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FCA affirms scope of “use” required for infringement

The Federal Court of Appeal upheld a summary trial decision finding Arc Resources Ltd., Rockies LNG Limited Partnership, Rockies LNG GP Corp. and Birchcliff Energy Ltd did not “use” Canadian Patent No. 3,027,085. Steelhead LNG (ASLNG) Ltd. and Steelhead LNG Limited Partnership alleged that the respondents infringed the 085 Patent when, in order to enter into commercially valuable transactions, they disclosed drawings, specifications and cost estimates of a design which, if ever built, would comprise the essential elements of the patent.

In the decision under appeal, the Federal Court found the 085 Patent did not claim “the conceptual design of the LNG facility invention”. The essential elements of the 085 Patent claims included a water-based apparatus that comprised a floating hull, an air-cooled electrically driven refrigeration (AER) system to convert the feed gas to LNG, and LNG storage tanks.

Given that the claimed system did not exist in Canada and the respondents’ new Ksi Lisims project did not infringe the 085 Patent, the Federal Court found the respondents could not have made, constructed, or sold the claimed system.

The appellants alleged three errors of law by the motions judge: (1) he failed to interpret section 42 of the Patent Act in a manner consistent with the purposive approach adopted by the Supreme Court in Monsanto and sufficiently attentive to the statutory context; (2) he incorrectly distinguished the within case from Eurocopter; and (3) he deprived the appellants of the time-limited monopoly under the patent bargain.

The Court of Appeal rejected that the Patent Act grants a patentee the exclusive right, privilege and liberty of using the goal, purpose or advantage of an invention for commercial benefit. After reviewing the decision and cases cited in Monsanto, the Court held that what is “used” under section 42 is the claimed invention. In the case of a patent for an apparatus, the claimed invention is the apparatus described in the claims.

The Court of Appeal also considered the terms “objet” and “objet de l’invention” in the French version of section 42 and rejected that it connotes the goal, purpose, or advantage of an invention. The Court found these terms designate the “subject-matter of the invention”.

To prove infringement, the appellants had to show that the essential elements of the claimed invention were “utilized with a view to production or advantage”. The Court of Appeal held the motion judge did not err in finding that they had failed to do so.

The Court of Appeal then found that the motions judge correctly distinguished the within case from Eurocopter, which held that the uses to which the defendant had put the patented Legacy gear were not solely uses related to the development and submission of information, as required by the Act for the regulatory exception.

Finally, the Court found the motion judge’s interpretation of section 42 did not frustrate the patent bargain. Instead, the appellants’ interpretation of “use” would effectively extend their patented monopoly from 20 years to 30 years if competitors were precluded from starting any preliminary work on an FLNG facility until the 085 Patent expired.

The Court noted other avenues that the appellants could or could have taken:

[85] […] Should anyone seek to use, during the 20-year term of the 085 Patent, an infringing FLNG plant, the appellants could initiate a quia timet proceeding or, following such use, sue for infringement. […]

[…]

[88] The subject matter and time-limited monopoly granted by the Act does not offer the protection that the appellants are seeking. Recourse may lie elsewhere, in the protection of other forms of intellectual property including copyright and moral rights, or in the enforcement of any non-disclosure agreements between the parties respecting the treatment and use of confidential information acquired by the parties in the course of their business dealings. […].

A copy of the decision can be found here.

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