2021 FCA 24, 2021 FCA 24

A-481-19 2021 FCA 24 Western Oilfield Equipment Rentals Ltd. and FP Marangoni Inc. ( Appellants ) v . M-I L.L.C. ( Respondent ) Indexed as: Western Oilfield Equipment Rentals Ltd. v. M-I L.L.C. Federal Court of Appeal, Gleason, Locke and Mactavish JJ.A.—Ottawa, September 9, 2020 and February 9, 2021.

Patents — Infringement — Appeal from Federal Court decision finding that certain claims of respondent’s Canadian Patent No. 2664173 (′173 patent) valid, infringed by appellants — ′173 patent relating to shale shakers used in oil, gas industry; describing desire to improve rate, efficiency at which shakers remove liquid from cuttings or other solids — Issues: how should claim elements be construed; whether there was infringement; whether there was invalidity; whether there was breach of procedural fairness — Regarding claim construction, Federal Court not erring in its construction of patent claims at issue, not erring in weighing of evidence adduced — Respondent’s motivation in amending claims not, by itself, telling in terms of claim construction or patent validity — Concerning infringement, text of Patent Act , s. 55(2) examined, not suggesting that pre-issuance infringer can avoid liability by discontinuing its activities prior to issuance of patent — No indication in Act, s. 55(2) that infringing activity must continue after issuance of patent — Inducing infringement merely form of patent infringement, not distinct tort; no reason to treat pre-issuance infringement by inducement differently from direct pre-issuance infringement — Federal Court not erring regarding finding of infringement — Also, no basis for liability for inducement to be avoided based on timing of instructions or any lack of evidence that customers induced by instructions given — Federal Court also not erring in consideration of Gillette defence appellants raising — Success of Gillette defence not depending on conclusion that claim in question invalid for anticipation or obviousness — In circumstances such as present case, where court construed claims in issue, determined which claims valid or not, found certain valid claims to be infringed, consideration of Gillette defence superfluous, unnecessary — As to anticipation, Federal Court not erring, not failing to consider anticipation on claim- by-claim basis — Federal Court finding that some claims of ′173 patent anticipated, others not — Clearly, Federal Court understood analysis of anticipation, performed its analysis as required — Concerning obviousness, Federal Court considering each of potential inventive concepts identified by expert evidence, indicating preference for one expert’s view that claims in dispute valid — No indication that Federal Court’s approach resulting in any reviewable error — Four-step test set out in Apotex Inc. v.

Sanofi-Synthelabo Canada Inc, one way to assess obviousness but not mandatory — Only mandatory considerations those laid out in Act, s. 28.3, which concerns obviousness to person skilled in art or science to which invention pertaining — On the matter of insufficiency, Federal Court did not fail to consider any evidence — Committing no error in finding patent not insufficient — With respect to ambiguity, Federal Court’s approach thereto not error of law — Nor did Federal Court err in law, misunderstand or fail to consider evidence or appellants’ arguments on inutility — As to overbreadth, distinct ground of invalidity to be considered separately — Although appellants arguing that claims of ′173 patent invalid on grounds of overbreadth, arguments rejected — Regarding addition of new subject matter as provided in Act, s. 38.2(2), provision not suggesting strict test, not providing explicity for patent revocation unlike in U.K. — Act, s. 38.2(1) providing that subject to certain limitations, patent application may be amended — Federal Court not erring in ruling that surrounding circumstances not relevant to whether s. 38.2(2) respected — Also not erring in finding that feature of preventing stalling of slurry in present case at least reasonably inferable from original patent application — Since Federal Court not erring in invalidity findings, not necessary to address appellants’ arguments on remedies — Finally, as to procedural fairness, parties’ submission of expert reports constituted undertaking to Court to call those experts as witnesses at trial — Appellants’ right to cross-examine constrained by their undertaking, which was voluntary — Procedural fairness not breached — Appeal dismissed.

Patents — Practice — Federal Court finding that certain claims of respondent’s Canadian Patent No. 2664173 (′173 patent) valid, infringed by appellants — That decision appealed — Whether trial before Federal Court procedurally fair — Parties’ submission of expert reports constituted undertaking to Court to call those experts as witnesses at trial — Such undertaking became particularly important here since parties also agreeing to present experts’ evidence out of usual order — While general principle being that parties can cross-examine as they wish, appellants’ right to cross-examine constrained by their undertaking to Federal Court to call their experts as witnesses — Undertaking was voluntary — At trial, Federal Court giving appellants option of withdrawing their undertaking or to comply with it; such option appropriate, necessary to ensure fair trial — Also, while option granted to appellants in present case, it was Federal Court’s discretion to do so — Federal Court could have required that appellants comply with their undertaking .

This was an appeal from a Federal Court decision finding that certain claims of the respondent’s Canadian Patent No. 2664173 (′173 patent) were valid and had been infringed by the appellants. The ′173 patent relates to shale shakers, which are used in the oil and gas industry to remove solids from the drilling fluid that emerges from an active well so that the fluid can be reused. The ′173 patent describes a desire to improve the rate and efficiency at which shakers remove liquid from cuttings or other solids.

It is known that introducing a pressure differential across the screen can increase the fluid capacity of the shaker, but doing so may result in solids sticking to the screen, thereby interfering with the passage of fluids through the screen. This is called “stalling” of the slurry.

The ′173 patent describes “a continuing desire for shakers having increased fluid capacity, increased fluid flow-through rates across the screens, and/or improved fluid removal efficiencies.” The ′173 patent comprises 23 claims, of which the Federal Court found claims 2, 4, 9, 10, 20, 21 and 22 were valid and infringed by the appellants’ Vac Screen System (VSS). The Federal Court also noted that the parties had

agreed that claims 1, 11, 16 and 19 of the ′173 patent are invalid. The appellants were Western Oilfield Equipment Rentals Ltd. (Western) and FP Marangoni Inc. (FPM). FPM is a wholly-owned subsidiary of Western but FPM has not carried on business since 2014. Both appellants were found to have infringed the ′173 patent. Numerous issues were addressed herein. These issues touched on: how to construe the claim elements; whether there was infringement; whether there was invalidity; and whether there was a breach of procedural fairness. Held , the appeal should be dismissed.

Regarding claim construction, the appellants’ main complaint was that the original claims of the ′173 patent were broadened during prosecution of the patent application to encompass the appellants’ VSS. However, a patent applicant is perfectly entitled, and indeed is well-advised, to draft patent claims with an eye on competitors’ products. The limitation is that the applicant must respect all of the requirements for valid claims. Therefore, the respondent’s motivation in amending the claims was not, by itself, telling in terms of claim construction or patent validity.

The Federal Court did not err in its construction of the patent claims at issue and did not err in the weighing of the evidence adduced. The claims that were in issue in this appeal were not limited to those that were found to infringe. Because the appellants’ invalidity arguments concerned all of the claims of the ′173 patent that the respondent did not admit were invalid, these claims were also in issue. The appellants argued, in particular, that FPM stopped doing business in 2014, prior to the issuance of the ′173 patent, and hence could not be liable for infringement.

They argued that a party is not liable under the Act for pre-issuance infringement if it discontinues the activities in question prior to issuance of the patent. The appellants also argued that, regardless of its activities after issuance of the patent, a party cannot be liable for pre-issuance infringement by inducement.

It had to be determined whether one who engages in pre- issuance infringement can avoid liability under subsection 55(2) of the Patent Act by discontinuing the activities in question prior to issuance of the patent, and (ii) whether liability under subsection 55(2) extends to one whose pre-issuance infringement is by inducement. These questions required an

interpretation of subsection 55(2) of the Act. Beginning with the text of subsection 55(2), there is nothing therein suggesting that a pre-issuance infringer can avoid liability by discontinuing its activities prior to issuance of the patent. The text is concerned with the period from publication of the patent application until issuance of the patent, and with activities during that period that would have constituted an infringement if the patent had already been granted. There is no indication in the text that the infringing activity must continue after issuance of the patent.

As regards the question of inducing infringement, this is merely a form of patent infringement, not a distinct tort. There is no reason to treat pre-issuance infringement by inducement differently from direct pre- issuance infringement. The context of subsection 55(2) of the Act does not suggest that a pre-issuance infringer can avoid liability therefor by discontinuing its activities prior to issuance of the patent. No cause of action exists under subsection 55(2) until the patent has issued but liability relates to the period from publication to issuance.

The purpose of subsection 55(2) is to compensate inventors whose published inventions are used without permission before they can enforce their rights. Nothing in the context or the purpose suggests any exclusion from liability to a patentee where the pre-issuance infringement stops prior to issuance or where such infringement is by inducement. Therefore, no error by the Federal Court was found regarding the finding of infringement against the appellant FPM.

With respect to inducement by the appellant Western, there was no basis for it to avoid liability based on the timing of its instructions or based on any lack of evidence that its customers were induced by the instructions. Regarding the Gillette defence the appellants raised, the Federal Court did not err in its consideration thereof. The Gillette defence permits a defendant (or a court) a shortcut around the often difficult and time-consuming process of construing the claims of a patent and then determining whether those claims are valid and whether they have been infringed.

However, the application of the Gillette defence has proved less simple in practice, and this has led to some misunderstanding and misapplication of the defence. Though the Gillette defence is frequently asserted by parties accused of patent infringement, it is rare for such parties to rely exclusively on this defence and actually omit analysis of claim construction, validity and infringement. Typically, a court will be faced with arguments on all of these issues.

It is perhaps because the Gillette defence is typically asserted along with other defences that its nature as an alternative to claim construction and analysis of validity and infringement is sometimes misunderstood or misapplied by counsel and by courts. The success of a Gillette defence does not depend on a conclusion that the claim in question is invalid for anticipation or obviousness. Quite the contrary, the principal benefit of a Gillette defence is to avoid the need to construe the claims and reach a conclusion on validity and infringement issues. Where a court has (

i) construed the claims in issue, (ii) determined which claims are valid and which are not, and (iii) found certain valid claims to be infringed (as did the Federal Court in the present case), consideration of the Gillette defence is superfluous and unnecessary. It may also create confusion. In fact, it is arguably preferable in some cases for the court not to take the shortcut offered by the Gillette defence because the more laborious claim construction process may lead to a conclusion that the claims in question are invalid.

Such a conclusion would be of interest not just to the parties but also to the broader public. The appellants argued as well that several patent publications and activities constitute prior art that anticipates the claims in issue. The appellants observed correctly that assessing anticipation (also known as lack of novelty) is a two-step process; the party attacking a claim must establish both disclosure and enablement of the invention. On disclosure, the appellants failed to acknowledge two important requirements.

Firstly, the disclosure “must contain so clear a direction that a skilled person reading and following it would in every case and without possibility of error be led to the claimed invention”. The second important disclosure requirement that the appellants failed to acknowledge is that there is no room for trial and error or experimentation by the skilled person at this stage; that person is simply reading the prior reference for the purposes of understanding it. Non-inventive experimentation is a consideration in assessing enablement but not disclosure.

On enablement, it is important to bear in mind that the question is whether the skilled person would be enabled to perform the claimed invention without undue burden, not the prior art. Another important requirement for anticipation is that all of the essential elements of the claim in issue must be disclosed and enabled in a single prior art reference. This means that a separate anticipation analysis must be done for each of the prior art references in issue. The teachings of the prior art are to be read as a skilled person would understand them.

By definition, that skilled person is aware of the common general knowledge. But it does not follow that a party attacking a patent claim is necessarily entitled to fill in gaps in a prior art reference with such common general knowledge. The appellants’ argument that the Federal Court erred in failing to consider anticipation on a claim-by-claim basis was not accepted. The Federal Court found that some of the claims of the ′173 patent were anticipated and some were not.

Clearly, the Federal Court understood that analysis of anticipation is to be done on a claim-by-claim basis, and it performed its analysis that way. With respect to obviousness, the appellants argued in particular that the Federal Court erred by failing, in its assessment of the

obviousness arguments, to (

i) identify the inventive concept of the claims and their differences from the prior art, and (ii) ask whether those differences would have been obvious to a skilled person. While the Federal Court did not divide its analysis into the well-known four steps identified in Apotex Inc. v. Sanofi-Synthelabo Canada Inc , the appellants did not argue that it failed to address any of the obviousness arguments they raised.

In its analysis of obviousness, the Federal Court considered each of the potential inventive concepts identified by expert evidence and indicated a preference for one expert’s view that the claims in dispute are valid. The Federal Court’s analysis essentially merged steps 2, 3 and 4 of the four-step test. There was no indication that the Federal Court’s approach resulted in any reviewable error. The four-step test set out in Sanofi-Synthelabo is one way to assess obviousness but it is not mandatory. The Supreme Court of Canada in Sanofi-Synthelabo characterizes the four-step test as a useful approach.

The only mandatory considerations are those laid out in

section 28.3 of the Patent Act , which is concerned with obviousness to a person skilled in the art or science to which the invention pertains, having regard to “information disclosed before the [relevant date] in such a manner that the information became available to the public in Canada or elsewhere.” The four-step test set out in Sanofi-Synthelabo provides a framework for assessing obviousness but it does not delve into the determination of whether those differences are obvious to the skilled person, except to say that it should be done without any knowledge of the alleged invention.

In reaching its conclusion on obviousness, the Federal Court made no error of law or a palpable and overriding error on an issue of fact or mixed fact and law. The appellants’ argument on insufficiency of the specification of the ′173 patent was based on the requirements set out in subsection 27(3) of the Act. The Federal Court considered the issues raised by the appellants. It preferred the opinion of one expert who explained that the skilled person would readily solve all of the alleged insufficiencies in the ′173 patent.

The Federal Court found that the invention in issue was not in any inventive component but rather in the inventive combination of known components. It did not fail to consider any of the evidence, and the evidence was not such that it was a reviewable error not to find the ′173 patent insufficient. The Federal Court also did not commit a reviewable error in refusing to find the specification of the ′173 patent insufficient for failure to comply with the best-mode requirement.

The appellants did not provide sufficient detail to establish that any error that the Federal Court may have made regarding the best-mode requirement in paragraph 27(3)(

c) of the Act was of sufficient importance to make a difference to the result. The details mentioned by the appellants in respect of their other arguments on insufficiency were not of the kind that had to be included in the specification. The appellants argued that the Federal Court erred in concluding that various claims in the ′173 patent are not invalid for ambiguity because the Federal Court was able to construe the terms in issue used therein. However, the appellants cited no authority providing that the Federal Court’s approach to ambiguity was an error of law.

The basis for invalidity due to ambiguity is that the patent must give adequate notice to the public as to what activities are claimed as exclusive to the patentee. If a skilled person is able to construe the claims, then it follows that that notice is provided. On inutility, the appellants argued that the Federal Court misunderstood their arguments and applied the wrong legal test. The Federal Court did not make any error in law or misunderstand or fail to consider the evidence or the appellants’ arguments on inutility.

It noted correctly that the fact that the inventor did not initially arrive at a prototype that could immediately be commercialized did not mean that his testing did not reveal a useful invention. The threshold for utility in a patent context is not commercial usefulness. A scintilla of utility will do. The Federal Court was clearly satisfied that the inventor had made a useful invention. It was also of the view that an external degassing chamber was not essential to the invention of the ′173 patent and, hence, claims not including such an element do not lack utility.

Utility is assessed from the point of view of the skilled person, not the inventor. Doubts that the inventor expressed about the utility of a certain embodiment would not necessarily lead to a conclusion of inutility. As well, the inventor’s doubts about whether the embodiment in question would function were based on the specific shaker that he observed. It was not a conclusion that no system with a cantilevered tray could work. Thus, the Federal Court did not make any reviewable error in considering the appellants’ arguments on inutility.

There are two ways that a patent claim can fail for overbreadth (or overclaiming): it can be broader than the invention disclosed in the specification or it can be broader than the invention made by the inventor. The concept of claim invalidity for overbreadth (or overclaiming) arises from the combination of the requirements that a patent specification (

i) correctly and fully describe the invention (Act, subsection 27(3)) and (ii) include “claims defining distinctly and in explicit terms the subject-matter of the invention for which an exclusive privilege or property is claimed” (Act, subsection 27(4)). Overbreadth often overlaps with other grounds of invalidity. Where a claim is broader than the description, it may fail for overbreadth, but it may also fail because the description does not adequately describe how to put it into practice. Despite this possibility of overlap, overbreadth is a distinct ground of invalidity that must be considered separately.

The appellants argued that the claims of the ′173 patent were invalid on both grounds of overbreadth but these arguments were rejected. Regarding the addition of new subject matter as provided in subsection 38.2(2) of the Act, the test for reasonable inferability of new subject matter is not strict such as the one in the U.K. as the appellants argued. Under Canada’s Act, a patent is presumed to be valid in the absence of evidence to the contrary (subsection 43(2)). The burden was on the appellants to establish that the ′173 patent is invalid, regardless of the ground of invalidity.

As well, subsection 38.2(2) does not suggest a strict test and does not provide explicitly for patent revocation unlike the U.K. provision in question. On the contrary, subsection 38.2(1) provides that, subject to certain limitations, a patent application may be amended. The provision of particular interest in the present appeal, subsection 38.2(2) of the Act, provides for one of the contemplated limitations. The Federal Court’s ruling that surrounding circumstances are not relevant to whether subsection 38.2(2) has been respected was not wrong.

The Federal Court reasoned that this issue is one of logic, not fact. The respondent’s motivation in amending the claims to broaden them and encompass the appellants’ VSS was likewise not relevant to whether the new matter therein could reasonably be inferred from the original application. The Federal Court was correct to exclude evidence on that point. Finally, there was support in the ′173 patent, as originally filed, for claims defining the purpose of preventing the stalling of slurry.

Thus, the Federal Court did not err in finding that the feature of preventing the stalling of slurry was at least reasonably inferable from the original patent application. With respect to procedural fairness, the parties’ submission of expert reports constituted an undertaking to the Court to call those experts as witnesses at trial. This undertaking became particularly important in this case because the parties also agreed to present the experts’ evidence out of the usual order.

The appellants argued that they were entitled to cross-examine the respondent’s witnesses without significant and unwarranted constraint, and that they had the right to decide whether to call witnesses of their own or to rely instead on evidence obtained in cross-examination. They argued that the denial of their right to conduct cross-examination as they wished was

procedurally unfair. While this was a general principle, the appellants’ right to cross-examine was constrained by their undertaking to theFederal Court to call their experts as witnesses. This undertaking was voluntary; the appellants could instead have chosen not to submittheir expert reports before trial. At trial, the Federal Court went so far as to give the appellants the option of withdrawing theirundertaking instead of complying with it. Not only was it appropriate for the Federal Court to require the appellants to choose, but it wasnecessary to ensure a fair trial.

Parties also should not expect to be given the option, partway through trial, to withdraw an undertaking.Though that option was granted to the appellants in this case, it was in the discretion of the Federal Court. The Federal Court mightinstead have simply required the appellants to comply with their undertaking. Having concluded that the Federal Court did not err in some of its invalidity findings, it was unnecessary to address the appellants’arguments on remedies. STATUTES AND REGULATIONS CITED Budget Implementation Act, 2018, No. 2, S.C. 2018, c. 27, s. 201.

Federal Courts Rules, SOR/98-106, rr. 52.2, 258, 279, Tariff B, colomn V. Patent Act, R.S.C., 1985, c. P-4, ss. 27(3),(4), 28.3, 38.2, 43(2), 53.1, 55(1),(2). Patents Act 1977 (U.K.), 1977, c. 37, s. 72(1)(d). CASES CITED APPLIED: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Canada v. South Yukon Forest Corporation, 2012 FCA 165, 4 B.L.R. (5th) 31;Catnic Components Ltd. v. Hill & Smith Ltd., [1982] R.P.C. 183, [1981] F.S.R. 60 (H.L.); Whirlpool Corp. v. Camco Inc., 2000 SCC 67,[2000] 2 S.C.R. 1067; Free World Trust v. Électro Santé Inc., 2000 SCC 66, [2000] 2 S.C.R. 1024; Camso Inc. v.

Soucy InternationalInc., 2019 FC 255, 165 C.P.R. (4th) 1, affd 2020 FCA 183; Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R.601; Bauer Hockey Corp. v. Easton Sports Canada Inc., 2010 FC 361, 8 B.C.L.R. (5th) 1, 366 F.T.R. 242, affd 2011 FCA 83, 92 C.P.R.(4th) 103; Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61, [2008] 3 S.C.R. 265. CONSIDERED: Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., 2001 FCT 889, [2002] 2 F.C. 3, revd on other grounds 2002 FCA 158, [2003] 1F.C. 49; Gillette Safety Razor Company v. Anglo-American Trading Company Ltd. (1913), 30 R.P.C. 465 (H.L.); J.

K. Smit & Sons, Inc.v. McClintock, (SCC), [1940] S.C.R. 279, [1940] 1 D.L.R. 507; Eurocopter v. Bell Helicopter Textron Canada Limitée,2012 FC 113, 404 F.T.R. 193, affd 2013 FCA 219, 120 C.P.R. (4th) 394. REFERRED TO: Benhaim v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352; Tearlab Corporation v. I-MED Pharma Inc., 2019 FCA 179, 166 C.P.R.(4th) 367; Pollard Banknote Limited v. BABN Technologies Corp., 2016 FC 883, 141 C.P.R. (4th) 329; CanMar Foods Ltd. v. TA FoodsLtd., 2021 FCA 7, [2021] 1 F.C.R. 799; Corlac Inc. v. Weatherford Canada Inc., 2011 FCA 228, 95 C.P.R. (4th) 101; HospiraHealthcare Corporation v.

Kennedy Trust for Rheumatology Research, 2020 FCA 30, leave to appeal to S.C.C. refused December 23,2020, [2020] S.C.C.A. No. 79 (QL); Premier Tech Ltée v. Équipements Tardif Inc. (1993), 48 C.P.R. (3d) 42, 63 F.T.R. 114 (F.C.T.D.);Sanofi-Aventis Canada v. Apotex Inc., 2009 FC 676, 350 F.T.R. 165; Pfizer Canada Inc. v. Canada (Health), 2009 FC 1294, 360 F.T.R.200, affd 2011 FCA 102, 92 C.P.R. (4th) 301; Biovail Corporation v. Canada (Health), 2010 FC 46, 361 F.T.R. 158; Pfizer Canada Inc.v. Canada (Health), 2010 FC 447, 367 F.T.R. 179, revd 2011 FCA 236, 95 C.P.R. (4th) 193; Beloit Canada Ltd. v.

Valmet OY (1986), 8C.P.R. (3d) 289, 64 N.R. 287 (F.C.A.); General Tire & Rubber Co. v. Firestone Tyre & Rubber Co., [1972] R.P.C. 457 (Eng. C.A.);Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2012 FCA 333, [2014] 2 F.C.R. 459; Teva Canada Limited v. NovartisPharmaceuticals Canada inc., 2013 FCA 244, 451 N.R. 246; Bombardier Recreational Products Inc. v. Arctic Cat, Inc., 2018 FCA 172,159 C.P.R. (4th) 319; Mobil Oil Corp. v. Hercules Canada Inc. (1995), 63 C.P.R (3d) 473, 188 N.R. 382 (F.C.A.); Pfizer Canada Inc. v.Canada (Minister of Health), 2005 FC 1725, 285 F.T.R. 1; AstraZeneca Canada Inc. v.

Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 943;Pfizer Canada Inc. v. Canada (Health), 2007 FCA 209, 60 C.P.R. (4th) 81; Bonzel v. Intervention Ltd. (No. 3), [1991] R.P.C. 553 (Pat.Ct.) (U.K.); Gedeon Richter plc v. Bayer Pharma AG, [2012] EWCA Civ. 235, [2012] All E.R. 87. AUTHORS CITED Barrigar, Robert and Andrew Shaughnessy, Canadian Patent Act Annotated, 2nd ed., loose-leaf, Toronto: Carswell, 1994. MacOdrum, Donald H. Fox on the Canadian Law of Patents, 5th ed. loose-leaf, Toronto: Carswell, 2002. Vaver, David « Best Mode Disclosure in Canadian Patents » (2013), 25 I.P.J. 303.

APPEAL from a Federal Court decision (2019 FC 1606, 175 C.P.R. (4th) 179) finding that certain claims of the respondent’s CanadianPatent No. 2664173 were valid and had been infringed by the appellants. Appeal dismissed. APPEARANCES Patrick S. Smith and R. Nelson Godfrey for appellants. Kevin L. LaRoche and Kirsten Crain for respondent. SOLICITORS OF RECORD

Gowling WLG (Canada) LLP , Calgary, for appellants. Borden Ladner Gervais LLP , Ottawa, for respondent. The following are the reasons for judgment rendered in English by Locke J.A.: I.

Background [ 1 ] This decision concerns an appeal of a decision of the Federal Court ( 2019 FC 1606 , 175 C.P.R. (4th) 179, per Justice O’Reilly (the Decision)) which found that certain claims of the respondent’s Canadian Patent No. 2664173 (the ′173 patent) were valid and had been infringed by the appellants. [ 2 ] The ′173 patent relates to shale shakers, which were described as follows at paragraph 6 of the Decision: .… Shale shakers are used in the oil and gas industry to remove solids from the drilling fluid that emerges from an active well, so that the fluid can be reused.

The solids are the product of the drill bit cutting through rock. They are often referred to as “cuttings.” Drilling fluid provides a medium for sending the cuttings to the surface, and helps lubricate the drilling equipment. The combined solid and fluid mixture that comes to the surface at the drill site is called “slurry.” [ 3 ] The Decision went on at paragraph 7 as follows: In essence, a shale shaker operates like a vibrating sieve, receiving the slurry and screening out the cuttings within it, leaving the fluid to be captured by tanks below.

Since drilling fluid is expensive, the more proficient a shaker is in removing solids, the lower the cost of the drilling operation. The more reusable drilling fluid recovered, the better. [ 4 ] The ′173 patent describes a desire to improve the rate and efficiency at which shakers remove liquid from cuttings or other solids. It is known that introducing a pressure differential across the screen can increase the fluid capacity of the shaker, but doing so may result in solids sticking to the screen, thereby interfering with the passage of fluids through the screen. This is called “stalling” of the slurry.

The ′173 patent describes “a continuing desire for shakers having increased fluid capacity, increased fluid flow-through rates across the screens, and/or improved fluid removal efficiencies.” [ 5 ] The ′173 patent comprises 23 claims, of which the Federal Court found claims 2, 4, 9, 10, 20, 21 and 22 were valid and infringed by the appellants’ Vac Screen System (VSS). The Federal Court also noted that the parties had agreed that claims 1, 11, 16 and 19 of the ′173 patent are invalid. Elements of the claims in issue include: A.

A first screen and a second screen having different pressure differentials applied across each (all claims), B. Controlling air flow under at least a portion of the first screen to prevent stalling of the slurry (claims 2, 10), C. The pressure differential across the first screen generated by a vacuum external to the shaker (claim 9), D.

The pressure differential across the first screen pulls vapors and drilling fluid through the first screen to a degassing chamber external to the shaker (claims 10, 20) (Throughout this decision, “vapor” is spelled without a “u” (as is done in the ′173 patent), except when quoting another source), E. A first screen for separating drill cuttings and drilling fluid within a shaker (claims 20, 21, 22), F.

A pressure differential generator configured to pull air or vapor through the first screen to enhance the flow of drilling fluid through the first screen with respect to a second screen within a shaker (claims 20, 21, 22), G. A sump located below the first screen and configured to collect the air or vapor and the drilling fluid that passes through the first screen (claim 20), H. A degassing chamber in fluid communication with the pressure differential generator and the sump and located external to the shaker for collecting all of the air or vapor and the drilling fluid in the sump (claim 20), I.

The air or vapor pulled through the first screen is adjustable to prevent stalling of drill cuttings on the first screen (claim 22). [ 6 ] The appellants are Western Oilfield Equipment Rentals Ltd. (Western) and FP Marangoni Inc. (FPM). FPM is a wholly-owned subsidiary of Western, but FPM has not carried on business since 2014. Both appellants were found to have infringed the ′173 patent. II. Issues [ 7 ] The appellants raise a number of issues which may be usefully classified as follows: i. Construction of claim elements, including: (a) “First screen” , (b) “Controlling air flow” , (c) “Vapor” ,

(d) “Degassing chamber” , (e) “All” , (f) “Or” and, (g) “Within a shaker” ; ii. Infringement, including: (

a) By FPM, (

b) Inducement by Western, (

c) Whether VSS pulls vapor, and (

d) Gillette defence, iii. Invalidity, including: (

a) Anticipation, including by: 1. Derrick Patent Application, 2. Derrick Prior Use, 3. Vasshus Patent, 4. Hensley Patent Application, and 5. Logue, Bongert, Erris, Cook and Fast Patent Publications, (

b) Obviousness, (

c) Insufficiency, (

d) Ambiguity, (

e) Inutility, (

f) Overbreadth, and (

g) Addition of new subject matter, iv. Procedural fairness, and v. Remedies. [ 8 ] As explained below, I have found no reviewable errors by the Federal Court. [ 9 ] Before continuing, I feel compelled to say a few words about the lack of wisdom of raising so many issues on appeal, especially so many issues that are so factually suffused, without due attention to the standard of review on such issues. Firstly, the appellants’ approach suggests that they themselves cannot identify any issues that are particularly strong.

This suggestion was compounded at the hearing of the appeal when, despite the Court’s suggestion that the appellants focus on their strongest points, the appellants insisted on addressing all of the issues raised in their memorandum of fact and law. Not only did this approach miss an opportunity to highlight certain of the issues, but it also prevented the appellants from delving deeper into points that might have merited more discussion. In addition to hurting the appellants’ own case on appeal, this approach also made unnecessary additional work for the Court and delayed the release of this decision.

I have additional comments below about the appellants’ treatment of the standard of review. III. Standard of Review [ 10 ] The appellants pay scant attention to the standard of review in their submissions, and therefore it is important to state the applicable standard here. [ 11 ] As indicated in Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 ( Housen ), the standard of correctness applies to questions of law (see paragraph 8), but findings of fact or of mixed fact and law are reviewable only where the Federal Court has made a palpable and overriding error (see paragraphs 10 and 36).

The standard of palpable and overriding error is not easily met. As stated by this Court in Canada v. South Yukon Forest Corporation , 2012 FCA 165 , 4 B.L.R. (5th) 31, at paragraph 46 , and quoted with approval by the majority of the Supreme Court of Canada in Benhaim v. St-Germain , 2016 SCC 48 , [2016] 2 S.C.R. 352, at paragraph 38 : Palpable and overriding error is a highly deferential standard of review.…“Palpable” means an error that is obvious. “Overriding” means an error that goes to the very core of the outcome of the case.

When arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall. [ 12 ] The deference given to the Federal Court on issues of fact is warranted for several reasons, not least because the judge at first instance was present throughout the trial to hear all the witnesses and see all the evidence on the many issues in this case, and was hence

in a much better position than members of this Court to consider and weigh the evidence: see Housen, at paragraph 12. [13] Though the parties do not seem to disagree on the applicable standard of review, it will be necessary to address its application tocertain of the issues discussed below. As a general comment, I note that the appellants could not hope to be successful on any issue inwhich the standard of review is palpable and overriding error applies without identifying the alleged error by the Federal Court, andexplaining why the error should be considered palpable and overriding.

Even after this reality was noted at the hearing, most of theappellants’ arguments failed to focus on the appropriate points, and were instead misguided attempts to have this Court re-weigh theevidence and re-characterize the facts. That is not our role. IV. Construction of claim elements [14] Because of the importance of claim construction to subsequent issues of infringement, validity and remedies, the analysis in thissection is determinative of many such issues. [15] A patent is not addressed to an ordinary member of the public, but to a worker skilled in the art to which it pertains.

As stated inCatnic Components Ltd. v. Hill & Smith Ltd., [1982] R.P.C. 183, at page 243, [1981] F.S.R. 60 (H.L.) (Catnic), and quoted by theSupreme Court of Canada in Whirlpool Corp. v.

Camco Inc., 2000 SCC 67, [2000] 2 S.C.R. 1067 (Whirlpool) at paragraph 44: .… A patent specification should be given a purposive construction rather than a purely literal one derived from applying to it the kind ofmeticulous verbal analysis in which lawyers are too often tempted by their training to indulge.… [16] The Supreme Court in Whirlpool went on to state as follows at paragraph 49(g): While “purposive construction” is a label introduced into claims construction by Catnic, supra, the approach itself is quite consistent, inmy view, with what was said by Dickson J. the previous year in Consolboard [Inc. v.

MacMillan Bloedel (Sask.) Ltd., (SCC), [1981] 1 S.C.R. 504, (1981), 56 C.P.R. (2d) 145], on the topic of claims construction, at pages 520–521: We must look to the whole of the disclosure and the claims to ascertain the nature of the invention and methods of its performance,(Noranda Mines Limited v. Minerals Separation North American Corporation, (SCC), [1950] S.C.R. 36), being neitherbenevolent nor harsh, but rather seeking a construction which is reasonable and fair to both patentee and public.

There is no occasion forbeing too astute or technical in the matter of objections to either title or specification for, as Duff C.J.C. said, giving the judgment of theCourt in Western Electric Company, Incorporated, and Northern Electric Company v. Baldwin International Radio of Canada, (SCC), [1934] S.C.R. 570, at p. 574, “where the language of the specification, upon a reasonable view of it, can be so read asto afford the inventor protection for that which he has actually in good faith invented, the court, as a rule, will endeavour to give effect tothat construction”.

Not only is “purposive construction” consistent with these well-established principles, it advances Dickson J.’s objective of aninterpretation of the patent claims that “is reasonable and fair to both patentee and public”. [17] On standard of review, the appellants argue that claim construction is a question of law to which the standard of correctnessapplies. For its part, the respondent notes correctly that claim construction is typically assisted by expert evidence, and the weighing ofsuch evidence by the trial judge is reviewed on a standard of palpable and overriding error: see Tearlab Corporation v.

I-MED PharmaInc., 2019 FCA 179, 166 C.P.R. (4th) 367, at paragraph 29. Accordingly, even if I would not have reached the same conclusions on theexpert evidence heard by the Federal Court, I must defer to its weighing of the evidence unless I find an error that meets this highstandard. [18] Before beginning my review of the specific issues of claim construction to be addressed, I must comment on an argument raisedby the appellants at the hearing of this appeal (though not mentioned in their memorandum). They argue that this Court may considersection 53.1 of the Patent Act, R.S.C., 1985, c.

P-4, in dealing with construction of the claims. The key part of this provision, subsection53.1(1) reads as follows: Legal Proceedings in Respect of Patents … Admissible in evidence 53.1

(1) In any action or proceeding respecting a patent, a written communication, or any part of such a communication, may be admittedinto evidence to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim in the patentif (

a) it is prepared in respect of (

i) the prosecution of the application for the patent, (ii) a disclaimer made in respect of the patent, or (iii) a request for re-examination, or a re-examination proceeding, in respect of the patent; and (

b) it is between (

i) the applicant for the patent or the patentee; and (ii) the Commissioner, an officer or employee of the Patent Office or a member of a re-examination board.

[ 19 ] Though the appellants refer to this provision as the “file wrapper estoppel” provision, it is important to note that it does not refer to an estoppel. Rather, it provides that certain communications between a patentee or applicant and the Patent Office pertaining to a patent or a patent application are admissible in a patent action or proceeding as evidence “to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim in the patent”.

This provision appears to have been enacted to address a prior prohibition against considering the prosecution history of a patent when construing its claims (see Free World Trust v. Électro Santé Inc. , 2000 SCC 66 , [2000] 2 S.C.R. 1024 ( Free World Trust ), at paragraph 66 ; Pollard Banknote Limited v. BABN Technologies Corp. , 2016 FC 883 , 141 C.P.R. (4th) 329, at paragraphs 79–81 ). For a broader discussion of this provision, see CanMar Foods Ltd. v. TA Foods Ltd. , 2021 FCA 7 , [2021] 1 F.C.R. 799 , at paragraphs 48–77 . [ 20 ]

Section 53.1 came into force in December 2018, upon enactment of the Budget Implementation Act, 2018, No. 2 , S.C. 2018, c. 27 . According to

section 201 thereof,

section 53.1 of the Patent Act applies “in respect of any action or proceeding that has not been finally disposed of on the coming into force of that

section 53.1 .” Though the trial had finished prior to the coming into force of

section 53.1, the Federal Court did not release the decision until December 2019. Regardless of whether an action is considered “finally disposed of” upon release of a Federal Court decision or a final decision on appeal, it appears that the action in this case had not been finally disposed of when

section 53.1 came into force, and therefore

section 53.1 applies in the present case. [ 21 ] That said, I note that the Federal Court heard no argument related to

section 53.1, even after it came into force following the trial. Therefore, it would be difficult to find any error to ascribe to the Federal Court on this point. Further, though the appellants argue that this Court should construe the claims of the ′173 patent in view of the claims as they appeared in the original patent application, they do not identify any representation made by the respondent before the Federal Court that they seek to rebut. The appellants’ main complaint seems to be that the original claims were broadened during prosecution of the patent application to encompass the appellants’ VSS.

Each of the claim construction and patent validity issues raised by the appellants is dealt with in the following paragraphs. However, as I said in Camso Inc. v. Soucy International Inc. , 2019 FC 255 , 165 C.P.R. (4th) 1 ( Camso ), at paragraph 197 , affd 2020 FCA 183 : .… A patent applicant is perfectly entitled, and indeed is well-advised, to draft patent claims with an eye on competitors’ products.

The limitation is that the applicant must respect all of the requirements for valid claims. [ 22 ] Therefore, the respondent’s motivation in amending the claims is not, by itself, telling in terms of claim construction or patent validity. A. First Screen [ 23 ] The essence of this issue is the appellants’ argument, before both the Federal Court and this Court, that the term “first screen” refers to the screen closest to the input end of the shaker, and excludes the screen at the discharge end of the screen.

The appellants cite common general knowledge of the use of this term. [ 24 ] The Federal Court disagreed with this construction. In doing so, the Federal Court noted the disagreement between the experts on this point (Peter Matthews and Bernard Murphy for the appellants, and Robert Palmer for the respondent), but favoured the evidence of Mr. Palmer. The Decision noted that Mr. Murphy reached his

interpretation without having read anything in the ′173 patent, and ultimately accepted that, in the context of the ′173 patent, the first screen could be any screen (see paragraph 60). Mr. Matthews also accepted that the ′173 patent makes clear that a pressure differential can be applied to the screen at the discharge end of the shaker (see paragraph 61). [ 25 ] For his part, Mr.

Palmer opined that there is no requirement that the first screen be closest to the inlet, and a skilled reader of the ′173 patent would understand that the key difference between the first and second screens is not location but function. The Federal Court agreed and noted that, where it is necessary to make clear which screen is which, the patent specifically tells the reader (see paragraph 65). [ 26 ] The Federal Court did not misunderstand the evidence and was entitled to weigh it in this way. I see no error. B.

Controlling Air Flow [ 27 ] The principal challenge in construing the term “controlling air flow” is that the manner most discussed in the ′173 patent for addressing the problem of pressure differential causing stalling of slurry on the screen is pulsing of the pressure. This pulsing is also referred to in the ′173 patent as toggling or intermittent interruption of the vacuum. The appellants argue that construction of the term “controlling air flow” should be limited to such pulsing, and should not encompass simply adjusting a continuous pressure differential.

They argue that a broader construction would render claims using this term obvious, since adjustment of a continuous pressure differential to prevent stalling of slurry was part of the common general knowledge of a skilled person prior to the ′173 patent. [ 28 ] The obviousness argument is addressed later in these reasons. However, claim construction is a separate exercise. [ 29 ] As with the term “first screen,” I am of the view that the Federal Court understood the expert evidence and explained why it reached a conclusion that it was entitled to reach.

At paragraph 77 of the Decision, the Federal Court noted that the ′173 patent refers not just to toggling or pulsing of pressure differential, but also to “manipulating the valve,” and that the experts agreed that some of the valves mentioned in the patent were designed for controlling air flow (and not just for on/off applications). This supports the Federal Court’s conclusion at paragraph 76 of the Decision that the term “controlling air flow” is broader than toggling or pulsing the pressure differential. C.

Vapor [ 30 ] The appellants argue that the experts agreed that the term “vapor” in the claims is confusing, but that the Federal Court disagreed, finding that vapor is a mist, not a gas. I do not accept that the Federal Court disagreed with the experts’ view that the term “vapor” in the claims is confusing. Paragraph 69 of the Decision acknowledged the experts’ agreement, and the subsequent discussion addressed the confusion. At paragraph 70, the Federal Court indicated that “[o]n its own, the term ‘vapour’ has a fairly uncomplicated

meaning – air or gas containing suspended liquids.” The subsequent discussion left that definition substantially unaltered. At paragraph 72, the Federal Court stated, “[a] vapour is not an entrained gas. Nor is a gas a vapour.” (N.B. an entrained gas is a gas that is trapped within a fluid.) [ 31 ] The appellants appear to draw an important distinction between vapor and mist. I find that there is no such important distinction. Either term can refer to a gas containing suspended liquids. The Federal Court also does not draw such a distinction.

The appellants seem to suggest that a mist is different because it is created when the drilling fluid is pulled through the screen, and therefore the suspended liquid is drilling fluid. However, this view is not supported in the Decision, nor did the evidence cited by the appellants compel the Federal Court to accept that view. [ 32 ] The appellants also build arguments based on the Federal Court’s use of the word “gases” and not “vapor” in paragraphs 102, 108 and 115 of the Decision. First, they point to the statement at paragraph 72 of the Decision that a gas is not a vapor.

Then they point to the Federal Court’s language in the above-listed paragraphs. I will address each of these, but I agree with the respondent’s argument that the Federal Court’s language is infelicitous, but unimportant. [ 33 ] The difference between a gas and a vapor is simply that the latter contains suspended liquids and the former, technically speaking, does not.

In paragraph 102 of the Decision the tray under the screen of the appellants’ VSS was described as collecting “fluid, fine particles, and gases that pass through the screen.” The appellants infer that the Federal Court intended to exclude gases containing suspended liquids (vapor). Having read the Decision in detail, I do not believe that this was the Federal Court’s intention.

Nor do I accept that the Federal Court misunderstood the evidence on this issue in any significant way. [ 34 ] At paragraph 108, the Decision stated that a true degasser (one as understood in the common general knowledge, not as construed in the context of the ′173 patent) is “used to recover gases entrained within the drilling fluid.” I see no problem with the use of “gases” here, even following the appellants’ strict

interpretation of “gases.” [ 35 ] Finally, paragraph 115 of the Decision described the appellants’ VSS as having a tray below the screen “to collect liquid and gases”. This is consistent with paragraph 102, and my view is the same. D. Degassing Chamber [ 36 ] The appellants argue that the term “degassing chamber” used in some of the claims in issue refers to a degasser, which is well- known to the skilled person and refers to a device that removes entrained gases from drilling fluid. The appellants point to repeated references in the ′173 patent to entrained gases.

The appellants object to the Federal Court’s broader construction of this term to encompass any chamber that separates air or vapor from drilling fluid. [ 37 ] The Federal Court accepted the evidence of the respondent’s expert Mr. Palmer (and the other experts) that the degassing chamber described and claimed in the ′173 patent is not a true degasser as understood by the skilled person. The Federal Court was entitled to accept the evidence of Mr. Palmer concerning the meaning of “degassing chamber” in the ′173 patent. I see no reviewable error in the Federal Court’s conclusion in this respect.

Even though the ′173 patent refers to entrained gases, the element described as a degassing chamber in Figure 6 of the ′173 patent is simply a holding tank for liquid in which air is exhausted, much like a household wet-vac. The appellants’ expert Mr. Murphy acknowledged this. The ′173 patent does not describe any means for removing entrained gases. [ 38 ] At the hearing, the appellants added an argument that the Federal Court erred in construing the term “degassing chamber” in claims 10, 17 and 20 as having the same scope as the term “chamber” in claims 12 and 16.

The appellants argue that this conclusion failed to recognize the principle of claim differentiation and claim 17, which differs from claim 12 only in defining the chamber to be a degassing chamber. This argument cannot succeed. Firstly, the principle of claim differentiation is not absolute. Rather, it contemplates a rebuttable presumption: where one claim differs from another in only a single feature it is difficult to argue that the different feature has not been made essential to the claim: Whirlpool , at paragraph 79; Camso, at paragraph 103.

Moreover, the appellants’ argument conflicts with the opinion of their own expert Mr. Murphy who construed the two terms as consistent with one another (see paragraph 72 of the Murphy Invalidity Report, appeal book, Vol. 33, tab 302, at page A6567). E. All [ 39 ] Claims 12 and 20 of the ′173 patent specify that “all” the air or vapor and drilling fluid that passes through the first screen is conveyed to a degassing chamber (or chamber). The appellants object to the Federal Court’s characterisation of the word “all” in these claims as essential.

The appellants argue that the Federal Court provided no purposive analysis of the word “all.” [ 40 ] It is not clear to me precisely what the appellants found missing in the Federal Court’s analysis here. It considered Mr. Murphy’s assertion concerning the possibility of hazardous gases being present in the slurry, but dismissed this assertion on the basis that the ′173 patent has no claims concerning treatment of such gases. The Federal Court also noted the absence of the word “all” in claim 10 as a basis for concluding that this word in claims 12 and 20 is essential.

I see no flaw in this analysis. [ 41 ] I note also the principle that elements of patent claims are presumed to be essential: Free World Trust , at paragraph 57 . The appellants make no reasonable argument as to why the word “all” in claims 12 and 20 should be treated as non-essential. F. Or [ 42 ] The appellants argue that the word “or” in the expression “air or vapor” in claims 19 and 20 should be construed conjunctively, and that the Federal Court erred in concluding that the expression contemplates air or vapor or a combination of the two.

The expression “air or vapor” refers to what is pulled through the first screen and then conveyed to the degassing chamber. The appellants argue, on the one hand, that vapor cannot be pulled through the first screen without also pulling through air. The appellants also argue that vapor must be sent to the degassing chamber, because the degassing chamber would be unnecessary if it received only air.

[ 43 ] The Federal Court considered this argument but reached its conclusion based on the opinion of Mr. Palmer. In my view, it was open to the Federal Court to favour Mr. Palmer’s evidence. The appellants’ argument assumes that the purpose of the claimed degassing chamber is to recover liquids suspended in a vapor. It is not. Its purpose is instead to remove air or vapor from the drilling fluid recovered from the slurry. G.

Within a Shaker [ 44 ] Claims 20, 21 and 22 of the ′173 patent depend from claim 19, which defines “a second screen within a shaker.” The appellants argue that these claims require that the second screen be located within the shaker, and that it is not enough for the second screen to be attached to the outside of the shaker. [ 45 ] The Federal Court did not explicitly construe the expression “within a shaker.” However, it is implicit in the Decision that the Federal Court was satisfied that a second screen is “within a shaker” if it is firmly attached to, or integrated into, the shaker: see paragraphs 16 and 87 of the Decision.

The evidence of Mr. Palmer supported this conclusion; paragraph 40 of his Reply Report stated that a screen “mounted externally onto the shaker and becoming part and parcel of the shaker … effectively becomes part of the shaker, extending the shaker bed”, and is therefore considered “within” the shaker (appeal book, Vol. 21, tab 83, page A4211). It was open to the Federal Court to reach this conclusion. V. Infringement [ 46 ] This

section addresses those non-infringement arguments raised by the appellants that are not defeated by the claim construction discussion in the previous

section of these reasons. [ 47 ] It is useful to preface the analysis in this

section with a few words concerning the claims that are in issue in this appeal. They are not limited to those that were found to infringe. Because the appellants’ invalidity arguments concern all of the claims of the ′173 patent that the respondent does not admit are invalid, these claims are also in issue. [ 48 ] Claims 1 to 18 concern a method comprising certain steps. These claims are directly infringed where one performs all of the steps of the claimed method. One who omits an essential step in a claimed method does not directly infringe the claim.

However, one who knowingly induces another to perform all of the steps of the claimed method (i.e. to directly infringe) may be liable for inducing infringement: Corlac Inc. v. Weatherford Canada Inc. , 2011 FCA 228 , 95 C.P.R. (4th) 101, at paragraph 162 . [ 49 ] Claims 19 to 23 of the ′173 patent concern a system. These claims are directly infringed where one makes, constructs, uses or sells a system that comprises all of the essential claim elements.

As with method claims, there is no direct infringement of a system claim where one omits an essential element thereof, but one may be liable for inducing infringement if one knowingly induces another to infringe. [ 50 ] The issue of inducing infringement is particularly relevant in this case in relation to the method claims. This is because all of the method claims in issue include the step of introducing (or delivering) a slurry to a shaker.

Typically, this step is performed by the appellants’ customer rather than by the appellants themselves. [ 51 ] It is also useful to preface the infringement analysis with a brief discussion of the issue of liability to a patentee for activities prior to the issuance of the patent. Subsection 55(1) of the Patent Act provides for liability for all damages sustained resulting from infringement of an issued patent. But subsection 55(2) also contemplates liability for certain activities prior to issuance of the patent.

The current version of subsection 55(2), which differs insubstantially from the text that was in force before the Federal Court, reads as follows: Infringement … 55 …. Liability damage before patent is granted

(2) A person is liable to pay reasonable compensation to a patentee and to all persons claiming under the patentee for any damage sustained by the patentee or by any of those persons by reason of any act on the part of that person, after the specification contained in the application for the patent became open to public inspection, in English or French, under

section 10 and before the grant of the patent, that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection, in English or French, under that section. [ 52 ] Though activities of the kind contemplated in subsection 55(2) are not true patent infringement because they take place in a time when no patent yet exists, I will refer to them in these reasons as “pre-issuance infringement” for the sake of simplicity. The following aspects of subsection 55(2) are notable: i.

Liability for pre-issuance infringement is not for “all damage sustained” (as it is in cases of true patent infringement), but rather for “reasonable compensation … for any damage sustained” ; ii. The period of liability is from the date the patent application became open to public inspection until issuance of the patent; and iii.

Liability arises from activities “that would have constituted an infringement of the patent if the patent had been granted on the day the specification became open to public inspection”. [ 53 ] An important fact is that the application for the ′173 patent, which has a filing date of October 1, 2007 and a publication date (the

date the application became open to public inspection) of April 10, 2008, was amended on October 2, 2013 to introduce, among otherthings, new claims. Prior to that date, all of the claims in the application defined toggling the pressure differential across the screen. Theappellants’ activities therefore did not fall within the scope of the prior claims. These facts are not in dispute, and there is no argumentthat either of the appellants is liable for any of its activities prior to October 2, 2013. [54] I now consider the specific arguments raised by the appellants. A.

By FPM [55] The appellants argue that FPM stopped doing business in 2014, prior to the issuance of the ′173 patent, and hence cannot beliable for infringement. The appellants argue that a party is not liable under the Patent Act for pre-issuance infringement if itdiscontinues the activities in question prior to issuance of the patent. The appellants also argue that, regardless of its activities afterissuance of the patent, a party cannot be liable for pre-issuance infringement by inducement.

The appellants acknowledge that there is noauthority in support of these arguments, but they note that there is also no authority that contradicts their position. [56] I note first that, even accepting the appellants’ argument that FPM stopped doing business in 2014, this stoppage occurred afterthe October 2, 2013 claims amendment. Accordingly, some of FPM’s pre-issuance activities in issue took place while the amendedclaims were on record. This means that FPM could not avoid liability based on its activities being entirely prior to the amendment, evenif that were a basis for avoiding liability.

I express no opinion here as to whether that would be a basis for avoiding liability. [57] The more important questions here are (

i) whether one who engages in pre-issuance infringement can avoid liability undersubsection 55(2) by discontinuing the activities in question prior to issuance of the patent, and (ii) whether liability under subsection55(2) extends to one whose pre-issuance infringement is by inducement. These questions require an

interpretation of subsection 55(2). [58] The Supreme Court of Canada, in Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601, at paragraph 10,has provided the following guidance in interpreting statutory provisions: It has been long established as a matter of statutory

interpretation that “the words of

an Act are to be read in their entire context and intheir grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”:see 65302 British Columbia Ltd. v. Canada, (SCC), [1999] 3 S.C.R. 804, at para. 50. The

interpretation of a statutoryprovision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as awhole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in theinterpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of thewords plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in allcases the court must seek to read the provisions of

an Act as a harmonious whole. [59] Beginning with the text of subsection 55(2) (reproduced at paragraph 51 above), I note that nothing therein suggests that a pre-issuance infringer can avoid liability by discontinuing its activities prior to issuance of the patent. The text is concerned with the periodfrom publication of the patent application until issuance of the patent, and with activities during that period that would have constitutedan infringement if the patent had already been granted.

There is no indication in the text that the infringing activity must continue afterissuance of the patent. [60] As regards the question of inducing infringement, I note that this is merely a form of patent infringement, not a distinct tort:Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research, 2020 FCA 30 (Hospira 2020), at paragraph 45, leave toappeal to S.C.C. refused, 39099 (23 December 2020) [[2020 S.C.C.A. No. 79 (QL)]; Bauer Hockey Corp. v. Easton Sports Canada Inc.,2010 FC 361, 8 B.C.L.R. (5th) 1, 366 F.T.R. 242 (Bauer), at paragraph 199, affd 2011 FCA 83, 92 C.P.R. (4th) 103.

There is no reasonto treat pre-issuance infringement by inducement differently from direct pre-issuance infringement. [61] The context of subsection 55(2) does not suggest that a pre-issuance infringer can avoid liability therefor by discontinuing itsactivities prior to issuance of the patent. The concept of pre-issuance infringement was added to Canada’s patent regime when Canadaadopted the practice in place in most of the rest of the world, and began (

i) publishing patent applications prior to issuance, and (ii)counting the life of the patent from the date of filing rather than the date of issuance. Given that the life of the patent was countingduring the pendency of the application, and that the public had access to the invention once the application was published (usually 18months after the priority date of the application), it was decided that the patent system would impose liability for “reasonablecompensation” on those who use inventions without permission during this pre-issuance period.

No cause of action exists undersubsection 55(2) until the patent has issued (see Premier Tech Ltée v. Équipements Tardif Inc. (1993), 48 C.P.R. (3d) 42, 63 F.T.R. 114(F.C.T.D.)), but liability relates to the period from publication to issuance. The concern remains that an invention that has been madepublic but has not yet issued will be exploited by a third party during this period when the inventor cannot prevent such exploitation.

Thediscontinuance of that exploitation prior to issuance of the patent does not reduce the inventor’s loss resulting from third partyexploitation during the pre-issuance period. [62] Similarly, the context of subsection 55(2) does not suggest that pre-issuance infringement by inducement should be treateddifferently from direct pre-issuance infringement.

In either case, the concerns for the unlicensed use of an invention prior to issuance ofthe patent are present. [63] The discussion in the previous two paragraphs concerning the context of subsection 55(2) also explains its purpose: tocompensate inventors whose published inventions are used without permission before they can enforce their rights. Nothing in thecontext or the purpose suggests any exclusion from liability to a patentee where the pre-issuance infringement stops prior to issuance, orwhere such infringement is by inducement.

Presumably, the earlier such activity stops the lower the liability for reasonablecompensation will be, but it would defeat the purpose of the provision if the pre-issuance infringer could continue its activities, possiblyfor many years, and then avoid all liability by discontinuing those activities just before the patent issues. Likewise, it would defeat thepurpose of the provision if one could avoid liability by inducing another to directly infringe. The reasons for imposing liability forinfringement on one who knowingly induces a third party to infringe after a patent has issued apply equally before issuance.

[64] There is precedent for finding that pre-issuance infringement can occur by inducement. The Federal Court, Trial Division madesuch a finding in Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., 2001 FCT 889, [2002] 2 F.C. 3 where it concluded that onedefendant, Canwell Enviro-Industries Ltd., had induced another defendant, the City of Medicine Hat, to perform pre-issuanceinfringement. The Federal Court of Appeal, in Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., 2002 FCA 158, [2003] 1 F.C. 49reversed the result on the basis that the patent in suit was invalid.

However, the Federal Court of Appeal made no comment on the issueof liability for inducing pre-issuance infringement. [65] Another case in which a trial led to a conclusion that inducement gave rise to liability for pre-issuance infringement is Bauer.There, the Federal Court found the defendant liable for pre-issuance infringement both by inducement and directly.

On appeal, theFederal Court of Appeal maintained the result, but found it unnecessary to address the defendant’s argument that the trial judge hadapplied the wrong test for inducement, since she had also found that there was direct pre-issuance infringement. [66] In conclusion, I find no error by the Federal Court with regard to the finding of infringement against FPM. B. Inducement by Western [67] The appellants argue that, though the Federal Court concluded that they had provided instructions on the use of their VSS, it didnot state when or in what circumstances this happened.

The appellants argue that there was no direct evidence of Western’s customersreceiving instructions and being induced to infringe. [68] However, the evidence accepted by the Federal Court (see paragraphs 131 and 132 of the Decision) was that written instructionswere always given. One reason given in the evidence for this was that rig crews are transient and need the instructions. Another reason isthat shale shakers are potentially dangerous to the uninstructed.

There is no basis for Western to avoid liability based on the timing of itsinstructions. [69] There is also no basis for Western to avoid liability based on any lack of evidence that its customers were induced by theinstructions. The description at paragraphs 131 and 132 of the Decision of the interactions with customers was sufficient to support theconclusion at paragraph 134 that Western’s influence had been effective. [70] Western also argues that one cannot induce an obvious act, and that it was obvious to address the problem of slurry stalling byturning down the pressure differential.

This argument cannot succeed. Inducement arises when the inducer’s influence results in

an act ofdirect infringement. Direct infringement occurs when the direct infringer has performed all of the essential steps in the claimedinvention. The fact that one or more of those steps is not, in and of itself, inventive does not relieve the direct infringer from liability.Likewise, it does not relieve the inducer from liability. Inducement is concerned with influence to directly infringe, and the Federal Courtproperly found such influence. C.

Whether VSS Pulls Vapor [71] The appellants argue that there was no evidence to support the Federal Court’s conclusion that their VSS infringes claims 10 and20 to 22 because it can separate gas from drilling fluid.

But the appellants’ submissions on this point depend on their earlier submissions(which I have rejected) concerning the meaning of “vapor” and “or”, and the Federal Court’s infelicitous use of the word “gas” in certainparagraphs of the Decision (see paragraphs 30 to 35 and 42 to 43 above). [72] The appellants also argue that, if the word “all” in claim 20 is essential, then there is no infringement because there is noevidence that all of the vapor pulled through the screen is removed from the drilling fluid. This argument misreads claim 20.

Claim 20refers to a degassing chamber “located external to the shaker for collecting all of the air or vapor and the drilling fluid in the sump[located below the screen] and removing air or vapor from the drilling fluid.” The word “all” relates to the air, vapor and drilling fluidthat is collected by the degassing chamber. It does not refer to the air or vapor that is removed from the drilling fluid. Accordingly, thereis no requirement that all of the vapor pulled through the screen be removed from the drilling fluid. D.

Gillette Defence [73] The appellants argue that the Federal Court erred because it failed to consider their Gillette defence, based principally on theDerrick patent application (see discussion in the Anticipation

section below). The respondent counters that the Federal Court determinedthat Derrick did not anticipate the infringed claims, and “[t]he Gillette defence was thus dealt with in substance, if not name.” [74] Though I see no error in the Federal Court’s consideration (or non-consideration) of the Gillette defence, the respondent’ssubmission suggests a common misunderstanding about the nature of this issue, which prompts me to say a few words on the subject. [75] The Gillette defence gets its name from the U.K. House of Lords decision in Gillette Safety Razor Company v.

Anglo-AmericanTrading Company Ltd. (1913), 30 R.P.C. 465 (Gillette). This case gave rise to the principle that if a defendant is accused of infringing apatent with a product that is the same as, or not patentably distinct from, the prior art, the patentee finds itself on the horns of a dilemmain pursuing its claim; in the words of Lord Moulton in Gillette, at page 480: .… If the claims of such a Patent were so wide as to include [the Defendants’ product], the Patent would be bad, because it would includesomething which differed by no patentable difference from that which was already in possession of the public.

Such a Patent would bebad for want of novelty. If the Claims were not sufficiently wide to include the Defendants’ [product], the patentee could not complain ofthe public making it. In other words, the Defendants must succeed either on invalidity or on non-infringement. [76] A similar approach was taken by the Supreme Court of Canada in J. K. Smit & Sons, Inc. v. McClintock, (SCC),[1940] S.C.R. 279, [1940] 1 D.L.R. 507, where the appellant sought a declaration of non-infringement on the basis that it was using amethod known in the prior art.

At page 286 [of S.C.R.], the Court asked itself “could the respondent at the time he applied for his patenthave got a patent for the process which the appellants employ”? Answering the question in the negative, the Court concluded that therecould be no infringement of any valid patent claim.

[ 77 ] The Gillette defence permits a defendant (or a court) a shortcut around the often difficult and time-consuming process of construing the claims of a patent, and then determining whether those claims are valid and whether they have been infringed. [ 78 ] However, the application of the Gillette defence has proved less simple in practice, and this has led to some misunderstanding and misapplication of the defence.

Though the Gillette defence is frequently asserted by parties accused of patent infringement, it is rare for such parties to rely exclusively on this defence and actually omit analysis of claim construction, validity and infringement. Typically, a court will be faced with arguments on all of these issues.

Likewise, courts dealing with a Gillette defence as well as issues of claim construction, validity and infringement rarely skip the other issues and limit themselves to the Gillette defence. [ 79 ] It is perhaps because the Gillette defence is typically asserted along with other defences that its nature as an alternative to claim construction and analysis of validity and infringement is sometimes misunderstood or misapplied, by counsel and by courts.

For example, contrary to some of the jurisprudence of the Federal Court, the success of a Gillette defence does not depend on a conclusion that the claim in question is invalid for anticipation or obviousness ( cf . Sanofi-Aventis Canada v. Apotex Inc. , 2009 FC 676 , 350 F.T.R. 165 , at paragraph 349 ; Pfizer Canada Inc. v. Canada (Health), 2009 FC 1294 , 360 F.T.R. 200, at paragraph 72 , affd 2011 FCA 102 , 92 C.P.R. (4th) 301; Biovail Corporation v. Canada (Health) , 2010 FC 46 , 361 F.T.R. 158, at paragraph 122 ; Pfizer Canada Inc. v.

Canada (Health), 2010 FC 447 , 367 F.T.R. 179, at paragraph 86 , revd 2011 FCA 236 , 95 C.P.R. (4th) 193; Eurocopter v. Bell Helicopter Textron Canada Limitée , 2012 FC 113 , 404 F.T.R. 193 ( Eurocopter ), at paragraph 52 , affd 2013 FCA 219 , 120 C.P.R. (4th) 394). Quite the contrary, the principal benefit of a Gillette defence is to avoid the need to construe the claims and reach a conclusion on validity and infringement issues. Where a court has (

i) construed the claims in issue, (ii) determined which claims are valid and which are not, and (iii) found certain valid claims to be infringed (as did the Federal Court in the present case), consideration of the Gillette defence is superfluous and unnecessary. It may also create confusion. In fact, it is arguably preferable in some cases for the court not to take the shortcut offered by the Gillette defence because the more laborious claim construction process may lead to a conclusion that the claims in question are invalid.

Such a conclusion would be of interest not just to the parties, but also to the broader public. [ 80 ] It is notable that the Federal Court of Appeal in Eurocopter , at paragraph 115 , found that the respondent’s Gillette defence in that case failed “[a]s a logical consequence” of the failure of its anticipation argument. I do not take this as a statement that a Gillette defence will always fail where anticipation has not been established.

In Eurocopter , the Federal Court of Appeal noted at paragraph 37 that the respondent had promoted its allegedly infringing product as innovative, and that the trial judge had considered this fact in dismissing the Gillette defence. In this context, dismissal of the Gillette defence makes sense: an assertion that a product is innovative would seem to be inconsistent with an assertion that one is practising the prior art. VI. Invalidity A. Anticipation [ 81 ] The appellants argue that several patent publications and activities constitute prior art that anticipates the claims in issue.

The appellants observe correctly that assessing anticipation (also known as lack of novelty) is a two-step process; the party attacking a claim must establish both disclosure and enablement of the invention. The appellants argue that disclosure is based on whether performing the subject matter of the prior art would result in infringement. With regard to enablement, the appellants argue that the test is whether the skilled person “would have been able to perform the prior art without undue burden”.

A comment is necessary on both of these arguments. [ 82 ] On disclosure, the appellants fail to acknowledge two important requirements. Firstly, the disclosure “must contain so clear a direction that a skilled person reading and following it would in every case and without possibility of error be led to the claimed invention” (emphasis added): Free World Trust , at paragraph 26

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