2021 FC 1437, 2021 FC 1437

EDITOR’S NOTE: This document is subject to editorial revision before its reproduction in final form in the Federal Courts Reports . T-451-20 2021 FC 1437 Kobold Corporation, Kobold Completions Inc., and 2039974 Alberta Ltd. ( Plaintiffs/Defendants by Counterclaim ) v. NCS Multistage Inc. ( Defendant/Plaintiff by Counterclaim ) Indexed as: Kobold v. NCS Multistage Inc. Federal Court, Zinn J.—By videoconference, September 29, 2021; Ottawa, December 17, 2021 and January 7, 2022. Editor’s Note: Portions redacted by the Court are indicated by [***]. Patents — Infringement — Motion by defendant/plaintiff by counterclaim (defendant) for

summary judgment, pursuant to Federal Courts Rules , r. 213 on all claims raised in pleadings of plaintiffs/defendants by counterclaim (plaintiffs) involving patent infringement — Plaintiffs, defendant both in business of providing equipment to oil, gas industry for hydraulic fracturing, known as fracking — In present action, plaintiffs’ claiming that defendant infringed, is infringing Canadian Patent No. 2919561 (′561 Patent) with four of its proprietary tools used in fracking — Defendant asked to have action resolved based on its defence of prior use pursuant to Patent Act , s. 56 — Litigation concerned bottomhole assembly (BHA), tool used to prepare well for production — Inventive concept of ′561 Patent is new way of equalizing pressure in BHA by pulling on sealing element — Defendant building, operating number of BHAs including Mongoose, Innovus — Each of these BHAs uses device named Blue Bullet, which defendant using since 2012 — Mongoose BHA has been in use since 2012 — Plaintiffs admitted that defendant could continue to manufacture, use 2012 Mongoose but stated that what defendant could not do was expand into new commercial products, such as defendant’s other three BHAs — Plaintiffs’ expert claiming that only Innovus BHA infringing claims 9, 12 of ′561 Patent — Issues were: whether matter was appropriate for

summary judgment or

summary trial; what was proper

interpretation of Patent Act , s. 56 ; what was proper construction of claims of ′561 Patent; whether defendant’s products or activities infringed ′561 Patent; whether defendant could rely on Patent Act , s. 56 as defence to any infringement — Some but not all aspects of claim, defence were suitable for

summary judgment — Proper

interpretation of Patent Act , s. 56 was issue suitable for

summary judgment — Also appropriate to construe claims of ′561 Patent on this

summary judgment motion — Patent Act , s. 56 coming into effect on December 13, 2018 — Current version thereof to be read as granting more expansive rights than previous version — Granting prior user right to commit “act” that would have otherwise constituted infringement, which is significantly broader, covering wider set of circumstances than sale or use of physical product — New statutory language including use of patented process as prior use — Regarding proper construction of claims of ′561 Patent, plaintiffs` submission that expert witness making no error in construction of independent claims of ′561 patent correct — Drafter of ′561 Patent used consistent terminology throughout independent claims — Defendant’s submissions respecting claim differentiation, use of term “secured” in specification flawed — Regarding whether defendant’s products or activities infringed ′561 patent, there was insufficient evidence to make determination on infringement on motion or on

summary trial — Evidence unclear as to whether defendant`s BHAs infringing ′561 Patent — Given conflicting or insufficient evidence on certain technical issues involving equalization in particular, question of whether defendant’s BHAs infringing ′561 Patent not appropriate for

summary judgment or

summary trial — Regarding defendant’s reliance on Act , s. 56 as defence to any infringement, defendant could not rely on Act , ss. 56(6) , 56(9) — Clear that Patent Act , ss. 56(6) , 56(9) are intended to benefit third parties who purchase articles or services of others — No evidence defendant was purchasing services from others; no evidence to establish that defendant was purchasing Blue Bullet element from third party — Given lack of evidence provided by defendant to support defences under Act , ss. 56(6) , 56(9) , it was appropriate to grant

summary judgment on issue of whether these subsections applied — These defences were dismissed — Also, given circumstances herein, was necessary to determine which of defendant’s acts were alleged to infringe ′561 Patent; therefore infringement analysis was necessary to determine which acts had to be compared — Insufficient evidence to determine which of defendant’s acts infringed ′561 Patent — Therefore, motion failed respecting defendant’s reliance on Act , s. 56(1) — This was matter requiring trial — Motion granted in part. Practice — Judgments and Orders —

Summary Judgment — Plaintiffs/defendants by counterclaim (plaintiffs), defendant/plaintiff by counterclaim (defendant) both in business of providing equipment to oil, gas industry for hydraulic fracturing, known as fracking — In present action, plaintiffs claiming that defendant infringed, is infringing Canadian Patent No. 2919561 (′561 Patent) with four of its proprietary tools used in fracking — Whether matter appropriate for

summary judgment or

summary trial — Federal Courts Rules , r. 215 providing Court with clear direction on

summary judgment motion — Court must grant

summary judgment if it is satisfied that there is no genuine issue for trial — In present case, some aspects of claim, defence suitable for

summary judgment — Proper

interpretation of Act , s. 56 was issue suitable for

summary judgment — Also, was appropriate to construe claims of ′561 Patent on present

summary judgment motion — However, there were areas of claim, defence that could not be determined on evidence; therefore, these had to be determined at trial. This was a motion for

summary judgment by the defendant/plaintiff by counterclaim (defendant), pursuant to rule 213 of the Federal Courts Rules , on all of the claims raised in the pleadings of the plaintiffs/defendants by counterclaim (plaintiffs) involving patent infringement. The plaintiffs and the defendant are both in the business of providing equipment to the oil and gas industry for hydraulic

fracturing, commonly known as fracking. In this action, the plaintiffs claim that the defendant infringed and is infringing Canadian Patent No. 2919561 (′561 Patent) with four of its proprietary tools used in fracking. The defendant asked to have the action resolved based on its defence of prior use pursuant to

section 56 of the Patent Act . If successful, it stated it would drop its counterclaim. Fracking is a method of extracting oil and natural gas. The litigation concerned the bottomhole assembly (BHA), a tool used to prepare a well for production. The inventive concept of the ′561 Patent is a new way of equalizing pressure in the BHA by pulling on the sealing element. In so doing, the sealing element can be disengaged from the wall of the well, creating an annular passageway on the outside of the sealing element for fluid to flow through. The defendant builds and operates a number of BHAs.

The four BHAs at issue in this litigation are known as the Mongoose, Shift Frac Close (SFC), Shift Frac Close 2 (SFC 2), and Innovus. The evidence was that each of these BHAs uses as part of its packer assembly a device named the Blue Bullet. Each is used in conjunction with an equalization value that releases the fluid pressure and unsets the packer. Apparently, the defendant has been using the Blue Bullet packer element in its BHAs since 2012. While the Blue Bullet element has been used in the defendant’s BHAs since 2012, variants of this device have been developed over time.

The Mongoose BHA has been in use since 2012. The evidence of the dates of first use of the other BHAs was unclear but appeared to have been subsequent to the Mongoose.At the hearing, the plaintiffs admitted that the defendant could continue to manufacture and use the 2012 Mongoose (presumably because of

section 56 of the Patent Act ) but stated that what the defendant could not do was expand into new commercial products, such as the other three BHAs. In the opinion of the plaintiffs’ expert in this proceeding, all four of the defendant’s BHAs fell under claims 1 and 15 of the ′561 Patent. However, only the Innovus BHA infringed claims 9 and 12. This is because all of the defendant’s BHAs operate by way of co-operating shoulders and therefore the sealing element is not “secured” to the mandrel. However, in the case of the Innovus, there is a set screw running from the sealing ring to the mandrel, which secures them, despite the co-operating shoulders. This was the first judicial

interpretation of

section 56 of the Patent Act and the first occasion it was considered as a defence to a patent infringement action. The issues were whether the matter was appropriate for

summary judgment or

summary trial; what was the proper

interpretation of

section 56 of the Patent Act ; what was the proper construction of the claims of the ′561 Patent; whether the defendant’s products or activities infringed the ′561 Patent; and whether the defendant could rely on

section 56 of the Patent Act as a defence to any infringement Held , the motion should be granted in part. Rule 215 of the Federal Courts Rules provides the Court with clear direction on a

summary judgment motion. The Court must grant

summary judgment if it is satisfied that there is no genuine issue for trial (subsection 215(1)). Where the only genuine issue for trial is a question of law, the Court may determine the question and grant

summary judgment accordingly (paragraph 215(2)(b)). If the Court is satisfied that there is a genuine issue for trial, it may still determine that issue by way of

summary trial or dismiss the motion in whole or in part; it can order that the action or the issues in the action not disposed of by

summary judgment proceed to trial or that the action be conducted as a specially managed proceeding (subsection 215(3)). The burden of establishing that there is no genuine issue for trial is heavy and

summary judgment should be granted only in the clearest of cases. In this case, some but not all aspects of the claim and defence were suitable for

summary judgment. The proper

interpretation of

section 56 of the Patent Act was a discrete question of law that could be resolved without reference to any of the factual issues at play. It was an issue suitable for

summary judgment. Furthermore, it was appropriate to construe the claims of the ′561 Patent on this

summary judgment motion. There were areas of the claim and defence that could not be determined on the evidence before the Court and therefore had to be determined at a trial.

Section 56 of the Patent Act , as it currently reads, came into effect on December 13, 2018. This provision applies only in respect of an action or proceeding in respect of a patent issued on the basis of an application whose filing date is on or after October 1, 1989, and that is commenced on or after October 29, 2018. Subsections (1), (6) and (9) of

section 56 of the Patent Act were at play in this litigation. The current version of

section 56 is to be read as granting more expansive rights than the previous version. In particular, it grants a prior user the right to commit an “act” that would have otherwise constituted infringement. This is significantly broader and covers a wider set of circumstances than simply the sale or use of a physical product. The new statutory language includes the use of a patented process as a prior use. The word “act” in subsection 56(1) should be read in light of

section 42 of the Patent Act , which speaks to a patent granting exclusive rights to “making, constructing and using the invention and selling it to others to be used.” These are the acts protected by subsection 56(1). Second, the previous English version of subsection 56(1) limited the protection to the sale or use of the “specific” physical manifestation of the invention. The current version of subsection 56(1), in both languages, instead protects the commission of “the same act” (“ le même acte ”) that would have constituted infringement.

Finally, the current version of subsection 56(1) grants protection not only to persons who committed an infringing act prior to the claim date but also to those who “made serious and effective preparations to commit such

an act.” Subsections 56(6) and 56(9) deal with the use of a purchased

article or service. They appear designed to extend prior user rights to third parties. There are no corresponding provisions in the previous version of the Patent Act . Under subsection 56(1), while the prior user may add to or alter the invention in other respects that do not further infringe the patent, the prior user cannot change or alter the relevant (i.e. relating to the inventive concept) part of the invention, even if those modifications infringe the inventive concept in the same manner.

In considering a defence under subsection 56(1), first, one must determine whether the acts being performed before and after the claim date are identical (other than wholly non-functional changes, such as colour). If they are, then there is no need to consider infringement given that subsection 56(1) would always provide a defence to any potential infringement. Second, if the acts are not identical, one must determine whether the acts infringe the patent, and if they do, which claims.

If the post-claim acts do not infringe the patent, then there is no “otherwise infringing acts” and therefore no need to rely on subsection 56(1). If the pre-claim acts do not infringe the patent, subsection 56(1) cannot apply. If the post-claim date acts infringe a particular claim of the patent that the pre-claim date acts do not, subsection 56(1) cannot apply. Finally, if the pre- and post-claim date acts are not identical but only infringe the same claims, then one must determine whether the changes relate to the inventive concept of the patent. If they do not, then subsection 56(1) will provide a defence.

Only in the clearest of cases, where the acts before the claim date are identical to those after the claim date, is there no need to construe the claims of the patent or conduct an infringement analysis. Such cases would be particularly well suited for

summary judgment. With respect to the proper construction of the claims of the ′561 Patent, the defendant submitted in particular that the plaintiffs’ expert witness erred in construing the phrase “secured thereto” in claims 9 and 12 of the ′561 Patent, which he alleged the Innovus packer was infringing, while the other packers do not. The plaintiffs’ submission that the expert witness made no error in his construction of the

independent claims of the ′561 patent was correct. The principles of claim construction and the specification of the ′561 Patent supported the expert witness’ distinction between the words “secured” and “connected.” The drafter of the ′561 Patent used consistent terminology throughout the independent claims. Where the drafter deviated in the language used, it should be presumed that a different meaning was intended. The defendant’s submissions respecting claim differentiation and the use of the term “secured” in the specification were flawed.

Regarding whether the defendant’s products or activities infringed the ′561 patent, there was insufficient evidence to make a determination on infringement on the motion or on a

summary trial. The evidence was unclear as to whether the defendant’s BHAs were infringing the ′561 Patent. According to the claims of the ′561 Patent, pulling on the sealing element creates an annular passageway that allows fluid to flow through, equalizing pressure. Therefore, even if the defendant’s operations cause the sealing element to be pulled on, there is only infringement if this pulling creates an annular passageway that equalizes pressure.

Given that the defendant’s BHAs feature equalization valves, if the equalization valves equalize pressure before the annular passageway is formed, then the annular passageway does not equalize pressure and there is no infringement. The specification of the ′561 Patent is clear that an annular passageway is not formed immediately after the sealing element is pulled. The process of forming an annular passageway takes time. It is entirely possible that in a device that features an equalization valve, equalization will already be complete by the time that the annular passageway is formed.

There was conflicting evidence as to how long it takes for equalization to occur. There was insufficient evidence on the motion as to how long it takes to equalize pressure using an equalization valve. Combined with the uncertainty of how long it takes for an annular passageway to form by pulling on the sealing element, it was unclear whether equalization would already be complete prior to the annular passageway being formed. Therefore, the question of whether the defendant’s BHAs infringe the ′561 Patent was not appropriate for

summary judgment or

summary trial. As to whether the defendant could rely on

section 56 of the Act as a defence to any infringement, the defendant could not rely on subsections 56(6) and 56(9) of the Patent Act . It was clear that subsections 56(6) and 56(9) of the Patent Act are intended to benefit third parties who purchase articles or the services of others. With respect to subsection 56(9) , there was no evidence the defendant was purchasing services from others; the evidence showed that the defendant itself was performing the services. While its customers may be able to rely on subsection 56(9) , the defendant could not.

With respect to subsection 56(6) , there was no evidence to establish that the defendant was purchasing the Blue Bullet element from a third party. It did not identify this party. There was no reason why a party should benefit from the more generous rights under subsection 56(6) merely because it chooses to outsource production of devices which it designed. In this case, given that no evidence of the third-party manufacturer was provided, it could be inferred that this party did not exist. Moreover, subsection 56(6) did not apply because the use of the Blue Bullet element was not the potentially infringing act.

Given the lack of evidence provided by the defendant to support the defences under subsections 56(6) and 56(9) of the Patent Act , it was appropriate to grant

summary judgment on the issue of whether these subsections applied. These defences were dismissed. Unless the defendant’s acts prior to the claim date of the ′561 Patent were identical to those after the claim date, then it was necessary to determine which of its acts were alleged to infringe the ′561 Patent. This was not a case in which no changes in the defendant’s actions were made and therefore an infringement analysis was necessary to determine which acts had to be compared. There was insufficient evidence to determine which acts of the defendant infringed the ′561 Patent.

There was also a requirement in subsection 56(1) that the acts be related to the inventive concept of the patent. It was clear that the inventive concept of the ′561 Patent is the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure. The defendant’s additional set screw on the Innovus BHA and the addition of a split ring on the SFC 2 BHA both related to the connection between the mandrel and the sealing element, which was part of the inventive concept of the ′561 Patent.

There was no compelling reason to ignore the expert’s evidence that the set screw secures the sealing element to the mandrel of the Innovus BHA. Therefore, the motion failed with respect to the defendant’s reliance on subsection 56(1) of the Patent Act . This was a matter requiring a trial. In conclusion,

summary judgment was granted with respect to the

interpretation of

section 56 of the Patent Act , the construction of the ′561 Patent, and the non-availability of the defences under subsections 56(6) and 56(9) of the Patent Act . In light of the admission by the plaintiff that the defendant could continue manufacturing and using the Mongoose, the claim as it related to that device, was dismissed.

Summary judgment was not granted with respect to issues of infringement and the application of subsection 56(1) of the Patent Act to the facts of this matter. STATUTES AND REGULATIONS CITED Budget Implementation Act, 2018, No. 2 , S.C. 2018, c. 27 ,

summary. Federal Courts Rules , SOR/98-106 , rr. 213, 215. Patent Act , R.S.C., 1985, c. P-4, ss. 42 , 56 . Patents Act 1977 (U.K.), 1977, c. 37, s. 64(1). CASES CITED APPLIED: Premakumaran v. Canada , 2006 FCA 213 , [2007] 2 F.C.R. 191 ; Apotex Inc. v. Merck & Co. , 2002 FCA 210 , [2003] 1 F.C. 242 . CONSIDERED: Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc. , 2011 FC 776 , [2013] 1 F.C.R. 413 ; Merck & Co., Inc. v. Apotex Inc. , 2006 FCA 323 , [2007] 3 F.C.R. 588 ., Lubrizol Corporation v. Esso Petroleum Co. Ltd. , [1997] R.P.C. 195 (Eng. C.A.); Forticrete Ltd. v. Lafarge Roofing Ltd. , [2005] EWHC 3024 (Ch.). REFERRED TO:

Kobold Corporation v. NCS Multistage Inc., 2021 FC 742; Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87; CanMar Foods Ltd. v.TA Foods Ltd., 2021 FCA 7, [2021] 1 F.C.R. 799; Watson v. Canada (Indian and Northern Affairs), 2017 FC 321; Western Electric Co.,Inc., et al. v. Baldwin International Radio of Canada, (SCC), [1934] S.C.R. 570; Halford v. Seed Hawk Inc., 2001 FCT1154, 16 C.P.R. (4th) 189; GlaxoSmithKline Inc. v. Pharmascience Inc., 2011 FC 239, 91 C.P.R. (4th) 189; Kirkbi Ag v. Ritvik HoldingsInc. (1998), (FC), 150 F.T.R. 205 (T.D.). AUTHORS CITED Canadian Oxford Dictionary, 2nd ed.

Toronto: Oxford University Press, 2004, “same”. Le Petit Robert, 2022 ed. “même”. MOTION by defendant/plaintiff by counterclaim for

summary judgment, pursuant to rule 213 of the Federal Courts Rules, on all of theclaims raised in the pleadings of the plaintiffs/defendants by counterclaim involving patent infringement of their fracking tool patent.Motion granted in part. APPEARANCES William D. Regan, Christopher J. Kvas, Evan Reinblatt and Rachel Meland for plaintiffs/defendants by counterclaim. Patrick Smith, Sharn Mashiana and Mike Myschyshyn for defendant/plaintiff by counterclaim. SOLICITORS OF RECORD Piasetzki Nenniger Kvas LLP, Toronto, for plaintiffs/defendants by counterclaim.

Seastone IP LLP, Calgary, for defendant/plaintiff by counterclaim. (Confidential Judgment and Reasons were issued December 17, 2021) The following are the public reasons for judgment and judgment rendered in English by Zinn J.: I. Introduction [1] The plaintiffs (Kobold) and the defendant (NCS) are both in the business of providing equipment to the oil and gas industry forhydraulic fracturing, commonly known as fracking. In this action, Kobold claim that NCS has infringed and is infringing CanadianPatent No. 2919561 (the ′561 Patent) with four of its proprietary tools used in fracking. [2] NCS moves for

summary judgment on all of the claims raised in the pleadings pursuant to rule 213 of the Federal Courts Rules,SOR/98-106 [Rules]. NCS asks to have the action resolved based on its defence of prior use pursuant to

section 56 of the Patent Act,R.S.C., 1985, c. P-4 [the Act]. If successful, it says it will drop its counterclaim. [3] In these reasons I shall first describe (1) the fracking process, (2) the ′561 Patent, (3) the NCS tools or devices at issue, and (4)the evidence of Kobold’s expert witness, Dr. Fleckenstein. After that, I shall analyze and discuss the issues involved in the matter, being(1) whether the matter is appropriate for

summary judgment, (2) the proper

interpretation of

section 56 of the Patent Act, (3) theconstruction of the ′561 Patent, (4) whether the NCS products or activities infringe the ′561 Patent, and (5) whether NCS can rely onsection 56 of the Patent Act as a defence to the action. II. Facts A. Fracking [4] Fracking is a method of extracting oil and natural gas. It was explained in some detail at paragraphs 27 to 37 of the affidavit ofthe plaintiff’s expert, Dr. William W. Fleckenstein. This explanation is not challenged and indeed accords with the description offered bycounsel for NCS.

I will summarize it. [5] Hydrocarbons such as oil and natural gas are contained in formations below the earth’s surface. In order to access thesehydrocarbons and bring them to the surface, a well is drilled. The formation may require additional treatment, such as hydraulicfracturing, in order to stimulate the extraction of the hydrocarbons.

This typically involves pumping large volumes of fluid at highpressure into the well. [6] After drilling vertically, horizontal drilling may be required to allow the formation to be stimulated in multiple stages, typicallystarting from the toe of the horizontal lateral, the point furthest from the vertical portion of the well, and working back to the heel. [7] This litigation concerns the bottomhole assembly (BHA), a tool used to prepare a well for production.

The BHA is run down thewell until it reaches a zone of interest (i.e. the area underneath a formation from which the operator wishes to extract oil or gas). Anelement of the BHA known as a packer is used to seal the well so that fluid cannot pass beyond it. [8] The packer has anchors that it uses to attach itself to the wall of the well. The packers at issue in this litigation also have anelement made of an elastomeric material. An elastomeric material is one that can be stretched.

The elastomeric element is squeezed untilit expands outward enough to seal the well, preventing fluids from flowing beyond the zone of interest. This squeezing is done byanchoring the packer and then continuing to push the BHA further into the hole. The anchor keeps some elements of the packer in placewhile others continue to move. Those moving elements push the elastomeric element into the non-moving elements, compressing it.

[ 9 ] Once the packer is set, sealing the well, the fracking fluid is injected into the well. The high pressure of the fluid further compresses the elastomeric element and assists in blocking off the downhole portion of the well. [ 10 ] There are various ways for the fluid to enter the formation. In some cases, the pressure of the fluid is used to cut through the wall of the well at the zone of interest, creating permanent holes in the well lining. In other cases, ports are installed in the well casing. The BHA opens these ports to allow fluid to pass through.

In some cases, the ports can be closed when the packer is unset. [ 11 ] After the injection is complete, the packer must be unset by contracting the elastomeric element and disengaging the anchors. However, after injecting the fluid, there is a large difference in the pressures above and below the packer. These pressures need to be equalized before unsetting the BHA. The most common ways to do this in the prior art are by placing a valve, called an equalization valve, on the sealing element, or by having a passageway through the centre of the tool that allows fluid to pass through, equalizing pressure.

The ′561 Patent discloses a new method of equalizing pressure by pulling on the sealing element. [ 12 ] Once the packer is unset, the BHA can be moved to the next zone of interest. In cases where permanent holes are created or where the ports cannot be closed, the completion must take place starting from the toe end of the well and moving towards the heel. Otherwise, the fluid would exit through the previously opened holes, causing a loss of pressure. If the ports can be closed, this is not a concern.

Therefore, an advantage of closable ports is the ability to frack zones of interest in any order and to re-frack previously fracked zones. B. The ′561 Patent [ 13 ] The inventive concept of the ′561 Patent is a new way of equalizing pressure in the BHA by pulling on the sealing element. In so doing, the sealing element can be disengaged from the wall of the well, creating an annular (i.e. ring shaped) passageway on the outside of the sealing element for fluid to flow through. [ 14 ] Independent claim 1 of the ′561 Patent reads as follows: 1.

A method for completing a wellbore comprising: running a completion tool, having a resealable packer therein, into the wellbore, the resealable packer having an annular elastomeric sealing element; an anchor for anchoring the sealing element into the wellbore; and a mandrel and a housing, the mandrel being axially and telescopically moveable within the housing, the elastomeric sealing element being positioned circumferentially about the mandrel and connected at least a pull end thereof; locating the sealing element below a zone of interest in the wellbore; axially compressing the elastomeric sealing element into sealing engagement with the wellbore and actuating the anchor by moving the mandrel axially toward the housing; treating the zone of interest above the compressed elastomeric sealing element, creating a pressure differential across the sealing element, and thereafter; applying axial tension to the pull end of the elastomeric sealing element for radially retracting at least the pull end thereof by moving the mandrel axially away from the housing for forming an annular passageway between the elastomeric sealing element and wellbore, allowing pressure thereabove to equalize with pressure therebelow, for releasing the packer from sealing engagement with the wellbore. [ 15 ] Much of the method described in this claim is a recitation of the known prior art, which has been discussed above.

The novel aspects involve pulling on the sealing element to create an annular passageway. [ 16 ] The method of claim 1 makes use of a resealable packer (i.e. a packer that can be used multiple times). The packer has an elastomeric sealing element, an anchor, and a mandrel and housing. A mandrel is a slightly tapered cylinder. In the packer in claim 1, the mandrel is contained within a housing.

The mandrel can move telescopically within the housing, that is to say, it can move back and forth along the axis of the housing like a telescope being opened or closed. [ 17 ] The elastomeric sealing element is connected to the mandrel. This connection exists at least at the “pull end” of the sealing element. This is defined in the specification as the end at which the sealing element is eventually pulled to decompress it. [ 18 ] The packer is positioned near a zone of interest. The mandrel is then pushed into the housing which engages the anchor and compresses the sealing element, sealing the well.

Fracking fluid is injected and a pressure differential forms. [ 19 ] After injecting the fluid, the mandrel is pulled away from the housing. Because the mandrel is connected to the sealing element, it pulls on it, which causes it to decompress, forming an annular passageway for fluid to flow through and allowing the pressure to equalize. [ 20 ] Independent claim 9 is similar to claim 1. It claims a method of equalizing pressure above and below a sealing element of a packer. In effect, it describes the final step in claim 1.

However, unlike in claim 1, the pull end of the sealing element is described as being “secured” to the mandrel rather than being “connected” to it. [ 21 ] Independent claim 12 is virtually identical to claim 9. However, rather than being a method for equalizing pressure, it is a method for protecting the sealing element. The specification of the ′561 Patent indicates that debris can build up in the wellbore during fracking. The ′561 Patent claims that creating an annular passageway around the sealing element can reduce the risk of this debris

damaging the sealing element. As with claim 9, the pull end of the sealing element in claim 12 is described as being “secured” to the mandrel. [ 22 ] Independent claim 15 is for a pressure equalization tool. It is largely equivalent to claim 9, the pressure equalization method. However, in claim 15, as in claim 1, the mandrel and the pull end of the sealing element are described as being “connected” to each other rather than “secured.” [ 23 ] Most of the dependent claims are not relevant for this matter.

However, four dependent claims are of interest: Claims 8, 11, 14, and 29 are dependent on claims 1, 9, 12, and 15, respectively. In claims 8 and 29, there is a ring “secured” to the uphole end of the sealing element (i.e. the end closest to the entrance of the well). This ring is attached to the mandrel by threads.

In the case of claim 8, the ring is described as being “connected” to the mandrel by threads, while claim 29 it is described as being “operatively connected.” In claims 11 and 14 the pull end of the sealing element is described as being “secured” to the mandrel by threads. [ 24 ] Most of the figures in the ′561 Patent show embodiments in which the sealing element is attached to a ring, with the ring being attached to the mandrel by threads.

However, in addition to examples in which the mandrel is attached to the ring by threads, there is also an example that operates by way of “co-operating shoulders” on the mandrel and the ring. These shoulders can be seen in Figure 8 of the ′561 Patent (elements 86 and 88). [ 25 ] When the mandrel is pushed telescopically into the housing, the space between the shoulders increases. When the mandrel is pulled back out, the mandrel is able to move for some distance without the ring moving.

Eventually however, the shoulders push against each other and pulling the mandrel further will also cause the ring to move in the same direction. The effect of this is that there is some distance for which the mandrel can move without the ring also moving. In the case of a threaded connection, the mandrel and the ring always move together. C. NCS’s Devices [ 26 ] NCS builds and operates a number of BHAs. The four BHAs at issue in this litigation are known as the Mongoose, Shift Frac Close (SFC), Shift Frac Close 2 (SFC 2), and Innovus.

The Innovus BHA is also referred to as the Shift Frac Close 3 in some of the materials. [ 27 ] The evidence is that each of these BHAs uses as part of its packer assembly a device named the Blue Bullet. Each is used in conjunction with an equalization value which releases the fluid pressure and unsets the packer. [ 28 ] According to Ryan Redecopp, an employee of NCS, NCS has been using the Blue Bullet packer element in its BHAs since 2012. Mr.

Redecopp says that the Blue Bullet element was tested in the field in 2012 and since then has been used in all of the NCS’s BHAs that require the use of a compression set packer. [ 29 ] While the Blue Bullet element has been used in NCS’s BHAs since 2012, variants of this device have been developed over time, including a “scalloped” Blue Bullet element. [ 30 ] The Mongoose BHA has been in use since 2012.

The evidence of the dates of first use of the other BHAs is unclear, but appear to have been subsequent to the Mongoose. [ 31 ] At the hearing, Kobold admitted that NCS can continue to manufacture and use the 2012 Mongoose (presumably because of

section 56 of the Patent Act ), but says that what NCS cannot do is expand into new commercial products, such as the other three BHAs. D. The Fleckenstein Affidavit [ 32 ] As noted, Kobold filed the affidavit of Dr. William Fleckenstein, their expert in this proceeding. A motion by NCS to file a reply expert affidavit was dismissed: see Kobold Corporation v. NCS Multistage Inc. , 2021 FC 742 . Dr. Fleckenstein is a registered engineer in the state of California and a professor at the Colorado School of Mines in Petroleum Engineering.

He is also a principal at a petroleum engineering consulting firm. [ 33 ] In his affidavit, Dr. Fleckenstein construes the claims of the ′561 Patent, discusses the differences in structure and function of the various BHAs of NCS, and determines whether any of the four packer assemblies that he reviewed, or their use in a completion tool, fall within the scope of the independent claims of the ′561 Patent. [ 34 ] Dr. Fleckenstein’s construction of the ′561 Patent’s claims is largely uncontroversial except on a single point. Much of his construction has already been summarized above.

The major point of contention regarding Dr. Fleckenstein’s construction is with respect to the terms “secured” and “connected.” [ 35 ] At paragraphs 52 to 65 of his affidavit, Dr. Fleckenstein defines several terms in the ′561 Patent as, in his opinion, they would be understood by the person ordinarily skilled in the art. “Connected” and “secured” are defined by Dr. Fleckenstein as follows: [0055] Connected – two or more elements that are in some way linked together.

This is a broad term that does not specify or limit the type of connection between the elements. … [0057] Secured – two elements that are attached together to allow a force to be transmitted from one structure to the next, and to allow co-movement of the two elements. [ 36 ] As an example of elements that may be connected but not secured, one can imagine two objects joined by a loose rope. While they are connected, moving one object will not necessarily move the other, unless the movement is so great as to cause the rope to

become fully extended. This is in contrast with two objects connected by a rigid metal bar. Any movement of one object will always cause the other object to move with it. Dr. Fleckenstein would describe the objects connected by a rigid bar as secured to one another. [ 37 ] The distinction between “connected” and “secured” is relevant, as claims 1 and 15 describe the mandrel and the sealing element as being “connected” to each other, while claims 9 and 12 describe the sealing element being “secured” to the mandrel. [ 38 ] In Dr.

Fleckenstein’s opinion, devices in which the sealing element is connected to the mandrel by threading (as in Figures 1 – 7 of the ′561 Patent) are both connected and secured. However, devices which operate by way of co-operating shoulders are connected but not secured, as the mandrel can be moved, at least for some distance, without moving the sealing ring. [ 39 ] Dr. Fleckenstein notes in his claim construction that the claims of the ′561 Patent make no mention of an equalization valve. In his opinion, the presence of an equalization valve is not mutually exclusive with the claims of the ′561 Patent.

A device falling under the claims of the ′561 Patent could include an equalization valve to further increase the speed at which equalization occurs. Dr. Fleckenstein notes that a major drawback of equalization valves is that they have limited cross-sectional area, which affects equalization time. Using both an equalization valve and the methods disclosed in the ′561 Patent would reduce this time, leading to less expense on a wellsite. [ 40 ] Dr. Fleckenstein engages in a thorough analysis of the Mongoose, SFC, SFC 2, and Innovus packer assemblies.

He finds the following as the major differences between NCS’s packer assemblies: • the Innovus BHA has an additional set screw to secure and attach the ring on the Blue Bullet (which is attached to the sealing element) to the mandrel, allowing for co-movement of the mandrel and the sealing element; • the SFC 2 BHA has a split ring on the mandrel to more directly connect the Blue Bullet element to the mandrel; • the Innovus BHA has a mechanical locator incorporated into the packer housing, while in the other BHAs this is a separate component; • the Innovus BHA has a number of new components, including a secondary housing, which appear to be designed to maintain the locator in a specific location; • the SFC packer has drilled holes in the mandrel and cone of the SFC packer as compared to the Mongoose packer; • the SFC 2 packer has additional drilled holes in the mandrel, set screws, an O-ring, and a backup ring that are not present in the SFC packer; • the Mongoose packer does not have dual-setting functionality (tension and compression); • the Mongoose packer has a slip retaining ring, while the other packers do not; • the Mongoose packer has a one-piece mandrel while the other packers have a two-piece mandrel; and • the SFC and SFC 2 packers have two-piece cones, while the Mongoose and Innovus packers have one-piece cones. [ 41 ] In Dr.

Fleckenstein’s opinion, all four of NCS’s BHAs fall under claims 1 and 15 of the ′561 Patent. However, only the Innovus BHA infringes claims 9 and 12. This is because all of NCS’s BHAs operate by way of co-operating shoulders and therefore the sealing element is not “secured” to the mandrel.

However, in the case of the Innovus, there is a set screw running from the sealing ring to the mandrel, which secures them, despite the co-operating shoulders. [ 42 ] Central to the infringement analysis for the Mongoose, SFC, and SFC 2 BHAs is the fact that NCS’s standard operating procedures (SOPs) call for the operator to disengage the BHA by pulling it out of the hole and continuing to pull. Dr. Fleckenstein acknowledges that pulling the BHA out of the hole opens the equalization valve, which begins the process of pressure equalization.

However, once the equalization valve is fully opened, pulling continues, which, according to Dr. Fleckenstein, would cause the sealing element to be pulled, creating an annular passageway allowing for further equalization. [ 43 ] The SOPs indicate that the BHA is to be pulled no faster than [***] feet per minute. Dr. Fleckenstein indicates that the equalization valves on the Mongoose and SFC BHAs can move for [***] inches before further pulling would pull on the sealing element. At the maximum speed of [***] feet per minute, this would take [***] seconds.

In the case of the SFC 2 BHA, there are multiple possible configurations so it is unclear how much the BHA can be pulled out of the hole before the sealing element is pulled. [ 44 ] In the case of the Innovus BHA, in Dr. Fleckenstein’s opinion, pulling on the sealing element would begin as soon as the BHA is pulled out of the hole, as the sealing element is secured to the mandrel by the set screw. [ 45 ] NCS takes issue with some of the assertions of Dr. Fleckenstein regarding its products. [ 46 ] NCS submits that Dr.

Fleckenstein is mistaken that in the Innovus BHA the Blue Bullet is secured to the mandrel by a set screw. This is particularly relevant because Kobold asserts that this constitutes a substantial change between the Innovus, which was released after the claim date, and the BHAs that pre-date the claim date. [ 47 ] NCS notes that Dr. Fleckenstein agreed that the dimensions of the Innovus packer are essentially the same as the other packers and he agreed that those packers move as a result of the cooperating shoulders.

NCS submits that if the dimensions are the same, then the cooperating shoulders of the Innovus packers are what causes the Blue Bullet to move with the mandrel, not the set screw. [ 48 ] NCS further submits that the set screw does not even touch the mandrel. It says that the set screw is used, like set screws present on the other packers, to prevent unthreading of the equalization valve. It says that the set screw passes through a hole in the mandrel and does not touch it.

[ 49 ] NCS presented a CAD drawing of the Innovus around the set screw to Dr. Fleckenstein to demonstrate that the screw does not touch the mandrel. This CAD drawing was a zoomed in version of another drawing. Rather than accepting that this drawing shows that the set screw does not touch the mandrel, Dr. Fleckenstein suggested that the drawing was inaccurate. [ 50 ] NCS takes issue with Dr. Fleckenstein’s assertion that, using its devices, equalization could take some time. NCS points to the evidence of its affiant, Mr.

Redecopp, who has used the devices and says that equalization occurs within a few seconds of the equalization valve being opened. NCS submits that Dr. Fleckenstein’s comments on equalization time take into account the bleed off time, when the equalization valve is not open and no pulling has occurred. [ 51 ] NCS points to a chart showing pressure on either end of the BHA over time. It shows a relatively slow decrease in pressure at the uphole end with no change in pressure at the downhole end, and then a sudden change in pressure on both ends to equilibrium.

NCS submits that the initial decrease uphole is due to bleeding off pressure ahead of opening the equalization valve and the later rapid drop is due to the valve being opened. It notes that this data is supported by Mr. Redecopp’s evidence on cross-examination that equalization only takes a couple of seconds. III. Analysis [ 52 ] This

summary judgment motion shall be analyzed and discussed under the following headings: 1. Is this matter appropriate for

summary judgment or

summary trial? 2. What is the proper

interpretation of

section 56 of the Patent Act ? 3. What is the proper construction of the claims of the ′561 Patent? 4. Do the NCS products or activities infringe the ′561 Patent? 5. Can NCS rely on

section 56 of the Patent Act as a defence to any infringement? [ 53 ] This is the first judicial

interpretation of

section 56 of the Patent Act , and the first occasion the Court has had to consider it as a defence to a patent infringement action. A. Is this matter appropriate for

summary judgment or

summary trial? [ 54 ] NCS correctly notes that the purpose of

summary judgment is to provide a proportionate, cost-effective, and timely dispute resolution: Hryniak v. Mauldin , 2014 SCC 7 , [2014] 1 S.C.R. 87 , at paragraphs 1 – 2 . It further notes that

summary judgment provides a mechanism to ensure a fair balance between expediency and a just resolution of disputes: CanMar Foods Ltd. v. TA Foods Ltd. , 2021 FCA 7 , [2021] 1 F.C.R. 799 , at paragraph 23 . [ 55 ] NCS submits that, win or lose, this motion will simplify the underlying action. If it is successful, the action is resolved; if Kobold are successful, then the defence of prior use need not be considered at trial. [ 56 ] Rule 215 of the Federal Courts Rules provides this Court with clear direction on a

summary judgment motion. [ 57 ] The Court must grant

summary judgment if it is satisfied that there is no genuine issue for trial: subsection 215(1) [of the Rules ]. Where the only genuine issue for trial is a question of law, the Court may determine the question and grant

summary judgment accordingly: paragraph 215(2)(b). If the Court is satisfied that there is a genuine issue for trial, the Court may still determine that issue by way of

summary trial or dismiss the motion in whole or in part, and order that the action or the issues in the action not disposed of by

summary judgment proceed to trial or that the action be conducted as a specially managed proceeding: subsection 215(3) [of the Rules ]. [ 58 ] The burden of establishing that there is no genuine issue for trial is heavy and

summary judgment should be granted only in the clearest of cases: see Watson v. Canada (Indian and Northern Affairs) , 2017 FC 321 , at paragraph 22 . The Federal Court of Appeal has instructed that the proper test is whether the case is so doubtful that it does not deserve consideration by the trier of fact: see Premakumaran v. Canada , 2006 FCA 213 , [2007] 2 F.C.R. 191 , at paragraph 8 .

It has also instructed that the motions judge can only make findings of fact or law where the relevant evidence is available on the record and does not involve a serious question of fact or law which turns on the drawing of inferences: see Apotex Inc. v. Merck & Co. , 2002 FCA 210 , [2003] 1 F.C. 242 , at paragraph 49 . [ 59 ] The current version of the Rules with respect to

summary trial were adopted from the British Columbia rules for

summary trials. In Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc. , 2011 FC 776 , [2013] 1 F.C.R. 413 , at paragraphs 95 – 96 , this Court considered the British Columbia jurisprudence on

summary trials and found that: • the onus of proof is the same as at trial, that being the party asserting the claim or defence must prove it on a balance of probabilities; • on a

summary trial motion, the judge can find the facts as they would upon a trial; • the judge should give judgment unless doing so would be unjust, regardless of complexity or conflicting evidence; and • in determining whether

summary trial is appropriate, the judge should consider factors such as the amount involved, the complexity of the matter, its urgency, any prejudice likely to arise by reason of delay, the cost of taking the case forward to a conventional trial in relation to the amount involved, the course of the proceedings, and any other matters that arise for consideration. [ 60 ] For the reasons set out in detail below, I have concluded that some, but not all, aspects of this claim and defence are suitable for

summary judgment.

[61] The proper

interpretation of

section 56 of Patent Act is a discrete question of law that can be resolved without reference to any ofthe factual issues at play. It is an issue suitable for

summary judgment. [62] Furthermore, it is appropriate to construe the claims of the ′561 Patent on this

summary judgment motion. There is evidence inthe form of Dr. Fleckenstein’s affidavit to assist in resolving this issue. [63] It has often been observed that in Canada, the construction of the claims of a patent is a question of law to be determined by thetrial judge. The judge is to determine what a person skilled in the art of the patent would have understood the claim to mean at therelevant date. Expert evidence can assist the trial judge, but the proper

interpretation is ultimately left to the judge: see Western ElectricCo., Inc., et al. v. Baldwin International Radio of Canada, (SCC), [1934] S.C.R. 570, at pages 572–573; Halford v. SeedHawk Inc., 2001 FCT 1154, 16 C.P.R. (4th) 189, at paragraph 24; GlaxoSmithKline Inc. v. Pharmascience Inc., 2011 FC 239, 91 C.P.R.(4th) 189, at paragraph 86. [64] As will be seen below, there are areas of the claim and defence that I have concluded cannot be determined on the evidencebefore the Court and therefore must be left to be determined at a trial. B. What is the proper

interpretation of

section 56 of the Patent Act?

(1) Legislative History of

Section 56 of the Patent Act [65]

Section 56 of the Patent Act, as it currently reads, came into effect on December 13, 2018. It is reproduced in full at Annex A.This provision applies only in respect of an action or proceeding in respect of a patent issued on the basis of an application whose filingdate is on or after October 1, 1989, and that is commenced on or after October 29, 2018. The amended provision came into effect byvirtue of the Budget Implementation Act, 2018, No. 2, S.C. 2018, c. 27 (Budget Implementation Act), which is an omnibus statutemodifying a number of statutes. [66] Subsections (1), (6) and (9) of

section 56 of the Patent Act are at play in this litigation. They read as follows: Exception — prior use 56

(1) Subject to subsection (2), if — before the claim date of a claim in a patent — a person, in good faith, committed

an act that wouldotherwise constitute an infringement of the patent in respect of that claim, or made serious and effective preparations to commit such anact, it is not an infringement of the patent or any certificate of supplementary protection that sets out the patent, in respect of that claim, ifthe person commits the same act on or after that claim date. … Exception — use of article (6) Subject to subsection (7), the use of an

article is not an infringement of a patent or any certificate of supplementary protection thatsets out the patent, in respect of a claim, if the

article was acquired, directly or indirectly, from a person who, before the claim date ofthat claim, in good faith, made or sold, or made serious and effective preparations to make or sell, an

article that is substantially the sameas the one used, for that use. … Exception — use of service

(9) Subject to subsection (10), the use of a service is not an infringement of a patent in respect of a claim if the service is provided by aperson who, before the claim date of that claim, in good faith, provided, or made serious and effective preparations to provide, a servicethat is substantially the same as the one used, for that use. [67] Prior to this amendment, the only substantive defence in

section 56 was subsection 56(1) which then read as follows: Patent not to affect previous purchaser 56

(1) Every person who, before the claim date of a claim in a patent has purchased, constructed or acquired the subject matter definedby the claim, has the right to use and sell to others the specific article, machine, manufacture or composition of matter patented and sopurchased, constructed or acquired without being liable to the patentee or the legal representatives of the patentee for so doing. [68] The

summary of the Budget Implementation Act, which is included in the statute as a

preamble, specifically notes that: Subdivision A of Division 7 of

Part 4 amends the Patent Act in order to … (

c) expand the rights of a person in respect of a claim in a patent who meets the requirements to be considered a prior user; [69] From this, it can be seen that the current version of

section 56 is to be read as granting more expansive rights than the previousversion. Aside from this, there is no guidance on the intention of the legislators to be obtained from any Parliamentary debate orcommittee review. [70] The current version of subsection 56(1) differs in three key ways from the former. [71] First, the previous version granted a prior user the right to use and sell a patented article, machine, manufacture, or composition

of matter. In this respect, it was limited to physical inventions and did not cover patented methods. The current version grants a prior user the right to commit an “act” that would have otherwise constituted infringement. This is significantly broader and covers a wider set of circumstances than simply the sale or use of a physical product. The new statutory language includes the use of a patented process as a prior use. NCS submits, and I agree, that the word “act” in subsection 56(1) should be read in light of

section 42 of the Patent Act , which speaks to a patent granting exclusive rights to “making, constructing and using the invention and selling it to others to be used.” These are the acts protected by subsection 56(1) . [ 72 ] Second, the previous English version of subsection 56(1) limited the protection to the sale or use of the “specific” physical manifestation of the invention. While the French version did not say this explicitly, it should be interpreted in this manner in order to be consistent with the English version.

The current version of subsection 56(1) , in both languages, instead protects the commission of “the same act” (“ le même acte ”) that would have constituted infringement. [ 73 ] Finally, the current version of subsection 56(1) grants protection not only to persons who committed an infringing act prior to the claim date, but also to those who “made serious and effective preparations to commit such

an act.” There is no such language in the previous version. [ 74 ] In Merck & Co., Inc. v. Apotex Inc. , 2006 FCA 323 , [2007] 3 F.C.R. 588 ( Merck ), the Federal Court of Appeal applied former subsection 56(1) narrowly. In Merck , the defendant Apotex purchased batches of Lisinopril, the subject of the plaintiff’s patent, from Delmar. The contract of purchase was drafted so that title in the product would only pass to Apotex upon Apotex being satisfied that the product batches met Apotex’s requirements.

The Federal Court of Appeal found at paragraphs 81 and 82 that Apotex did not have prior user’s rights: … Apotex cannot be said to have purchased or acquired the Delmar batches until they obtained title to them. If the Delmar batches were of a finished product, title would have passed to Apotex and Apotex could then claim the statutory benefit. However, that is not the case here. At trial, Dr. Dickinson, President of Delmar, testified that they were not satisfied that the Delmar batches met the description of the lisinopril Apotex sought to purchase.

The lisinopril had not yet been isolated as a solid and still had to undergo purification steps followed by drying before it could be released as a finished product. These steps were eventually undertaken but it was not until October 23, 1990, and November 7, 1990, that the Delmar batches were packaged and ready for delivery. As a result, title could not pass to Apotex until the product was in a deliverable state (i.e. October 23, 1990, and November 7, 1990). By that time, the ʹ350 patent was already granted to Merck (October 16, 1990) and Apotex’s right to reap the benefit of

section 56 was already extinguished. [ 75 ] The inclusion of “serious and effective preparations” in subsection 56(1) was likely designed to override the outcome in Merck . Under the new provisions, it is likely that a court would have found that serious and effective preparations had been made given that Apotex had ordered the lisinopril and production had commenced but had not been completed. [ 76 ] Subsections 56(6) and 56(9) deal with the use of a purchased

article or service. They appear designed to extend prior user rights to third parties. There are no corresponding provisions in the previous version of the Patent Act .

(2) The Parties’ Submissions on

Section 56 of the Patent Act [ 77 ] Kobold and NCS differ on the standard of similarity subsection 56(1) of the Patent Act requires. What does “the same act” in that subsection mean? [ 78 ] NCS submits that it means the same or substantially the same. Kobold submit that it means identical or nearly identical. This is not a mere semantic dispute. The resolution of this issue of

interpretation guides how different, if at all, the act subsequent to the issuance of the patent can be from the act prior and still obtain the protection of subsection 56(1). [ 79 ] Both parties directed the Court to English jurisprudence interpreting its legislative provision providing for a prior use defence. The British provision is subsection 64(1) of the United Kingdom’s Patents Act 1977 , 1977, c. 37 (the U.K. Act) which provides as follows: 64

(1) Where a patent is granted for an invention, a person who in the United Kingdom before the priority date of the invention — (

a) does in good faith

an act which would constitute an infringement of the patent if it were in force, or (

b) makes in good faith effective and serious preparations to do such

an act, has the right to continue to do the act or, as the case may be, to do the act, notwithstanding the grant of the patent; but this right does not extend to granting a licence to another person to do the act. [ 80 ] One immediately notices that the U.K. legislation refers to doing “the act” after the patent issues; whereas the Canadian Act speaks to doing “the same act on or after that claim date” (emphasis added). [ 81 ] In Lubrizol Corporation v. Esso Petroleum Co. Ltd. , [1997] R.P.C. 195 (Eng.

C.A.) , at page 216, the Court of Appeal interpreted “the act” in the U.K. statute to mean “substantially the same act”: In deciding whether the activity is substantially the same all the circumstances must be considered. Both technical and commercial matters must be taken into account. That is important in a case such as the present where there are inherent minor variations in starting materials or the like. If the protected act has to be exactly the same (whatever that may mean) as the prior act then the protection given by the

section would be illusory. The

section is intended to give a practical protection to enable a man to continue doing what in substance he was doing before. [Emphasis added.]

[ 82 ] NCS submits that the U.K. Act is similar to the Canadian Act and therefore English jurisprudence is informative on how to interpret the Canadian Act. It submits, based on judicial

interpretation of the U.K. Act, that the Canadian Act should be interpreted to mean that a prior user can commit “substantially the same act” without infringing the patent.

As noted above, it also submits that “an act” should be taken to mean any action that would infringe a patent, namely making, constructing, and using the invention, or selling it to others to be used. [ 83 ] NCS further submits that because subsection 56(1) limits its application to “an act that would otherwise constitute an infringement of the patent in respect of that claim,” a prior user is granted immunity from any infringement of a claim that it infringed prior to the claim date and that changes to ancillary technologies, not related to the patent claims, do not prevent the application of subsection 56(1). [ 84 ] NCS submits that this Court can find the prior use defence applies without first finding that infringement has occurred.

NCS relies on its factual assertion that it has been performing the same acts after the claim date of the ′561 Patent as before the claim date. There are therefore two possibilities: If its acts would constitute an infringement but for

section 56 , then

section 56 is engaged and there is no infringement. If its acts do not constitute infringement, then there is no need to consider

section 56 as no infringement has occurred. In either scenario, the acts do not infringe the ′561 Patent. The only relevant consideration is whether it has been performing substantially the same acts. [ 85 ] Kobold agree that the U.K. Act has interpreted the language “the act” to mean “substantially the same act.” In the U.K., the prior use and the current use need not be identical, but the prior user does not have full rein to manufacture any infringing product or to expand into other products. [ 86 ] Kobold note that the Canadian Act does not use the same language as the U.K. Act. They observe that

section 56 of the Canadian Patent Act sets out two different standards of similarity for what acts are protected by prior user’s rights. Subsections 56(1), 56(3), and 56(4) make reference to “the same” act, while subsections 56(6) and 56(9) make reference to “substantially the same”

article or service. [ 87 ] Kobold submit that by using different phrases in the different sections, Parliament is presumed to have intended that the words should have different meanings. They say that this presumption is strengthened by the fact that the different phrasings are found within the same

section of the Patent Act and were introduced as part of the same amending legislation. [ 88 ] Therefore, Kobold submit that the words “same act” should be interpreted to require near identicality to benefit from subsection 56(1) , while the words “substantially the same” in subsections 56(6) and 56(9) imply a standard similar to that of the U.K. Act. [ 89 ] Under the

interpretation proposed by Kobold, the proper approach in applying subsection 56(1) is to (

i) determine what act(

s) occurred before the claim date, (ii) determine whether the act(

s) would constitute an infringement, and (iii) determine whether the act(

s) after the claim date are the same or nearly identical as the act(

s) before. [ 90 ] Kobold submit that the language of the

section is clear that the comparison to be made is between two acts to each other and is not an assessment of whether both a prior and subsequent act infringe a claim, as there are multiple ways to infringe a patent claim. They rely on the judgment of Justice Kitchin of the England and Wales High Court (as he then was) in Forticrete Ltd. v. Lafarge Roofing Ltd. , [2005] EWHC 3024 (Ch.) , at paragraph 25, where he rejected an argument from a defendant that, having made one infringing product, it was entitled to make any other product falling within the scope of the patent.

(3) Analysis [ 91 ] Subsection 56(1) provides a defence to a person doing

an act that would otherwise be an infringement of a claim based on a comparison of the pre- and post-patent infringing “act” (“ acte ”). I agree with NCS that the word “act” is to be interpreted in keeping with the acts which the patent protects, as set out in

section 42 of the Patent Act ; namely “making, constructing and using the invention and selling it to others to be used.” Those are the acts that are potentially protected. [ 92 ] With respect to the standard of similarity, I find that subsection 56(1) of the Patent Act requires the acts pre- and post-patent must be the “same” (“ le même acte ”), i.e. identical.

I reach this conclusion for the following reasons. [ 93 ] First, the word “same” is used in subsection 56(1) as an adjective describing the noun “act” and in its ordinary grammatical meaning means identical. “Same” is defined in the Canadian Oxford Dictionary , 2nd ed.

Toronto: Oxford University Press, 2004 , used as an adjective, as follows: Same adjective 1 (often prec. by the ) a identical in form, appearance, or number ( how embarrassing, we’re wearing the same dress; they are the same age ). b not different ( we go to the same doctor ). 2 unchanged, unvarying, uniform ( they’ve been giving the same service for over fifty years ). 3 (usu. prec. by this, these, that, those ) (of a person or thing) previously alluded to; just mentioned ( this same medical student went on to become a doctor ). 4 (in combination ) identical, not different ( same-age partners ). “ Même ” is defined in Le Petit Robert , 2022 ed. as follows: adj.

Indéf. 1 (Devant le nom) Marque l’identité absolue....Marque la simultanéité….Marque la similitude → semblable... Marque l’égalité. → égale. [ 94 ] Second, it is to be noted that subsections 56(6) and subsections 56(9) allow a third party defence of prior use on the less stringent standard of “substantially the same” (“ sensiblement le même ”).

The choice to use the phrase “substantially the same” in subsections 56(6) and 56(9) of the Patent Act while using the phrase “the same” in subsection 56(1) makes it clear that Parliament intended different standards to apply. [ 95 ] Third, and as submitted by Kobold, while the phrase “the act” in the U.K. Act has been interpreted to mean “substantially the same act”, Parliament did not use the same language as the U.K. Act. The language of the U.K. Act is more open ended and invites a

more flexible

interpretation as to what is meant by “the act.” The Canadian statute on the other hand clearly indicates what kind of act is meant: the same act in subsection 56(1) and substantially the same act in subsections 56(6) and (9) . [ 96 ] Fourth, the Budget Implementation Act indicates that the new legislation is intended to grant more expansive prior user rights. This

interpretation is consistent with that purpose, as the rights provided are more expansive than those found in the previous version of subsection 56(1). The previous version made reference to being able to make use of a “specific” physical manifestation of the invention. On a plain reading of the previous version, a person who had previously constructed a patented invention was able to use or sell that physical manifestation of the invention but not to construct additional or somewhat different physical manifestations. It was effectively a right to deplete one’s existing stock. The new version grants the much broader right to perform “the same act.” A person who previously committed

an act that would, had the patent have been issued, have infringed the patent may now continue to do that same act. If they previously manufactured and sold an article, they would be entitled to continue to manufacture and sell more of the same article, rather than simply sell existing inventory. [ 97 ] As noted above, the pre- and post-patent acts must be identical in the sense that one can only perform those acts set out in

section 42 of the Patent Act which were actually performed pre-patent, or those acts for which substantial preparations to perform were made. [ 98 ] On this

interpretation, if the person claiming the protection of subsection 56(1) had, for example, previously only manufactured and used its device, then they can continue to manufacture and use it, but they cannot now sell the device to others to use, as selling is not

an act done prior to the issuance of the patent. [ 99 ] This

interpretation then leads one to ask if the same act is the manufacture of a device, must it be an identical device that is manufactured to obtain the protection of subsection 56(1) as Kobold submit. [ 100 ] I agree with Kobold that the language of the

section is clear that the comparison to be made is between two acts to each other and I further agree that to some extent it is not merely an assessment of whether both a prior and a subsequent act infringes the patent. The prior user does not have carte blanche to infringe the patent in any way that it wishes.

What is protected is the doing of the same act so that both pre- and post-patent it is not an infringement of the patent “in respect of that claim.” Accordingly, if the act done pre-patent would have infringed claim 1, but no other, the subsequent act is protected vis-à-vis claim 1, but no other. [ 101 ] If the prior user manufactured the infringing device prior to the patent and painted it green, would it be prevented from manufacturing the identical device but painting it red? I can see no practical, logical, or legal reason why the protection of

section 56 of the Patent Act would be so restricted. Similarly, I see no reason why the prior user should be restricted from making changes to its device so long as those changes do not relate to what is disclosed by the patent. After all, the protection afforded the inventor is the invention as claimed in the patent. [ 102 ] Therefore, in my view, the prior user has the ability to make changes to aspects of its device or process that are part of the prior art or outside the claims of the patent.

Patent claims must be drafted to contain all aspects of the invention and so will usually contain elements that are well established in the prior art and described in general terms. For example, in claim 1 of the ′561 Patent, a reference is made to locating the sealing element below a zone of interest in the wellbore. This element must be included in the claim in order to provide a complete description of a method of completing a wellbore.

However the claims give no mention as to how this step in the method is performed and it could be done in any number of ways that are previously known. [ 103 ] In my opinion, it would be unreasonable for the prior user, having selected one method known in the prior art, to be restricted to only using that particular method when the patent is silent as to what method should be used and where that aspect of the claims does not form part of the inventive concept.

I see no reason why Kobold, having chosen to recite established steps in operating a completion tool, would be able to prevent NCS from making any changes in how it performs those established steps, despite Kobold having introduced no innovation to them. If, for example, a new, more efficient fracking fluid was developed, should NCS be prevented from using it because it would represent a change in the step of “treating the zone of interest” as set out in claim 1? I think it should not.

To do so would grant Kobold protection for more than what has been invented. [ 104 ] Similarly, if the prior user made a device that benefitted from a subsection 56(1) defence, I see no reason why it should be restricted to making just that device standing alone in the future, provided any additions to the device do not infringe the patent.

Accordingly, with respect to BHAs, if it is the packer that was made prior to the patent, I can see no reason why the prior user cannot add additional components to the BHA and market them as one, provided the infringing element, the packer element of the BHA, remains identical pre- and post-patent. [ 105 ] This then begs the question as to the scope of changes, if any, the prior user may make to its device vis-à-vis the aspects of it that infringe a specific claim of the patent.

In the above example, is the prior user prevented from making improvements to or changing the packer element if that is the infringing aspect of the device? [ 106 ] Subsection 56(1) protects a person who committed

an act before the claim date of a patent and that would now infringe that patent’s claims when they later, after the patent is in place, commit the “same act.” In my view, the prior user cannot make any change to the infringing aspect of the device; otherwise, he is not engaging in the same act in respect of the patent’s claims and has lost the protection of subsection 56(1) of the Patent Act . He is engaging in a different act vis-à-vis the infringed claim, even if they both infringe the same claim of the patent. [ 107 ] Subsections 56(6) and (9) are markedly different in wording and scope to subsection 56(1).

These subsections protect third parties whereas subsection 1 is directed to those with whom the third parties are dealing. [ 108 ] Subsection 56(6) protects one who uses an

article acquired from a manufacturer or a seller who previously made or sold “an

article that is substantially the same” (emphasis added) as made or sold before the patent issued. The “substantially the same” description is materially different from the “same” description imposed on the manufacturer or seller of the

article in subsection 56(1). [ 109 ] Similarly subsection 56(9) protects one who uses a service “substantially the same” as one used before the patent. Like

subsection 56(6) it does not protect the service provider. The service provider must find its protection in subsection 56(1) . [ 110 ] I find below that subsections 56(6) and (9) are not at issue in this matter as they cannot provide any protection to NCS on the facts before the Court.

(4) Conclusion on

Interpretation of Subsection 56(1) of the Patent Act [ 111 ] Subsection 56(1) provides a defence to one who makes, constructs, or uses an invention or sells it to others to use, that infringes a claim of the patent, if prior to the issuance of the patent that person did the same act of making, constructing, using, or selling, and the relevant (i.e. relating to the inventive concept) part of the invention is identical.

While the prior user may add to or alter the invention in other respects that do not further infringe the patent, the prior user cannot change or alter the relevant (i.e. relating to the inventive concept) part of the invention, even if those modifications infringe the inventive concept in the same manner. [ 112 ] The process to be followed in considering a defence under subsection 56(1) is as follows. [ 113 ] First, one must determine whether the acts being performed before and after the claim date are identical (other than wholly non- functional changes, such as colour).

If they are, then there is no need to consider infringement, as subsection 56(1) would always provide a defence to any potential infringement. [ 114 ] Second, if the acts are not identical, one must determine whether the acts infringe the patent, and if they do, which claims. If the post-claim acts do not infringe the patent, then there is no “otherwise infringing acts” and therefore no need to rely on subsection 56(1) . If the pre-claim acts do not infringe the patent, subsection 56(1) cannot apply.

If the post-claim date acts infringe a particular claim of the patent that the pre-claim date acts do not, subsection 56(1) cannot apply. [ 115 ] Finally, if the pre- and post-claim date acts are not identical but only infringe the same claims, then one must determine whether the changes relate to the inventive concept of the patent. If they do not, then subsection 56(1) will provide a defence. [ 116 ] Only in the clearest of cases, where the acts before the claim date are identical to those after the claim date, is there no need to construe the claims of the patent or conduct an infringement analysis.

Such cases would be particularly well suited for

summary judgment. C. What is the proper construction of the claims of the ′561 Patent? [ 117 ] NCS submits that Dr. Fleckenstein erred in construing the phrase “secured thereto” in claims 9 and 12 of the ′561 Patent, which he alleges the Innovus packer infringes, while the other packers do not. According to Dr.

Fleckenstein, two elements are “secured” if they are “attached together to allow a force to be transmitted from one structure to the next, and to allow co-movement of the two elements.” [ 118 ] NCS notes that the ′561 Patent shows two different types of connections between the mandrel and the pull-end ring: a threaded connection, shown in Figures 1 – 7, and a configuration that operates via corresponding shoulders, shown in Figure 8.

NCS submits that the description of the ′561 Patent describes both embodiments using threads and embodiments using shoulders as being “secured”, and differentiates the two embodiments by describing the threaded embodiments as being “fixed.” The term “fixed” does not appear in any of the claims. [ 119 ] NCS submits that a purposive construction of the claims is consistent with the description of the ′561 Patent. In both sets of claims, the purpose of being “connected” or “secured” is to ensure that the pull end of the sealing element moves with the mandrel.

It submits that this construction would include both threading and shoulders. [ 120 ] NCS submits that claim differentiation also reaches the same result.

It submits that if “secured thereto” limits connections only to threads, then the dependent claims 11 and 14 would be redundant, as claims 11 and 14 add a limitation to claims 9 and 12 that the pull end is secured by threads. [ 121 ] Kobold submit that NCS’s position is that the only relevant act is the making and using of the Blue Bullet element, which would require the claims of the ′561 Patent to be construed in such a way that only the annular sealing element is an essential element of the patent claims.

Kobold submit that this goes against the presumption that all elements are essential and would also lead to a non- purposive construction. [ 122 ] Kobold support Dr. Fleckenstein’s opinion that “secured” should be construed as requiring co-movement, while “connected” does not. They submit that the principle of claim differentiation does not support NCS’s position. They say that NCS has failed to consider that there are other means of securing the mandrel and sealing element other than threading.

The specification of the ′561 Patent provides three examples of secured connections: mechanical bonding, elastomeric bonding, and threading. [ 123 ] Kobold further submit that the argument regarding the use of the term “secured” in the specification is flawed. While the term “secured” was used in relation to an embodiment incorporating co-operating shoulders, “secured” was used in that passage to describe the relationship between the ring and the elastomer and not between the ring and the mandrel. They point to Dr.

Fleckenstein’s cross-examination and the plain reading of the disclosure for this point. [ 124 ] I find that Kobold’s submissions are correct

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