2016 FC, 2016 FC 1047

Date: 20160916 Docket: T-1353-13 Citation: 2016 FC 1047 Ottawa, Ontario, September 16, 2016 PRESENT: The Honourable Mr. Justice Roy BETWEEN: ARCTIC CAT INC. AND ARTIC CAT SALES, INC. Plaintiffs/Defendants by counterclaim and BOMBARDIER RECREATIONAL PRODUCTS INC. Defendant/Plaintiff by counterclaim PUBLIC JUDGMENT AND REASONS (Confidential Judgment and Reasons issued September 16, 2016) TABLE OF CONTENTS I. The parties . 6 II. Two-stroke engine operation .. 7 III. The 738 Patent . 10 A. An overview / Disclosure . 10 B. The claims at issue . 17 IV. Foreign litigation .. 19 V. The witnesses . 20 A.

Brad Darling . 21 B. Troy Halvorson . 22 C. Greg Spaulding . 28 D. Bernard Guy . 35 E. Steward Strickland . 37 F. Bruno Schuehmacher 41 G. The Experts . 47 VI. Credibility of experts . 48 VII. Person of skill in the art . 58 VIII. Claims construction .. 71 A. “Ignition Pattern” . 72 B.

Controlling the activation of the ignition source according to an ignition pattern in which an ignition point during the compressing movement varies with operation speed of the engine [and throttle position]. (claims 33(28), 47(41) and 16) 77 A controller for activating the ignition source ..., the controller activating the ignition source according to an ignition pattern in which an ignition point during the compressing movement varies with the operation speed of the engine [and throttle position]. (claims 40(34) and 11) 77

C. The ignition pattern being selected from a plurality of different ignition patterns. 80 D. The particular ignition pattern used by the controller being selected based upon the sensed exhaust gas temperature. 81 E. The different ignition patterns having different relationships between ignition point and engine speed. 82 F. The ignition pattern being selected from a plurality of different basic ignition patterns. (Claims 11 and 16) 85 G. The basic ignition pattern used by the controller being modified based upon the sensed exhaust gas temperature. (Claims 11 and 16) 87 IX. Infringement . 91 A.

The 440 HO and 600 RS engines . 96 B. The 600 ETEC and 800 ETEC Engines . 97 C. Analysis . 99 X. Invalidity .. 106 A. Anticipation . 110 B. Obviousness . 114 XI. Overbreadth .. 137 XII. Inventor .. 146 XIII. Conclusion .. 159 XIV. Damages . 160 A. Mr. A. Carter for the Plaintiffs . 164

(1) The expert compared two engines produced by BRP. One engine, the 800 P-TEC does not practice the invention. That engine was compared to the 800 E-TEC which practices the invention. That engine is a direct injection engine which does not use a carburetor. 166

(2) The second method put forth by Mr. Carter was, in fact, a variation on the theme summarized under (1). This time, instead of multiplying the contribution margins derived from the difference from the contribution margin for the E-TEC snowmobile and for the P- TEC snowmobile, amounts that reach $[REDACTED] in 2012 and $[REDACTED] in 2014, the expert multiplied these figures by a market share of 20%, which would represent the patent holders’ market share. He arrives at figures of $[REDACTED] (20% of $[REDACTED]) and $[REDACTED] (20% of $[REDACTED]). 169

(3) Mr. Carter compared the additional profit that BRP was expecting for its new 600 E-TEC engine as it was comparing it to its “600” semi-direct injection engine. The expert indicates that BRP was projecting an increased retail price attributable to the direct- injection engine of $[REDACTED]/unit. Given that BRP in 2002 expected that some additional costs for the production for the E-TEC engine would be $[REDACTED], Mr. Carter projected an incremental profit of between $[REDACTED] and $[REDACTED] that would be associated with moving to the E-TEC technology, which included the invention. 170

(4) The preferred method offered by the expert is his comparison of AC snowmobiles using model year 2005, where the engine does not include the invention, and model year 2006, where the said invention is included. 172 B. Dr. Ugone for the Defendant 179

(1) Incremental cost-based apportionment 180

(2) Relative cost and inputs-based apportionment 183

(3) Accused functionality usage-based apportionment 187 XV. Objections . 198 A. Objections to admissibility of evidence . 200

(1) Lack of factual basis . 200 B. Case splitting . 203 C. Failure to comply with Expert Code of Conduct 209 D. Improper factual evidence . 212 E. Opinion beyond stipulated expertise . 213 XVI. Post scriptum ... 214

JUDGMENT . 216 ANNEX “A” . 218 ANNEX “B” . 230 PUBLIC JUDGMENT AND REASONS [ 1 ] This action for infringement (

section 54 of the Patent Act , RSC, 1985, c. P-4, hereinafter Patent Act ) is concerned with some claims found in Canadian Patent No 2,322,738, to which we refer as the 738 Patent. In essence, Arctic Cat Inc. and Arctic Cat Sales Inc. allege that four engines, used by Bombardier Recreational Products Inc. (BRP) in more than 125 000 snowmobiles sold in Canada in the last few years, infringe one or more of five asserted claims (3 of the five asserted claims are dependent on another independent claim such that there are in fact eight claims in play in this case).

The Defendant argues that it does not practice the Patent-in-suit. Even if it did, it would argue that the 738 Patent would have to be invalid for anticipation (lack of novelty) or obviousness (lack of inventiveness), is overbroad and the person presented as the inventor is not, such that the Plaintiffs as the assignees do not have the standing required to enforce the Patent. As for appropriate damages if a valid claim has been infringed, the parties remain at a considerable distance from one another.

The trial took place over a period of 25 days. [ 2 ] This action for infringement of a patent originated as a counterclaim to an action for infringement launched by BRP against AC with respect to patents held by BRP that have a different subject-matter, one which is not concerned with engines. The Patent bears the title “Two-cycle Engine with temperature-Controlled Ignition Timing” . By order dated July 25, 2013, Prothonotary Aronovitch determined that the whole matter be severed from the original action and that it be pursued separately.

As a result, AC became the Plaintiff in the action for infringement, and BRP became the Defendant in that action and counterclaimed that the asserted claims of the 738 Patent were, at any rate, invalid and void. [ 3 ] Over and above the damages sustained by the patentee which would come from a declaration that its valid patent has been infringed, the Plaintiffs seek a permanent and interlocutory injunction restraining BRP from infringing the asserted claims of the 738 Patent, together with an order for the destruction of all vehicles that infringe its Patent.

Exemplary, aggravated and punitive damages, with pre and post judgment interests are also sought. I. The parties [ 4 ] One Plaintiff, Arctic Cat Inc., is a recreational vehicle manufacturer founded in the early 1960s by Edgar Hetteen, who has been described as the grandfather of the snowmobile industry.

Arctic Cat Inc. currently produces snowmobiles and other recreational vehicles destined for the United States, Canada, and markets around the world. [ 5 ] The other Plaintiff, Arctic Cat Sales, Inc., is a wholly owned subsidiary of Arctic Cat, Inc. that is responsible for the sale of Arctic Cat snowmobiles to independent third-party dealers in Canada. Both Arctic Cat, Inc. and Arctic Cat Sales, Inc. (collectively, Arctic Cat or AC) are incorporated pursuant to the laws of the U.S. State of Minnesota and have a head office located at 601 Brooks Avenue South in Thief River Falls, Minnesota.

Both are also Defendants by counterclaim in view of the allegations of invalidity made by the Defendant. [ 6 ] The Defendant and Plaintiff by counterclaim, Bombardier Recreational Products Inc. (BRP), is a public company incorporated pursuant to the

Canada Business Corporations Act , RSC 1985, c C-44. Like Arctic Cat, BRP is a recreational vehicle manufacturer. It traces its lineage back to the 1940s with the first “autoneige” designed by Joseph Armand Bombardier, as well as the Ski-Doo mark snowmobiles that began production in the 1960s. Bombardier acquired Lohnwerke GMbH, which manufactures Rotax engines, in 1970. [ 7 ] BRP now employs people in approximately 20 different countries and sells six different lines of products, including Ski-Doo snowmobiles, in the United States, Canada, and elsewhere in the world.

BRP’s head office is located at 726 rue Saint-Joseph in Valcourt, Québec. II. Two-stroke engine operation [ 8 ] Before tackling the 738 Patent, a brief description of the operation of the two-stroke engine could prove to be useful. Evidence to that effect was led at trial. [ 9 ] In his testimony, Dr.

Checkel, the expert retained by AC, elaborated at length on the general operation of two-stroke engines, so named because they complete five basic processes (specifically intake, compression, combustion, expansion and exhaust) in two strokes (one up, one down) of the reciprocating piston typically found inside an engine cylinder.

A four-stroke engine, by contrast, requires four reciprocating piston strokes to complete these same five basic engine processes. [ 10 ] In both cases, the piston is typically attached to a connecting rod and crank shaft, the latter of which is in turn attached to an engine flywheel used to deliver output power from the engine. This is normally paired with a cylinder head that closes off the top of the engine, forming a chamber between it and the piston inside the cylinder.

The objective is to ignite the mixture of air and fuel compressed into that chamber while the piston is close to its highest point in the cylinder (commonly called “top-dead-centre” or “TDC”). The mixture then burns as the piston passes through the TDC position and begins to move downwards, increasing the pressure and imparting more energy into the downward-moving piston than was required for the upward-moving piston to compress that mixture before combustion.

The net energy gain is then delivered to the vehicle through the flywheel. [ 11 ] The ability of two-stroke engines to provide energy output in this manner on each engine cycle allows for the engine to be

lighter and more compact than four-stroke engines for a given power level. They have thus proven popular for small vehicles like motorcycles, all-terrain vehicles and snowmobiles. However, two-stroke engines must also accomplish the five processes listed above in only two piston strokes, rather than the four afforded to four-stroke engines. [ 12 ] On small vehicles like snowmobiles, the engines typically accomplish this task through the combination of cylinder ports rather than valves for the intake and exhaust processes, pre-compression in the crank shaft case, and an exhaust expansion chamber.

These extra features allow the engine to accomplish both the intake and compression processes as the piston moves up towards the cylinder head on the first stroke.

After the combustion process occurs as the piston passes the TDC position, the engine accomplishes the remaining expansion and exhaust processes as the piston moves down towards its lowest point in the cylinder (bottom dead centre or BDC) on the second stroke. [ 13 ] While the piston is at the BDC position, the intake ports in the upper part of the cylinder are exposed, and the mixture of air and fuel from the crank shaft case is forced through the ports in the cylinder wall.

This pushes out remaining combustion products through the exhaust ports and into an expansion chamber that forms part of the engine's exhaust system. That chamber, if sized (or “tuned” ) correctly, creates an exhaust pressure wave at the right instant to prevent the new mixture of air and fuel from being forced out of the chamber alongside these remnants before the exhaust ports close as the piston moves back up the cylinder. Proper tuning varies with current conditions, including engine speed and the temperature inside the chamber itself.

When done correctly, however, this process provides an important power boost to the engine. [ 14 ] Traditionally, engines have used carburetors to manage the mixture of air and fuel at the engine intake. As explained by Dr. Bower, the mechanical engineer expert retained by BRP, a carburetor is a mechanical fuel admission device that does not rely on a controller or electronic input.

These devices have been progressively replaced with direct fuel injection technology, which injects fuel directly into the chamber above the piston at the start of compression rather than drawing it into the cylinder along with the air. [ 15 ] Dr. Checkel explained that the amount of power a two-stroke engine produces is typically controlled using a valve (the throttle), which is used to restrict the air flowing into the engine during intake.

Knowing how hard the engine is working compared with its maximum capability (engine load) is useful for engine control purposes. [ 16 ] The precise timing of the ignition in each engine cycle would be instrumental for engine power, efficiency, durability and controlling exhaust emissions in both two-stroke and four-stroke engines. If combustion occurs too late in the cycle, the engine produces lower output power, more waste heat, and is generally less efficient.

If it occurs too early in the cycle, the engine is doing more work to complete the compression process, similarly reducing engine power output and efficiency, and increasing undesirable exhaust emissions. III. The 738 Patent A. An overview / Disclosure [ 17 ] Before considering more closely the 738 Patent, some basic information about the Patent should be stated: • The inventor is Greg L.

Spaulding, an employee of AC, and he testified at trial. • The Patent was open to public inspection on May 25, 2001. • The Patent was issued on February 18, 2003, having been filed on October 10, 2000. • The Patent signals as priorities December 1, 1999 for U.S. Patent 09/452,657 and May 10, 2000 for U.S. Patent 09/568,449. [ 18 ] Originally, AC was asserting a large number of the 47 claims found in the Patent-in-suit.

However, by the time the matter came for trial, the number of claims asserted had been reduced to 5. [ 19 ] The title given to the Patent is not particularly illuminating: Two-cycle Engine with exhaust temperature-controlled Ignition Timing. The abstract of the Patent states: A two-cycle internal combustion engine has an ignition timing that varies with engine speed. A plurality of ignition patterns (the relationship between ignition timing and engine speed) are used.

The engine exhaust gas temperature is sensed and is used to determine the particular engine pattern used at a particular time. [ 20 ] Evidently, this invention is concerned with engines and, more specifically, the two-cycle, or two-stroke, internal combustion engine. In the two-stroke engine, it is possible to vary the point at which the fuel-air mixture is ignited within the cylinder in which the piston is operating, such that the optimization of the engine operation will be provided.

The invention under consideration would allow for the selection of different “ignition patterns” based on the exhaust gas temperature. There are two ways of using the exhaust gas temperature according to the Patent. Three of the five asserted claims are dealing with the selection of ignition patterns based on the exhaust gas temperature. They will be referred to collectively as the “selection claims” .

There are also two claims that refer to the selection of the ignition pattern from a plurality of basic ignition patterns, the basic ignition pattern selected being modified based on the sensed exhaust gas temperature. They will be known as the “modifications claims” . The background of the invention provides some information and it reads: Background of the Invention The present invention is directed to a two-cycle internal combustion engine and the operation of such an engine. Such engines are used, for example, to drive various vehicles such as snowmobiles, motorcycles, personal watercraft and others.

The operation of such engines is based on the ignition of a compressed fuel-air mixture within a cylinder, with the resulting expansion of the ignited mixture driving a reciprocating piston located in the cylinder. The reciprocating movement of the piston then is used to drive the vehicle powered by the engine. It is desirable to vary the point during the reciprocation cycle of the piston at which the fuel-air mixture is ignited, i.e. a point between “bottom dead center” and ''top dead center”, to provide optimum operation of the engine.

Thus, as one example the optimum point of ignition during acceleration can differ from that for a normal running operation. Because the piston usually is driven by a rotating crank shaft, the ignition point often is expressed in terms of degrees of advancement with respect to top dead center, in other words the position with respect to degrees of rotation of the rotating crank shaft ahead of the top dead center position. Typically, different engine operating speeds, which usually are expressed in revolutions per minute, will be associated with different engine conditions.

For example, higher engine speeds often are associated with acceleration. Thus, it has been considered that the point of ignition during the reciprocation cycle of the piston should be varied, depending on the engine operating speed at the particular time, and engine ignition control systems can be programmed to vary the ignition point depending on the engine speed. Other factors can affect the optimum ignition timing.

For example, an engine operating shortly after start-up may require a different relationship between ignition timing and engine speed (hereinafter “ignition pattern”) than an engine that has been operating from some time. Consideration has been given in the past to a system that allows the user to switch between two different ignition patterns. This has not been completely satisfactory in optimizing engine performance. [ 21 ] Under the title “Summary of the Invention” in the disclosure part of the specification, one finds the replication of the claims.

The only paragraph worth reproducing is the following, at page 2 of the 738 Patent:

Summary of the Invention The present invention seeks to provide a two-cycle engine that enjoys improved performance by selecting from a plurality of relationships between ignition timing and engine speed (ignition patterns) based on exhaust gas temperature. In one aspect of the present invention, individual ignition patterns cover ranges of exhaust gas temperature of about 50C. The sensitivity of the control system increases as the temperature range decreases.

In another aspect of the present invention the exhaust gas temperature is determined by use of a sensor that is in contact with the exhaust gas, for example in an exhaust pipe. In a further aspect of the invention, a capacitor discharge ignition system is used to control the ignition timing of a spark plug. Yet another aspect of the invention provides for a default ignition pattern when there is a malfunction of the temperature sensor.

On its face, the invention is centered on various ignition patterns that will be selected based on the exhaust gas temperature, or will be modified based on exhaust gas temperature, that will have been detected by an appropriate sensor. The ignition patterns are merely the relationships between ignition timing and the engine speed, expressed in revolutions per minute (RPMs). For different engine speeds there could be different ignition timings.

The piston, in a two-stroke engine, will move towards the top of the cylinder and, at some point, the air-fuel mixture will be ignited, the explosion thus created generating energy that will send the piston back toward the bottom of the cylinder. Through the operation of a rotating crankshaft that is activated by the piston going to the bottom of the cylinder (bottom dead center), the vehicle moves. The ignition patterns are selected according to the Patent with a view to optimize the operation of the engine in different conditions.

That point is described in terms of the degrees of rotation of the crankshaft ahead, or possibly after, the piston has reached the top of the cylinder (top dead center). [ 22 ] Before reaching the claims, the disclosure presents in five tables (A to

E) data that are each representing an ignition pattern. For a given engine speed (RPMs) there is an angle which is the number of degrees before top dead center. The angle may vary with different RPMs. In the ignition patterns depicted in the five tables, there is an angle that corresponds to different RPMs, from 1000 to 8800 RPMs. Each of the tables presents an ignition pattern that is a function of a range of different exhaust gas temperature.

In this particular case, the temperatures are presented in ranges, Table A covering a range of 0 to 250 C, and the other tables operating in increments of 50 C (250 to 300, 300 to 350, 350 to 400) until one reaches 400 and higher. As long as the temperature of the exhaust gas remains within a range, it will be that ignition pattern that will control. Thus, as the RPMs change, a different ignition point, representing a different angle, will be chosen in a particular table. [ 23 ] I have reproduced Table E from the 738 Patent. This is an example of an ignition pattern.

The table applies once the temperature of the exhaust gas has reached at least 400 degrees. Other ignition patterns are said to apply for different temperature ranges: E: Exhaust Temperature 400C or higher RPM Angle 8800 11.0 8600 11.0 8400 11.0 8200 11.5 8000 13.0 7750 15.0 7250 19.0 7000 20.0 6500 22.0 6000 24.0 5000 24.0 4000 20 3000 10 2000 10 1000 8

0 8 An ignition point will correspond to the angle, the number of degrees before top dead center at a particular RPM. Hence, at 8000 RPMs, the angle will be 13º, which means that the ignition source will ignite the mixture air-fuel at 13 degrees before TDC. The angle differs for different RPMs for temperature above 400C, as the table shows. Similarly, the angle may be different for different exhaust gas temperature ranges. In table A, for temperature lower than 250C, the angle before TDC is 10 at 8000 RPMs.

Once the exhaust gas temperature leaves a particular range, it is a new ignition pattern that kicks in. [ 24 ] The specification refers to figures found after the claims.

Figure 1, reproduced here, is a rather rudimentary drawing of a two- cycle engine, where 10 is the engine itself, 12 the cylinder, 14 the piston, 16 the crankshaft, 18 the ignition source (like a spark plug), 20 the controller for the ignition of the ignition source, 22 the coil through which a spark plug could be activated, 24 the exhaust gas temperature sensor and 26 is the exhaust pipe (at p 3 of the disclosure, it referred to “exhaust pipe 28” ; that is manifestly an error). [ 25 ] Figures 2 and 3 illustrate examples of the control of the ignition timing.

Figures 4 to 8 are graphs illustrating different ignition patterns. The graphs do not appear to correspond precisely to tables A to E found at pages 7 to 9 of the specification. Nevertheless, each is presented as an ignition pattern covering a particular temperature range. Neither the tables nor the figures provide information concerning what these patterns are supposed to achieve in order to optimize the operation of an engine. There is no information either about the diagnosis that comes from sensing the temperature. [ 26 ] As a matter of first impression, the ignition pattern is at the heart of the invention.

Tables A to E present numbers that correspond to ignition points for various RPMs once the exhaust gas temperature has reached a particular range. When considering figures 4 to 8, they are no more than the graphical representation of the ignition patterns. The ignition point is found at the intersections of the speed of the engine and the number of degrees before top dead center for a particular exhaust gas temperature range. It is the collection of those points that is represented graphically. An ignition pattern is never one point.

The pattern is simply the relationship between the engine speeds and the degrees of advance before top dead center, the ignition timings, for different temperature ranges. Figures 4 to 8 and tables 1 to 5 present in different formats the same information: an ignition pattern is composed of various ignition points; there is no pattern if there is one ignition point according to the tables and figures 4 to 8.

That fundamental concept is not altered if is added how open the throttle is in a given case (two of the asserted claims are said to be “three dimensional” in that the ignition pattern is the relationship of degrees in advance of top dead center, engine speed and throttle opening). B. The claims at issue [ 27 ] From the 47 claims found in the 738 Patent, AC is now asserting five claims: claims 11 and 16, the “modification claims” , as well as claims 33, 40 and 47, the selection claims. Claims 11 and 16 are related to each other in that claim 11 is the engine claim to claim 16’s method claim of the same engine.

The same is true of claims 40 and 47. They are in fact the mirror image of one another and conclusions reached by the Court regarding the engine would apply altogether to the method of operating. While claims 40 and 47, which are written in dependent form from claims 34 and 41, are specific to snowmobiles, claims 11 and 16 do not have that specificity. They are not limited to snowmobiles. Finally, claim 33 is the dependent claim of “method claim” claim 28, wherein the engine is a snowmobile engine.

Although claims 40 and 47 are three dimensional, i.e. the ignition point varies with the speed of the engine and the throttle position, as opposed to the ignition point varying only with the engine speed for the other three claims, that proved to be largely immaterial. The claims are reproduced in Annex “A”. The asserted claims, together with their independent claims, are highlighted. [ 28 ] It is not disputed that all the engine claims are with respect to a two-cycle engine comprising: • a cylinder • a piston • an ignition source • a controller

• a sensor. Similarly, the method claims all include a method of operating a two-cycle engine comprising: • Moving a piston in a cylinder • Activating an ignition source in the cylinder during the compression movement • Expelling exhaust gas from combustion • Sensing a temperature of the exhaust gas BRP does not contest that its engines on their accused snowmobiles comprise these elements. Indeed, BRP does not contest that its engines have all of the elements presented at Figure 1 of the 738 Patent (reproduced at para 24 of these reasons).

That is not where the debate is situated. [ 29 ] There are evidently differences between the claims and there are issues with respect to the construction of those claims. These will be reviewed later in these reasons. For now, an overview will suffice. [ 30 ] Claims 11 and 16 will be examined together. According to them a plurality of “basic ignition patterns” must exist; out of that plurality of basic ignition patterns one will be selected and that basic ignition pattern will be modified based on exhaust gas temperature. That is the reason why they have been referred to as “modification claims” .

That modified basic ignition pattern becomes the ignition pattern. It is according to that ignition pattern that the activation of the ignition source by the controller will occur. Claims 11 and 16 are only concerned with the relationship of ignition timing and engine speed. [ 31 ] The other three asserted claims are “selection claims” in that it is the selection of the ignition pattern out of a plurality of ignition patterns that is effected based on the exhaust gas temperature. Claim 33, which is dependent on claim 28, a method claim, is a selection claim.

However, contrary to selection claims 40(34) and 47(41), the other two selection claims, claim 33(28) is two- dimensional, as are claims 11 and 16, as the throttle is not featured. [ 32 ] As pointed out earlier, claims 40(34), 47(41) and 33(28) are all concerned with engines that are snowmobile engines. That is not the case for the modification claims 11 and 16. IV. Foreign litigation [ 33 ] It has transpired, during the course of the trial, that there has been, and there continues to be, litigation in the United States concerning patents that relate to the Patent-in-suit in this case between the parties.

This came to the attention of the Court through the cross-examination of witnesses involved in some manner in the other pieces of litigation. [ 34 ] Thus, it appears that there is litigation in the Federal Court of Minnesota; however, the matter will not be heard for some time as it has not been set for trial. As for the litigation before the United States International Trade Commission, it was terminated in May 2015, following the withdrawal of the complaint filed by Arctic Cat Inc. in December 2014.

As I understand it, Arctic Cat Inc. alleged that snowmobiles were imported in the U.S. that infringed certain claims of their U.S. patents. The allegation is no more. [ 35 ] There would have also been some litigation between Polaris, another snowmobile manufacturer, and AC more than ten years ago. [ 36 ] Having said that, I consider that litigation taking place elsewhere has no bearing on the case that must be decided in Canada on the basis of Canadian Law and the evidence put forth by the parties. At any rate, there is no foreign decision that has been rendered. V.

The witnesses [ 37 ] The parties relied on a number of witnesses to advance their position at trial. First and foremost, they each relied on one expert to discuss and put forth their theory of the case concerning the alleged infringement of the Patent and, by counterclaim, the alleged invalidity of the claims. The parties also produced experts with respect to the damages claimed in case a valid patent had been infringed. Each side had three other witnesses. I will begin with the non-experts and the evidence of the experts will be referred to, as needed, when their expertise is required. A. Brad Darling [ 38 ] Mr.

Darling was AC’s corporate representative. Mr. Darling has been working for Arctic Cat since 2000 and is currently the vice-president, general manager of the snowmobile division of Arctic Cat Inc., a position he has held since January 2011. [ 39 ] Mr. Darling explained that Arctic Cat first became aware, and first believed, that BRP was infringing the 738 Patent in early 2012, following a review of all of Arctic Cat’s patents by its new in-house counsel. This happened shortly after BRP launched its own patent lawsuit against Arctic Cat, but Mr.

Darling was uncertain if the review of Arctic Cat’s patents was done in order to retaliate, as suggested by BRP. Whether the Court’s action was in retaliation or not is of no moment as far as this Court is concerned. The only relevant consideration is to establish that a valid patent has been infringed or not. [ 40 ] It appears that AC approached BRP after it formed the opinion that its 738 Patent was infringed with a view to conclude a

cross-licence arrangement. Obviously, the discussion did not produce an agreement. [ 41 ] Mr. Darling explained the dealer distribution aspect of his position, which involved keeping track of competitive dealers and Arctic Cat dealers across Canada. This analysis is conducted based on model year, calendar year, and then snowmobile season. The takeaway from these surveys is that Arctic Cat is competitive in Canada within the dealer base of the competition in the industry (Polaris, Ski-Doo, and Yamaha). Mr.

Darling testified that for the 2016 model year, Arctic Cat will produce 26,000 snowmobiles, down from just over 41,000 in 2005, before the recession. This corresponds to an industry-wide decline. [ 42 ] AC relies on racing snowmobiles for marketing its product as well as to assist in research and development. The 738 Patent in particular started being used on racing models in the 2000 model year, and was used in consumer models starting with the 2001 model year. By 2008, the 738 Patent was being used on all of Arctic Cat’s 600 and 800 two-stroke models.

That “technology” was very well received in the industry, as it gave a remarkable advantage in terms of acceleration when “starting out of the gate” . [ 43 ] On cross-examination, Mr. Darling explained that he was not aware of the technology used for the first time in conjunction with a “hot button” on 1999 model year snowmobiles. He also wasn’t aware of previous technology to manually adjust “tuning in the pipe” . He confirmed that Suzuki had been Arctic Cat’s sole supplier of engines until 2008. [ 44 ] Is noteworthy that Mr. Darling did not testify concerning how AC is practicing its invention. No one did. B.

Troy Halvorson [ 45 ] Mr. Halvorson has worked for Arctic Cat since 1997. In 2004, he became high performance product team manager, where he was responsible for the development of the Firecat models, among others. Mr. Halvorson is currently the snowmobile product manager at Arctic Cat, a position he has held since April 2015. In that capacity, he helps to guide the product plan, which governs the development of new products over a five-year cycle generally. [ 46 ] As was to become obvious later, the testimony of Mr.

Halvorson, based largely on written material produced by AC, was offered for the purpose of comparing two snowmobiles manufactured by AC with a view to distinguish between model years 2005 and 2006 to lay the groundwork for the expert on damages. [ 47 ] Thus, Mr. Halvorson explained that the F6 Firecat EFI EXT, the F6 Firecat EFI, and the F6 Firecat EFI Sno Pro were the available models listed on the specification sheet in model year 2005. “EFI” designates electronic fuel injection, while “EXT” designates a longer track than the F6 Firecat EFI (the base model) or the F6 Firecat EFI Sno Pro.

An additional model, the F6 Firecat EFIR, was also available – the “R” designates that it had a reverse. All models are said to have the same engine specifications. He explained that the engines used in the 2006 models are the same as in the 2005 ones. However, the 2006 brochure lists an exhaust pipe temperature sensor (EPTS), introduced in the F6 for that model year. Another listed difference exists with respect to the shocks, with the 2005 using Arctic Cat gas internal floating piston shocks and the 2006 using Fox gas internal floating piston shocks.

As for the 2005 F6 Firecat EFIR, it would have had the same specifications as the F6 Firecat EFIR from 2006 had it been listed in the brochure for model year 2005. Mr. Halvorson then provided two final differences between the 2005 and 2006 model years: a change in colour scheme, and Arctic Cat no longer offering the EXT model in 2006. Next, Mr. Halvorson explained that Arctic Cat did not list the electric start as available optional equipment in 2005, but did in 2006.

However, the offering in 2006 did not affect the price Arctic Cat charged its dealers for snowmobiles, as optional equipment was sold to customers by the dealers separately from the snowmobiles themselves. [ 48 ] The witness did not offer any information about how the 2006 model year F6 snowmobile practiced the invention. In fact, surprisingly, Mr. Halvorson only referred to the addition of an exhaust pipe temperature sensor on the later engine. [ 49 ] On cross-examination, Mr.

Halvorson explained that knowledge of Arctic Cat’s models of those years was quite limited, as is his knowledge of marketing material he did not develop. He confirmed that Arctic Cat purchased its engines for the Firecat models during those years from Suzuki. As for the specification sheets on the brochures, they were accurate to a point, as specifications could be changed by the time production started and errors could slip in. [ 50 ] Mr.

Halvorson explained that the reference to an exhaust pipe temperature sensor, which is to be found on the specification sheet but not in the brochure, could have been connected by a knowledgeable reader to “breakthrough performance regardless of temperature” . It was not disputed by the witness that AC was promoting its suspension in 2006. [ 51 ] It was established before the Court that the witness is a graduate of CalPoly (California Polytechnic State University) in what he described as industrial technology. Although he is not an engineer, and does not profess to be one, Mr.

Halvorson has been employed by AC since 1997, yet he was incapable to give any explanation about the engine that is supposed to make a difference. [ 52 ] The Court has no doubt whatsoever about the integrity of this witness: he was honest and forthcoming. He readily conceded that his knowledge about the engine was limited. Here are the important portions of the cross-examination which are found at pages 2441 to 2445: A. I don’t hold a mechanical engineering degree. Q. Right. And you don’t hold an electrical engineering degree either? A. No, I don’t. Q. Okay. You mentioned the F6 Firecat EFI.

EFI stands for electronic fuel injection. Correct? A. Correct.

Q. Yeah. Do you know how electronic fuel injection works, generally speaking? A. Generally speaking, yes, I do. Q. So, what is the extent of your knowledge? A. In an older conventional system with carburetors, the fuel delivery system is based off of – is how the fuel flows into the carburetor into the engine. In an electronic fuel injection system, it’s injected into the engine through electrical pulses that’s supplied by – dictated by the computer, the ECU of a snowmobile. Q. Okay. And to control the electronic fuel injection of an ECU, do you know what are the inputs and outputs of that ECU? A.

There are a lot of inputs and outputs, yes. Q. Would you be able to name them? A. Probably not all of them. Q. And would you know how the control of that electronic fuel injection works within the controller based on the inputs of the sensors and the outputs? A. I am not knowledgeable about how exactly it works. Q. And that’s not your responsibility in any way? A. No, it is not. … So you mentioned you are not familiar with how the ECU works. Correct? You don’t know the inner functionings of the ECU, the logic, the software? A. Right. I – I don’t – I know how a – I mean. I have an idea how a computer works.

If I had to tell somebody how to build a computer, I would struggle. Q. Yes. And you wouldn’t be able to tell or help someone program the ECU of the ECUs used by Arctic Cat? A. No. Q. Back in 2005 or 2006? A. I would not be able to tell them. Q. So that EPTS, you don’t know what it does? A. Yes, I know what the EPTS does. Q. It’s connected to the ECU? A. I know the electronic or the exhaust pipe temperature sensor measures the temperature of the exhaust. Q. Right. And that signals input into the ECU? A. It is a sensor that the ECU relies on for that information, yes. Q.

But beyond that, you don’t know what the ECU does with that and how it accomplishes it? A. Well, I – I don’t know how it does it, no. Q. Thank you. Back in 2006, the model year 2006, equipped with the EPTS, again, that was a Suzuki engine. Correct? A. Correct. Q. Equipped with Kokusan ECUs? Does that ring any bells for you? A. Yes. Q. So that’s K-O-K-U-S-A-N. And those were delivered with the engines. Correct? A. You would have to define “delivered with the engine”. Q. So they were already installed on the engine or ready to be installed on the engine. That’s how the engine came? A. No.

Q. No, they were not. Were they shipped together with the engine for a given engine? A. I have – they were part of a packet that would have been with the engine, but not directly with the engine. Q. Right. So Engine A comes with Kokusan ECU A. Engine B comes with Kokusan ECU B. Would that be a correct description of how it happened? A. I wouldn’t – I wouldn’t be able to answer that question. Q. Okay. And you know nothing about the control logic of those ECUs, whether that was developed internally at Arctic Cat or elsewhere? A. I don’t. [ 53 ] As can been seen, there was no evidence coming from Messrs.

Darling and Halvorson, in spite of their long standing association with AC and, in the case of Mr. Halvorson, his degree in industrial technology, about the very engine which it is claimed produced contribution margins that were used by an expert in calculating damages. That left to Greg Spaulding, the named inventor, to provide the evidence on the invention. C. Greg Spaulding [ 54 ] Mr. Spaulding is currently the group leader for two-stroke engine design and development in Arctic Cat’s engineering department. He has been with Arctic Cat since 1994.

His group designs the components necessary to have an assembled engine, working with Suzuki Motor Corporation as the motorist to produce a prototype. His group then completes engine development, which includes designing and developing the exhaust pipe. Mr. Spaulding does not have an engineering degree, but his experience and expertise in the calibration of engines is not to be denied. [ 55 ] The witness provided to the Court his view of the history of the invention. Mr. Spaulding explained that he had originally come up with the idea of optimizing ignition timing around 1996.

It started with his idea of keeping engine RPMs at the starting line below the level where the clutch engages while opening up the throttle to get out of the starting line faster when the race starts. Mr. Spaulding contacted Suzuki, Arctic Cat’s engine supplier, in order to implement this idea. However, the engine control units (ECUs) he received from Suzuki limited RPMs by producing fewer sparks. This also lowered the heat output to the exhaust pipe, thus reducing rather than improving starting line performance. [ 56 ] Mr.

Spaulding explained that he contacted Suzuki to propose limiting the RPMs by retarding engine ignition instead, thus transferring less energy to the piston and more to the exhaust pipe to increase temperature. As a result, he received additional systems that retarded ignition timing, but also continued to use the counterproductive spark removal method. Mr. Spaulding then contacted Suzuki to specifically request the capacity to have ignition take place after top-dead-centre. This functionality was incorporated into the 1998 model year 440 ZR racer. However, Mr.

Spaulding was not yet satisfied with the design, and so he did not implement that which would actually allow the driver to use this capability. [ 57 ] Mr. Spaulding’s next step in the development saw him move away from the RPM limiter idea towards a “two-map system” selected by a hot/cold switch, with the settings providing an optimized power curve for cold and hot exhaust pipe temperatures respectively. Arctic Cat implemented this new approach in the 1999 model year 440 ZR racer.

Nonetheless, the cold map name continued to be called “Rev Limit Ignition Timing” in Suzuki’s finalized engine specifications delivered to AC, the result of Mr. Spaulding’s desire to avoid “confusing” Suzuki. [ 58 ] Mr. Spaulding then explained that the following developmental step was to make the changes between maps automatic. He requested that Suzuki review the ignition timing curves that Arctic Cat was using for its hot/cold switch settings. Mr.

Spaulding described the cold curve as allowing for better acceleration through faster pipe heating, and the hot switch as providing better performance and preventing “heat sagging” – the loss of performance in two-stroke engines that occurs in higher temperatures. Mr. Spaulding asked Suzuki if these curves could be selected automatically without a throttle position sensor, but Suzuki did not come up with any suggestions. [ 59 ] The invention is described as “using exhaust gas temperature to optimize settings, ignition timing on a two-stroke engine” .

The term “optimize” refers, in a circular way, to “using exhaust gas temperature to select the optimum ignition timing based on that internal temperature” (Transcript, p 2616, lines 5-14). Mr. Spaulding did not testify as to how the exhaust gas temperature was to be used, and to what effect. From his examination in chief, the Court is left with someone who was asking questions of Suzuki, the motorist, which would come back with possible solutions. Actually, the documentary evidence offered by AC consists of questions, usually sent by fax, to Suzuki.

I have not been able to find what contribution to solutions was offered by AC, and Mr. Spaulding, towards answering the questions asked. [ 60 ] Mr. Spaulding claimed that he came up with the idea of using exhaust gas temperature to select between the patterns, a method Arctic Cat implemented in the 2000 model year 440 ZR. Developmental problems included the fact that the temperature sensor they had selected would not function below and above certain temperatures. According to the testimony, Arctic Cat worked with Suzuki to develop a software logic that would get around the sensor tolerance range.

However, no details of the cooperation were supplied. [ 61 ] Mr. Spaulding explained that he was never specifically concerned with the logic or the sensors, only the intended results. His goal was to have the sensor “measure temperature to select timing patterns that were optimum for that particular temperature” (Transcript, p 2677, lines 9-18). He confirmed that in the case of the 2000 model, “optimize” referred to power (Transcript, p 2678, lines 12-14).

The use of the pipe sensor to select between different ignition timing maps in the 2000 model year ZR 440 produced very good racing results with respect to starting line acceleration.

[ 62 ] The first consumer model to use the “technology” of selecting ignition patterns based on measured exhaust gas temperature for better engine control was the 2001 model year 500 ZR. The pipe sensor “technology” was not incorporated into models using 600 CC and 700 CC engines, including the F6 Firecat, until the 2006 model year because of costing issues with the pipe sensor. It remains very much unclear what the witness means by “technology” .

If technology is taken to mean “the study or use of the mechanical and applied sciences, the application of this to practical tests industry” ( The Canadian Oxford Dictionary , Oxford University Press, 2001), the Court is hard pressed to find in the testimony anything resembling technology. We are left in the dark concerning how the temperature of the exhaust gas is used to adjust the ignition timing through different timing patterns or maps. Similarly, we are left in the dark about what benefit was to be obtained, other than speaking in terms of “optimization” . [ 63 ] Mr.

Spaulding then explained that it was Mr. Ole Tweet, a vice-president at Arctic Cat, who suggested that the use of a sensor to select ignition patterns to be patented. Mr. Spaulding did not write the text of the Patent. He produced the sketch that became Figure 1 of the 738 patent by hand. As for Figures 2 and 3, which depict the software logic used in the 2000 model year 440 ZR, they came from Suzuki, as well as Figures 4 to 8. [ 64 ] Finally, Mr.

Spaulding explained that Kokusan, another Japanese company, the manufacturer of the Engine Control Unit [ECUs] used in Arctic Cat engines, actually wrote the control software. Kokusan then supplied the electronic components to Suzuki who then supplied the engines, with electrical systems, to Arctic Cat. Mr. Spaulding was quite clear about what he considers to be his invention. The development of the invention was around the use of different ignition patterns.

He ended up with a system that was described as “the exhaust gas temperature measurement by sensor to select ignition timing patterns that are optimised for engine operation of those internal pipe temperatures” (Transcript, p 2671). Throughout the development of the invention, the concept of changing ignition patterns remained central (Transcript, pp 2649, 2646, and 2670, among others). [ 65 ] On cross-examination, Mr. Spaulding confirmed that the design of an engine meant designing its structure and parts.

This was mainly done by Suzuki, although Arctic Cat provided its input on a regular basis during the design phase. Mr. Spaulding did not communicate with Suzuki for the development of the exhaust pipe technology on the 2000 model year ZR 440 engine, but rather Arctic Cat received a system that would measure exhaust gas temperature to select different timing patterns. The development and optimizing of those patterns was done by Mr. Spaulding himself at Arctic Cat. [ 66 ] Mr. Spaulding also confirmed that the control logic, including the ability to select from maps, was already programmed into the ECU when Mr.

Spaulding received it, and Mr. Spaulding played no

part in programming it. The ignition timing values he had provided to Suzuki to install in the ECU were all common generic values. Mr. Spaulding then optimized the different maps while working on the finalized version of the tuned pipe, which he confirmed accounted for up to 70% of the engine power from a snowmobile engine like the ZR 440. [ 67 ] Although Arctic Cat did not offer evidence about how its own engine may be practicing the invention, Mr. Spaulding was cross-examined on the use that was made of his invention, starting in 2006. However, it became clear that the inventor did not have much to contribute.

He was clearer about the history of the invention. [ 68 ] The data found in the five tables in the 738 Patent, which represent five ignition patterns, were taken from the input values and not the actual values of the finalized engine specification. [ 69 ] The matter of what constitutes the modification of the ignition patterns was also the subject of the cross-examination. The inventor was presented with the only paragraph in the disclosure which addresses the issue of modification of an ignition pattern (that corresponds with claims 11 and 16).

There is in my view no ambiguity as to what was intended to modify an ignition pattern: A. I did not have any other way than a timing dial, D-58, to select? Q. A pattern and then – A. When developing the 2000 model 440 ZR-- Q. Yes A. -- with my pipe sensor technology and a D-58 timing dial, the exhaust temperature selected the pattern. D-58 timing dial would simply take the patterns and shift them up or down . Q. Yes A. The measurement of the exhaust to select a pattern would still exist and function.

The purpose of this was, and still is, because we still use this same dial, it, as an example, would be – because of tolerances and ignition components, manufacturing tolerances, is a specific timing value is the timing setting, meaning where do you check timing to make sure that your system is timed correctly, there can be a plus or minus 1-degree tolerance in a timing value by manufacturing tolerance . So the operator with a dial like this would be able to check his timing manually, assuming he understood how to do that.

He found that, because of the tolerance it was 1-degree retarded, 1 degree advanced, you could turn this dial to make the timing setting correct per the specification. That’s one purpose. (Transcript, p 2824) [My emphasis] Clearly the pattern is modified in that it is changed, in the example given by the witness, by “shifting them up or down” . [ 70 ] It is striking that the inventor did not offer what his contribution to the invention was other than having general ideas and asking the motorist for solutions.

Many times, the witness stated that it was a joint effort in the development of the engine, yet this assertion was not supported by the details of Mr. Spaulding’s contribution. He simply pivots in announcing that he moved from “rev

limiter” (limiting the RPMs) to the selection of maps. The evidence is at best murky (Transcript, pp 2653 to 2658). The witness even testifies that his thinking had evolved, but he did not advise the motorist for fear of Suzuki becoming confused. How was Suzuki to implement the two-pattern innovation remained unsaid: we are only told about faxes being sent to Suzuki, by AC in December 1997, asking for views on how to turn the manual 2-pattern evolution to something “done automatically somehow, without a T.P.S. Maybe RPM and time activated.

What are your ideas?” (Exhibit P-57). [ 71 ] It remains that the witness testified that, as the notion of changing ignition pattern automatically was being explored, he had the idea (Transcript, p 2669). But, what idea precisely? The record remained very thin about the actual contribution. There is no doubt that Mr. Spaulding is a master calibrator with many years of experience.

His contribution to an invention, his “system” which he described at page 2671 of the transcript as “the exhaust gas temperature measurement by sensor to select ignition timing patterns that are optimum for engine operation at those internal pipe temperature” is much more in doubt in view of the quality of the evidence proffered at trial. [ 72 ] BRP also presented three witnesses, other than experts retained for the purpose of discussing patent infringement and validity, and damages incurred. D. Bernard Guy [ 73 ] Mr. Guy was trained as a mechanical engineer at the Université de Sherbrooke.

He also holds a master’s degree in business administration. Employed by BRP since 1987, he became vice-president responsible for sales and dealerships before being promoted to vice-president responsible for sales, marketing and customer service for North America. [ 74 ] The witness explained that BRP is not a division of Bombardier since 2003. It is a stand-alone corporate entity. The market for snowmobiles was around 150,000 units in 2005, but has dropped to 90 to 100,000 units per year more recently. The Canadian share would be around 40 to 50,000 units.

There are four major players: Yamaha, Polaris, AC and BRP. BRP holds 49% of the market in Canada and 43% in North America. [ 75 ] He testified that the difference in price between snowmobiles does not come entirely from the high cost of engines. In some cases, a difference of $3700 between two snowmobiles of the same category could come in large part from the difference in shock absorbers (as much as $1000). At other times, the differences in price are much reduced. [ 76 ] On cross-examination, focus was put on a document titled ‘Direct Injection Study’, dated June 2006. Mr.

Guy confirmed that BRP was looking at consumers’ perceptions of direct injection technology, and, as a subset, any association with specific direct injection technology such as the Evinrude E-TEC. Mr. Guy agreed that the perceptions of disadvantage, even if only slight, in terms of reliability and durability, were issues that BRP needed to address. The strongest concerns were about price and the fact that direct injection was not proven in the snowmobile industry. [ 77 ] The cross-examination established that BRP was concerned with durability, quality and reliability issues.

When the initial 600 E-TEC engines were introduced into the market place, part of BRP’s advertising campaign promoted the engine as being virtually “hassle-free” . It appears that the 2009 roll-out was not completely successful. A market survey of June 2009 showed difficulties. Mr. Guy confirmed that this was after the 600 E-TEC rollout, and that a survey stated the Ski-Doo had lost from 5,000 to 8,000 sales due to durability, quality and reliability issues. Mr. Guy explained that he would need to validate the document further to be able to provide a specific opinion on what is a statistical projection. Mr.

Guy explained that these statistics were based on statistical surveys of customers that are extrapolated for results on a bigger scale. [ 78 ] The Court is left with little doubt that durability, quality and reliability were issues BRP was concerned about. BRP needed to avoid these types of issues on its 800 E-TEC model. BRP studies carefully client satisfaction. In spite of the equivocation of Mr. Guy, there would not be much doubt that reliability and durability were issues of concern for BRP. E. Steward Strickland [ 79 ] Mr.

Strickland obtained a bachelor’s degree in mechanical engineering from McGill University in 2000 and started working at BRP shortly thereafter. He is an “intellectual property engineer” , currently one of two at BRP, a job that involves liaising between inventors at BRP and the outside agents who draft patent applications. [ 80 ] The witness’ job involves ensuring that BRP products do not infringe patents held by third parties. There is no doubt that BRP wanted to adjust the timing of its engines in connection with the temperature of the exhaust gas. Thus, Mr. Strickland was put to contribution.

The first engine for which BRP proposed to use the exhaust gas temperature for the purpose of adjusting ignition timing was the 440 HO, in 2004. In conducting his patent clearance work, Mr. Strickland searches patent offices in an effort to locate relevant patents once he has been apprised of the issue raised by the project presented to him. Thus, using engine searches or other methods, he came across the 738 Patent; he also located US equivalent patents. [ 81 ] There are four BRP engines at issue in this case: the 440 HO, 600 RS, 600 E-TEC and 800 E-TEC. Mr.

Strickland explained that he was involved in the patent clearance search for the 440 HO in 2004, when a racing department engineer approached him about using exhaust pipe temperature sensors for the purpose of altering the ignition timing. The objective was to help racing engines get out of the gate faster. [ 82 ] These patents, located by Mr. Strickland, are owned by AC and the witness considered that they were all within the same family of patents. Reviewing the file history of the US patents, he noticed the existence of past litigation involving AC to Polaris, another snowmobile manufacturer.

Having been unable to locate a decision in the matter, the witness got in touch with an American counsel who had been involved in the litigation.

[ 83 ] The telephone conversation with the American attorney, which would have taken place late in 2004, led the witness to U.S. Patent 5,946,908 (908 Patent). While the witness wished to avoid infringing patents in place, he was also interested in locating prior art that could help deal with validity issues. According to the testimony, the American attorney stressed the 908 Patent as practicing something different than AC’s patent: it teaches a base map from which a timing value is extracted, and the timing value is then corrected. One reads at page 1320 of the transcript: A.

Well, that’s – you know, these are my recollections and my understanding of what he was saying when I was writing it down. And basically, what he continued on to give me was a few more details. He also said preprogrammed maps elected by exhaust gas temperature was different to the preprogrammed than to calculate on the fly. And basically what he’s mentioning there – and he was always making reference to this -- we see at the bottom of the page there’s some U.S. Patent numbers. One of them ends with 908. He was making reference to that patent.

He was saying, this patent shows – it was in the prior art at the time, it was publicly available. He was saying that this 908 Patent shows using a base map and correcting the base map with a correction factor, and that was different because it was being calculated all the time. The point – the ignition point from the base map was calculated and then manipulated with the correction factor, which was different than what was actually being claimed in the patents that were at suit at the time between Polaris and Arctic Cat. [ 84 ] Content that the 908 Patent was different from the AC’s patents, Mr.

Strickland continued his investigation to ascertain that the 908 Patent could not be infringed: Q. We will pause for a moment here. So you said you had a lot of U.S. patents. So we see the numbers here. In terms of these patents, you were in the exercise of looking for alternative, I would say, or clearance search for the 440 HO. Did you look at those patents to see their status? A. Yes, at the time, I remember the – because once Chuck Segelbaum told us about the 908 Patent, he said, this is what was being practised and this is what was taught and protected in the patent.

Well, obviously before going ahead and trying to avoid one patent by doing one thing in the next patent, well, I wanted to make sure that I wasn’t going to infringe the second one. So yes, I looked at the status at the time of the 908 Patent. Q. What was the status? A. It had actually been expired. The assignee, which is Yamaha, they didn’t pay one of the maintenance fees that had been due prior to that time, and thus the patent had expired. (Transcript, p 1323) [ 85 ] Mr.

Strickland was therefore testifying that the AC patents were not infringed if BRP sought to practice the 908 patent, which had expired by then. [ 86 ] Following discussions within BRP, the witness testified that was chosen the option of a base map with corrective values. As explained at p 1335 of the transcript, the corrective factor would be added to the ignition timing point “previously gotten from the base ignition map.” That was the suggestion advocated by Mr.

Strickland (Transcript, p 1339). [ 87 ] It is the witness’ evidence that the suggestions were also implemented in the other accused engines, the 600 RS, the 600 HOE-TEC and the 800 HOE-TEC (Transcript, pages 1350-1351). [ 88 ] On cross-examination, Mr.

Strickland clarified that the American attorney made specific references to the US 908 Patent and that it was practiced by Polaris; BRP chose to base their system “on a base map with a correction factor method, that is what was taught by the 908 Patent.” (Transcript, p 1371) [ 89 ] The testimony about the practice of the 908 Patent was not seriously challenged at trial. The cross-examination concentrated instead on the location of the sensor for the exhaust gas temperature.

The witness expressed his view that the 908 Patent teaches that the sensor can be directly in touch with the exhaust gases or it may be installed flush against the exhaust system, thus measuring the temperature indirectly. [ 90 ] It is of course one thing to have an intellectual property engineer testify that BRP chose to practice the U.S. 908 patent which is claimed to be different than the 738 Patent with its insistence on ignition patterns being either selected or modified through the use of the exhaust gas temperature. That was the task at hand for the next witness. F. Bruno Schuehmacher [ 91 ] Mr.

Schuehmacher holds a Bachelor’s degree in mechanical engineering from the École Polytechnique de Montréal. He has been working at BRP since 1993, and as a mechanical engineer in the engine calibration department since 1998. As such, he is in charge of calibrating snowmobile and two-stroke engines. Since the engines themselves are assembled by the Rotax division of BRP in Austria, his work consists of developing intake and exhaust systems, as well as software used by the control module of the engines. [ 92 ] Mr.

Schuehmacher explained that in response to environmental standards that were becoming increasingly strict, BRP developed a series of SDI ( semi-direct injection ) engines, introduced for the 2003 models. The SDI technology limits fuel loss through the exhaust pipe of a two-stroke engine by injecting fuel in the transfer port and not by using a carburetor. True direct injection resolves this issue completely but the technology is much more expensive. BRP acquired Johnson-Evinrude and its E-TEC direct injection technology around 2000-2001 and began developing it for use in its snowmobiles.

This technology was marketed for the 2008 model year and the SDI technology was discontinued in 2009. However, another technology called “P-TEK” , marketed for the first time in

2000, continued to be manufactured in small quantities with a carburetor managed by a control module. [ 93 ] The witness explained how inputs are used in the control logic of the BRP engines. His evidence is that the same control logic was in use for the P-TEK engines (carburetors) as well as the 440 HO and 600 RS (direct injection). Base maps are basically ignition patterns. They are pre-determined ignition points for different engine speeds.

For a given engine speed, or range of engine speeds, an ignition point is determined, usually at a point before the piston reaches the top of the cylinder (top dead center). The base maps provide the initial advance ignition timing. In the case of these engines, the four base maps, A, B, C and D, relate to the type of fuel to be used and, with respect to D, corresponds to the “preheat” map used solely in race models.

Map C was never used. [ 94 ] E, F, G, H, J and KxL are all corrections that are applied on the ignition timing selected from one of the four base maps, such that the logic is portrayed as: ((A or B or C or D)+E+F+G+H+J+KxL) where K is the correction made as a function of the exhaust gas temperature. As can be seen from the equation, once one of the four base maps has been selected, a correction is to be applied on the ignition point that corresponds to the engine speed. One of the corrections will come from the temperature of the exhaust gas. It is worth reproducing the

summary of the operation of the logic control for engines, in the words of the witness. That was never challenged. It must be taken by the Court as the operating logic for the BRP engines. As will appear later, the same logic will apply equally to the E-TEC engines. R. [ T RADUCTION ] First, the controller will have to select which basic spark advanced table to use to extract the ignition timing.

Therefore, as explained, this will normally be A or B depending on whether it is a race application or not, or whether it’s at the starting line warming up the tuned pipe; in that case it would be D, if I am not mistaken, that corresponded to the preheat. So based on the engine operating conditions, the basic table is chose.

Knowing the point of operation for engine speed and throttle position, a base ignition timing is extracted and once this base ignition timing is extracted various corrections are added for the barometric pressure of the engine temperature, the engine break-in, the exhaust emissions temperature. Once these additions are made, the final ignition timing is determined, and that will be sent to the ignition coil to produce the spark. (Transcript, page 828) [ 95 ] Mr. Schuehmacher then addressed the E-TEC engines, for which BRP used the control module and logic developed by Johnson-Evinrude.

He explained that BRP merely added functions that did not exist in outboard but that are necessary for snowmobiles. BRP also integrated a number of other functions that exist in the P-TEK modules, including muffler temperature management. This work was done in collaboration with Johnson-Evinrude and, to a certain extent, Rotax. [ 96 ] According to Mr. Schuehmacher, the inputs to the E-TEC module are essentially the same as those for the P-TEC module. However, there is also a “GPSTP” input that is for the temperature of the exhaust gas in the tuned pipe.

This corresponds to a second temperature detector for exhaust gas in the tuned pipe rather than in the muffler. It is found in the 800 E-TEC, but not in the 600 E-TEC. Mr. Schuehmacher then explained that the spark advance of the 800 E-TEC module operates by selecting one of the four basis tables based on the combination of two distinct parameters: barometric pressure and fuel quality. Once the basic table is selected, the module will extract a spark advance according to the engine’s rotational speed and the throttle position.

To this value, the corrections extracted from the “Dynamic ignition timing correction map” are added, including a correction based on the exhaust gas temperature sensor. This only applies when the throttle is open more than 70% or 80%, depending on the model of the snowmobile, and when the engine is at an operating speed greater than 7,800 revolutions per minute.

Therefore, it is only when these conditions are met that the correction will apply according to the temperature detected. [ 97 ] The Engine Control Module [ECM] of the E-TEC engines is programmed to determine the final ignition point by applying one or more correction(

s) to a base ignition timing point extracted from one of the four base ignition timing maps.

The corrections are determined based on engine speed, atmospheric pressure and muffler temperature (see BRPE-58/8-9), using the following formula: Ignition timing calculation: (A or B or C or D) + E + F + G where: • A, B, C or D is the ignition timing value extracted based on rpm and throttle position from the previously selected Base Ignition Timing Map; • E is the ignition timing correction value (Dynamic Ignition Angle Correction) for sensed EGT [exhaust gas temperature] and engine speed (rpm); • F is the ignition timing correction value for Altitude; • G is the ignition timing correction value for muffler overheat protection. [ 98 ] Mr.

Schuehmacher explained that according to the data collected from the trials conducted on BRP snowmobiles since 2005, situations in which there was a correction on the basis of the exhaust gas temperatures were very rare in practice since they correspond to high throttle openings, greater than 70% and 80%, which requires a very high speed. The correction for the 800 E-TEC will only be used beyond 7,800 revolutions per minute. The correction based on the temperature of the exhaust gas therefore only applies 3% to 5% of the time. Mr.

Schuehmacher added, however, that this data may vary according to engine power and the way it is used. In the 800 E-TEC, 3% corresponds to use on trails while 5% corresponds to use in the mountains. The 600 E-TEC, a more reliable engine, is generally only used on trails, and the correction also only applies less than 5% of the time it is used. [ 99 ] On cross-examination, the witness was not challenged on the control logic that is used with respect to the accused engines. He

was asked to provide examples of how the logic would actually operate in an attempt, presumably, to show that the logic followed by the four engines corresponds, in the end, to the teachings of the asserted claims of the 738 Patent. [ 100 ] The witness was however steadfast.

The logic of the four engines requires that an ignition point be extracted from the selected base map, to be corrected, including being corrected as a function of the temperature of the exhaust gas (Transcript, pp 1108 to 1123). [ 101 ] Finally, the cross-examination confirmed that BRP was conscious of the existence of the patents owned by AC. Clearly, BRP wanted to avoid infringement and Mr. Schuehmacher concluded that, in his view, there was no infringement (Transcript, pp 1143 to 1146).

Far from resiling from the view that BRP was not practicing the 738 Patent, BRP goes even further in stating that it took care to avoid infringement. This is not a case where the infringement is justified ex post facto . BRP, knowing about the AC patents, sought to avoid being in violation of the monopoly. [ 102 ] It is uncontradicted, on the record before the Court, that BRP’s logic was to the effect that a base map would be selected according to some criteria (eg.

Fuel quality), but not on the basis of the exhaust gas temperature. [ 103 ] Once a map was selected, the ignition point corresponding to a particular engine speed (revolutions per minute) would be extracted for the purpose of applying to it a correction. That figure would then be corrected for different factors including as a function of the temperature of the exhaust gas. That logic is fundamentally the same for the four accused engines.

The question then is, having constructed the claims asserted by AC, is there infringement? [ 104 ] I have reviewed at significant length the testimonies offered by these witnesses. The evidence of Mr. Spaulding is important in order to understand what the invention is and whether it is his invention. Messrs. Strickland and Schuehmacher sought to establish how BRP was to avoid infringing the 738 Patent. This case boils down to determining first what logic is followed by the four accused engines.

Second, the Court will have to determine what the invention consists of, through a construction of the claims, before comparing the invention to the logic followed by BRP with respect to its engines. G. The Experts [ 105 ] There have been four experts presented by the parties in this case. AC and BRP offered an expert each in order to assist with an understanding of how two-stroke engine operates and how to construct this Patent. [ 106 ] For AC, Dr. David Checkel is a professional mechanical engineer; he is the holder of a Ph.D. in engineering from the University of Cambridge.

He has taught at the University of Alberta's Department of Mechanical Engineering for close to 30 years. He is now retired. [ 107 ] For BRP, Dr. Glenn Bower was also trained as a mechanical engineer. He holds a Ph.D. earned at the University of Wisconsin- Madison. He is currently a Senior Scientist at the University of Wisconsin-Madison Engine Research Center and Faculty Associate in the University of Wisconsin-Madison Mechanical Engineering Department. [ 108 ] Two other experts were retained by the parties to assist with the assessment of damages.

The matter of damages was not bifurcated in this case and the case on damages was heard irrespective of the decision on infringement and validity. Both experts on damages also testified in the sister case T-2025-11. [ 109 ] For AC, Mr. Andrew N. Carter offered his expertise. He has a Bachelor of Science degree from the Rose-Hulman Institute of Technology. He also holds a Master of Business Administration from the University of Chicago’s Graduate School of Business. [ 110 ] Dr. Keith R. Ugone, for BRP, was trained in economics. His B.A. in Economics was received from the University of Notre Dame.

His M.A. in Economics is from the University of Southern California. His Ph.D was earned at Arizona State University. [ 111 ] Mr. Carter and Dr. Ugone have for some time provided advice to clients through, in the case of Mr. Carter, a firm where he is the head of the expert testimony practice, while Dr. Ugone is a managing principal at Analysis Group, Inc. where he specializes in the

interpretation of financial and economic data. VI. Credibility of experts [ 112 ] The qualifications of the experts were never doubted. Nevertheless AC chose to dedicate a number of its allocated 60 pages for its memorandum of facts and law to challenging the credibility of the two experts retained by BRP in this case. [ 113 ] As for Dr.

Bower, an expert in mechanical engineering, AC reproaches him that he lacked impartiality and acted as an advocate for the party having retained his services. [ 114 ] There is no doubt that expert witnesses have “an overriding duty to assist the Court impartially on matters relevant to his or her area of expertise” (Section 1 of the Code of Conduct for Expert Witnesses before the Federal Courts , adopted pursuant to Rule 52.2 of the Federal Courts Rules , SOR/98-106).

Section 2 of the Code is even more explicit: 2 This duty overrides any duty to a party to the proceeding, including the person retaining the expert witness. An expert is to be independent and objective. An expert is not an advocate for a party. Cette obligation l’emporte sur toute autre qu’il a envers une

partie à l’instance notamment envers la personne qui retient ses services. Le témoin expert se doit d’être indépendant et objectif. Il ne doit pas plaider le point vue d’une partie.

Given the particular role played by expert witnesses and their duty to assist the Court impartially, a number of questions came from the bench throughout their testimony for the purpose of clarifying what was often left either ambiguous or unclear, at least in the eyes of the Court. That was true of the experts retained by BRP as well as those retained by AC. [ 115 ] In my view, having reviewed their lengthy reports and listened very carefully to the testimony of the four experts in this case including the testimony of Dr. Bower, I was left with the firm conviction that Dr.

Bower was certainly no more an advocate for BRP than were Dr. Checkel and Mr. Carter for AC. [ 116 ] It must be acknowledged that experts are appearing in the context of trials where the parties have different points of view. They have formed an opinion which, evidently, will be consistent with the theory of the case advanced by a party. I thought this was the idea captured by the Supreme Court of Canada in White Burgess Langille Inman v Abbott and Haliburton Co. , 2015 SCC 23 , [2015] 2 SCR 182 [ White Burgess Langille Inman ].

It is certainly true that the expectation is that the expert’s opinion must be impartial, independent and unbiased. However, these concepts are qualified in view of the context in which an expert is testifying: 32 Underlying the various formulations of the duty are three related concepts: impartiality, independence and absence of bias. The expert's opinion must be impartial in the sense that it reflects an objective assessment of the questions at hand.

It must be independent in the sense that it is the product of the expert's independent judgment, uninfluenced by who has retained him or her or the outcome of the litigation. It must be unbiased in the sense that it does not unfairly favour one party's position over another. The acid test is whether the expert's opinion would not change regardless of which party retained him or her: P. Michell and R. Mandhane, “The Uncertain Duty of the Expert Witness” (2005), 42 Alta. L. Rev. 635, at pp. 638-39. These concepts, of course, must be applied to the realities of adversary litigation.

Experts are generally retained, instructed and paid by one of the adversaries. These facts alone do not undermine the expert's independence, impartiality and freedom from bias. It is certainly not infrequent for experts to hold different opinions. This is exemplified again in the recent case of R. v Borowiec , 2016 SCC 11 , where two experts came to diametrically different views on whether a mother charged with the offence of infanticide had a disturbed mind. Different opinions do not show a lack of impartiality. It is common place that experts disagree. [ 117 ] In the case at hand, AC complained that Dr.

Bower did not satisfy some of the specific requirements of

section 3 of the Code of Conduct. Here, AC seems to refer to their view that Dr. Bower ought to have disclosed “literature and other materials specifically relied on in support of the opinion.” As I have explained elsewhere in this judgment, there was no such derogation from the Code, as what M. Bower was faulted for did not fall in the category of literature and other materials. [ 118 ] AC was also complaining about a peripheral role that may be played by the expert on a project at the Univers

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