IP monitor: Know when to hold ‘em, know when to fold ‘em – appellate advocacy and patent validity

Canada Publication March 23, 2021

The Federal Court of Appeal (FCA) upheld the trial judgment that certain claims of Canadian Patent No. 2,664,173 (173 Patent) relating to shale shakers in the oil and gas industry were valid and infringed. In doing so, the FCA provided helpful guidance on issues such as liability for infringement prior to issuance of a patent, proper use of the Gillette defence, and the relationship between overbreadth and other grounds of invalidity.

Background

Shale shakers are used in the oil and gas industry like vibrating sieves to separate rock cuttings from the drilling fluid in which they are suspended in order to recover and reuse the drilling fluid. The 173 Patent, owned by M-I L.L.C. (M-I), describes applying a vacuum across the screen used to sieve the slurry of solids and drilling fluid, which increases the amount of drilling fluid recovered. The claims covered a pulsing vacuum when the initial application was filed, but claims covering a continuous vacuum were later added during prosecution.

The Federal Court (FC) found that certain claims of the 173 Patent were valid and infringed by Western Oilfield Equipment Rentals Ltd. (Western) and FP Marangoni Inc. (FPM), who rented out their shale shaker machines to customers.

Too many issues and failure to address the standard of review

Writing for the FCA, Justice Locke questioned the merit of raising so many issues on appeal without paying attention to the applicable standard of review. He noted this prevented the appellants from focusing on their strongest points and on deeper treatment of certain points. Justice Locke also pointed out that for issues of mixed fact and law, the appellants failed to identify the alleged error and why it met the required standard of palpable and overriding error.

Construction of claim elements

Before addressing the specific issues on appeal, the FCA rejected the argument that section 53.1 of the Patent Act should be considered. This section allows written communications between the patentee and the patent examiner to be used as evidence to rebut representations about construction made by the patentee in an action or proceeding. Justice Locke explained that the appellants neither raised section 53.1 at trial, nor identified any representation made by M-I before the FC to be rebutted using communications made during prosecution. He noted the appellants seemed to take issue with the claims amendment during prosecution to encompass the appellants’ shale shaker, but explained that M-I was entitled to make such an amendment, and was well advised to do so.

The FCA concluded that the FC did not misunderstand the expert evidence or make any reviewable errors in its characterization of the numerous claim elements at issue. In particular, Justice Locke agreed with the FC’s finding that there is no distinction between a vapor and a mist, as both refer to a gas containing suspended liquids.

Infringement

Liability not avoided by ceasing activities prior to issuance or the performance of a non-inventive step

The FCA rejected the argument that FPM was not liable for infringement by inducement under subsection 55(2) of the Patent Act because FPM stopped doing business prior to the issuance of the 173 Patent. Justice Locke found that the context and purpose of subsection 55(2) do not suggest that liability can be avoided by stopping infringing activities prior to issuance of the patent or that is limited to direct infringement.

The FCA also agreed with the FC that Western had induced infringement by providing instructions for use of its shale shaker system. Justice Locke found that there is no relief from liability for infringement because end users perform the non-inventive but essential step of turning down the vacuum.

Use of the Gillette defence

The FCA held that the FC did not err in how it considered the Gillette defence as raised at trial. A defendant can use the Gillette defence to allege the product at issue is not patentably distinct from the prior art, putting the patentee on the horns of a dilemma between invalidity and non-infringement. The Gillette defence provides for a shortcut around the process of construing the claims, and determining validity and infringement.

Justice Locke wrote that it may be preferable to avoid the Gillette defence when the court has properly addressed construction, validity, and infringement. He explained that the typical practice of asserting the Gillette defence along with other defences had led to misunderstanding and misapplication. Justice Locke raised the example that the success of a Gillette defence does not depend on a conclusion that the claim in question is anticipated or obvious.

Invalidity

Sufficiency

The appellants argued it is not enough that a skilled person can “figure it out” from the specification for the 173 Patent to be sufficient. Justice Locke disagreed, holding that the need for some non-inventive trial and error does not invalidate a patent for lack of sufficiency. He also did not find that the FC erred in failing to consider technical challenges faced during development of the invention, or that these challenges did not affect the 173 Patent’s sufficiency.

The FC had also dismissed the appellants’ argument regarding best mode on the basis that this requirement under paragraph 27(3)(c) of the Patent Act relates solely to machines, but the 173 Patent claims a method and a system. Justice Locke disagreed with the FC’s reasoning, writing that defining an invention as a system rather than a machine should not prevent the best mode requirement from applying. He also noted there is doubt whether the best mode requirement is limited to machines. Despite these concerns, Justice Locke did not find that the FC committed a reviewable error.

Utility

The FCA disagreed with the appellants’ submission that the FC misunderstood and applied the wrong legal test to their arguments that the claims of the 173 Patent lack utility, including that the inventor did not have a practical working prototype, and the inventor believed that one version of the shale shaker would fall apart. Justice Locke wrote that, while the inventor did not initially arrive at a prototype that could be immediately commercialized, this did not mean the invention was not useful. The threshold for utility is a scintilla, not commercial usefulness.

Justice Locke also rejected the appellants’ argument that there was no sound prediction of utility because the inventor had doubts about the utility of a particular embodiment. First, utility is assessed from the viewpoint of the skilled person rather than the inventor. Second, the inventor’s doubts were limited to a specific shale shaker and were not a general conclusion.

Overbreadth

Justice Locke began his analysis by looking at the basis for overbreadth under subsections 27(3) and 27(4) of the Patent Act, and in light of the bargain theory of patent law. Overbreadth is a distinct ground of invalidity that must be considered separately even though it often overlaps anticipation and insufficiency.

The appellants argued the claims of the 173 Patent are broader than the invention disclosed because the FC found that the claim term “vapor” is a mist, but the patent does not describe pulling a mist through a screen and separating it from the drilling fluid. Justice Locke found that this argument was one of insufficiency and nothing in the claims was omitted from the disclosure. 

The appellants also argued the claims were broader than the invention made because the inventor never contemplated applying a constant vacuum or applying the vacuum only to the screen at the discharge end of the shaker. Justice Locke rejected these arguments, writing that the specification of the patent was a reliable indicator of what the inventor had in mind. He also held that the FC accepted the inventor’s testimony regarding his consideration of the type of vacuum and where it is applied.

Addition of new subject-matter

The appellants argued the 173 Patent is invalid because the claims to a continuous vacuum for the purpose of preventing the slurry of solids and fluid from stalling were not reasonably inferable from the original patent application. Justice Locke rejected the appellants’ submissions that the strict UK test applies to the admissibility of new subject-matter to the original patent application, holding that section 38.2 of the Patent Act allows for reasonable inference. He found the FC did not err in finding that the claims in question were reasonably inferable from the original application, and the FC was correct to exclude evidence on the motivation for amending the claims because it was not relevant.

Obviousness

The appellants argued the FC erred in finding that the prior art does not refer to adjusting the vacuum to prevent stalling of the slurry. They also argued the trial judge did not identify the inventive concept of the claims and their differences from the prior art, and whether these differences would have been obvious. In upholding the trial judge’s ruling that the claims were not obvious, Justice Locke added to recent comments by the FCA that use of the four-part test in the Supreme Court’s Sanofi decision is not mandatory. Section 28.3 of the Patent Act sets out the only mandatory considerations in assessing obviousness.

Undertaking to call experts whose reports have been provided to the court

The FCA confirmed that trial judges are empowered to enforce a party’s undertaking to call expert witnesses at trial. Once an undertaking is given, it would be unfair to allow one party to change its mind, particularly when this could result in introducing evidence not tested by cross-examination.

Western Oilfield Equipment Rentals Ltd. v. M-I LLC, 2021 FCA 24



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