2023 FC, 2023 FC 1591

Date: 20231128 Docket: T-1449-20 Citation: 2023 FC 1591 Toronto, Ontario, November 28, 2023 PRESENT: Mr. Associate Judge Michael D. Crinson BETWEEN: PROSLIDE TECHNOLOGY, INC. Plaintiff/ Defendant by Counterclaim and WHITEWATER WEST INDUSTRIES, LTD. Defendant/ Plaintiff by Counterclaim ORDER AND REASONS I. THE BACKGROUND [ 1 ] The Plaintiff, ProSlide Technology Inc. ( " “ProSlide” " ) commenced this action in December 2020 alleging infringement by the Defendant, Whitewater West Industries Ltd. ( " “Whitewater” " ), of six patents and five industrial design registrations. Specifically, the allegedly infringed patents (the “Asserted Patents”) were:

a) Canadian Patent No. 2,778,601 (the " “601 Patent” " );

b) Canadian Patent No. 2, 951,552 (the " “552 Patent” " );

c) Canadian Patent No. 3,063,073 (the " “073 Patent” " );

d) Canadian Patent No. 3,063,078 (the " “078 Patent” " );

e) Canadian Patent No. 3,063,165 (the " “165 Patent” " );

f) Canadian Patent No. 3,085,150 (the " “150 Patent” " ). [ 2 ] The allegedly infringed Industrial Design Registration Nos. (the " “Asserted Designs” " ) were: a) 185,714 (the " “714 Design” " ); b) 185,715 (the " “715 Design” " ); c) 180,884 (the " “884 Design” " ); d) 188,207 (the " “207 Design” " ); e) 188,361 (the " “361 Design” " ). [ 3 ] Whitewater has denied infringement of the Asserted Patents and the Asserted Designs and has alleged that the Asserted Patents and the Asserted Designs are invalid.

Whitewater also commenced a counterclaim seeking a declaration that the Asserted Patents and the Asserted Designs are invalid on the same grounds asserted in the statement of defence. [ 4 ] The issues of liability and quantification have been bifurcated with a thirteen (13) day trial on the liability issues set to commence on June 17, 2024. Examinations for discovery of both ProSlide’s representative and of the inventor of the Asserted Patents took place in December 2022 and Whitewater’s representative was examined for discovery in early February 2023. II.

THE FACTUAL BACKGROUND [ 5 ] Approximately four months after completing examination for discovery of ProSlide’s representative and the inventor of the Asserted Patents, Whitewater advised ProSlide that it intended to amend its statement of defence and counterclaim and provided a copy of that proposed amended pleading. On May 9, 2023, Whitewater consented to some of the proposed amendments but demanded additional information to assess whether it would consent to other proposed amendments.

Despite objecting to ProSlide’s request, Whitewater nonetheless provided a revised proposed amended pleading providing at least some of the requested information. ProSlide, on August 1, 2023, indicated that it would not consent to those contentious amendments, which are the subject matter of this motion. [ 6 ] On this motion Whitewater seeks as relief, an order granting leave to amend its statement of defence and counterclaim in the form attached as Exhibit A (the " “Proposed Pleading” " ) to the affidavit of Lori Gilliland, sworn August 14, 2023 as well as its costs of this

motion. Throughout the balance of these reasons, references to paragraph numbers to be amended shall be to the paragraph numbers asfound in the Proposed Pleading. [7] There are numerous proposed amendments set out in the draft Proposed Pleading which is the subject of this motion. The Plaintiff hasconsented to a number of these proposed amendments, specifically to the following: 1. Amendments at paragraphs 28, 57, 84, 114, 148 and 182 which add additional prior art to existing allegations that five of the sixpatents in suit are obvious (the "“Obviousness Amendments”"); 2.

Amendments at paragraphs 55.1 to 55.9, 82.1 to 82.9, 112.1 to 112.9, 146.1 to 146.9 and 180.1 to 180.9 which add additional priorart to existing allegations that the patents in suit are anticipated (the "“Anticipation Amendments”"); 3. Amendments at paragraphs 30.3 to 30.10 which add anticipation allegations with respect to the ‘601 Patent (the "“ ‘601 PatentAnticipation Amendments”"); 4.

Amendments at paragraphs 30.1 and 30.2, 59.1 and 59.2, 86.1 and 86.2, 116.1 and 116.2, 150.1 and 150.2, and 184.1 and 184.2which add inutility allegations which it is alleged would result in invalidity of the patents in suit (the "“Inutility Amendments”"); 5. Amendments at paragraphs 30.11, 59.4, 86.4, 116.4, 150.4 and 184.4 which add allegations that the claims of the patents in suit areambiguous and consequently invalid (the "“Ambiguity Amendments”"); 6.

Amendments at paragraphs 86, 150 and 184 which revise existing allegations that the claims of the ‘073 Patent, the ‘165 Patentand the ‘150 Patent are overbroad and consequently invalid (the "“Overbreadth Amendments”"); 7. Amendments at paragraphs 188 to 192, 198 to 202, 208 to 212, 218 to 222, and 228 to 232 which revise existing allegations thatthe five industrial designs in suit are not infringed (the "“Design Non-Infringement Amendments”"); 8.

Amendments at paragraphs 194, 204, 214, 224 and 234 which revise existing allegations with respect to publications prior to therelevant date for each of the five industrial designs in suit (the "“Design Prior Publication Amendments”"); 9. Amendments at paragraphs 196, 206, 216, 226 and 236, which revise originality allegations for each of the five industrial designsin suit (the "“Design Originality Amendments”"). [8] However, a number of proposed amendments remain at issue on this motion: 1.

Amendments at paragraphs 59.5, 86.5, 116.5, 150.5 and 184.5 which add allegations that five of the six patents in suit fail tocorrectly and fully describe the invention and its operation or use as contemplated by the inventor and are consequently invalid (the"“Contested Sufficiency Amendments”"); 2.

Amendments at paragraphs 59.3, 86.3, 116.3, 150.3 and 184.3 which add allegations that five of the six patents in suit are invalidpursuant to section 27(1) of the Patent Act since each relevant patent was not granted to the individuals the Defendant alleges werethe true inventors (the "“Contested Inventorship Amendments”"); 3.

Amendments at paragraphs 195, 195.1 to 195.7, 205, 205.1 to 205.7, 214.1 to 214.7, 215, 215.1, 224.1 to 224.7, 225, 225.1, 234.1to 234.7, 235 and 235.1, which, add allegations with respect to publications prior to the relevant date for the 884 Design, the 207Design and the 361 Design and lack of originality of the Asserted Designs (the "“Contested Design Prior Publication andOriginality Amendments”"). [9] In light of the consent of ProSlide to the Obviousness Amendments, the Anticipation Amendments, the ‘601 Patent AnticipationAmendments, the Inutility Amendments, the Ambiguity Amendments, the Overbreadth Amendments, the Design Non-InfringementAmendments, the Design Prior Publication Amendments and the Design Originality Amendments may be included in an AmendedStatement of Defence and Counterclaim.

III. THE LAW [10] Rule 75 of the Rules provides that the Court may, on motion, at any time, allow a party to amend a pleading, on such terms as willprotect the rights of all parties. Upon such a motion to amend, the applicable test is whether it is more consonant with the interests ofjustice that the amendment be permitted or that it be denied (Janssen Inc. v. Abbvie Corporation, 2014 FCA 242 , at para. 3).

Inother words a pleadings amendment should be allowed at any stage of an action for the purpose of determining the real questions incontroversy, provided that allowing the amendment would not result in an injustice to the other party that is not capable of beingcompensated by an award of costs and the amendment would serve the interests of justice, see (Apotex Inc. v Bristol-Myers SquibbCompany, 2011 FCA 34, at para. 4). [11] In determining whether it is more consonant with the interests of justice that the amendment be permitted or that it be denied, thefactors the Court should consider include 1) the timeliness of the motion to amend, 2) the extent to which the proposed amendmentswould delay the expeditious hearing of the matter, 3) the extent to which a position taken originally by one party has led another party tofollow a course of action in the litigation which it would be difficult or impossible to alter, and, 4) whether the amendments sought willfacilitate the Court’s consideration of the true substance of the dispute on its merits to guide the exercise of its discretion.

These factorsare non-exhaustive and not limiting. No single factor predominates nor is its presence or absence necessarily determinative, and all mustbe assigned their proper weight in the context of the particular case (Janssen Inc. supra, at para. 3). [12] However, the requirement that the amendment have a reasonable prospect of success has become a threshold issue: (Remo ImportsLtd. v. Jaguar Cars Ltd., 2005 FC 870 at para. 49). In determining whether a proposed amendment has a reasonable prospect of success,

its chance of success must be examined in the context of the law and the litigation process and a realistic view must be taken ( Teva Canada Limited v Gilead Sciences Inc , 2016 FCA 176 at para. 30 ). The absence of a reasonable prospect of success is a well-established reason for a Court to dismiss a motion for leave to amend: ( Bauer Hockey Corp. v. Sport Maska Inc. , 2014 FCA 158 (F.C.A.) at para. 16 ). The burden is on the amending party to demonstrate such a reasonable prospect of success ( Merck & Co Inc v Apotex , 2003 FCA 488 at para 46 ). IV.

ANALYSIS [ 13 ] The basis for the timing of all the proposed amendments is said by Whitewater to be facts learned during discovery, which discovery took place in December 2022. This date will be pertinent when considering the timeliness of the Contested Amendments.

(1) The Contested Sufficiency Amendments [ 14 ] Each of paragraphs 59.5, 86.5, 116.5, 150.5 and 184.5 of the Proposed Pleading are similar except that they relate to the ‘552 Patent, the ‘073 Patent, the ‘078 Patent, the ‘165 Patent and the ‘150 Patent respectively. Paragraph 59.5 is representative of the proposed amendments in this category: 59.5 The 552 Patent does not correctly and fully describe the invention and its operation or use as contemplated by the inventor.

The 552 Patent also fails to set out clearly the method of making the claimed subject matter in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it pertains to make the claimed subject matter. The named inventor of the 552 Patent told the Canadian government that downhill roll geometry, with no tilt, is key to the technology disclosed and claimed in the 552 Patent. The named inventor provided additional details to the Canadian government on the technology disclosed and claimed in the 552 Patent.

The named inventor made these statements to the Canadian government in a SR&ED document dated March 31, 2015. The statements to the Canadian government were made for the purpose of securing financial incentives in the form of tax credits and/or refunds. All details on the technology provided to the Canadian government are essential to the manufacture and operation of the subject matter disclosed and claimed in the 552 Patent. These details are omitted from the 552 Patent.

The full extent of documents submitted to the Canadian government to secure tax credits and/or refunds for projects leading to the patents and industrial designs asserted in this proceeding, including the 552 Patent, that describe details on the technology and the supporting documents that the Plaintiff possess are unknown to Whitewater but are known to the Plaintiff. The 552 Patent fails to comply with subsections 27(3)(

a) and (

b) of the Patent Act and is invalid. [ 15 ] These proposed pleading amendments constitute a radical departure from prior pleadings. The proposed amendments introduce an entirely new challenge to the validity of the patents, insufficiency, notwithstanding that the Defendant has had, and been aware of, these patents since at least the commencement of this lawsuit in 2020.

Furthermore, the breadth and scope of the pleaded insufficiency, as including " “All details on the technology provided to the Canadian government” " including statements " “unknown to Whitewater” " establish that the proposed pleading is inadequately particularized to allow the Plaintiff to properly plead in response. The proposed pleading fails to tell the Plaintiff the necessary particularity of " “who, when, where, how and what” " give rise to the newly alleged ground of invalidity. [ 16 ] As the Court has previously held in Farmobile, LLC v.

Farmers Edge Inc. , 2022 FC 22 at para 21 : An amendment must also yield a sustainable pleading. As a result, an amendment that does not disclose a reasonable cause of action or defence and is thus liable to be struck out under Rule 221, should not be permitted [ Mancuso v Canada (National Health and Welfare) , 2015 FCA 227 at paras 16-20 ] . This includes amendments that are inadequately particularized to allow the opposing party to plead in response [citation omitted].

Similarly, amendments that represent a radical departure from the party’s prior position are abusive and should not be permitted. ( Farmobile, LLC v. Farmers Edge Inc. , 2022 FC 22 at para 21 ). [ 17 ] The nature of this pleading, including its breadth and the nature of allegations that statements unknown to the Defendant are essential to sufficiently describe the claimed invention are abusive and should not be permitted. [ 18 ] Furthermore, the alleged pleading represents a misunderstanding of the scope of sufficiency of disclosure. In Teva Canada Ltd. v.

Pfizer Canada Inc. , 2012 SCC 60 the Court held: “The patent did not fully describe the invention” (at para. 77) “Whether or not a specification is sufficient depends upon what a skilled person would consider to be sufficient” (at para. 79) “The description must be such as to enable a person skilled in the art or the field of the invention to produce it using only the instructions contained in the disclosure” (at para. 82) [ 19 ] This standard of disclosing sufficient information in a patent specification to enable the skilled person to produce the claimed invention is distinct from requiring an entity to disclose everything it knows about commercial products or potential commercial products.

It is clear in law that " “the analysis of the insufficiency of the disclosure must relate to the invention and not to one of its preferred embodiments” " and " “the patentee does not have to describe all the preferred embodiments of the claimed invention in the

section relating to the description thereof” " ( Bessette v. Quebec (Attorney General) , 2019 FC 393 at paras. 540 & 541 ). The Defendant’s proposed pleading appears to be incorrectly alleging that everything known or said by the patentee is essential for the purpose of sufficiency. [ 20 ] In light of the foregoing analysis, I conclude the proposed amendments in this category do not have a reasonable prospect of success

when taking a realistic view and examined in the context of the law and the litigation process. [ 21 ] Finally, the onus is also on the party seeking to amend a pleading to establish the timeliness of the proposed amendment. While the Defendant states that examinations for discovery were the basis for these allegations, the Defendant has known of the patents in suit since the commencement of the lawsuit.

It is the content of the patents, which the Defendant has been aware of since it was served with the Statement of Claim that determines whether there has been sufficient disclosure in the patent to put the claimed invention into operation. Hence, the timeliness of these proposed, " “sufficiency amendments” " has not been established.

(2) The Contested Inventorship Amendments [ 22 ] Each of paragraphs 59.3, 86.3, 116.3, 150.3 and 184.3 of the Proposed Pleading are similar to each other except that they relate to the ‘552 Patent, the ‘073 Patent, the ‘078 Patent, the ‘165 Patent and the ‘150 Patent respectively. Paragraph 59.3 is representative of the proposed amendments in this category: 59.3 Richard Hunter is listed as the inventor of the 552 Patent. Mr. Hunter did not invent the subject matter disclosed and claimed in the 552 Patent.

To the extent that the subject matter disclosed and claimed in the 552 Patent was invented, which is denied, the inventors are Ray Smegal, Daric Briggs, and Jonathon Brazeau. The Plaintiff, through its president, Mr. Hunter, sought tax incentives in the form of tax credits and/or refunds from the Canadian government for scientific research and experimental development (“SR&ED”). In a SR&ED document dated March 31, 2015, the Plaintiff represented to the Canadian government that the key individuals directly involved in the project that led to the 552 Patent were Ray Smegal, Daric Briggs, and Jonathon Brazeau.

The SR&ED document states that the project started in March 2013 and that the completion or expected completion date is December 2016.

In the SR&ED document, the Plaintiff stated that the evidence it has regarding the project that led to the 552 Patent to support its claim for tax credits and/or refunds are project planning documents, records of resources allocated to the project, time sheets, project records, laboratory notebooks, progress reports, minutes of project meetings, test protocols, test data, analysis of test results, conclusions, photographs and videos, samples, prototypes, and scrap or other artefacts. Mr. Hunter did not identify himself as a key individual involved in the project or that he was involved in the project at all.

The Plaintiff did, however, list Mr. Hunter as the sole inventor of the 552 Patent in documents submitted to the Canadian Intellectual Property Office as part of the application for the 552 Patent (i.e., the file or prosecution history for the 552 Patent).

The full extent of documents submitted to the Canadian government to secure tax credits and/or refunds for projects leading to the patents and industrial designs asserted in this proceeding that describe the key individual involved, the work done, and the supporting documents that the Plaintiff possesses, are unknown to WhiteWater but are known to the Plaintiff. The 552 Patent is invalid pursuant to section 27(1) of the Patent Act since it was not granted to Ray Smegal, Daric Briggs, and Jonathon Brazeau. [ 23 ] These allegations claim that the named inventor on the patent, Mr.

Hunter, is not the proper inventor and to the extent there are inventors those individuals are Ray Smegal, Daric Briggs, and Jonathon Brazeau, who are not named as inventors on the patent. As a result, of this purported misidentification of inventors of the Asserted Patents it is alleged the patents are invalid pursuant to section 27(1) of the Patent Act . Whitewater explicitly stated there was no allegation of fraud and that there was no reliance on section 53(1) of the Patent Act . [ 24 ] The Defendant relied upon Dec International Inc. v. A. L.

Lacombe Associates Ltd. et al (1989), 26 CPR (3d) 193 (FCTD) in support of the proposition that a patent may be found to be invalid based on the incorrect naming of the inventors pursuant to then subsection 28(1) of the Patent Act . Dec International was based upon the former subsection 28(1) which is equivalent to subsection 27(1) of the current Patent Act . In Dec International, a patent infringement action regarding a liquor dispensing system, the Court considered a challenge to a patent’s validity based upon incorrect inventorship.

Ultimately, that Court found that notwithstanding that the wrong inventor was named " , “In the circumstances of this case, I cannot agree that the patent should thereby be declared invalid” " .

An important circumstance was that whether or not the inventor was correctly or incorrectly named " “the Plaintiff would be no less entitled to the patent so that the patent which did issue should have been issued in any event.” " In that case, (at paragraph 93) it was acknowledged that even if the correct inventor had been named, that inventor had a " “legal duty to assign to the Plaintiff the rights to any inventions made during the course of his employment” " . [ 25 ] Subsection 27(1) of the Patent Act is directed to ensuring that a patent when granted is issued to the entity entitled to the patent.

Subsection 27(1) provides: 27.

(1) Commissioner may grant patents – The Commissioner shall grant a patent for an invention to the inventor or the inventor’s legal representative if an application for the patent in Canada is filed in accordance with this Act and all other requirements for the issuance of a patent under the Act are met. [ 26 ] A patent may thus be granted to either the inventor or the inventor’s legal representative. In short, the enquiry under subsection 27(1) should be whether the person or entity to whom the patent was granted was legally entitled to that grant.

The proposed amendments focus upon whether or not the proper inventors were named but in order to succeed would need to allege that the patent when granted was issued to neither the inventor nor the inventor’s legal representative. In light of this deficiency, these proposed amendments have no reasonable prospect of success and shall not be permitted.

(3) The Contested Design Prior Publication and Originality Amendments [ 27 ] The Contested Design Prior Publication and Originality Amendments (paragraphs 59.3, 86.3, 116.3, 150.3 and 184.3 and paragraphs 195, 195.1 to 195.7, 205, 205.1 to 205.7, 214.1 to 214.7, 215, 215.1, 224.1 to 224.7, 225, 225.1, 234.1 to 234.7, 235 and 235.1) add allegations with respect to publications prior to the relevant dates for each Asserted Design. The allegations disclose, with sufficient particularity, defences supported by sections 6 and 7 of the Industrial Design Act and as such have a reasonable prospect of success.

While the Plaintiff argues such proposed allegations will not succeed those arguments are premised upon defences and the Court has been provided with no legal authority that the defences cannot succeed.

[ 28 ] The allegations in this category have been raised in a timely fashion following examination for discovery and should be allowed. ORDER THIS COURT ORDERS that : 1 .

The Defendant/Plaintiff by Counterclaim may serve and file by December 8, 2023 an Amended Statement of Defence in which the following paragraphs (from the Proposed Pleading) are incorporated: a . the Obviousness Amendments at paragraphs 28, 57, 84, 114, 148 and 182; b . the Anticipation Amendments at paragraphs 55.1 to 55.9, 82.1 to 82.9, 112.1 to 112.9, 146.1 to 146.9 and 180.1 to 180.9; c . the ‘601 Patent Anticipation Amendments at paragraphs 30.3 to 30.10; d . the Inutility Amendments at paragraphs 30.1 and 30.2, 59.1 and 59.2, 86.1 and 86.2, 116.1 and 116.2, 150.1 and 150.2, and 184.1 and 184.2; e . the Ambiguity Amendments at paragraphs 30.11, 59.4, 86.4, 116.4, 150.4 and 184.4; f . the Overbreadth Amendments at paragraphs 86, 150 and 184; g . the Design Non-Infringement Amendments at paragraphs 188 to 192, 198 to 202, 208 to 212, 218 to 222, and 228 to 232; h . the Design Prior Publication Amendments at paragraphs 194, 204, 214, 224 and 234; i . the Design Originality Amendments at paragraphs 196, 206, 216, 226 and 236; and j . the " Contested Design Prior Publication and Originality Amendments " at paragraphs 195, 195.1 to 195.7, 205, 205.1 to 205.7, 214.1 to 214.7, 215, 215.1, 224.1 to 224.7, 225, 225.1, 234.1 to 234.7, 235 and 235.1. 2 .

The following proposed amendments are not permitted: a . The Contested Sufficiency Amendments at paragraphs 59.5, 86.5, 116.5, 150.5 and 184.5; and b . The Contested Inventorship Amendments at paragraphs 59.3, 86.3, 116.3, 150.3 and 184.3. 3 . Costs shall be in the cause. "Michael D. Crinson" Associate Judge FEDERAL COURT SOLICITORS OF RECORD Docket: T-1449-20 STYLE OF CAUSE: PROSLIDE TECHNOLOGY, INC. v. WHITEWATER WEST INDUSTRIES, LTD. PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: September 5, 2023 ORDER AND REASONS: CRINSON A.J.

DATED: November 28, 2023 APPEARANCES: Matthew Burt For The Plaintiff Sean Jackson For The Defendant SOLICITORS OF RECORD: Smart & Biggar LLP Ottawa, Ontario For The Plaintiff Blake, Cassels & Graydon LLP Toronto, Ontario For The Defendant