Federal Court invalidates patent based on counsel’s admission of invalidity before Québec court

Background

In Robitaille Equipment et al. v. 9125-6651 Quebec Inc. et al., the Federal Court decided a motion for summary judgment concerning the validity of Canadian Patent No. 2,712,715 in light of a prior admission of invalidity before a Québec court.

In 2016, the defendants started two actions against the plaintiffs in the Cour supérieure du Québec (CSQ) for the infringement of five patents, including the 715 Patent.

Subsequently, the plaintiffs initiated the present action in the Federal Court for a declaration under s. 60(1) of the Patent Act that several claims in three of the five patents (including the 715 Patent) are invalid or null.

During the trial of the actions before the CSQ in November 2019, one of the defendants’ counsel, Me El Ayoubi, admitted that the 715 Patent was invalid for anticipation and obviousness. Furthermore, the defendants modified their pleadings before the CSQ to remove most allegations concerning the 715 Patent.

However, the defendants later contested their counsel’s admission—made without authorization—and presented a motion to this effect to the CSQ. The CSQ rejected the defendants’ motion and confirmed the judicial admission concerning the invalidity of the 715 Patent.

Before the Federal Court, the plaintiffs asked for summary judgment that the admission concerning the 715 Patent invalidated this patent in rem or, at the very least, invalidated the patent inter partes or made it inapplicable to the plaintiffs.

Analysis

The defendants’ proceeding for disavowal before the CSQ

The CSQ had rejected the defendants’ proceeding for disavowal under section 191 of the Code de procedure civile du Québec after examining the three necessary conditions for disavowal:

1. The party must not have authorized the act;
2. The party must not have ratified the act; and
3. The act must have prejudiced the party.

The first condition was satisfied because the defendants’ counsel, Me El Ayoubi, had admitted having exceeded his mandate concerning the declaration of invalidity of the 715 Patent.

However, the CSQ found that the second and third conditions were not met.

There had been ratification of the admission because the evidence was completed before the request for disavowal was made. Furthermore, the counsel ad litem had signed the modification of the pleadings concerning withdrawing the 715 Patent from the litigation. Counsel ad litem also did not object to Me El Ayoubi’s modifications or proposals or to the Court’s frequent interventions regarding the fact that the defendants had recognized the invalidity of the 715 Patent. The defendants had not made a formal request for disavowal during the proceeding.

Furthermore, the defendants were not prejudiced. The defendant Mr. Hamel had declared he didn’t use the 715 Patent and had described it as an improvement on Canadian Patent No. 2,423,830, which was also at issue in the CSQ proceedings. Mr. Hamel believed he would be able to prove infringement of the 830 Patent which, according to him, covered the same elements as the 715 Patent.

The defendants did not appeal the CSQ’s decision rejecting their request for disavowal.

Because the admission before the CSQ was an extrajudicial admission, the Federal Court had to examine its probative value. The Court found the admission had a high probative value because the admission was made without constraints in a trial between the same parties concerning the same patent, the same facts, and the same issues.

Issue estoppel

The Federal Court then examined whether issue estoppel applied. The three conditions for issue estoppel were laid out by the Supreme Court of Canada inToronto (City) v. C.U.P.E., Local 79:

1. The same issue has already been decided;
2. The prior judicial decision was final; and
3. The parties to both proceedings are the same.

The Court had no doubt the conditions were satisfied in this case. The issue was the same: whether a judicial admission had been made. The CSQ’s decision was definitive, because the defendants had chosen not to appeal it. Finally, the parties to the litigation were the same in both proceedings.

Finally, the Court found no reason to exercise its discretion not to apply the principles of issue estoppel.

The judicial admission was a renunciation of the validity of the 715 Patent

The Federal Court found that the defendants’ admission had the effect of invalidating the 715 Patent in rem.

The Patent Act grants a monopoly for an invention under the condition that this invention is inventive, new, and useful.

However, the defendants’ counsel had admitted that the 715 Patent was anticipated, previously disclosed, and non-inventive. The defendants had ratified this admission by their behaviour and had renounced their infringement allegations concerning the 715 Patent.

Conclusion

The Federal Court granted the plaintiffs’ motion for summary judgment. The Court declared that claims 1 and 2 of the 715 Patent are invalid pursuant to subsection 60(1) of the Patent Act. Furthermore, the Court ordered that, pursuant to section 62 of the Patent Act, the Commissioner of Patents must register the certificate of judgment in relation to the 715 Patent so this patent appears to have been invalidated and be null of all effect.

A copy of the decision can be found here.