Valence Technology Inc. v. Phostech Lithium Inc., 2011 FC 174

• Judge: Gauthier, J.
• Court: Federal Court (Canada)
• Case Date: October 01, 2010
• Jurisdiction: Canada (Federal)
• Citations: 2011 FC 174;(2011), 384 F.T.R. 162 (FC)

Valence Tech. Inc. v. Phostech Lithium Inc. (2011), 384 F.T.R. 162 (FC)

MLB headnote and full text

Temp. Cite: [2011] F.T.R. TBEd. FE.036

Valence Technology Inc. (plaintiff/defendant by counterclaim) v. Phostech Lithium Inc. (defendant/plaintiff by counterclaim)

(T-219-07; 2011 FC 174)

Indexed As: Valence Technology Inc. v. Phostech Lithium Inc.

Federal Court

Gauthier, J.

February 17, 2011.

Summary:

Valence Technology Inc. claimed that its rights under Canadian Patent Nos. 2,395,115, 2,483,918 and 2,466,366 (the '115, '918 and '366 Patents) had been infringed by Phostech Lithium Inc. by the manufacture, distribution, offering for sale, sale and use in Canada of lithiated iron phosphate (LiFePO4) cathode materials. The Valence Patents all related to processes for the synthesis of lithium mixed metal cathode materials for use in lithium ion batteries. Phostech produced its product, carbon-coated lithium iron phosphate (C-LiFePO4), using the "P1 Process". Phostech alleged that it was not infringing the Valence Patents as its product was manufactured pursuant to Canadian Patent No. 2,307,119 and Canadian Patent Application No. 2,423,129 (the '129 Application) for which it held licences. Phostech also challenged the validity of the Valence Patents and claimed that the '918 and '366 Patents misappropriated the '129 Application.

The Federal Court found that Phostech's P1 Process infringed claim 3 of the '115 Patent. Valence was entitled to reasonable compensation for Phostech's acts under s. 55(2) of the Patent Act from the time that the application for the '115 Patent became open to public inspection until its date of issue, to be assessed by reference preceded by discovery if requested. Valence was entitled to elect either an accounting of profits of Phostech or all damages sustained by reason of sales directly lost as a result of Phostech's infringement, to be assessed by reference preceded by discovery if requested. Valence was also granted an injunction. Phostech's counterclaim was granted in respect of the '918 Patent only. The '918 Patent was declared null and void.

Patents of Invention - Topic 1026

The specification and claims - Construction of a patent - General - The Federal Court referred to the principles applicable to the construction of patent claims - The court stated, inter alia, "The Court will obviously consider the examples in the patents under review as they are part of their specifications. However, one must be cautious not to rely too heavily on these for they are just as their description implies 'examples' of some of the embodiments of the invention, and, as mentioned in most patents, they are not usually meant to limit the monopoly defined in the claims" - See paragraphs 63 to 64.

Patents of Invention - Topic 1507

Grounds of invalidity - General - Untrue material allegations in petition, specification or drawings - Valence Technology Inc. claimed that its rights under Canadian Patent Nos. 2,395,115, 2,483,918 and 2,466,366 (the '115, '918 and '366 Patents) had been infringed by Phostech Lithium Inc. by the manufacture, distribution, offering for sale, sale and use in Canada of lithiated iron phosphate (LiFePO4) cathode materials - The Valence Patents all related to processes for the synthesis of lithium mixed metal cathode materials for use in lithium ion batteries - Phostech produced its product, carbon-coated lithium iron phosphate (C-LiFePO4), using the "P1 Process" - Phostech alleged that it was not infringing the Valence Patents as its product was manufactured pursuant to Canadian Patent No. 2,307,119 and Canadian Patent Application No. 2,423,129 (the '129 Application) for which it held licences - Phostech also argued that Valence misappropriated the claims in the original '129 Application of Phostech and misrepresented to the Patent Office that three of its employees were the inventors of the invention described in those claims, contrary to s. 53(1) of the Patent Act - Phostech argued that the court had to infer from the inappropriate use of substantial portions of the claims of the '129 Application that Valence intentionally misled the Patent Office as to who were the real inventors of the invention claimed in the '366 Patent - The Federal Court held that Phostech's attack on the basis of s. 53(1) failed - The court stated that "None of this evidence establishes to my satisfaction that the named inventors did not invent what is claimed in the '366 Patent. No misrepresentation has been established in that respect. I should also say that Phostech has not satisfied me either that I should infer an intention to mislead" - See paragraphs 195 to 221.

Patents of Invention - Topic 1603

Grounds of invalidity - Anticipation - By previously published article or patent - [See Patents of Invention - Topic 1653 ].

Patents of Invention - Topic 1653

Grounds of invalidity - Anticipation by prior patent - What constitutes anticipation - Valence Technology Inc. claimed that its rights under Canadian Patent Nos. 2,395,115, 2,483,918 and 2,466,366 (the '115, '918 and '366 Patents) had been infringed by Phostech Lithium Inc. by the manufacture, distribution, offering for sale, sale and use in Canada of lithiated iron phosphate (LiFePO4) cathode materials - The Valence Patents all related to processes for the synthesis of lithium mixed metal cathode materials for use in lithium ion batteries - Phostech produced its product, carbon-coated lithium iron phosphate (C-LiFePO4), using the "P1 Process" - Phostech alleged that it was not infringing the Valence Patents as its product was manufactured pursuant to Canadian Patent No. 2,307,119 and Canadian Patent Application No. 2,423,129 ('129 Application) for which it held licences - Phostech also challenged the validity of the Valence Patents - The Federal Court held that Phostech's P1 Process infringed claim 3 of the '115 Patent - With respect to Phostech's counterclaim, the court was not satisfied that Phostech had established that the '366 Patent should be voided on this basis of insufficiency - However, the court held that the '918 Patent was void on the basis of anticipation - Example 5 in the '129 Application constituted an enabling disclosure and the method used following the instructions in that example would infringe claim 1 of the '918 Patent - It therefore anticipated the patent - See paragraphs 78 to 244.

Patents of Invention - Topic 1779

Grounds of invalidity - Insufficiency - Particular cases - [See Patents of Invention - Topic 1653 ].

Patents of Invention - Topic 2888

Infringement of patent - Acts constituting an infringement - Of particular patents - [See Patents of Invention - Topic 1653 ].

Patents of Invention - Topic 3102

Infringement of patent - Remedies - Damages or accounting of profits - Valence Technology Inc. claimed that its rights under Canadian Patent Nos. 2,395,115, 2,483,918 and 2,466,366 (the '115, '918 and '366 Patents) had been infringed by Phostech Lithium Inc. by the manufacture, distribution, offering for sale, sale and use in Canada of lithiated iron phosphate (LiFePO4) cathode materials - The Federal Court held that Phostech infringed claim 3 of the '115 Patent - For the period after the issuance of the '115 Patent, Valence sought the right to elect between its damages and an accounting of profits - Although Phostech argued that Valence unnecessarily prolonged the proceeding by relying on 107 claims of its patents until April 2010, the court did not find that there were undue delays in the prosecution of the matter - The court stated that "until the beginning of the trial, Phostech itself was insisting that the Court review the validity of each and every one of the claims of the three patents (over 230 claims). It was only the Court's repeated requests that prompted the parties to re-examine their mutual position" - The court was satisfied that neither party acted in bad faith and it was not satisfied that it was not appropriate to exercise its discretion in favour of the election - Valence was entitled to make such an election - See paragraphs 234 to 238.

Cases Noticed:

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 56, footnote 49].

Eli Lilly & Co. et al. v. Apotex Inc. (2009), 351 F.T.R. 1; 2009 FC 991, refd to. [para. 62].

Janssen-Ortho Inc. et al. v. Novopharm Ltd. (2006), 301 F.T.R. 166; 2006 FC 1234, affd. (2007), 366 N.R. 290; 2007 FCA 217, leave to appeal refused (2007), 383 N.R. 397 (S.C.C.), refd to. [para. 63].

Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504; 35 N.R. 390, refd to. [para. 182].

Pfizer Canada Inc. et al. v. Canada (Minister of Health) et al., [2009] 1 F.C.R. 253; 377 N.R. 9; 2008 FCA 108, refd to. [para. 183].

ratiopharm inc. v. Pfizer Ltd. (2009), 350 F.T.R. 250; 76 C.P.R.(4th) 241; 2009 FC 711, affd. (2010), 405 N.R. 209; 2010 FCA 204, refd to. [para. 184].

Eli Lilly Canada Inc. v. Apotex Inc. et al. (2008), 323 F.T.R. 56; 63 C.P.R.(4th) 406; 2008 FC 142, affd. (2009), 392 N.R. 243; 2009 FCA 97, refd to. [para. 196].

Beloit Canada Ltd. v. Valmet Oy (1984), 78 C.P.R.(2d) 1 (T.D.), revd. (1986), 64 N.R. 287; 8 C.P.R.(3d) 289 (F.C.A.), refd to. [para. 215, footnote 112].

Sanofi-Synthelabo Canada Inc. et al. v. Apotex Inc. et al., [2008] 3 S.C.R. 265; 381 N.R. 125; 2008 SCC 61, refd to. [para. 222].

Synthon BV v. Smithkline Beecham plc, [2005] N.R. Uned. 180; [2006] 1 All E.R. 685; [2005] UKHL 59, refd to. [para. 223].

Merck & Co. et al. v. Apotex Inc. et al. (2010), 381 F.T.R. 162; 2010 FC 1265, refd to. [para. 234, footnote 118].

Unilever PLC v. Procter & Gamble Inc. (1993), 60 F.T.R. 241; 47 C.P.R.(3d) 479 (T.D.), refd to. [para. 239].

Merck & Co. et al. v. Apotex Inc. (2006), 282 F.T.R. 161; 2006 FC 524, refd to. [para. 239].

Statutes Noticed:

Patent Act, R.S.C. 1985, c P-4, sect. 53(1) [para. 195.

Authors and Works Noticed:

Dahn, Jeff, and Ehrlich, Grant M., Lithium-ion batteries, in Reddy, Thomas, and Linden, David, Linden's Handbook of Batteries (4th Ed. 2010), generally [para. 47, footnote 47].

Hayhurst, William L., The Art of Claiming and Reading a Claim, in Henderson, Gordon F., Patent Law of Canada (1994), pp. 177 [para. 208, footnote 109]; 204 [para. 209, footnote 111]; 213 [para. 208, footnote 110].

Henderson, Gordon F., Patent Law of Canada (1994), pp. 177 [para. 208, footnote 109]; 204 [para. 209, footnote 111]; 213 [para. 208, footnote 110].

Huang, H., Yin, S.-C., and Nazar, L.F., Approaching Theoretical Capacity of LiFePO 4 at Room Temperature at High Rates (2001), 4 Elect. Sol. State Lett. A170, generally [para. 74, footnote 54].

Padhi, A.K., Nanjundaswamy, K.S., and Goodenough, J.B., Phospho-olivines as Positive-Electrode Materials for Rechargeable Lithium Batteries (1997), 144 J. Electrochem. Soc. 1188, generally [para. 74, footnote 54]; p. 1191 [para. 17, footnote 9].

Ravet, N., Chouinard, Magnan, Besner, Gauthier, and Armand, Electroactivity of natural and synthetic triphylite (2001), 97 J. Power Sources 503, generally [para. 38, footnote 37].

Reddy, Thomas, and Linden, David, Linden's Handbook of Batteries (4th Ed. 2010), generally [para. 47, footnote 47].

Whittingham, M. Stanley, Lithium Batteries and Cathode Materials (2004), 104 Chem. Rev. 4271, pp. 4280 [para. 21, footnote 14]; 4293 [para. 22, footnote 19].

Counsel:

Ron Dimock, Angela Furlanetto, and Ryan Evans, for the plaintiff;

Eric Ouimet, Simon Pelletier, and Pascal Lauzon, for the defendant.

Solicitors of Record:

Dimock Stratton LLP, for the plaintiff;

BCF, LLP, for the defendant.

This action was heard on September 1 to 3, 7 to 10, 13 to 16, 29 and 30, and October 1, 2010, in Montreal, Quebec, and Toronto, Ontario, before Gauthier, J., of the Federal Court, who delivered the following judgment on February 17, 2011.