Voith (J.M.) GmbH v. Beloit Corp., (1997) 214 N.R. 85 (FCA)

• Judge: Isaac, C.J., Stone and Desjardins, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: April 23, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 214 N.R. 85 (FCA)

Voith GmbH v. Beloit Corp. (1997), 214 N.R. 85 (FCA)

MLB headnote and full text

Temp. Cite: [1997] N.R. TBEd. MY.008

Beloit Canada ltée/Ltd. and Beloit Corporation (appellants/plaintiffs) v. Valmet-Dominion Inc. (now Valmet Montreal Inc.) (respondent/defendant)

(Court File No. A-176-93)

(T-1450-86)

Beloit Canada ltée/Ltd. and Beloit Corporation (appellants/plaintiffs) v. General Electric Canada Inc. (respondent/defendant)

(Court File No. A-177-93)

(T-2253-86)

Beloit Corporation (appellant/defendant) v. Valmet-Dominion Inc. (now Valmet Montreal Inc.) (respondent/plaintiff)

(Court File No. A-179-93)

(T-1268-86)

Indexed As: Voith (J.M.) GmbH v. Beloit Corp.

Federal Court of Appeal

Isaac, C.J., Stone and

Desjardins, JJ.A.

April 23, 1997.

Summary:

These actions concerned a patent owned by Beloit Corp. for a "tri-nip" configuration for the press section of a paper machine. J.M. Voith GmbH, Valmet-Dominion Inc. and General Electric Canada Inc. claimed that the patent was invalid. Beloit Corp. and its licensee Beloit Canada Ltd. alleged that Voith, Valmet-Dominion and General Elec­tric infringed the patent.

The Federal Court of Canada, Trial Di­vision, in a decision reported 30 F.T.R. 35, determined that Beloit's patent was invalid and dismissed all of Beloit's infringement suits. The court declared the patent cancelled and set aside. Beloit appealed.

The Federal Court of Appeal, in a decision reported 128 N.R. 54, allowed the appeal and set aside the dismissal of Beloit's in­fringement action and the expungement of Beloit's patent. The court declared the patent to be valid and referred the case for a con­tinuance of the trial on the issue of infringe­ment.

The Federal Court of Canada, Trial Di­vision, in a judgment reported 61 F.T.R. 161, allowed Beloit's patent infringement action in part. The court held that the ap­propriate remedy was damages and ordered a reference accordingly. Beloit appealed and Valmet-Dominion Inc. (VDI) cross-ap­pealed.

The Federal Court of Appeal allowed the appeals in part and dismissed the cross-appeal.

Courts - Topic 4029

Federal Court of Canada - Jurisdiction - Trial Division - Patents of invention - [See first Patents of Invention - Topic 3827 ].

Equity - Topic 1481

Equitable principles respecting relief - Clean hands doctrine - General - [See second Patents of Invention - Topic 3827 ].

Patents of Invention - Topic 2807

Infringement of patent - General prin­ciples - Combination patents - In deter­mining whether the sale of unassembled components of a patented press machine amounted to infringement, the Federal Court of Appeal stated that: "Where the elements of an invention are sold in a substantially unified and combined form for the purpose of later assembly, in­fringement may not be avoided by a sepa­ration or division of parts which leaves the purchaser a simple task of integration and assembly. ... A manufacturer cannot avoid liability for infringement by disassembling the machine after the completed assembly has occurred. In our view, the manu­facturer of all of the components that are later sufficiently assembled to test the fitting of the parts, constitutes 'making' a patented invention for the purposes of s. 44 of the [Patent] Act." - See paragraphs 41 and 47.

Patents of Invention - Topic 2884

Infringement of patent - Acts constituting an infringement - Selling component parts of patented invention - Beloit sued VDI for patent infringement, alleging infringe­ment of Beloit's patented three-nip con­figuration of the press section of paper machines - Beloit's three-nip press was a combination patent - VDI manufactured two machines, which were substantially assembled and tested in its Montreal plant and subsequently disassembled in Canada and shipped to Malaysia for reassembly - A trial judge held that VDI's manufacture and sale of component parts, delivered for assembly and use outside Canada, did not constitute infringement - On appeal, the Federal Court of Appeal held that VDI infringed the patent where although the delivery format was in unassembled parts, the whole press section was made and sold - VDI was therefore liable for its domes­tic actions - See paragraphs 27 to 50.

Patents of Invention - Topic 2924

Infringement of patent - Acts not consti­tuting an infringement - Supplying com­ponents of combination patent - [See Patents of Invention - Topic 2807 and Patents of Invention - Topic 2884 ].

Patents of Invention - Topic 3510

Infringement actions - Limitation of actions - Beloit owned a patent for a "tri-nip" configuration for the press section of a paper machine - In 1986, Beloit sued the defendants for patent infringement relating to contracts executed by the de­fendants in Quebec in 1979, 1980 and 1983 - A trial judge held that Beloit's claims were prescribed by the two year prescription period in art. 2261 of the Civil Code of Lower Canada (Que.) - Art. 2261 provided that, inter alia, actions for damages resulting from offences or quasi-offences (délits et quasi-délits) were prescribed by two years - The Federal Court of Appeal agreed, stating that for prescription purposes, an infringement of a patent was properly characterized as an offence or quasi-offence under art. 2261 - Conse­quently, the claims were barred except for the 1983 contracts (recognized by the par­ties as valid irrespective of the limita­tion period) - See paragraphs 58 to 84.

Patents of Invention - Topic 3821

Infringement actions - Damages - General - Beloit Corp. sued VDI for infringement of its patented "tri-nip" configuration for the press section of a paper machine - The action was allowed in part - Damages were assessed for the press sections and other components with which the press sections would have been sold - The trial judge assumed that where the patented article was not always sold by itself, dam­age to the patentee could lie in selling the articles in which it traded - Beloit appealed and VDI cross-appealed, alleging that damages should be limited to the press sections - The Federal Court of Appeal held that a patentee was only entitled to damages assessed upon the sale of non-infringing components where there was a finding of facts, rather than an as­sumption, that sales arose from infringing the patent component - See paragraphs 120 to 130.

Patents of Invention - Topic 3827

Infringement actions - Damages - Profits - Accounting - The Federal Court of Appeal held that the court had jurisdiction to award the remedy of accounting of profits in an action for patent infringement under s. 57(1)(b) of the Patent Act and ss. 3 and 20 of the Federal Court Act - In so doing, the court reviewed the history of the remedy and the legislative history of s. 57 of the Patent Act - Sections 3 and 20 of the Federal Court Act applied where the remedy was expressly provided for in s. 57(1)(b) of the Patent Act - Since ac­counting was an equitable remedy and s. 3 of the Federal Court Act conferred au­thority upon the court to grant equitable remedies, the court had jurisdiction to grant an accounting of profits in actions for patent infringement - See paragraphs 86 to 106.

Patents of Invention - Topic 3827

Infringement actions - Damages - Profits - Accounting - Beloit sued VDI for patent infringement, seeking, inter alia, an accounting of profits - A trial judge allowed the action in part, but declined to award an accounting of profits based on the complexity and inordinate length of the action, Beloit's delay in bringing the action after it became aware of the in­fringement and the infringer's good faith - Beloit appealed, alleging a prima facie right to equitable relief where it came to equity with clean hands - The Federal Court of Appeal held that the trial judge's exercise of discretion did not warrant the court's intervention - The trial judge was not bound by maxims of equity in exer­cising his discretion since the election of an accounting of profits was a statutory alternative to a remedy in damages - See paragraphs 107 to 119.

Patents of Invention - Topic 3834

Infringement actions - Damages - Interest - Prejudgment - Beloit sued VDI for patent infringement - A trial judge allowed the action in part and awarded simple prejudgment and post-judgment interest on the damage award - Beloit appealed, claiming that the trial judge failed to apply the proper legal test for the award of compound interest - The Federal Court of Appeal held that both prejudg­ment interest and post-judgment interest awards were discretionary - Given the infringer's good faith, the trial judge could exercise his discretion by awarding simple interest - Furthermore, there was no legal test mandating the award of both prejudg­ment and post-judgment compound in­terest to a successful patentee in an in­fringement action - See paragraphs 131 to 138.

Patents of Invention - Topic 3838

Infringement actions - Damages - Interest - Post-judgment - [See Patents of In­vention - Topic 3834 ].

Quebec Prescription - Topic 6405

Time periods - Delicts and quasi-delicts - Applicable periods - [See Patents of Invention - Topic 3510 ].

Cases Noticed:

Windsurfing International Inc. v. Bic Sports Inc. (1985), 63 N.R. 218; 8 C.P.R.(3d) 241 (F.C.A.), refd to. [para. 29].

Windsurfing International Inc. v. Trilantic Corp. - see Windsurfing International Inc. v. Bic Sports Inc.

Deepsouth Packing Co. v. Laitram Corp. (1972), 406 U.S. 518, refd to. [para. 29].

Skelding v. Daly, [1942] 1 D.L.R. 355; 1 C.P.R. 266 (B.C.C.A.), refd to. [para. 30].

Steel Co. of Canada Ltd. v. Sivaco Wire & Nail Co. (No. 3) (1973), 11 C.P.R.(2d) 153 (F.C.T.D.), refd to. [para. 30].

Dole Refrigerating Products Ltd. v. Ca­nadian Ice Machine Co. (1957), 28 C.P.R. 32 (Ex. Ct.), refd to. [para. 33].

Paper Converting Machine Co. v. Mag­nagraphics Corp. (1984), 745 F.2d 11; 223 U.S.P.Q. 591 (Fed. Cir.), refd to. [para. 37].

Radio Corp. of America v. Andrea (Andrea II) (1937), 90 F.2d 612; 34 U.S.P.Q. 312 (2nd Cir.), refd to. [para. 38].

Hewitt-Robins Inc. v. Link-Belt Co. (1966), 371 F.2d 225; 151 U.S.P.Q. 670 (7th Cir.), refd to. [para. 38].

Cold Metal Process Co. v. United En­gineering & Foundry Co. (1956), 235 F.2d 224; 110 U.S.P.Q. 332 (3rd Cir.), refd to. [para. 38].

Reeves Brothers Inc. v. Toronto Quilting & Embroidery Ltd. (1978), 43 C.P.R.(2d) 145 (F.C.T.D.), not folld. [para. 60].

Mastini v. Bell Telephone Co. of Canada (1971), 18 D.L.R.(3d) 215; 1 C.P.R.(2d) 1 (Ex. Ct.), refd to. [para. 62].

Johnson Controls Inc. v. Varta Batteries Ltd. (1984), 53 N.R. 6; 80 C.P.R.(2d) 1 (F.C.A.), refd to. [para. 65].

Tyburn Productions Ltd. v. Conan Doyle, [1990] 1 All E.R. 909, refd to. [para. 67, footnote 4].

Def Lepp Music et al. v. Stuart-Brown et al., [1986] R.P.C. 273 (H.C. of Ch.), refd to. [para. 67, footnote 4].

Commissioner of Patents v. Farbwerke Hoechst A.G. (1963), 25 Fox Pat. C. 99 (S.C.C.), refd to. [para. 67, footnote 5].

PSM International plc v. Specialized Fastener Products (Southern) Ltd., [1993] F.S.R. 113 (Patents County Ct.), refd to. [para. 68].

Club de chasse et pêche de Chartierville Inc. v. Gaudreau, [1993] R.J.Q. 1529 (S.C.), refd to. [para. 72, footnote 9].

Commission des droits de la personne du Québec v. Québec (Ville de), [1986] R.J.Q. 243 (S.C.), refd to. [para. 72, footnote 9].

Brisson v. Leduc, [1988] R.J.Q. 1623 (S.C.), refd to. [para. 72, footnote 9].

Reading & Bates Construction Co. v. Baker Energy Resources Co. et al., [1995] 1 F.C. 483; 175 N.R. 225; 58 C.P.R.(3d) 359 (F.C.A.), leave to appeal refused (1995), 191 N.R. 238 (S.C.C.), not appld. [para. 74, footnote 10].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 42 R.P.R. 161; 31 D.L.R.(4th) 481; 34 B.L.R. 187, refd to. [para. 78].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1; 10 D.L.R. (4th) 641, refd to. [para. 79].

Oznaga v. Société d'exploitation des loteries et courses du Québec, [1981] 2 S.C.R. 113; 40 N.R. 7, refd to. [para. 81].

Stein Estate v. Ship Kathy K, [1976] 2 S.C.R. 802; 6 N.R. 359; 62 D.L.R.(3d) 1, refd to. [para. 82, footnote 11].

Irving Refining Ltd. v. National Harbours Board, [1976] 2 F.C. 415 (T.D.), refd to. [para. 88].

Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd. (1978), 39 C.P.R.(2d) 191 (F.C.T.D.), refd to. [para. 90].

Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd., [1981] 1 S.C.R. 504; 35 N.R. 390, refd to. [para. 90].

Grand Trunk Pacific Railway v. Dearborn (1919), 58 S.C.R. 315, refd to. [para. 90, footnote 12].

Assessment of Halifax Branch of Navy League of Canada, Re, [1927] 2 D.L.R. 184 (N.S.C.A.), refd to. [para. 90, foot­note 12].

Electric Fireproofing Co. of Canada v. Electric Fireproofing Co. (1909), 43 S.C.R. 182, refd to. [para. 90, footnote 12].

Radio Corp. of America v. Philco Corp. (Delaware), [1965] 2 Ex. C.R. 197, affd. [1966] S.C.R. 296, refd to. [para. 92].

Allied Signal Inc. v. Du Pont Canada Inc. and Complax Corp. (1995), 184 N.R. 113; 61 C.P.R.(3d) 417 (F.C.A.), refd to. [para. 94].

Teledyne Industries Inc. v. Lido Industrial Products Ltd. (1982), 68 C.P.R.(2d) 204 (F.C.T.D.), refd to. [para. 94, footnote 13].

Algonquin Mercantile Corp. v. Dart In­dustries Canada Ltd., [1987] 2 F.C. 373; 7 F.T.R. 81; 12 C.P.R.(3d) 289 (T.D.), affd. [1988] 2 F.C. 305; 79 N.R. 305; 16 C.P.R.(3d) 193 (F.C.A.), refd to. [para. 94, footnote 13].

Blacktop (R.W.) Ltd. et al. v. Artec Equipment Co. et al. (1991), 50 F.T.R. 225; 39 C.P.R.(3d) 432 (T.D.), refd to. [para. 94, footnote 13].

Neilson v. Betts (1871), L.R. 5 (H.L.) 1, refd to. [para. 99].

De Vitre v. Betts (1873), L.R. 6 (H.L.) 319, refd to. [para. 99].

Aro Manufacturing Co. v. Convertible Tops Replacement Co. (1964), 377 U.S. 476, refd to. [para. 101, footnote 21].

Formea Chemicals Ltd. v. Polymer Corp. (1967), 61 D.L.R.(2d) 475; 35 Fox Pat. C. 21 (Ont. C.A.), affd. [1968] S.C.R. 754; 38 Fox. Pat. C. 116, refd to. [para. 103].

Siddell v. Vickers (1892), 9 R.P.C. 152 (C.A.), refd to. [para. 107, footnote 24].

Automatic Coal and Gas Retort Co. v. Salford (City) (1897), 14 R.P.C. 450, refd to. [para. 107, footnote 24].

Watson, Laidlaw and Co. v. Pott, Cassels and Williamson (1914), 31 R.P.C. 104 (H.L.), refd to. [para. 107, footnote 24].

Ductmate Industries Inc. v. Exanno Products Ltd. (1987), 12 F.T.R. 37; 16 C.P.R.(3d) 15 (T.D.), refd to. [para. 107, footnote 24].

Bond v. Hopkins (1802), 1 Sch. & Lef. 413, refd to. [para. 107, footnote 25].

Hanson v. Keating (1844), 4 Hare 1; 67 E.R. 1, refd to. [para. 107, footnote 25].

Sharp v. Wakefield, [1891] A.C. 173 (H.L.), refd to. [para. 107, footnote 25].

Roncarelli v. Duplessis, [1959] S.C.R. 121, refd to. [para. 107, footnote 25].

Weingarten Brothers v. Bayer & Co. (1905), 22 R.P.C. 341 (H.L.), refd to. [para. 107, footnote 25].

Szuba v. Szuba, [1951] 1 D.L.R. 387 (Ont. H.C.), refd to. [para. 107, footnote 25].

Unilever plc v. Procter & Gamble Inc. (1995), 184 N.R. 378; 61 C.P.R.(3d) 499 (F.C.A.), refd to. [para. 109].

Lubrizol Corp. et al. v. Imperial Oil Ltd. et al. (1992), 150 N.R. 207; 45 C.P.R.(3d) 449 (F.C.A.), refd to. [para. 109].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1990] 2 F.C. 18; 108 N.R. 241 (F.C.A.), refd to. [para. 118].

Colonial Fastener Co. et al. v. Lightning Fastener Co., [1937] S.C.R. 36, refd to. [para. 124].

Meters Ltd. v. Metropolitan Gas Meters Ltd. (1911), 28 R.P.C. 157 (C.A.), refd to. [para. 124].

Statutes Noticed:

Civil Code of Lower Canada, art. 2261 [para. 13].

Federal Court Act, R.S.C. 1985, c. F-7, sect. 3, sect. 20(2) [para. 94]; sect. 36(5) [para. 134].

Patent Act, R.S.C. 1985, c. P-4, sect. 44 [para. 30]; sect. 55(1) [para. 64]; sect. 57(1)(a), sect. 57(1)(b) [para. 66].

Authors and Works Noticed:

Beaudoin, J.-L., La responsabilité civile délictuelle, 3e éd., 1990, pp. 2 [para. 73]; 97 [para. 61].

Brisson, Jean-Maurice, and Morel, André, Droit fédéral et droit civil: complémen­tarité, dissociation (1996), 75 Can. Bar Rev. 297, p. 324 [para. 59, footnote 1].

Clerk and Lindsell on Torts (17th Ed. 1995), pp. 21, 22 [para. 67, footnote 5]; 1348 [paras. 67, 68, footnote 4].

Fetherstonhaugh, F., and Fox, H.G., The Law and Practice of Letters Patent of Invention in Canada (1926), p. 1 [para. 67, footnote 5].

Fox, Harold G., The Canadian Law and Practice Relating to Letters Patent for Inventions (4th Ed. 1969), pp. 5 [para. 67, footnote 5]; 5, 6 [para. 103].

Linden, Allen M., Canadian Tort Law (5th Ed. 1993), p. 1 [para. 73].

Macklin, G. Alexander, Relief in Intellec­tual Property Actions, in Patent and Trademark Institute of Canada Bulletin (Feb. 1983), Series 8, vol. 17, pp. 1090, 1091 [para. 95].

MacOdrum, Donald H., Entitlement to an Accounting of Profits, in Patent and Trademark Institute of Canada Bulletin (Nov. 1983), Series 8, vol. 19, pp. 1245 [para. 95]; 1246 [para. 103].

Mathély, Paul, Le droit français des brevets d'invention (1974), Journal des notaires et des avocats, p. 11 [para. 69].

Meagher, R.P., Gummow, W.M.C., and Lehane, J.R.F., Equity, Doctrines and Remedies (3rd Ed. 1992), p. 659 [para. 98].

Mew, Graeme, The Law of Limitations (1991), pp. 106 to 109 [para. 79].

Murphy, J.D., Paper Converting Machine Company v. Magna-Graphics Cor­poration: Increased Protection Against Making and Using Combination Patents (1985), 34 Am. U.L.R. 761, generally [para. 37].

Snell, Principles of Equity (29th Ed. 1990), pp. 29 [para. 114]; 582, 638 [para. 106].

Watt, S., Patent Infringement: Redefining the "Making" Standard to Include Partial Assemblies (1985), 60 Wash. L. Rev. 889, generally [para. 37].

Counsel:

Donald J. Wright, Q.C., and J. Douglas Wilson, for the appellants;

James D. Kokonis, Q.C., and A. David Morrow, for the respondents.

Solicitors of Record:

Ridout & Maybee, Toronto, Ontario, for the appellants;

Smart & Biggar, Ottawa, Ontario, for the respondents.

These appeals and cross-appeal were heard on June 17-20, 1996, at Ottawa, Ontario, before Isaac, C.J., Stone and Desjardins, JJ.A., of the Federal Court of Appeal. The following decision was delivered by the Court on April 23, 1997.