On October 6, 2016, Justice Roy granted Camso’s motion to stay the re-examination of Camso’s 562 Patent until final judgment is rendered in an action in which the validity of the 562 Patent is being challenged on the same grounds as those raised in the re-examination.
Patent re-examination is provided for in sections 48.1 to 48.5 of the Patent Act. These sections allow any person to request that a patent be re-examined based on prior art consisting of patents, patent applications and printed publications. After a re-examination is requested a re-examination board is formed and reviews the request to determine “whether a substantial new question of patentability affecting any claims of the patent concerned is raised by the request for re-examination.” If so, the patentee is notified and has three months to submit a reply. After receiving the patentee’s reply the re-examination board has one year to complete the re-examination and decide whether to reject or uphold the impugned claims. Apart from initiating the proceeding the party who filed the request for re-examination plays no further role in the proceeding.
Camso’s 294, 509 and 562 Patents all relate to tracks used on ATVs. The 294 Patent was the subject of a re-examination in which a substantial number of claims were cancelled. Immediately after re-examination, but prior to the issuance of the 509 and 562 Patents, Camso sued Soucy for infringement. The 509 and 562 Patents were added to the infringement action shortly after their issuance.
After the 562 Patent was added to the infringement action, Brouillette + Partners filed a request for re-examination of the 562 Patent raising essentially the same validity issues raised in Soucy’s counterclaim. Camso then brought a motion requesting a stay of the re-examination arguing it is not in the interest of justice for the re-examination to continue when the validity of the 562 Patent is already being contested on the same grounds. Justice Roy noted that while the request for re-examination was filed by Brouillette + Partners and not Soucy, their interests align and no effort was made to suggest they were acting independently.
This is not the first time the Federal Court has dealt with a request for re-examination brought concurrently with a validity challenge. In Prenbec the Federal Court held that it has jurisdiction to stay re-examinations of patents and did so pending the outcome of an action involving a validity challenge.
Following Prenbec, Justice Roy applied the three part test set out in RJR Macdonald for determining whether a stay should be granted but noted that it would have arrived at the same outcome had it accepted the argument of Brouillette + Partners and applied the analysis in White. In White, the Court discussed nine factors relevant to assessing whether a stay should be granted under section 50(1)(a) of the Federal Courts Act on the basis that the claim is being proceeded with in another Court or jurisdiction.
Justice Roy’s analysis focused on the irreparable harm and balance of inconvenience components of the RJR Macdonald test. Justice Roy was cognizant of the fact that where two proceedings deal with the same issues the more comprehensive proceeding should be preferred and citing the following passage from Prenbec with approval:
Moreover, as stated earlier, when determining whether to grant a stay, preference should be given to the proceedings which are more comprehensive of the two. In this regard, for reasons expressed above, re-examination proceedings are unequivocally less comprehensive as compared to an infringement/invalidity action before this Court.
In granting the stay, Justice Roy found that the harm to Soucy would be minimal because it would not be deprived of challenging the validity of the 562 Patent. On the other hand, Justice Roy found that the harm to Camso would be irreparable as Camso would face having claims of the 562 Patent cancelled on the basis of a proceeding where the evidence is inferior to that in the infringement proceeding. Justice Roy also found that the balance of inconvenience favoured Camso because Soucy would suffer no injustice as it can call upon its experts and witnesses to defend itself against infringement while arguing the claims are invalid on the same grounds raised in the re-examination:
In one case, Camso would suffer irreparable harm, and the balance of inconvenience is clearly in its favour. In the other, in addition to the harm caused to Camso compared to the inconvenience suffered by Soucy, it must be recognized that the same issues in the request for re-examination are raised in the action, that there is a possibility of inconsistent findings on factual records with different content, and that the decisions would likely be made in parallel.
A copy of Justice Roy’s Order and Reasons can be found here.