Baker Petrolite Corp. et al. v. Canwell Enviro-Industries Ltd. et al., (2002) 288 N.R. 201 (FCA)

• Judge: Strayer, Rothstein and Evans, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: April 29, 2002
• Jurisdiction: Canada (Federal)
• Citations: (2002), 288 N.R. 201 (FCA);2002 FCA 158

Baker Petrolite v. Canwell Enviro-Ind. (2002), 288 N.R. 201 (FCA)

MLB headnote and full text

Temp. Cite: [2002] N.R. TBEd. MY.022

Canwell Enviro-Industries Ltd., Clive Titley and The City of Medicine Hat (appellants/defendants) v. Baker Petrolite Corporation, Petrolite Holdings Inc., Baker Hughes Canada Company (respondents/plaintiffs)

(A-483-01; 2002 FCA 158)

Indexed As: Baker Petrolite Corp. et al. v. Canwell Enviro-Industries Ltd. et al.

Federal Court of Appeal

Strayer, Rothstein and Evans, JJ.A.

April 29, 2002.

Summary:

The plaintiffs held a patent for an invention entitled "Composition and Method for Sweetening Hydrocarbon", used in the oil and gas industry to scavenge the hydrogen sulphide from sour gas. The plaintiffs sued the defendants for damages and declaratory and injunctive relief, submitting that the defendant Canwell's gas sweetening product infringed the patent. Canwell challenged the validity of the patent and counterclaimed for damages and injunctive relief.

The Federal Court of Canada, Trial Division, in a judgment reported 210 F.T.R. 161, allowed the plaintiffs' action and dismissed the counterclaim. The defendants failed to establish the patent was invalid and were found liable for patent infringement. The court granted a permanent injunction against the defendants to restrain them from infringing the patent. The defendants were ordered to deliver up all infringing products and to account for all profits earned, which were assessed by the court. The court awarded nominal damages for compensation under s. 55(2) of the Act. Although the individual defendant (sole shareholder and director of the corporate defendant Canwell) was not personally liable for damages awarded for profits, he was liable in trust for all bonuses paid to him by Canwell after the patent infringement action was commenced. The defendants appealed.

The Federal Court of Appeal allowed the appeal. The trial judge erred in failing to find the patent invalid on the ground of anticipation.

Courts - Topic 2107

Jurisdiction - Appellate jurisdiction - To make fresh assessment of evidence - [See Practice - Topic 9256 ].

Patents of Invention - Topic 1602

Grounds of invalidity - Anticipation - Test for - The defendant claimed that the plaintiffs' patent was invalid on the ground of anticipation based on prior knowledge or use - The Federal Court of Appeal stated that "I accept that, at a broad level, the principles in Beloit v. Valmet, supra, and Free World Trust, supra, relating to anticipation by prior publication are also applicable to anticipation by prior use or sale. For example, the evidence of anticipation by prior public use or sale, as well as by prior publication, should be subjected to close scrutiny. However, below a certain level of generality, the principles gov-erning anticipation by prior publication may need to be tailored to fit the particular characteristics of anticipation by prior public use or sale. For example, the principle that the prior publication must contain so clear a direction that a skilled person reading and following it would be led, without error, to the invention claimed, applies to the specific context of prior publication. In the case of prior publication, the skilled person will read the publication. In the case of prior use or sale, reading may not be relevant. When faced with having to decide whether there has been anticipation by disclosure through prior use or sale under paragraph 28.2(1)(a), it is necessary for the Court to have regard to the circumstances of prior use or sale, in order to determine how a person skilled in the art might be led, without error, to the invention claimed." - See paragraph 35.

Patents of Invention - Topic 1605

Grounds of invalidity - Anticipation - Particular patents - The plaintiffs held a patent for an invention entitled "Composition and Method for Sweetening Hydrocarbon", used in the oil and gas industry to scavenge the hydrogen sulphide from sour gas - The plaintiffs claimed that the defendant Canwell's gas sweetening product infringed the patent - Canwell challenged the validity of the patent on the ground of anticipation by prior commercial sale of W-3053 before the one year grace period preceding the filing of the patent (Patent Act, s. 28.2(1)(a)) - The trial judge held that the defendant failed to establish anticipation - The commercial sale of W-3053 in western Oklahoma before the grace period did not anticipate the invention disclosed by the plaintiffs' patent - The commercial sale did not make available to the public in Canada or elsewhere the subject matter of the patent - The Federal Court of Appeal held that the patent was invalid on the ground of anticipation - The trial judge applied the wrong test - The test was whether the subject matter of the patent was disclosed, not whether the product could be reproduced - Applying the correct test to the evidence, the trial judge should have found that a person skilled in the art and using data and techniques available at the relevant time, and without the exercise of inventive skill, would have been led inevitably to the subject matter of the patent claims - See paragraphs 30 to 101.

Patents of Invention - Topic 1801

Grounds of invalidity - Prior knowledge and use - General - The Federal Court of Appeal listed the following principles respecting anticipation by prior sale or use under s. 28.2(1)(a) of the Patent Act: "(1) Sale to the public or use by the public alone is insufficient to prove anticipation. Disclosure of the invention is required to constitute anticipation under s. 28.2(1)(a). ... (2) For a prior sale or use to anticipate an invention, it must amount to 'enabling disclosure'. ... (3) The prior sale or use of a chemical product will constitute enabling disclosure to the public if its composition can be discovered through analysis of the product. ... (4) The analysis must be able to be performed by a person skilled in the art in accordance with known analytical techniques available at the relevant time. ... The person skilled in the art, using available analytical techniques, must be able to find the invention without the exercise of inventive skill. (5) In the context of patent anticipation under s. 28.2(1)(a), when reverse engineering is necessary and capable of discovering the invention, an invention becomes available to the public if a product containing the invention is sold to any member of the public who is free to use it as she or he pleases. ... sale of a product to even one member of the public constitutes a making available to the public for the purposes of s. 28.2(1)(a). ... (6) It is not necessary to demonstrate that a member of the public actually analyzed the product that was sold. ... (7) The amount of time and work involved in conducting the analysis is not determinative of whether a skilled person could discover the invention. The relevant consideration ... is only whether inventive skill was required. ... (8) It is not necessary that the product that is the subject of the analysis be capable of exact reproduction." - See paragraph 42.

Patents of Invention - Topic 1803

Grounds of invalidity - Prior knowledge and use - Particular patents - [See Patents of Invention - Topic 1605 ].

Practice - Topic 8800

Appeals - General principles - Duty of appellate court regarding findings of fact by a trial judge - The Federal Court of Appeal stated that "the appellate court may only intervene in conclusions of fact, including inferences of fact, in cases of palpable and overriding error" - See paragraph 49.

Practice - Topic 8800.1

Appeals - General principles - Duty of appellate court regarding findings of mixed law and fact by a trial judge - The Federal Court of Appeal, in setting out the correct standard of review of findings of mixed fact and law, stated that "such questions involve the application of legal standards to a set of facts. Where there is no extricable error of law or where the facts are so particular that decisions about whether they satisfy legal tests have no precedential value, greater deference is mandated. ... Where, however, on a question of mixed fact and law it is possible to extricate the legal question from the factual and determine that a legal error has been made, the standard of review will be correctness. ... Mischaracterizing the proper legal test results in the application of the correctness standard to the factual conclusions reached by the trial judge." - See paragraphs 50 to 52.

Practice - Topic 9256

Appeals - Judgments by appeal court - Remittal to lower court - When appropriate - At issue in a patent infringement claim was whether the patent was invalid for anticipation - The trial judge, in finding the patent valid, applied the wrong legal test - Further, there was an absence of specific fact findings upon which to apply the correct legal test - The Federal Court of Appeal, faced with a choice of re-assessing the evidence and applying the correct test, or remitting the matter to the trial judge to determine the facts, chose in the interests of justice to reassess the evidence and apply the test rather than remitting the matter to the trial judge - See paragraphs 79 to 83.

Cases Noticed:

Beloit Canada Ltd. v. Valmet Oy (1986), 64 N.R. 287; 8 C.P.R.(3d) 289 (F.C.A.), refd to. [para. 14].

Slattery (Bankrupt) v. Slattery, [1993] 3 S.C.R. 430; 158 N.R. 341; 139 N.B.R.(2d) 246; 357 A.P.R. 246, refd to. [para. 22].

Nowegijick v. Minister of National Revenue et al., [1983] 1 S.C.R. 29; 46 N.R. 41, refd to. [para. 22].

Sarvanis v. Canada (2002), 284 N.R. 263 (S.C.C.), refd to. [para. 22].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 25].

Free World Trust v. Electro Santé Inc. et al., [2000] 2 S.C.R. 1024; 263 N.R. 150, refd to. [para. 29].

Diversified Products Corp. and Brown Fitzpatrick Lloyd Patent Ltd. v. Tye-Sil Corp. (1991), 125 N.R. 218; 35 C.P.R.(3d) 350 (F.C.A.), refd to. [para. 33].

Merrell Dow Pharmaceuticals Inc. v. Norton (H.N.) & Co. et al., [1996] R.P.C. 76; 189 N.R. 364 (H.L.), refd to. [para. 42].

PLG Research Ltd. v. Ardon International Ltd., [1993] 1 F.S.R. 197, refd to. [para. 42].

Lux Traffic Controls Ltd. v. Pike Signals Ltd. and Faronwise Ltd., [1993] R.P.C. 107, refd to. [para. 42].

Bristol Meyers Co., Re, [1969] R.P.C. 146 (Q.B.), refd to. [para. 42].

Whirlpool Corp. et al. v. Camco Inc. et al., [2000] 2 S.C.R. 1067; 263 N.R. 88, refd to. [para. 46].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1 (S.C.C.), appld. [para. 47].

Hollis v. Dow Corning Corp. et al., [1995] 4 S.C.R. 634; 190 N.R. 241; 67 B.C.A.C. 1; 111 W.A.C. 1, refd to. [para. 83].

Statutes Noticed:

Interpretation Act, R.S.C. 1985, c. I-21, sect. 3(1), sect. 43 [para. 23].

Patent Act, R.S.C. 1985, c. P-4, sect. 27(1)(c) [para. 31]; sect. 28.2(1)(a) [para. 28]; sect. 78.4 [para. 17].

Authors and Works Noticed:

Côté, Pierre-André, The Interpretation of Legislation in Canada (3rd Ed. 2000), p. 150 [para. 19].

Driedger, Elmer A., Construction of Statutes (3rd Ed. 1994), p. 522 [para. 19].

Counsel: [not disclosed]

Solicitors of Record: [not disclosed]

This appeal was heard on March 20-21, 2002, at Toronto, Ontario, before Strayer, Rothstein and Evans, JJ.A., of the Federal Court of Appeal.

On April 29, 2002, Rothstein, J.A., delivered the following judgment for the Court of Appeal.