Zero Spill Systems (Int'l) Inc. et al. v. 614248 Alberta Ltd. et al., (2015) 472 N.R. 127 (FCA)

• Judge: Dawson, Stratas and Near, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: October 16, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2015), 472 N.R. 127 (FCA);2015 FCA 115

Zero Spill Systems v. 614248 Alta. (2015), 472 N.R. 127 (FCA)

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Temp. Cite: [2015] N.R. TBEd. MY.015

Zero Spill Systems (Int'l) Inc., Katch Kan Holdings Ltd., Quinn Holtby and Katch Kan Rentals Ltd. (appellants) v. Bill Heide dba Central Alberta Plastic Products, Rat Plastic Ltd. and 1284897 Alberta Ltd. (respondents)

(A-293-13; 2015 FCA 115; 2015 CAF 115)

Indexed As: Zero Spill Systems (Int'l) Inc. et al. v. 614248 Alberta Ltd. et al.

Federal Court of Appeal

Dawson, Stratas and Near, JJ.A.

May 4, 2015.

Summary:

The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of Canadian Patent '375 and '064 Patent) and Canadian Industrial Design '793. The patents and design covered certain fluid containment apparatuses for use in oil field operations. Zero Spill sued the Heide defendants and 1284897 Alberta Ltd. (Lea-Der) for infringing the patents by making and selling competing oil field fluid containment products. Further, Zero Spill sued the Heide defendants for infringing the '793 Design by making and selling a product that was substantially similar in appearance. Zero Spill also sought a declaration that Canadian Industrial Design 102,346 ('346 Design), held by the Heide defendants, was invalid. Both the Heide defendants and Lea-Der alleged non-infringement of the patents. Lea-Der further alleged that the patents were invalid and sought declarations to that effect. Lea-Der also sought a declaration that another patent, Canadian Patent 2,166,265 ('265 Patent), at one time said to be infringed, was invalid. The Heide defendants alleged that they did not infringe the '793 Design and that their '346 Design was valid.

The Federal Court, in a decision reported at [2013] F.T.R. Uned. 499, dismissed the action. It held that Lea-Der and the Heide defendants had not infringed either patent. Further, the Heide defendants had not infringed the '793 Design. The '375 Patent was valid, but both the '064 and '265 Patents were invalid on the basis of obviousness, and the '064 Patent was invalid on account of anticipation. The court did not deal with the validity of the '346 Design. Zero Spill appealed the non-infringement and invalidity findings and the court's failure to deal with the validity of the '346 Design.

The Federal Court of Appeal allowed the appeal in part, remitting several issues to the trial judge. The court granted Zero Spill 70% of its costs on appeal and below where it had been substantially successful on appeal.

Patents of Invention - Topic 1026

The specification and claims - Construction of a patent - General - The Federal Court of Appeal stated that "The well-accepted canons of construction are as follows: • Claims construction is the first step in a patent suit. • The task of claims construction rests with the court. • The court must read the claims through the eyes of the person skilled in the art to which the patent pertains. • The skilled reader comes to the patent armed with all of the common general knowledge in the art. • The skilled reader construes the claims as at the patent's publication date. • The essential elements of the claims must be sorted from the non-essential elements. • The claims are to be read purposively with the object of obtaining a fair result as between the patentee and the public. • The words of the claims are to be considered with reference to the entire specification, but not with a view to enlarging or contracting the claims' language as written. • Expert evidence is admissible to assist in placing the court in the position of the skilled reader." - See paragraph 41.

Patents of Invention - Topic 1026

The specification and claims - Construction of a patent - General - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of Canadian Patent '375 - The '375 Patent related to an upper containment tray that attached to the top of the flow nipple of an operating oil well drilling rig - Zero Spill sued the defendants for patent infringement - The Federal Court held that the '375 Patent was valid, but not infringed by the defendants - Zero Spill appealed the non-infringement finding, alleging that the Federal Court misconstrued the '375 Patent by incorrectly interpreting the term "telescopically movable" - The Federal Court of Appeal stated that "[e]ven if the Federal Court did construe 'telescopic movement' with an eye to the prior art, Zero Spill's appeal on this ground must still fail. Appellate review is only concerned with legal errors that bear on the outcome of the case. No matter what the applicable standard of review is, if the error would not have affected the Federal Court's judgment, the appeal must be dismissed. Where, as here, the Federal Court offered other sustainable and overwhelming reasons for holding as it did - namely its reliance on the wording of the specification and the expert evidence - merely pointing to an inconsequential legal error will not result in the appeal being allowed." - Further, the court held that Federal Court correctly construed the claims of the '375 Patent - See paragraphs 36 to 55.

Patents of Invention - Topic 1032

The specification and claims - Construction of a patent - Particular patents - [See second Patents of Invention - Topic 1026 ].

Patents of Invention - Topic 1032

The specification and claims - Construction of a patent - Particular patents - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of Canadian Patent '064 - The '064 Patent related to a sectional fluid containment tray that was mounted low on the central stack of an oil well - Its purpose was to capture fluid leaking from above and to drain it away - The Federal Court held that the '064 Patent was neither valid nor infringed by the defendants - In particular, the Federal Court held that the '064 Patent was both anticipated and obvious in its entirety - On appeal, the Federal Court of Appeal held that those claim elements of the '064 Patent that the Federal Court did construe were construed without reversible error and this was sufficient to dispose of Zero Spill's infringement appeal - In considering Claims 1 and 9, the Federal Court focussed on a few key claim elements, holding that each was essential - The Court of Appeal held that the Federal Court did not err when it construed any of these elements - The Federal Court relied heavily on both the text of the patent and the input of the experts, who were initially all agreed - The Court of Appeal was not persuaded that the Federal Court committed palpable and overriding error in preferring the experts it did and there were no other reversible errors in its construction of the patent - However, the Federal Court did not construe completely the claims of the '064 Patent - As a result, it was not possible for it to properly assess the issues of anticipation and obviousness - Thus, its invalidity finding could not stand and had to be remitted to the judge for reconsideration - See paragraphs 70 to 78.

Patents of Invention - Topic 1582

Grounds of invalidity - Lack of "inventive ingenuity" (obviousness) - Test for obviousness - [See Patents of Invention - Topic 1602 ].

Patents of Invention - Topic 1589

Grounds of invalidity - Lack of "inventive ingenuity" (obviousness) - Particular patents - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of Canadian Patent '265 - Patent '265 related to the capture of fluid from a leaking wellhead - The specification described an annular ring with an outer flange that was bolted directly into the central stack of the wellhead - A catch pan was attached and sealed to the outer edge of the annular ring - This way, fluids leaking from above were caught and drained away - The Federal Court found that the '265 Patent was entirely invalid because it was obvious - Zero Spill appealed this finding on multiple bases, including that the Federal Court did not assess obviousness claim-by-claim and considered the obviousness of individual claim elements in the abstract rather than considering the claimed invention as a whole - The Federal Court of Appeal remitted the issue to the Federal Court for redetermination - Whether or not the claim language was disputed, the Federal Court was required to construe or determine the inventive concept of each of the nine claims at issue and thereafter to assess the combinations of the various elements claimed to determine whether they were inventive - See paragraphs 98 to 105.

Patents of Invention - Topic 1602

Grounds of invalidity - Anticipation - Test for - The Federal Court of Appeal stated that "[t]ogether, sections 28.2, 28.3 and 58 of the Patent Act establish that invalidity for anticipation or obviousness must be assessed claim-by-claim. Although sections 28.2 and 28.3 prohibit claims that are anticipated or obvious, these sections offer little help to distinguish between claims that are valid and invalid. In short, these sections establish a standard (novelty or inventiveness, respectively) and certain conditions for their application (including the correct date for determination), without prescribing any test for determining whether that standard is met. To determine whether a given claim is anticipated or obvious, one must apply common law tests." - The court reviewed the case law and held that the trial judge erred in the application of the test in the present case - The court remitted these issues to the judge for determination in accordance with its reasons - See paragraphs 83 to 97.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of a Canadian patent - Zero Spill sued the defendants for patent infringement - The Federal Court held that the patent was valid, but not infringed by the defendants - Zero Spill appealed the non-infringement finding - The Federal Court of Appeal upheld the decision on this point - Patent infringement required that the defendant had misappropriated all of the essential elements of a valid patent claim and Zero Spill had not established palpable and overriding error on this point - The absence of references to expert and documentary evidence did not automatically translate to a finding of palpable and overriding error - The full record was before the Federal Court and on appeal the court had to presume that all of it was reviewed - On a point such as this, the court had to ask whether the Federal Court grappled with the matter as a whole - To determine this, the court's focus had to be on the substance of the reasons for judgment, discerned by a reading of the reasons as an organic whole - See paragraphs 56 to 61.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - [See second Patents of Invention - Topic 1026 ].

Practice - Topic 9164

Appeals - Cross-appeals, notices of contention and notices to vary - Filing of - Effect of failure to file - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of a Canadian patent - Zero Spill sued the defendants for patent infringement - The Federal Court held that the patent was valid, but not infringed - Zero Spill appealed the non-infringement finding - The Federal Court of Appeal stated that, on appeal, one defendant was attempting to assert that the patent was invalid - However, this issue was not properly before the Court of Appeal - In its judgment, the Federal Court had declared the patent valid - If, in the Court of Appeal, the defendant wished to set aside that declaration and challenge the patent's validity, it had to bring a cross-appeal and it had not done so - Therefore, the Federal Court's declaration that the patent was valid stood - See paragraphs 62 and 63.

Trademarks, Names and Designs - Topic 8067

Designs - Registration - Functional articles - The plaintiffs (collectively, "Zero Spill") were non-exclusive licensees of Canadian Industrial Design '793 which covered certain fluid containment apparatuses for use in oil field operations - Zero Spill sued the Heide defendants for infringing the '793 Design by making and selling a product that was substantially similar in appearance - The trial judge found non-infringement based solely on s. 5.1(a) of the Industrial Design Act - On appeal, the Federal Court of Appeal held that the trial judge erred in law when it required Zero Spill to lead evidence explaining which features of its '793 Design complied with s. 5.1(a) - Rather, the Heide defendants were required to plead that asserted features of the design were unprotectable because they were dictated solely by function and were required to adduce evidence to prove it, but they did not - See paragraphs 10 to 21.

Trademarks, Names and Designs - Topic 8067

Designs - Registration - Functional articles - Section 5.1(a) of the Industrial Design Act provided that "No protection afforded by this Act shall extend to (a) features applied to a useful article that are dictated solely by a utilitarian function of the article;" - The Federal Court of Appeal rejected a trial judge's apparent finding that all features of an industrial design that were functional were unprotectable by virtue of s. 5.1(a) even though those features might also appeal to the eye - Together, the plain text of s. 5.1(a) and the purpose underlying the Act confirmed that functional features of designs could be protected under the Act - Only those features whose form were dictated solely by function were not protected - See paragraphs 22 to 27.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 15].

Minister of National Revenue v. Canada Trustco Mortgage Co. (2005), 340 N.R. 1; 2005 SCC 54, refd to. [para. 16].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1; 154 D.L.R.(4th) 193, refd to. [para. 16].

Whirlpool Corp. et al. v. Camco Inc. et al., [2000] 2 S.C.R. 1067; 263 N.R. 88; 2000 SCC 67, refd to. [para. 43].

AstraZeneca Canada Inc. et al. v. Mylan Pharmaceuticals ULC et al. (2012), 432 N.R. 292; 2012 FCA 109, refd to. [para. 43].

Wenzel Downhole Tools Ltd. et al. v. National-Oilwell Canada Ltd. et al., [2014] 2 F.C. 459; 443 N.R. 173; 2012 FCA 333, refd to. [para. 43].

Eurocopter v. Bell Helicopter Textron Canada Ltd. et al. (2013), 449 N.R. 111; 2013 FCA 219, refd to. [para. 43].

Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504; 35 N.R. 390; 122 D.L.R.(3d) 203, refd to. [para. 43].

Manitoba v. Canada - see Lac Seul Indian Band v. Canada.

Lac Seul Indian Band v. Canada (2015),  470 N.R. 187; 2015 FCA 57, refd to. [para. 48].

Canada v. South Yukon Forest Corp. - see South Yukon Forest Corp. et al. v. Canada.

South Yukon Forest Corp. et al. v. Canada (2012), 431 N.R. 286; 2012 FCA 165, refd to. [para. 49].

Dableh v. Ontario Hydro, [1996] 3 F.C. 751; 199 N.R. 57 (F.C.A.), refd to. [para. 51].

Free World Trust v. Electro Santé Inc. et al., [2000] 2 S.C.R. 1024; 263 N.R. 150; 9 C.P.R.(4th) 168; 2000 SCC 66, refd to. [para. 56].

Monsanto Canada Inc. et al. v. Schmeiser et al. (2004), 320 N.R. 201; 2004 SCC 34, refd to. [para. 57].

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. 85].

Purdue Pharma v. Pharmascience Inc. et al. (2009), 347 F.T.R. 224; 77 C.P.R.(4th) 262; 2009 FC 726, refd to. [para. 94].

Bridgeview Manufacturing Inc. et al. v. 931409 Alberta Ltd. et al. (2010), 405 N.R. 32; 87 C.P.R.(4th) 195; 2010 FCA 188, refd to. [para. 95].

Purdue Pharma v. Canada (Attorney General) et al. (2011), 417 N.R. 223; 2011 FCA 132, refd to. [para. 96].

Bauer Hockey Corp. et al. v. Easton Sports Canada Inc. (2011), 414 N.R. 69; 2011 FCA 83, refd to. [para. 97].

Statutes Noticed:

Industrial Design Act, R.S.C. 1985, c. I-9, sect. 5(1)(a) [para. 11].

Patent Act, R.S.C. 1985, c. P-4., sect. 28.2, sect. 28.3 [para. 81]; sect. 58 [para. 82].

Authors and Works Noticed:

Hughes, Roger T., Copyright Legislation & Commentary (2015), pp. 360, 361 [para. 25].

Hughes, Roger T., and Peacock, Susan J., Hughes on Copyright and Industrial Design (2nd Ed. 2005) (Looseleaf consulted on April 7, 2015), § 152 [para. 25].

Counsel:

Christopher J. Kvas, William D. Regan and Adrian H. Lambert, for the appellants;

Bruce Comba, for the respondents, Bill Heide dba Central Alberta Plastic Products, and Rat Plastic Ltd.;

Daryl W. Schnurr and Judy Fowler Byrne, for the respondent, 1284897 Alberta Ltd.

Solicitors of Record:

Piasetzki Nenniger Kvas LLP, Toronto, Ontario, for the appellants;

Emery Jamieson LLP, Edmonton, Alberta, for the respondents, Bill Heide dba Central Alberta Plastic Products, and Rat Plastic Ltd.;

Miller Thomson LLP, Waterloo, Ontario, for the respondent, 1284897 Alberta Ltd.

This appeal was heard at Toronto, Ontario, on October 16, 2014, by Dawson, Stratas and Near, JJ.A., of the Federal Court of Appeal. Stratas, J.A., delivered the following decision for the court at Ottawa, Ontario, on May 4, 2015.