‘953 Patent. He also provides background information about the three types of skate boots found on the skate market, namely the lasted, moulded and K2-type Softboots, and discusses the main manufacturing steps for a lasted skate. In his second report (P-45), he first summarizes the opinion discussed in his first report with respect to construction before responding to the allegations of invalidity raised by Easton, namely that the ‘953 Patent is anticipated, obvious, lacks utility and is unclear or confusing. He analyzes the various pieces of prior art relied upon by Easton’s experts, and discusses the results of three tests that were performed by Bauer to evaluate the stiffness of a one-piece quarter in comparison to a two-piece quarter: the component stiffness test, the finished skate boot rigidity test and the finished skate boot functional rigidity test. He also addresses the allegations of Easton’s experts with respect to the commercial success of the Vapor 8. Finally, Dr. Hoshizaki filed a third report (P-46) in rebuttal.
[56] Easton challenged the credibility of Dr. Hoshizaki stating, among other things, that he cannot be objective, having had some kind of relationship with Bauer since 1985, ranging from independent researcher at McGill University (1985-1986) to VP Research (1989-1995) to consultant (including expert witness in litigation) up to the present date.[25]
[57] It is to be noted, however, that at the relevant time (from 1997-2002), Dr. Hoshizaki was in charge of product development at CCM,[26] Bauer’s main competitor. His relationship with Bauer between 1995 and 1997 was limited and was part of the termination package he was given when Nike bought Bauer.
[58] I reviewed the case law relied upon by Easton. It is evident that it can be distinguished on its facts. Dr. Hoshizaki was not involved at all or in any way in the Vapor Project. Despite Easton counsel’s vigorous attempts to convince me otherwise, I find that he testified in a straightforward manner. I have no doubt that he truly believes in the opinions he expressed and I see no good reason to discard all his evidence as suggested by the Defendant. The Court has examined the reasoning behind each of the views he expressed and gave them appropriate weight based on their intrinsic value. It is evident that this expert was particularly well-qualified to discuss the biomechanics of skating. He is not a thermoplastic expert and was not particularly experienced in the production/manufacturing side of the skate industry.
[59] Mr. Beaudoin was qualified as an expert in the field of hockey skate and inline skate design, development and manufacture, with experience in the boot and footwear industry. Upon reviewing his curriculum vitae, the Court now notes that Mr. Beaudoin does not have any particular expertise in the athletic footwear industry. However, Mr. Beaudoin was particularly well-qualified to opine on the issues relating to the manufacture of skate boots. He has been involved in the skate industry for over 10 years and while he was at Daoust,[27] a company based in Montreal, and Bauer, Mr. Beaudoin has occupied positions that focus on the manufacture and production of skates.
[60] Two reports by Mr. Beaudoin were filed by Bauer. His first report (P-39) is a response to Easton’s experts’ first reports and specifically deals with the allegations that the ‘953 Patent is invalid because it is unclear, confusing or misleading. He also discusses the utility of the invention, the commercial success of the Vapor 8 and the differences between the shoe, boot and skate industries. His second report (P-40), filed in reply to Easton’s second reports, deals with the commercial success, infringement and claim construction. He also provides comments on the characterization of the three types of skate boots.
[61] The Court was particularly impressed by Mr. Beaudoin who testified in a very measured manner, clearly indicating when he had to made assumptions. He readily admitted it when he did not know something.
[62] Dr. Lafortune was qualified as an expert in the field of biomechanics of athletic activity and its relationship to the design, development and manufacture of athletic footwear, equipment and apparel. He prepared one report (P-47). It was filed in reply to Mr. Tonkel’s second report and focuses on the distinctions between athletic shoes and hockey skates as well as the differences between the athletic footwear and skate industries. The Court accepts the evidence of Dr. Lafortune with respect to the main areas in which the biomechanics of skating defers from those relevant to other athletic footwear.[28]
[63] Mr. Rennie was qualified as an expert in the marketing and sale of sporting goods, including athletic shoes and hockey skates, and trends in the industry relating to those goods. He prepared three reports that mostly focus on the hockey skate market, the commercial success of the Vapor 8 and the importance of lightweight, aesthetics and performance for hockey skates (P-11, P-41 and P-42 respectively).
[64] Even though Mr. Rennie was well-qualified, his opinion will have little impact on the findings of the Court. In effect, this evidence was not particularly useful given that it resulted in a side debate as to why the Vapor 8 was successful. There is no dispute that this line of skates was successful, the Vapor 8 created a buzz in the market and put more focus on the overall weight of skates. Although satisfied that the invention contributed to the skate’s success, it is also clear that its other novel features did too. In the circumstances, the Court decided not to consider this factor in assessing the allegation of obviousness.
[65] Mr. Tonkel was qualified as an expert in the field of footwear design, footwear development and manufacture, including its relationship to performance, and footwear commercialization. Bauer’s counsel objected, stating that the reference to footwear should be limited to athletic footwear such that it should not be understood to encompass hockey skates. Easton’s counsel agreed that Mr. Tonkel was not an expert in the field of skate design or development per se. This obviously has some impact on the weight attributed to his evidence especially considering the definition of the person to whom the ‘953 Patent was addressed. This will be further discussed when dealing with the construction of the claims and obviousness.
[66] Mr. Tonkel’s first report (D-16) focuses on why he was of the opinion that the invention was obvious. He analyzes the prior art cited by Easton,[29] namely the Bauer Supreme 5000, “Boot Construction”, U.S. Patent No. 2915835, (27 May 1957) (the Snitzer Patent) (TX-563), Chin Patent/Champion 90 skate, CCM Mustang and Rapide, Easton’s first skates, CCM Tacks and the K2 Softboot inline skates. Mr. Tonkel also discusses claim construction and the similarities between boot and shoe manufacture and skate manufacture.
[67] In his second report (D-17), Mr. Tonkel responds to Mr. Rennie’s opinion with respect to the commercial success of the Vapor 8. In response to Dr. Hoshizaki’s first report, he discusses the similarities and influences existing between footwear and hockey skates. Also, he provides comments on the characterization of the three types of skates as well as a summary of his view on infringement. His third report (D-20), as redacted,[30] replies to the second reports of Mr. Rennie and Dr. Hoshizaki as well as the first report of Mr. Beaudoin. It deals with commercial success, the relationship between the footwear and the skate industries, validity and the infringement of claim 3.
[68] Mr. Hall was qualified as an expert in the field of skate design, skate development and manufacture, including its relationship to performance, and skate commercialization.
[69] In his first report (D-14), Mr. Hall primarily focuses on the utility and the validity of the ‘953 Patent and more precisely, his view that the patent was unclear, confusing and misleading. Regarding claim construction, Mr. Hall states that he agrees with and adopts Mr. Tonkel’s conclusions in the latter’s report. Mr. Hall did not perform a detailed analysis of the prior art, relying instead on the analysis of Mr. Tonkel. However, the Champion 90 and the Chin Patent were omitted from the list of prior art found in Mr. Hall’s first report and Mr. Hall’s conclusion on obviousness focuses on what he views as a simple change in the direction of the rear seam used particularly in CCM skates.
[70] In his second report (D-15), Mr. Hall responds to Mr. Rennie’s allegations with respect to the commercial success of the Vapor 8 in the hockey skate market. In response to Dr. Hoshizaki’s first report, Mr. Hall addresses claim construction, the characterization of the three types of skate boots and the infringement of the ‘953 Patent. Also, he comments on the advantages described in the ‘953 Patent’s disclosure. Mr. Hall’s third report (D-21), as redacted, rebuts the evidence found in the second reports of Dr. Hoshizaki and Mr. Rennie as well as the evidence found in the first report of Mr. Beaudoin. He addresses the similarities between the hockey skate industry and the footwear industry, commercial success and the characterization of the three types of skate boots. He also provides comments on the interpretation of the term tendon guard and on the tests performed by Bauer.
[71] Mr. Hall was particularly well-qualified to deal with most of the issues raised in this case. Although clearly a very creative individual - contrary to the person skilled in the art (posita) - he worked for many years, developing skates. His evidence was particularly useful in helping the Court understand the history and development of the skate industry.
[72] However, for reasons that will be explained, the Court could not accept his views on the construction of the patent, particularly the meaning of “tendon guard”. Having heard this witness over 3 days of testimony and having read and re-read his reports, it appears, and this is understandable given that this was his first experience as an expert witness on such matters, that he had an insufficient understanding of the principles[31] that should guide him. Among other things, I found that he was overly critical in dealing with the ‘953 Patent and that, despite his assertion to the contrary, he did not exhibit an open mind seeking to understand the patent and the claimed invention. In the end, his evidence was not as useful as I would have hoped.
[73] The Court obviously considered all the evidence in the record, however, for ease of reference certain passages have been included in the footnotes.
II. General Background
A. The Hockey Skate Market
[74] It is not disputed that for several decades up until the late 1990s, the manufacture of hockey skates in North America was dominated by three principal players, namely, Bauer, CCM and, to a lesser extent, Daoust.[32] In fact, up until the late 1990s, these three companies represented about 85% of hockey skate sales in North America.[33]
[75] In the fall of 1992, Daoust was purchased by Bauer.[34] The Daoust brand name was used by Bauer until late 1995. [35]
[76] Graf was another brand of skates available on the North American hockey skate market in the 1990s. Graf was manufacturing high-quality skates in Switzerland. However, these skates were not very popular amongst consumers because they were sold at a higher price point.[36]
[77] In the late 1990s, new manufacturers of ice hockey skates entered the market, the most important companies being Easton and Mission.[37]
[78] In 1998, there were over 1.5 million pairs of hockey skates sold worldwide, including low-end skates, 70-75% of which were sold in North America.[38] There were approximately 120,000 pairs of high-end hockey skates sold worldwide, of which, about 90,000-95,000 pairs were sold in North America.[39]
[79] Bauer owns an important percentage of market shares among NHL players as well as at the regular consumer level in North America. In fact, from 1997 to 2009, its market shares at the NHL level ranged between 55% and 60% and between 35% to over 50% at the consumer level.[40]
[80] As for Easton, it is agreed that it owned no significant market share before 2000 at the NHL level.[41] However, from 2000 to 2009, Easton’s market shares at the NHL level increased from 5% to 10%. At the consumer level, its market shares also increased over the last decade, ranging from less than 5% from 1998 to 1999 to over 10% to 15% from 2000 to 2009.[42]
[81] As of 2009, the three main brands in the North American hockey skate market were Bauer, CCM and Easton.[43] Their combined market shares represented over 85% of the hockey skate sales in North America.
[82] Little information was given to the Court about the inline roller skate market. Although there is scant evidence in that respect, it appears that it is the development of roller skates that first attracted the attention of major athletic shoe manufacturers, such as Reebok International Ltd. (Reebok) and Nike, to the ice hockey skate business. In fact, there are examples of a partnership between such companies and skate manufacturers on specific projects, such as the aborted project between Daoust and Nike to produce a skate for Wayne Gretzky, or the project between Reebok and CCM for the Instapump technology used in certain CCM skate models. Furthermore, those two major athletic shoe companies bought the two major ice skate companies – Reebok bought CCM and Nike bought Bauer. It appears that Nike never captured a large share of the ice skate market under their own brand.
B. Types of Skates
[83] Skates can be divided into two main c