In Orthoarm Inc v GAC International LLC, 2015 ONSC 5097, Justice Matheson of the Ontario Superior Court held that certain orthodontic brackets marketed and sold by GAC are not covered by US Patent No. 5,630,715 and therefore not covered by the Licence Agreement between the parties.
The 715 Patent relates to orthodontic brackets that have a mechanism for retaining an archwire without requiring elastic bands. The inventor, Dr. Voudouris, assigned the 715 Patent to Orthoarm, which in turn licenced GAC to make, use, and sell all products covered by the 715 Patent. Millions of products were sold under the Licence Agreement.
In 2003, Dr. Voudouris suggested to GAC that it sell lingual and buccal tube molar brackets based on his design. GAC began development of such New Products in 2005 and began selling them in 2007. GAC denied that the 715 Patent covers the New Products and refused to make any payments to Orthoarm under the Licence Agreement in relation to them. Orthoarm brought a claim for breach of the obligation to pay royalties and also sought aggravated damages.
Justice Matheson noted that his role was to construe the claims of the 715 Patent, a US patent, as would be done at a Markman hearing, and to apply the construction to the New Products to determine if there is infringement. He characterized the opinions of the parties’ expert witnesses regarding US Patent law and the construction of the 715 Patent as submissions that would have been made at a Markman hearing. However, Justice Matheson held that a previous Markman hearing regarding the 715 Patent was irrelevant because different claim terms were at issue.
The claims of the 715 Patent require “a slidable locking shutter movable between open and closed positions …”. Although Orthoarm argued that the claims require only some sliding motion, Justice Matheson interpreted this term to mean that the entire movement of the locking shutter, from open to closed, must be sliding. This interpretation was supported by phrases in the claims and specification.
Justice Matheson concluded that the claims of the 715 Patent are not infringed by the New Products because, although the locking shutter in the New Products slides slightly, its major movement is a rotation.
Justice Matheson also noted that he would not have awarded Orthoarm’s claim for aggravated damages regardless of the outcome. Applying the Supreme Court’s decision in Bhasin, Justice Matheson held that the Licence Agreement did not impose upon GAC a duty of loyalty or of disclosure, and that GAC was free to pursue its individual self-interest.
A copy of Justice Matheson’s Reasons for Judgement may be found here.