Allied Signal Inc. v. Du Pont Canada Inc. and Complax Corp., (1998) 142 F.T.R. 241 (TD)

• Judge: Heald, D.J.
• Court: Federal Court (Canada)
• Case Date: February 13, 1998
• Jurisdiction: Canada (Federal)
• Citations: (1998), 142 F.T.R. 241 (TD)

Allied Signal Inc. v. Du Pont Can. Inc. (1998), 142 F.T.R. 241 (TD)

MLB headnote and full text

Temp. Cite: [1998] F.T.R. TBEd. MR.020

AlliedSignal Inc. (previously Allied-Signal Inc.) (plaintiff) v. Du Pont Canada Inc. and the Complax Corporation (defendants)

(T-2234-89)

Indexed As: Allied Signal Inc. v. Du Pont Canada Inc. and Complax Corp.

Federal Court of Canada

Trial Division

Heald, D.J.

February 13, 1998.

Summary:

Allied sued Du Pont and Complax for infringement of its patent of an invention relating to polymeric carrier film for use in the manufacture of plastic sheet moulding compounds. The defendants sought a declaration that the patent was invalid.

The Federal Court of Canada, Trial Division, in a decision reported at 68 F.T.R. 17, held that the patent was invalid insofar as the use of polyhexamethylene adipamide as the polyamide component was concerned and requested that the parties submit a draft order.

The Federal Court of Canada, Trial Division, in a decision reported at 70 F.T.R. 248, considered the draft orders submitted by the parties and declared the patent invalid insofar as it purported to relate to the use of polyhexamethylene adipamide as the polyamide component. Allied appealed the finding of invalidity and the failure to find infringement. The defendants cross-appealed the failure to hold all the claims invalid.

The Federal Court of Appeal, in a decision reported at 184 N.R. 113, allowed the appeal. The court declared that the claims were valid and the defendants had infringed the claims. The court ordered issuance of a permanent injunction. The court remitted to the trial judge the question of whether Allied was entitled to an accounting of profits instead of damages. Allied elected damages.

The Federal Court of Canada, Trial Division, in a decision not reported in this series of reports, ordered that the reference proceed to determine the extent of infringement, the damages arising from the infringement, and the pre- and post-judgment interest payable as against the defendant Du Pont.

The Federal Court of Canada, Trial Division, awarded damages and interest accordingly.

Editor's Note: For other decisions relating to this matter, see 104 F.T.R. 143 and 192 N.R. 282.

Evidence - Topic 7010

Opinion evidence - Expert evidence - General - Admissibility of information used to support opinion - The plaintiff's expert accountant gave evidence on the amount of electricity used at a manufacturing plant - A plant engineer testified to the accuracy of the measurements relied on by the accountant - The defendant objected to the engineer's testimony on the basis that he was called as a fact witness, not an expert - The defendant submitted that any calculations made by the engineer brought his testimony into the domain of opinion evidence and expert testimony - The Federal Court of Canada, Trial Division, disagreed - The fact that the engineer relied on his expertise as an electrical engineer did not mean that he was drawing an inference or expressing an opinion - The engineer's calculations laid a proper foundation for the accountant's opinion - See paragraphs 127 to 131.

Evidence - Topic 7010

Opinion evidence - Expert evidence - General - Admissibility of information used to support opinion - The plaintiff successfully sued the defendant for patent infringement - The plaintiff argued that, but for the defendant's infringing presence in the market, it would have been able to raise its prices - The Federal Court of Canada, Trial Division, held that much of the plaintiff's evidence on this point was not admissible - See paragraphs 217 to 252 - The court held, inter alia, that evidence by the plaintiff's expert economist that the plaintiff would have no difficulty in raising its prices as submitted because it would simply be keeping up with inflation was inadmissible because the defendant did not have proper notice of inflation as a part of the foundation of the expert's opinion (Federal Court Rule 482) - See paragraphs 227 to 244.

Interest - Topic 5009

Interest as damages (prejudgment interest) - General principles - Prejudgment interest - Calculation of - [See first Patents of Invention - Topic 3834 ].

Interest - Topic 5010

Interest as damages (prejudgment interest) - General principles - Calculation of interest - Simple or compound - [See second Patents of Invention - Topic 3834 ].

Patents of Invention - Topic 3102

Infringement of patent - Remedies - Damages or accounting of profits - The plaintiff successfully sued the defendant for patent infringement - The Federal Court of Canada, Trial Division, awarded, inter alia, damages for lost profits due to lost sales - In examining the hypothetical situation of what would have happened had the defendant's product never entered the market, the court considered the following factors: a) presence of competing products in the market; b) advantages of the patented product over competing products; c) advantages of the infringing product over the patented product; d) market position of the patentee; e) market position of the infringer; f) market share of the patentee before and after the infringing product entered the market; g) size of the market before and after the infringing product entered the market; and h) capacity of the patentee to produce additional products - See paragraphs 34 to 58.

Patents of Invention - Topic 3102

Infringement of patent - Remedies - Damages or accounting of profits - The Federal Court of Canada, Trial Division, stated that "[w]here competition by the infringer forces the patentee to reduce the selling price of its patented product, the patentee is entitled to the profit it lost both on the sales it actually made, and the sales that it would have made, at the selling price it would have maintained but for the presence of the infringing product ... ." - See paragraph 217.

Patents of Invention - Topic 3102

Infringement of patent - Remedies - Damages or accounting of profits - [See Patents of Invention - Topic 3105 ].

Patents of Invention - Topic 3105

Infringement of patent - Remedies - Royalties - The plaintiff successfully sued the defendant for patent infringement relating to polymeric carrier film for use in the manufacture of plastic sheet moulding compounds - The Federal Court of Canada, Trial Division, awarded the plaintiff damages for lost profits due to lost sales (sales the plaintiff would have made but for the presence of the defendant's infringing product in the market) and a reasonable royalty for sales made by the defendant that the plaintiff would not have made.

Patents of Invention - Topic 3823

Infringement actions - Damages - Rate of royalty - The plaintiff successfully sued the defendant for patent infringement relating to polymeric carrier film for use in the manufacture of plastic sheet moulding compounds - The Federal Court of Canada, Trial Division, awarded the plaintiff, inter alia, a reasonable royalty for sales made by the defendant that the plaintiff would not have made - The court stated that "[a] reasonable royalty rate is 'that which the infringer would have to pay if, instead of infringing the patent, [the infringer] had come to be licensed under the patent' ... . The test is what rate would result from negotiations between a willing licensor and a willing licensee." - See paragraph 199 - The court held that the plaintiff was entitled to a royalty rate of 17.5% of the selling price on sales that it would not have made - See paragraph 216.

Patents of Invention - Topic 3826

Infringement actions - Damages - Profits - General - The Federal Court of Canada, Trial Division, stated that "... the right to claim lost profits is not circumscribed by the territorial limitations of the Patent Act to profits made on sales within Canada. The patentee has a right to be compensated for all damages flowing from the infringement of the patent within Canada, which may include profits lost on sales outside Canada. Furthermore, lost profits are merely a useful measure to help determine an appropriate and fair level of compensation." - See paragraph 33.

Patents of Invention - Topic 3826

Infringement actions - Damages - Profits - General - The plaintiff successfully sued the defendant for patent infringement - The Federal Court of Canada, Trial Division, held that the plaintiff was not entitled to claim any lost profit for product that the defendant delivered to its customer, but was never paid for (i.e., a bad debt) - To hold otherwise would amount to the defendant underwriting the plaintiff's profits - See paragraphs 106 to 112.

Patents of Invention - Topic 3834

Infringement actions - Damages - Interest - Prejudgment - The Ontario plaintiff successfully sued the defendant for patent infringement - The plaintiff elected damages - The Federal Court of Canada, Trial Division, exercised its discretion under s. 130(1) of the Ontario Court of Justice Act not to award prejudgment interest at the rate stipulated by s. 127(1) of the Act (14%) where interest rates had fluctuated widely over the relevant period - The court accepted the weighted average of 9.2% as proposed by the defendant - See paragraphs 253 to 258.

Patents of Invention - Topic 3834

Infringement actions - Damages - Interest - Prejudgment - The plaintiff successfully sued the defendant for patent infringement - The cause of action arose in Ontario - The Federal Court of Canada, Trial Division, held that s. 128(4)(b) of the Ontario Courts of Justice Act precluded the plaintiff from receiving compound interest - The court stated that an award of compound interest could be justified under s. 128(4)(g) where the parties had contemplated compound interest (e.g., evidence of a contract or past conduct) or a remedy that gives rise to the court's equitable jurisdiction (e.g., an accounting of profits) - However, in this case, the plaintiff had elected damages, there was no evidence of bad faith and there was no analogy between the defendant and a trustee who had breached a fiduciary duty - See paragraphs 259 to 263.

Patents of Invention - Topic 3834

Infringement actions - Damages - Interest - Prejudgment - The plaintiff sued the defendant for patent infringement - The plaintiff was successful on appeal and the matter was returned to the trial court for a reference on damages - The defendant submitted that interest should not be awarded for: 1) the period between the trial and appeal decisions because the patent was invalid during this period and 2) another period of time due to a lack of cooperation on the part of the plaintiff in the production of documents - The Federal Court of Canada, Trial Division, rejected the submissions - See paragraphs 264 to 268.

Practice - Topic 5402

Judgments and orders - General - Currency of judgments - Date of conversion - The plaintiff successfully sued the defendant for patent infringement - All evidence in the case was expressed in U.S. Currency - Section 12 of the Currency Act required that the damage award be stated in Canadian currency - The Federal Court of Canada, Trial Division, held that the case did not fall within the breach-date rule for the conversion of funds into Canadian currency, mainly because there was no date corresponding to the infringement of the patent, which occurred over a period of six years - The court set the date of conversion at the date of judgment - See paragraphs 269 to 274.

Cases Noticed:

General Tire & Rubber Co. v. Firestone Tyre & Rubber Co., [1976] R.P.C. 197; [1975] 2 All E.R. 173 (H.L.), folld. [para. 19, footnote 5].

Meters Ltd. v. Metropolitan Gas Meters Ltd. (1910), 27 R.P.C. 721 (Ch. D.), affd. (1911), 28 R.P.C. 157 (C.A.), refd to. [paras. 20, 34, footnotes 6, 23].

Watson, Laidlaw & Co. v. Pott, Cassels & Williamson (1914), 31 R.P.C. 104 (H.L.), refd to. [para. 20, footnote 7].

Colonial Fastener Co. v. Lightning Fastener Co., [1937] S.C.R. 36, refd to. [para. 21, footnote 8].

Catnic Components Ltd. v. Hill & Smith Ltd., [1983] F.S.R. 512; [1982] R.P.C. 183 (Pat. Ct.), refd to. [para. 22, footnote 11].

American Braided Wire Co. v. Thomson (1890), 7 R.P.C. 152 (C.A.), refd to. [para. 23, footnote 13].

Domco Industries Ltd. v. Mannington Mills Inc. and Congoleum Corp. (1990), 107 N.R. 198; 29 C.P.R.(3d) 481 (F.C.A.), refd to. [para. 27, footnote 15].

Voith (J.M.) GmbH v. Beloit Corp. (1997), 214 N.R. 85; 73 C.P.R.(3d) 321 (F.C.A.), refd to. [para. 27, footnote 16].

Beloit Canada ltée/Ltd. v. Valmet Dominion Inc. - see Voith (J.M.) GmbH v. Beloit Corp.

Allied Signal Inc. v. Du Pont Canada Inc. and Complax Corp. (1993), 68 F.T.R. 17; 50 C.P.R.(3d) 1 (T.D.), affd. (1995), 184 N.R. 113; 61 C.P.R.(3d) 417 (F.C.A.), refd to. [para. 28, footnote 18].

Schneider (Europe) A.G. v. SciMed Life Systems Inc. (1995), 39 U.S.P.Q.2d 1596 (C.A.F.C.), refd to. [para. 30, footnote 20].

Dominion Manufacturers Ltd. v. Electrolier Manufacturing Co., [1939] Ex. C.R. 204, refd to. [para. 32, footnote 21].

United Horse-Shoe and Nail Co. v. Stewart & Co. (1888), 5 R.P.C. 260; 13 App. Cas. 401, refd to. [para. 34, footnote 22].

Domco Industries Ltd. v. Armstrong Cork Canada Co. and Congoleum Co. et al. (1983), 76 C.P.R.(2d) 70 (F.C.T.D.), varied (1986), 3 F.T.R. 289; 10 C.P.R.(3d) 53; 9 C.I.P.R. 139 (T.D.), refd to. [para. 34, footnote 26].

Panduit Corp. v. Stahlin Brothers Fibre Works Inc. (1978), 575 F.2d 1152 (6th Cir.), refd to. [para. 35, footnote 29].

State Industries v. Mor-Flo (1989), 883 F.2d 1573 (Fed. Cir.), refd to. [para. 35, footnote 30].

Rothwell v. Canada (1985), 2 F.T.R. 6 (T.D), refd to. [para. 130, footnote 98].

Lewis v. Todd et al., [1980] 2 S.C.R. 694; 34 N.R. 1; 115 D.L.R.(3d) 257; 14 C.C.L.T. 294, appld. [para. 134, footnote 104].

Unilever PLC v. Procter & Gamble (1993), 60 F.T.R. 241; 47 C.P.R.(3d) 479 (T.D.), affd. (1995), 184 N.R. 378; 61 C.P.R.(3d) 499 (F.C.A.), refd to. [para. 199, footnote 157].

Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd. (1983), 50 N.R. 161; 74 C.P.R.(2d) 199 (F.C.A.), refd to. [para. 199, footnote 157].

A.G. für Autogene Aluminium Schweissung v. London Aluminium Co. (No. 2) (1923), 40 R.P.C. 107, refd to. [para. 201, footnote 157].

R. v. Marquard (D.), [1993] 4 S.C.R. 223; 159 N.R. 81; 66 O.A.C. 161, refd to. [para. 204, footnote 163].

Rite-Hite Co. v. Kelley Co., 35 U.S.P.Q. 2d 1065 (C.A. Fed. Cir.), refd to. [para. 208, footnote 167].

Omega Africa Plastics Pty. Ltd. v. Swisstool Manufacturing Co., [1978] 3 S.A. 465 (App. Div.), refd to. [para. 218, footnote 172].

McEachrane v. Children's Aid Society of Essex County et al. (1986), 10 C.P.C.(2d) 265 (Ont. H.C.), folld. [para. 242, footnote 187].

Haida Inn Partnership v. Touche Ross Ltd. (1989), 34 B.C.L.R.(2d) 80 (S.C.), folld. [para. 243, footnote 188].

Bonneville v. Kurtow (1997), 25 O.T.C. 262 (Gen. Div.), refd to. [para. 256, footnote 198].

120 Adelaide Leaseholds Inc. v. Thomson Rogers (1995), 38 C.P.C.(3d) 69 (Ont. Gen. Div.), refd to. [para. 256, footnote 198].

Spencer v. Rosati, Brim Concrete and Spencer (1985), 9 O.A.C. 119; 50 O.R.(2d) 661 (C.A.), refd to. [para. 256, footnote 198].

Graham et al. v. Rourke (1990), 40 O.A.C. 301; 75 O.R.(2d) 622 (C.A.), refd to. [para. 256, footnote 198].

Reading & Bates Construction Co. v. Baker Energy Resources Co. et al., [1995] 1 F.C. 483; 175 N.R. 225; 85 F.T.R. 240; 51 A.C.W.S.(3d) 137; 58 C.P.R.(3d) 359 (F.C.A.), leave to appeal refused, 60 C.P.R.(3d) vi (S.C.C.), refd to. [para. 260, footnote 204].

Brock v. Cole (1983), 40 O.R.(2d) 97 (C.A.), refd to. [para. 261, footnote 208].

Royal Bank v. Roland Home Improvements Ltd. (1994), 17 B.L.R.(2d) 108 (Ont. C.A.), folld. [para. 266, footnote 210].

Altantic Lines & Navigation Co. v. Ship Didymi and Didymi Corp., [1988] 1 F.C. 3; 78 N.R. 99 (F.C.A.), refd to. [para. 270, footnote 213].

N.V. Bocimar S.A. v. Century Insurance Co. of Canada (1984), 53 N.R. 383 (F.C.A.), revd. on other grounds [1987] 1 S.C.R. 1247; 76 N.R. 212, refd to. [para. 271, footnote 214].

Capital Life Insurance Co. v. Minister of National Revenue, [1988] 2 C.T.C. 101; 88 D.T.C. 6352; 87 N.R. 153 (F.C.A.), refd to. [para. 271, footnote 214].

Custodian v. Blucher, [1927] 3 D.L.R. 40 (S.C.C.), refd to. [para. 271, footnote 215].

Gatineau Power Co. v. Crown Life Insurance Co., [1945] S.C.R. 655, refd to. [para. 271, footnote 216].

Statutes Noticed:

Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 128(4)(b) [para. 254, footnote 196].

Currency Act, R.S.C. 1985, c. C-52, sect. 12 [para. 269, footnote 212].

Federal Court Rules, rule 482 [para. 238, footnote 184].

Authors and Works Noticed:

Canada, Law Reform Commission, Evidence Project (Paper No. 7) (1972-1975), pp. 34, 35, generally [para. 243, footnote 189].

Fox, H.G., The Canadian Law and Practice Relating to Letters Patent for Inventions (4th Ed. 1969), p. 494 [para. 36, footnote 31].

Plastics World, SMC Release Film Meets Specialty Requirements (June 1997), generally [para. 63, footnote 56].

Saxe, Diane, Judicial Discretion in the Calculation of Prejudgment Interest (1986), 6 Adv. Q. 433, generally [para. 261, footnote 209].

Sopinka, J., The Law of Evidence in Canada (1992), pp. 160, 161 [para. 223, footnote 178].

Counsel:

G. Alexander Macklin, Q.C., and Hélène D'Iorio, for the plaintiff;

Roger Hughes, Q.C., Arthur Renaud and Trent Horne, for the defendants.

Solicitors of Record:

Gowling Strathy & Henderson, Ottawa, Ontario, for the plaintiff;

Sim, Hughes, Ashton & McKay, Toronto, Ontario, for the defendants.

This matter was heard at Ottawa, Ontario, on August 25 to 29, and September 3 to 9, 1997, by Heald, D.J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on February 13, 1998.