STELPRO DESIGN INC. Plaintiff (Responding party) v. THERMOLEC LTÉE, 2019 FC 363

Date: 20190322 Docket: T-1159-18 Citation: 2019 FC 363 Montréal, Quebec, March 22, 2019 PRESENT: The Honourable Madam Justice St-Louis BETWEEN: STELPRO DESIGN INC. Plaintiff (Responding party) and THERMOLEC LTÉE Defendant (Moving party) ORDER AND REASONS I.

INTRODUCTION [ 1 ] Thermolec Ltée [Thermolec] filed a motion to this Court seeking (1) an order that Stelpro Design Ltée [Stelpro]’s impeachment action be dismissed as moot; (2) if Stelpro’s action is not dismissed, an order staying it pending the outcome of the parallel Superior Court of Quebec proceeding involving the same parties and the same patent; and (3) if the action is not dismissed or stayed, an order that Stelpro pay $50,000 in security for costs pursuant to subsection 60(3) of the Patent Act , RSC 1985, c P-4 [the Patent Act ]. II.

BACKGROUND [ 2 ] Stelpro and Thermolec are Quebec-based manufacturers of heating equipment. [ 3 ] On July 10, 1998, Thermolec filed a Canadian patent application for an electric air heating system, and on February 25, 2003, the Canadian Patent No. 2,242,829 [the 829 patent] was issued to Thermolec’s president and subsequently assigned to Thermolec. As patents are valid for 20 years starting from the patent application’s filing date, as per

section 44 of the Patent Act , on July 10, 2018, the 829 patent expired. [ 4 ] On July 31, 2017, Thermolec filed an infringement action against Stelpro before the Superior Court of Quebec. Thermolec claimed that Stelpro infringed the 829 patent and competed unfairly and illegally against Thermolec. It sought relief in the form of an interlocutory injunction, a permanent injunction, and damages.

Stelpro defended itself, partly, by arguing that the 829 patent is invalid. [ 5 ] On January 9, 2018, the Superior Court ordered an interlocutory injunction against Stelpro, and on July 9, 2018, this interlocutory injunction expired. [ 6 ] On June 14, 2018, Stelpro brought an impeachment action before the Federal Court to declare the 829 patent invalid. In its Statement of Claim, Stelpro sought a declaration that the 829 patent’s claims " “are and have always been invalid, void and of no force or effect” " [emphasis added].

Stelpro then highlighted that it is an interested party within the meaning of subsection 60(1) of the Patent Act , given the legal proceedings currently unfolding before the Superior Court. [ 7 ] On August 14, 2018, Thermolec filed the motion now before this Court, seeking to dismiss Stelpro’s impeachment action as moot, because the patent that the action seeks to invalidate had already expired.

In the alternative, Thermolec seeks an order staying the impeachment action pending the outcome of the proceedings before the Superior Court and, in the further alternative, an order that Stelpro pay $50,000 in security for costs pursuant to subsection 60(3) of the Patent Act .

On October 24, 2018, Stelpro tendered a payment of $10,000 into the Federal Court as security for costs. [ 8 ] Since the hearing of this matter on February 19, 2019, Thermolec’s counsel informed the Court that, on March 7, 2019, the Superior Court dismissed Stelpro’s motion to stay the proceedings, and set further timelines with the goal of achieving trial readiness by Fall 2019. The parties have submitted no information as to the date of the trial, assuming the file is ready for trial by Fall 2019. III. PARTIES’ SUBMISSIONS A.

Thermolec’s submissions [ 9 ] In support of its motion, Thermolec filed three affidavits from Mr. Daniel Menassa, Vice President of Thermolec, sworn on August 13, 2018, on October 29, 2018, and on January 14, 2019. Mr. Menassa namely undertakes, under Thermolec’s name, to consent to the entry of a judgment in the Federal Court that mirrors the Superior Court’s future decision on the validity of the 829 patent. [ 10 ] In support of its argument seeking dismissal of the action before this Court, Thermolec argues that this case is moot and should therefore be dismissed.

[11] Thermolec argues that the Court’s power to dismiss for mootness is not based on rule 221 of the Federal Court Rules, SOR/98-106[Federal Courts Rules], such that the heightened standard for a motion to strike does not apply and that the two-step test from Borowski vCanada (Attorney General), (SCC), [1989] 1 SCR 342 [Borowski] is satisfied (Hässle v Apotex Inc, 2008 FCA 88 atparas 12–14 [Hässle]).

Thermolec submits that the first step of the Borowski test requires the moving party to show that the Court’sdecision "“will not have the effect of resolving some controversy which affects or may affect the rights of the parties”" (Borowski at353). It argues that the first step is satisfied as the 829 patent is expired and an expired patent is moot (Hässle at para 14; Apotex Inc. vBayer AG, 2004 FCA 242 at para 5 [Bayer AG]; Sanofi-Aventis v Apotex, 2006 FCA 328 at paras 14–15 [Sanofi-Aventis]).

Thermolecsubmits that the second step of the Borowski test allows the Court to exercise its discretion and evaluate whether special circumstancesjustify the continuation of the moot action, considering three factors set out in Borowski.

Thermolec concedes that the first factor – theexistence of an adversarial context – is satisfied, but argues that the second and third factors rather discourage the hearing of this action.It maintains that judicial economy favours dismissal, as this impeachment action implies duplicative litigation and does not fall into anyof the special categories of judicial economy cases identified in Borowski.

Also, hearing this action would undermine Parliament’sdecision to grant concurrent jurisdiction over patent infringement cases to both federal and provincial courts. [12] In support of its alternate argument seeking a stay of the present action, Thermolec confirms its motion is based on paragraph50(1)(

b) of the Federal Courts Act, RSC 1985, c F-7 [Federal Courts Act] – staying in the interest of justice – and that the proper test toapply is the one set out by Safilo Canada Inc. v Contour Optik Inc., 2005 FC 278 [Safilo Canada], which presents a list of nineguidelines to follow in determining whether to grant or refuse a stay. Thermolec adds that the decision of the Court in Safilo Canadapertained to paragraph 50(1)(

b) of the Federal Courts Act and that, given that it was confirmed by the Federal Court of Appeal in SàfiloCanada Ltd. v Contour Optik Inc, 2005 FCA 434, it constitutes a solid precedent. [13] In response to a question by the Court, Thermolec asserts that the Federal Court of Appeal decisions Mylan Pharmaceuticals ULC vAstraZeneca Canada, Inc., 2011 FCA 312 [Mylan] and Clayton v Canada (Attorney General), 2018 FCA 1 [Clayton] concern staysunder paragraph 50(1)(

b) of the Patent Act as well, and that they both confirm a broad and flexible approach to the "“interest of justice”"test and reject the strict 3-step test from RJR-MacDonald Inc. v Canada (Attorney General), (SCC), [1994] 1 SCR 311[RJR-MacDonald] (Clayton at paras 26, 30; Mylan at para 14). Thermolec further asserts that, contrary to Safilo Canada, Mylan andClayton are not directly applicable to the facts of this case, as they involve long term adjournments, do not raise questions of publicorder, and do not involve parallel litigation.

Moreover, Thermolec maintains that the application of any of the three cases would favourgranting a stay, because Mylan and Clayton confirm Safilo Canada’s guidelines: Clayton recognizes delays, costs, relative advancement,due administration of justice, parties’ behaviour and prejudice as relevant considerations in granting or refusing a stay and the possibilityof deferring the evaluation of a stay is irrelevant (Clayton at paras 28–30).

Thermolec stresses that costs are relevant and that suchposition is consistent with the Supreme Court’s decision Hryniak v Mauldin, 2014 SCC 7 at paras 24–25; 31–32 [Hryniak]. [14] Thermolec argues that the guidelines set out in Safilo Canada at paras 30–34 favour granting a stay: (1) continuing the proceedingwould prejudice Thermolec, as Stelpro’s impeachment action casts a cloud of uncertainty over Thermolec’s infringement action (PrenbecEquipment Inc. v Timberblade Inc., 2010 FC 23 at para 45 [Prenbec Equipment]); (2) staying the proceeding would not prejudiceStelpro, as Thermolec will provide an undertaking to consent to a Federal Court judgment that mirrors the findings of the Superior Courtof Quebec, and Stelpro can raise the same invalidity arguments regardless of the choice of forum; (3) the two proceedings involve thesame parties, patent, and invalidity issues, such that there is substantial overlap; (4) the judgments might be contradictory; (5) parallellitigation wastes judicial resources; (6) the action before the Superior Court of Quebec is substantially more advanced;

(7) Stelpro waitedalmost a year before filing the present impeachment action and failed to pay security for costs; (8) federal and provincial courts haveconcurrent jurisdiction over patent infringement (Safilo Canada at para 38) and the Superior Court can rule on a patent’s validity (RochePalo Alto LLC v Apotex Inc, [2005] OJ No 4948 (ONSC) at paras 5–6, 9); and

(9) Thermolec will provide an undertaking by which itconsents to a Federal Court judgment that mirrors the findings of the Superior Court. [15] Regarding security for costs, Thermolec submits that security for costs is obligatory under subsection 60(3) of the Patent Act, andthat an amount of $50,000 would be in line with the amounts ordered in previous patent cases between sophisticated commercial parties(Teva Canada Ltd. v OSI Pharmaceuticals, Inc. [2012] FCJ No 1670 at para 22 [Teva]; Faulding (Canada) Inc. v Pharmacia S.p.A.,[1997] FCJ No 1490 (Fed TD) at para 14 [Faulding]). [16] Regarding costs on this motion, Thermolec suggests that Stelpro’s motivation in filing the present action was to achieve conflictingjudgments and that such conduct should be sanctioned with costs on a solicitor and client basis.

B. Stelpro’s submissions [17] Stelpro filed an affidavit from Ms. Leah Ann Kelly, legal assistant, sworn on October 25, 2018 and attaching a copy of the motionfor stay filed at the Superior Court and a copy of the tender of payment into the Federal Court. Stelpro also filed an affidavit from CarlConsigny, counsel for Stelpro, sworn on January 18, 2019 and two affidavits from Étienne Guay, Vice-President Marketing &Innovation for Stelpro, sworn on October 24, 2018 and on January 18, 2019. Mr.

Guay undertakes, under Stelpro’s name, to consent tothe entry of a finding of validity in the Superior Court matter that mirrors the Federal Court’s decision. [18] With regards to the dismissal for mootness, Stelpro submits that, contrary to what Thermolec alleges, the first step in the Borowskitest is actually "“whether the required tangible and concrete dispute has disappeared and the issues have become academic”" and that theinfringement proceedings at the Superior Court show the dispute and the invalidity issue are not academic (Borowski at 353).Additionally, Stelpro submits that even Thermolec’s version of the first step would not be satisfied, as the Court’s finding of invalidity orvalidity will resolve the issues between the parties and have an impact on their rights.

Moreover, Stelpro submits that a party is entitledto impeach a patent after its expiration date if there is a live controversy between the parties (Bayer AG at para 5; Hässle). Further,dismissing an action for mootness because a patent is expired would go against the principles of the Patent Act, which allows a patentholder to seek damages after the patent’s expiry (section 55.01 of the Patent Act). [19] With regards to the stay of proceedings, Stelpro argues that the test applicable to stay a proceeding under paragraph 50(1)(

b) of theFederal Courts Act is the "“interest of justice”" test, as recognized by Mylan and Clayton, and that the guidelines set forth in Safilo

Canada and White v EBF Manufacturing Ltd., 2001 FCT 713 , [2001] FCJ No 1073 (Fed TD) [White] generally addressparagraph 50(1)(

a) of the Federal Courts Act. Stelpro adds, however, that Safilo Canada and White’s first two guidelines encompass theinterest of justice consideration, such that Mylan and Clayton complete and enhance the guidelines. Stelpro submits that a refusal to staywould be in the interest of justice, namely because Stelpro has the right to seek impeachment of the 829 patent. Stelpro notes that theCourt may take RJR-MacDonald considerations into account and that, if so, Thermolec fails the tripartite test as well (Clayton at para26). Stelpro submits that the same principles apply, whether a stay is sought under paragraph 50(1)(

a) or (b), and that the Safilo Canadaguidelines, which are rooted in the interest of justice, should be applied in this case. [20] Stelpro submits that Thermolec relied only on the Safilo Canada guidelines that were helpful to its case, and erroneously putforward other guidelines, not mentioned in Safilo Canada. Stelpro maintains that applying the proper factors established by the FederalCourt in Safilo Canada will favour continuing the present action:

(1) Stelpro’s impeachment action will not cause Thermolec prejudiceor injustice, but merely inconvenience and extra expense, and the parallel Thermolec draws between Prenbec Equipment and the presentaction is incorrect; (2) in response to Thermolec’s submission that Stelpro will not suffer an injustice if the stay is granted, Stelpromaintains that Thermolec is free to file actions in provinces other than Quebec, such that Thermolec’s undertaking is insufficient andStelpro would have to raise the same invalidity arguments across Canada; (3) the onus to establish that the previous two conditions aremet lies with the party that seeks a stay (Dominion Mail Order Products Corp. v Weider, (FC), [1977] 1 FC 141 atparas 4, 9); (4) the Court has discretion to grant or refuse the stay; (5) a stay should only be granted sparingly and in the clearest of cases,which the present action is not, considering that both the impeachment and the infringement actions are in their initial stages; (6) eventhough both courts will consider the issue of validity, a determination by the Federal Court will be in rem and will settle the matterabsolutely and with best use of judicial resources; (7) the party seeking the stay should lead evidence showing significant or real risk ofinconsistent findings, which Thermolec has not done (Tractor Supply Co. of Texas, LP v TSC Stores L.P., 2010 FC 883 [Tractor Supply])and only the Federal Court can ensure absolute certainty relative to the patent’s validity; (8) there is no risk of imminent adjudication atthe Superior Court, as Stelpro filed a motion to suspend proceedings and Thermolec has failed to follow the agreed upon

schedule (themotion has since been denied by the Superior Court and a scheduled set); and (9) priority ought not necessarily be given to the firstproceeding over the second and Stelpro has acted diligently. [21] Regarding security for costs, Stelpro submits that, following the parties’ failed negotiations in relation to the quantum, it posted$10,000 as security for costs and maintains that this amount is reasonable, given the stage of proceedings, the nature of the productdescribed in the 829 patent, and Stelpro’s strong presence in Canada. [22] Stelpro seeks costs for this motion. IV. DISCUSSION A. Dismissal for mootness

(1) Test for mootness: Borowski [23] The two-part test for mootness is set out in Borowski, at paragraph 16. First, the Court must determine whether the required tangibleand concrete dispute has disappeared and the issues have become academic (the "“live controversy”" test). Second, if there is no livecontroversy between the parties or, in other words, if the case is moot, the Court must evaluate whether it should exercise its discretionto hear the case despite the mootness.

Three factors are relevant for the exercise of this discretion: (1) presence of an adversarialrelationship between the parties, (2) concern for judicial economy, and (3) need for the Court to be sensitive to its role as the adjudicativebranch in our political framework (Doucet-Boudreau v Nova Scotia (Minister of Education), 2003 SCC 62 at para 18; Borowski at paras31, 34, 40). [24] The parties disagree on the exact nature of the first step, quoting different paragraphs of Borowski. [25] Thermolec submits that the first step requires the moving party to show that the Court’s decision "“will not have the effect ofresolving some controversy which affects or may affect the rights of the parties”" (Borowski at para 15), while Stelpro submits that thefirst step is actually "“whether the required tangible and concrete dispute has disappeared and the issues have become academic”"(Borowski at para 16). [26] According to Borowski, the first step is to determine "“whether the required tangible and concrete dispute has disappeared and theissues have become academic”" (Borowski at para 16).

The Federal Court of Appeal has previously held that, in order to hear a casedespite its mootness, the responding party must show that a decision will have a "“practical effect on the rights of the parties”" (Sanofi-Aventis at para 21). This suggests that Thermolec’s submission is actually the second step. [27] The onus of establishing mootness rests on the moving party (Saskatchewan (Minister of Agriculture, Food & Rural Revitalization)v Canada (Attorney General), 2005 FC 1027 at para 15; Morin v Canada, 2001 FCT 1430 at para 30).

(2) Applying the first step of the Borowski test for mootness [28] The parties also disagree on whether the first step is satisfied. Thermolec argues that the first step is satisfied because the 829patent is expired and an expired patent is moot (Hässle at para 14; Bayer AG at para 5; Sanofi-Aventis at paras 14–15).

Stelpro respondsthat the infringement proceedings at the Superior Court of Quebec show that the dispute and the invalidity issue are not academic, thatthe Court’s finding of invalidity or validity will resolve the issues between the parties and have an impact on their rights, and that a partyis entitled to impeach a patent after its expiration date as long as there is a live controversy between the parties (Bayer AG at para 5;Hässle). [29] The Federal Court of Appeal previously held, in Hässle, that “There is no question that the invalidity action involving an expired

patent is moot: the thing that the respondent seeks to be declared invalid no longer exists” ( Hässle at para 14 ). This statement relies on another decision from the same court, Bayer AG , where Mr. Justice Rothstein wrote, “I am satisfied that this appeal is, indeed, moot. The '067 Patent has expired and a Notice of Compliance has issued to Apotex [ sic ]. The live controversy between the parties has ceased to exist” ( Bayer AG at para 5 ).

A third decision concluded in the same way: “We are satisfied that the appeal became moot as a result of the expiration of the patent in issue” ( Sanofi-Aventis at para 14 ). [ 30 ] However, it appears that all previous patent law cases cited by the parties on the issue of mootness involve the Patented Medicines (Notice of Compliance) Regulations , SOR/93-133 , which is not at play here.

The difference between NOC proceedings and the present case lies in the fact that remedies sought in the former have an effect in the future only, whereas those sought in the latter operate retroactively ( Eli Lilly Canada Inc. v Novopharm Limited , 2007 FCA 359 at para 14 ). [ 31 ] Thermolec has not convinced the Court that the case is moot based on the fact that the patent has expired. There remains a live controversy as to whether or not the patent has always been invalid as per Stelpro’s Statement of Claim. The fact that the patent is now expired says nothing about whether it has always been invalid.

(3) Second step of the Borowski test for mootness [ 32 ] Since I find the case not to be moot, there is no need to examine the second step of the Borowski test. B. Stay of proceedings

(1) Applicable legal test for stay [ 33 ] This Court has discretion to grant a stay of proceedings, on the ground that the claim is being proceeded with in another court or jurisdiction, as per paragraph 50(1) (

a) of the Federal Courts Act , or, where for any other reason it is in the interest of justice that the proceeding be stayed, as per paragraph 50(1) (b). [ 34 ] The Court must first determine the applicable legal test given the facts at hand. Case law from the Federal Court and from the Federal Court of Appeal relating to

section 50 of the Federal Courts Act refers to three tests: (1) the tripartite test set out in RJR- MacDonald ; (2) the " “interest of justice” " test set out in Mylan and Clayton ; and (3) the test guided by the factors set out in White and Safilo Canada . [ 35 ] Regarding the first test, the RJR-MacDonald tripartite test, it would generally be the one the Court would refer to when asked to enjoin another body from exercising its jurisdiction ( Mylan at para 5 ).

The parties have not argued that the case at hand warranted the application of this test and the Court will not consider it. [ 36 ] Regarding the second test, the " “interest of justice” " test, it is the one provided by paragraph 50(1) (

b) of the Federal Courts Act . As set out in the Mylan and Clayton decisions, it commands a flexible approach, and involves consideration of, namely, the need for proceedings to move fairly and with due dispatch, the length of the requested stay, and the effects on a party or the public. In those decisions, the Federal Court of Appeal and the Federal Court were asked to stay their own proceedings, in a context where the claim was not being proceeded with in another court or jurisdiction. It appears clear that both cases called into play paragraph 50(1) (

b) of the Federal Courts Act . [ 37 ] Regarding the third test, the factors set out in the White and Safilo Canada decisions relate to a stay of the Court’s own proceedings under paragraph 50(1) (a), not under paragraph 50(1) (

b) of the Federal Courts Act . In both cases, the claim was being proceeded with in another court of jurisdiction, and Justice Dubé specifically confirms as much at paragraph 5 of the White decision, cited at paragraph 27 of Safilo Canada . [ 38 ] As paragraph 50(1)(

a) of the Federal Courts Act specifically provides that the Court may stay proceedings on the ground that the claim is being proceeded with in another court, it follows that this paragraph would be raised when a similar matter is being litigated before two different courts, as was the case in both the White and the Safilo Canada cases, and as is the case in these proceedings. [ 39 ] Paradoxically, T hermolec confirmed, at the hearing and in its additional written representations, that its motion is based on paragraph 50(1) (

b) of the Federal Courts Act , not on paragraph 50(1) (a), although it relies on the guidelines outlined in White and Safilo Canada . [ 40 ] Despite this issue, I agree with the parties that the factors set out in Safilo Canada are the appropriate ones, and will thus refer to those factors to assess Thermolec’s motion.

(2) Factors to take into account [ 41 ] As per the parties representations, a

summary of guidelines, or factors, have evolved over time to assist in determining whether to grant a stay, as set out in White , hence: A . Would the continuation of the action cause prejudice or injustice (not merely inconvenience or extra expense) to the defendant? B . Would the stay work an injustice to the plaintiff? C . The onus is on the party which seeks a stay to establish that these two conditions are met. D . The grant or refusal of the stay is within the discretionary power of the judge.

E. The power to grant a stay may only be exercised sparingly and in the clearest of cases. F. Are the facts alleged, the legal issues involved and the relief sought similar in both actions? G. What are the possibilities of inconsistent findings in both Courts? H. Until there is a risk of imminent adjudication in the two different forums, the Court should be very reluctant tointerfere with any litigant’s right of access to another jurisdiction. I.

Priority ought not necessarily be given to the first proceeding over the second or, vice versa. [42] In Safilo Canada, Justice de Montigny considered those guidelines, and added consideration of each court’s proceedings’ state ofadvancement, of the courts’ limited resources, of the parties’ conduct and of the fact that an undertaking was provided (also in Kent atpara 19).

It is worthy to note, as Thermolec submitted, that the Supreme Court also recognized that "“unnecessary expense and delay”"may prevent "“the fair and just resolution of disputes”" and that, when a court is asked to exercise its discretion, it must take into account"“the appropriateness of the procedure, its cost and impact on the litigation, and its timeliness, given the nature and complexity of thelitigation”" (Hryniak at paras 24, 31).

(3) Applying Safilo Canada’s guidelines to facts of this case [43] Thermolec asserts that continuing the proceedings in this Court would cause it prejudice. First, it submits that this Court’s judgmentmight contradict the Superior Court’s judgment and that, consequently, Thermolec would be deprived of the benefit of a judgmentobtained from a court of competent jurisdiction. However, until there is a risk of imminent adjudication in the two different forums, theCourt should be very reluctant to interfere with any litigant’s right of access to another jurisdiction.

Thermolec has not established thatthere exists a risk of imminent adjudication. The file could be ready for trial in the Fall of 2019, but there is no indication as to when thetrial would actually proceed. [44] Second, Thermolec maintains that parallel litigation would generate additional costs and delays. The Court has already indicatedthat these are matters that can be remedied by way of costs (White at para 11). Moreover, I am aware that, following Hryniak, additionalexpense and delay are deemed a relevant consideration.

However, I do not have enough evidence before me to determine whichconclusion would favour judicial economy. If a stay is granted, the parties would only need to proceed at the Superior Court. If a stay isnot granted, the expungement proceedings at this Court might resolve the invalidity issues before trial begins at the Superior Court.

Assuch, cost considerations are not a determinative factor. [45] Stelpro asserts that a stay would work an injustice to it, as Thermolec’s undertaking is insufficient to prevent it from filinginfringement actions in other provinces, and that Stelpro should not have to raise the same invalidity arguments across Canada. Justice deMontigny indicated that an undertaking "“makes moot the distinction between the in rem and in personam nature of the remedies whichthe Federal Court and Superior Court may grant respectively”" (Safilo Canada at para 34).

I have no reason to disagree. [46] As was the case in Safilo Canada, it appears, in view of the foregoing, that neither of the two parties would suffer real prejudice ifthis motion to stay were allowed or dismissed. [47] Ultimately, in Safilo Canada, Justice de Montigny allowed the motion to stay, based on the fact that the case was much furtheradvanced in the Superior Court, and encouraged by the fact that the plaintiff’s conduct was questionable (Safilo Canada at paras 36, 39).In the case at bar, although the Superior Court had ordered an interlocutory injunction, the proceedings on the merits are still at an earlystage in both courts.

Additionally, the parties’ conduct is not determinative. [48] As per the Safilo Canada guidelines, the power to grant a stay may only be exercised sparingly and in the clearest of cases. As canbe shown from the paragraphs above, I have not been convinced that this is "“the clearest of cases”", and will thus not grant the stay. C.

Security for costs [49] Thermolec submits that security for costs is obligatory under subsection 60(3) of the Patent Act and that the amount of $50,000would be in line with the amounts ordered in previous patent cases between sophisticated commercial parties. [50] Stelpro submits that $10,000 is a reasonable amount, given the stage of proceedings, the nature of the product described in the 829patent, and Stelpro’s strong presence in Canada. [51] Subsection 60(3) of the Patent Act requires plaintiffs to give security for costs in impeachment proceedings, and the Court hasdiscretion only in determining the amount of security (Excalibre Oil Tools Ltd. v Garay (1999), (FC), 179 FTR 313 atpara 1; International Hollowcore Engineering Inc. v Ultra-Span Technologies Inc., [1997] FCJ No 1068 (Fed TD) at paras 7, 11[International Hollowcore]).

The purpose of security for costs in an impeachment action is to deter unfounded, irresponsible andfrivolous attacks on a patent (International Hollowcore at para 8; Electec Ltd. v Comstock Canada (1989), 26 FTR 154 (Fed TD) at para8 [Electec]).

Security for costs provides some guarantee that the defendant will obtain his costs if he should succeed (Revolving MediaCanada Inc. v Münkner, [2000] FCJ No 1923 (Fed TD) at para 7 [Revolving Media]; Electec at para 12). [52] The Federal Court of Appeal has held that, when exercising its discretion as to the amount of security to be paid, the Court mayconsider factors such as the possibility that the action may settle before trial, the possibility for the defendant to reapply for additionalsecurity, and a party’s conduct (Trevor Nicholas Construction Co.

Limited v Canada, 2012 FCA 111 at para 23). [53] In Electec, Justice Strayer mentioned that the amount should not be arbitrary and that the actual costs of the action are a relevantcriterion in the exercise of the Court’s discretion (Electec at para 16). The Court has considered costs taxable according to Tariff B insubsequent decisions as well (Canada Scaffold Supply Co. v Hy-Rise Scaffolding Ltd. (1997) (FC), 135 FTR 158 (Fed

TD) at para 6 ; Faulding at para 6; International Hollowcore at para 12). Hence, estimates of actual costs seem to be the starting point of all these decisions.

In International Hollowcore , Prothonotary Hargrave also considered the possibility of resolution before trial and the early stage of the proceedings as criteria justifying trimming the amount of security ( International Hollowcore at para 17). [ 54 ] The parties have not submitted information as to the actual costs in these proceedings, and I am not convinced that the reference to the amount of security ordered in cases involving pharmaceutical patents is completely appropriate in this case.

However, despite the lack of evidence on actual costs, I am satisfied that an amount of $10,000 is insufficient, given the costs of litigation, and will thus increase the amount to $25,000 and order Stelpro to pay an additional $15,000. D. Costs [ 55 ] As there has been divided success, no costs shall be awarded to either party. ORDER in T-1159-18 THIS COURT ORDERS that: 1 . The motion is dismissed, except as it relates to security for costs; 2 . Stelpro shall pay an additional $15,000 as security for costs within 14 days; 3 . As there has been divided success, no costs shall be awarded to either party.

"Martine St-Louis" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-1159-18 STYLE OF CAUSE: STELPRO DESIGN INC. v THERMOLEC LTÉE PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: February 19, 2019 ORDER AND REASONS: ST-LOUIS J. DATED: March 22, 2019 APPEARANCES : Pierre Robichaud Carl Consigny For The Plaintiff/ RESPONDING PARTY Michael Shortt Chris Semerjian For The Defendant/ MOVING PARTY SOLICITORS OF RECORD : Andrews Robichaud Ottawa, Ontario For The Plaintiff/ RESPONDING PARTY

Fasken Martineau DuMoulin LLP Montréal, Quebec For The Defendant/ MOVING PARTY