On September 17, 2014, Justice Mosley of the Federal Court of Canada allowed an appeal of an Order of Prothonotary Milczynski (see here) that had struck paragraphs 25 to 27 of the defendants’ amended statement of defence and counterclaim. These paragraphs sought to rely on purported wilful misrepresentations in the prosecution history of Canadian Patent No. 2,255,065:
25. During the pendency of the application for the 065 Patent, the applicant at the time (Andergauge Limited, hereinafter “Andergauge”) amended the 065 Patent application. The amendments, on their face, restricted the scope of the monopoly sought to embodiments which included a valve whose operation was based on the transverse motion of one of its parts. However, the Plaintiffs now seek to assert that the scope of the 065 Patent is infringed by the Defendants, despite the fact that at no time has any TLL Downhole Tool had a valve part or element, which has moved in a transverse manner so as to provide variable flow through the valve.
26. By reason of the activities of Andergauge set out above and pursuant to section 53 of the Patent Act, the 065 was void ab initio. The post-issuance assertion of the 065 Patent demonstrates that the amendments to the 065 Patent application to purportedly restrict the scope of the monopoly were made with the intention of misleading the Patent Office. The amendments were strategically made by the applicant so as purportedly narrow the scope of the 065 Patent application to overcome prior art while knowing that the 065 Patent, when granted, would be alleged against competitors as having a much broader scope. After issuance of the 065 Patent the Plaintiffs now seek to disavow the steps taken in the Patent office so as to assert the 065 Patent with a broader scope as against the Defendants. The Plaintiffs’ conduct demonstrates wilful misleading in the Patent Office due to the Plaintiffs’ due to the Plaintiffs’ allegations that the 065 Patent covers systems having no “transverse motion” in the valve part.
27. In the alternative, the applicant’s conduct before the patent office disentitles the Plaintiffs from the equitable and/or discretionary remedies claimed, including the equitable remedies of an injunction and accounting for profits, and costs.
In striking the impugned paragraphs, Prothonotary Milczynski concluded that the allegation of “unclean hands” relates to the original applicant and not to either of the Plaintiffs. Justice Mosley disagreed, holding:
 In any event, in an action by an assignee to enforce its rights, the defendant may raise as against the assignee whatever defences would have been available against the assignor. It will be for the trial court to sort out whether the plaintiffs are to be denied equitable relief. I agree with the defendants that it is open to them to argue at trial that the plaintiffs should not benefit from the assignment by asserting the patent against the defendants, while avoiding the consequences of [the assignor’s] alleged misconduct before the Patent Office. [references omitted]
Justice Mosley then summarized the jurisprudence on whether misrepresentations in documents filed with the Patent Office may be admissible to establish a breach of section 53 of the Patent Act. While acknowledging that the prosecution history is not admissible for the purpose of claims construction, Justice Mosley found that the evidence of misrepresentation may be admissible for this purpose, concluding:
 As stated in Foseco Trading Ag v Canadian Ferro Hot Metal Specialties Ltd (1991), 36 CPR (3d) 35 (FCTD), cited by the Supreme Court in Free World Trust, above, at para 67: “information contained in file wrappers, either domestic or foreign, may be relevant for some purposes on some occasions.” It remains a live issue whether section 53 of the Patent Act may void an entire patent due to steps taken in the application process. The prothonotary therefore erred in finding that it was plain and obvious that the defence had no chance of success.
A copy of Justice Mosley’s Order and Reasons may be found here.
The decision has been appealed to the Federal Court of Appeal.