MAOZ BETSER-ZILEVITCH Appellant/ Respondent on cross-appeal v. PETROCHINA CANADA LTD, 2022 FCA 162

Date: 20220928 Docket: A-57-21 Citation: 2022 FCA 162 CORAM: STRATAS J.A. RIVOALEN J.A. LOCKE J.A. BETWEEN: MAOZ BETSER-ZILEVITCH Appellant/ Respondent on cross-appeal and PETROCHINA CANADA LTD Respondent/ Appellant on cross-appeal Heard at Toronto, Ontario, on September 28, 2022. Judgment delivered from the Bench at Toronto, Ontario, on September 28, 2022. REASONS FOR JUDGMENT OF THE COURT BY: LOCKE J.A. Date: 20220928 Docket: A-57-21 Citation: 2022 FCA 162 CORAM: STRATAS J.A. RIVOALEN J.A. LOCKE J.A.

BETWEEN: MAOZ BETSER-ZILEVITCH Appellant/ Respondent on cross-appeal and PETROCHINA CANADA LTD Respondent/ Appellant on cross-appeal REASONS FOR JUDGMENT OF THE COURT (Delivered from the Bench at Toronto, Ontario, on September 28, 2022). LOCKE J.A.

[1] The appellant, Maoz Betser-Zilevitch (Mr. Betser), appeals a decision of the Federal Court (the "“Judgment”", 2021 FC 85, perManson J.) dismissing his action against the respondent, PetroChina Canada Ltd. (PCC), alleging infringement of his Canadian PatentNo. 2,584,627 (the 627 Patent). Mr. Betser also appeals the Federal Court’s decision on costs arising from his action (the "“CostsJudgment”", 2021 FC 151, per Manson J.).

For its part, PCC cross-appeals the Federal Court’s dismissal, in the Judgment, of itscounterclaim alleging invalidity of the 627 Patent. [2] For the following reasons, we have concluded that both the appeal and the cross-appeal should be dismissed in their entirety. [3] Mr. Betser’s appeal on infringement is based on the argument that the Federal Court erred in its construction of the term “first level”in the claims in issue of the 627 Patent. Mr.

Betser argues that this term should have been construed as being a volume of space (orregion) sufficient to encompass the pipes (including flow lines) in PCC’s allegedly infringing system rather than a single horizontalplane, as argued by PCC. The parties disagree on the standard of review that should apply to this Court’s analysis of this issue, but it isnot necessary to decide the point. We would dismiss the appeal regardless of the standard of review. [4] Mr.

Betser argues that the Federal Court improperly imported into the claims a “gloss” (or stray mention) from paragraph 53 of the627 Patent that the invention involves locating a pipe between modules at the lowest possible point, which "“eliminates the need forscaffolding”" and "“reduces the safety issues”".

Paragraph 16 of the 627 Patent identifies improved safety as an object of the invention.The Federal Court concluded at paragraph 117 of its reasons for the Judgment that the term "“first level”" refers to: a horizontal plane, of a measured height above ground, that allows operators to access the flow lines from the ground level,without the need for or use of scaffolding, thereby reducing safety issues, costs and allowing easier access to flow lines byoperators. [5] The Federal Court made no reviewable error in construing the term "“first level”".

It correctly concluded that the term is ambiguous,and appropriately had recourse to the disclosure of the 627 Patent to construe it (see Dableh v. Ontario Hydro, (FCA),[1996] 3 F.C. 751 at para. 30 (F.C.A.); Tetra Tech EBA Inc. v. Georgetown Rail Equipment Company, 2019 FCA 203 at para. 103).More than a gloss or stray mention, paragraph 53 of the 627 Patent describes characteristics of the invention with reference to its objects,and the elimination of the need for scaffolding is relevant to the object of improved safety.

We do not accept that the Federal Court erredin its reliance on paragraph 53. [6] Since there is no dispute that PCC’s allegedly infringing system would infringe the 627 Patent only if the term "“first level”"encompassed a volume sufficient to require scaffolding, the Federal Court did not err in finding that PCC did not infringe. [7] Because the appeal has no merit, it is not necessary to discuss the parties’ arguments concerning remedies for infringement. As forthe Costs Judgment, we see no reviewable error.

Therefore, the appeal will be dismissed with costs. [8] It is, however, necessary to consider the cross-appeal, since that concerns patent claims and remedies that are not in issue oninfringement. PCC argues that the Federal Court gave inadequate consideration to evidence of the obviousness of locating the steaminjection line on the first level together with the heavy oil production flow line (which was the only difference between the invention andthe prior art), and the fact that the "“Orion modules”" had done this prior to the relevant date for assessing obviousness.

Importantly, it isnot disputed that the Orion modules were not "“available to the public”" at that time, and therefore were not citable as prior art for thepurposes of obviousness (see

section 28.3 of the Patent Act, R.S.C. 1985, c. P-4). [9] PCC argued before the Federal Court that the Orion modules were secondary indicia of obviousness in that they established thatanother skilled person was able to make the invention at the relevant time, albeit not publicly. PCC now argues that it was inapt todescribe the Orion modules as secondary indicia of obviousness, and that they should rather be considered as a primary factor in theassessment of obviousness. This argument cannot prevail.

Section 28.3 of the Patent Act describes the prior art that is primarily relevantto obviousness, and the Orion modules clearly do not qualify. They could be no more than secondary indicia. Moreover, it does notfollow that simultaneous invention necessarily indicates obviousness. Even the jurisprudence cited by PCC acknowledges thatsimultaneous invention "“may or may not be an indication of obviousness”": Ecolochem, Inc. v. Southern California Edison Co., 227F.3d 1361 at 1379 (Fed. Cir. 2000).

For instance, the person or persons who conceived the simultaneous invention may have themselvesexercised inventive ingenuity in doing so. In this case, there appears to be little or no evidence that those who conceived the Orionmodules were uninventive. [10] PCC also argues that the Federal Court erred in failing to conclude that the 627 Patent was obvious when it rejected what PCC saysis the only reason proposed by Mr. Betser’s expert Richard Beale as to why a skilled person would not have made the invention. PCCargues that the other expert evidence concluded that the invention was obvious.

However, patents are presumed to be valid, and PCCbore the onus of proving obviousness. The Federal Court was entitled to reject PCC’s argument on the issue even in the absence of anyevidence of inventiveness. The Federal Court explained its concerns with PCC’s expert evidence on validity. The Federal Court alsoexplained that "“a myriad of factors”" went into the design of modules of the kind described in the 627 Patent, and concluded that itwould not have been obvious to a skilled person to move the steam injection line to the first level.

This conclusion is entitled todeference, and we see no reviewable error in this analysis. [11] PCC also takes issue with the Federal Court’s statement, at paragraph 171 of its reasons, that "“the evidence shows that no one inthe industry had [moved the steam injection line to the first level] prior to the 627 patented invention being made public.”" PCC arguesthat this statement erroneously ignores the Orion modules. We do not accept that the Federal Court erred in this respect. The paragraphsimmediately preceding this statement demonstrate that the Federal Court understood and considered the Orion modules.

The most likelyexplanation for the Federal Court’s statement is that it was referring to public uses, which are citable as prior art. [12] We are also of the view that the Federal Court did not err in stating that "“[t]he evidence relied on by [PCC] is typical of the‘hindsight is 20-20’ problem in relation to this obviousness attack.”" This conclusion by the Federal Court was consistent with its view ofthe evidence, and was open to it.

[ 13 ] Having found no error on the issue of obviousness, we will dismiss the cross-appeal with costs. "George R. Locke" J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-57-21 APPEAL FROM A JUDGMENT AND SUPPLEMENTARY JUDGMENT OF THE HONOURABLE MR. JUSTICE MANSON OF THE FEDERAL COURT DATED JANUARY 26, 2021, AND FEBRUARY 15, 2021 IN DOCKET NO. T-1158- 18. STYLE OF CAUSE: MAOZ BETSER-ZILEVITCH v. PETROCHINA CANADA LTD PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: September 28, 2022 REASONS FOR JUDGMENT OF THE COURT BY: STRATAS J.A. RIVOALEN J.A. LOCKE J.A.

DELIVERED FROM THE BENCH BY: LOCKE J.A. APPEARANCES : Michael Crinson Jennifer Ko For The Appellant D. Doak Horne Nikolas Purcell Sarah Li For The Respondent SOLICITORS OF RECORD : Crinson Law LLP Toronto, Ontario For The Appellant Gowling WLG (Canada) LLP Calgary, Alberta For The Respondent