T-1029-88
Cactus Machinery Inc. (Plaintiff)
v.
Mapro Inc. (Defendant)
INDEXED AS: CACTUS MACHINERY INC. V. MA PRO INC.
Trial Division, Teitelbaum J.—Toronto, January
11; Ottawa, January 19, 1989.
Patents — Practice — Motion for interlocutory determina
tion Mapro entitled to patent — Commissioner of Patents
finding conflicting claims, but awarding priority to Mapro —
Cactus commencing action in Federal Court under Patent Act,
s. 45(8), for determination of respective rights — Mapro
alleging irreparable harm as, under existing law, unable to
claim damages for patent infringement until patent issues —
Patent not issuing until appeal determined — S. 45(8) not
authorizing temporary determinations — No mention of
"interlocutory" or "temporary" — Patent entitlement to be
decided by trial judge, hearing appeal by way of trial de novo,
not by motions judge in summary proceedings on temporary
basis — Deliberate delay of proceedings not established.
Practice — Interim preservation of property — Application
for interlocutory determination of rights under Patent Act, s.
45(8) — Patent not yet issued — R. 470 inapplicable to
"preserve" non-existent patent rights.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Rules, C.R.C., c. 663, RR. 419(1)(c), 470.
Patent Act, R.S.C. 1970, c. P-4, ss. 10 (as am. by S.C.
1987, c. 41, s. 2), 45(3),(8) (as am. by R.S.C. 1970
(2nd Supp.), c. 10, s. 64), 57 (as am. by S.C. 1987, c.
41, s. 21).
CASES JUDICIALLY CONSIDERED
APPLIED:
Sankey v. Minister of Transport, [1979] 1 F.C. 134
(T.D.).
REFERRED TO:
Scott Paper Co. v. Minnesota Mining and Manufacturing
Co. (1981), 53 C.P.R. (2d) 26 (F.C.T.D.).
COUNSEL:
Stephen M. Lane for plaintiff.
Daniel Hitchcock for defendant.
SOLICITORS:
Sim, Hughes, Dimock, Toronto, for plaintiff.
Riches, McKenzie & Herbert, Toronto, for
defendant.
The following are the reasons for order ren
dered in English by
TEITELBAUM J.: On June 3, 1988, the plaintiff,
Cactus Machinery Inc. (Cactus) filed into the
Registry of the Federal Court of Canada a state
ment of claim wherein Cactus prays:
(A) an order that, as between the parties, the Plaintiff is
entitled to the issue of a patent including conflict claims Cl to
C18, as applied for by it, and that a patent including conflict
claims Cl to CI8 may issue to the Plaintiff.
(B) in the alternative, an order that the Defendant is not
entitled to the issue of a patent including conflict claims Cl to
C18.
(C) such further and other relief as to this Honourable Court
may seem just for the determination of the respective rights of
the parties.
(D) its costs of this action.
The filing of this statement of claim occurred
after the Commissioner of Patents had decided
"claims in conflict" between Cactus and the
defendant Mapro Inc. (Mapro). Subsequent to the
filing of the statement of claim, Mapro filed a
statement of defence on July 5, 1988.
The notice of motion which is now before me
was filed on September 7, 1988. In the notice of
motion filed by Mapro, it requests:
1. For a determination, on an interlocutory basis, that the
Defendant is entitled to the issue of a patent including conflict
claims Cl to C18, as applied for by it and as already deter
mined by the Commissioner of Patents, and that a patent
including conflict claims Cl to CI8 may issue to the Defend
ant; [Underlining is mine.]
2. Directing the Commissioner of Patents to carry out forth
with and expeditiously all steps necessary to advance to patent
the Defendant's patent application serial number 398,389
including conflict claims Cl to C18;
3. In the alternative, permitting the Commissioner of Patents
to carry out forthwith and expeditiously all steps necessary to
advance to patent the Defendant's patent application serial
number 398,389 including conflict claims CI to C18;
4. For costs of this motion; and
5. For such other relief as this Honourable Court may deem
just.
The grounds of the motion, as stated therein,
are:
(a) Based on affidavit evidence presented by the Plaintiff and
Defendant, the Commissioner of Patents has already made a
determination that the Defendant is entitled to the conflict
claims Cl to C18;
(b) the Plaintiff is intentionally and maliciously delaying the
issue to patent of the Defendant's patent application so as to
avoid paying damages for patent infringement and to avoid
even the risk of paying damages;
(c) the Plaintiffs drying apparatus falls within the scope of
conflict claims Cl to C18 and would be an infringement of the
rights in any patent to issue for conflict claims Cl to C18;
(d) by delaying the issue of the patent to the Defendant,
Plaintiff is extending the time period during which it can make
and sell in Canada its drying apparatus without liability, or
even risk of liability, to pay damages for patent infringement;
(e) there are no retroactive rights associated with a patent
which permits a patentee to collect damages for activity occur
ring prior to the issue of the patent;
(f) but for the Plaintiff whose activity is delaying issue of the
patent to the Defendant, the patent would have been issued to
the Defendant and the Plaintiff [sic] would be entitled to sue
the Plaintiff for infringement of patent rights and to claim
damages from the date of issue of the patent and to collect
those damages once the matter had been finally determined by
a Court;
(g) as a result of the Plaintiffs activity, the Defendant cannot
claim damages until the patent issues which, if the Plaintiff
continues with this action, will be several years from now; and
(h) if the order sought is not granted, the Defendant will suffer
irreparable harm because the Defendant cannot be compensat
ed for the lost damages which it cannot collect from the
Plaintiff.
As is stated by counsel for Mapro, the present
motion is a novel one, a similar request for the
issuance of a patent on an interlocutory basis has,
to counsel's knowledge, never before been request
ed.
The filing of the statement of claim on June 3,
1988 by Cactus, is an appeal by means of a trial de
novo (see Scott Paper Co. v. Minnesota Mining
and Manufacturing Co. (1981), 53 C.P.R. (2d) 26
(F.C.T.D.)) of a decision of the Commissioner of
Patents in a conflict proceeding pursuant to sub
section 45(8) of the Patent Act [R.S.C. 1970, c.
P-4 (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s.
64)].
Mapro filed a patent application serial number
398,389 on March 15, 1982 by its predecessor in
title. Cactus filed a patent application serial
number 423,806 on March 17, 1983. The Commis
sioner of Patents, pursuant to the provisions of
subsection 45(3) of the Patent Act notified the
parties hereto that conflict existed with regard to
the applications filed. By a decision dated Decem-
ber 3, 1987, the Commissioner notified Cactus
that priority in conflict of certain claims (C1 to
C18) should be awarded to Mapro in application
serial number 398,389 and refused in the Cactus
application serial number 423,806. Pursuant to
subsection 45(8) Cactus filed a statement of claim
appealing the decision of December 3, 1987.
There are two issues that are to be decided. The
first is to determine whether the Court has the
jurisdiction to determine, on an interlocutory basis,
the respective rights of the parties regarding the
issues in conflict and then, secondly to order the
Commissioner of Patents to issue, again, on an
interlocutory basis, the patent applied for by
Mapro.
Subsection 45(8) of the Patent Act states:
45....
(8) The claims in conflict shall be rejected or allowed
accordingly unless within a time to be fixed by the Commis
sioner and notified to the several applicants one of them
commences proceedings in the Federal Court for the determi
nation of their respective rights, in which event the Commis
sioner shall suspend further action on the applications in con
flict until in such action it has been determined either
(a) that there is in fact no conflict between the claims in
question,
(b) that none of the applicants is entitled to the issue of a
patent containing the claims in conflict as applied for by him,
(c) that a patent or patents, including substitute claims
approved by the Court, may issue to one or more of the
applicants, or
(d) that one of the applicants is entitled as against the others
to the issue of a patent including the claims in conflict as
applied for by him. [Underlining is mine.]
It is to be noted that nowhere in subsection
45(8) is there any mention of the word interlocuto-
a nor is there any mention of the word temporary.
What is stated is that the Commissioner "shall
suspend further action". I take this to mean that
the Commissioner shall take no further steps and
shall do nothing further with regard to the issu
ance of the patent, until, "in such action" and I
take this to mean, in the proceedings of the appeal
of the decision of the Commissioner, "it has been
determined [by the Court] either" (a), (b), (c) or
(d) of subsection 45(8).
It is Mapro's submission, and I am satisfied that
the submission is a correct one that Cactus knows
that if it appealed the decision of the Commission
er of Patents pursuant to subsection 45(8) of the
Patent Act, Mapro would not obtain the patent,
until the appeal was finally determined, assuming
that the appeal was resolved in its favour nor can
Cactus be responsible for any damages caused to
Mapro for patent infringement until the patent
issues in Mapro's favour. Mapro estimates that it
is presently losing the sum of $600,000 in profits
per year as a result of sales of the invention by
Cactus and for which it cannot ever recover as
infringement damages as the patent for the inven
tion has not issued.
Even if the patent applied for were to issue to
Mapro, Mapro would not be able to claim dam
ages for activity (sales) by Cactus occurring before
the patent issued to Mapro. The reasoning for this
is, at the present time, applications for patent that
are pending are not open to the public for inspec
tion (section 10, Patent Act). It is thus reasonable
that if a person or corporation unknowingly
infringes a patent pending application it should not
be responsible for damages. This is to be changed
with amendments to the Patent Act [S.C. 1987, c.
41, ss. 2, 21].
10. (1) Subject to subsections (2) and (3) and section 20, all
applications for patents and documents filed in connection with
applications for patents and all patents and documents filed in
connection with patents shall be open to the inspection of the
public at the Patent Office, under such conditions as may be
prescribed.
(2) Except with the approval of the applicant, no application
for a patent or document filed in connection with an application
for a patent shall be open to the inspection of the public before
the expiration of eighteen months after
(a) the priority date of the application, in the case of an
application to which section 29 applies; or
(b) the date of filing of the application in Canada, in any
other case.
(3) No application for a patent that is withdrawn before the
expiration of the period referred to in subsection (2) that is
applicable with respect to the application shall be open to the
inspection of the public.
57. (1) Any person who infringes a patent is
(a) liable to the patentee and to all persons claiming under
the patentee for all damages sustained by the patentee or by
any such person, after the grant of the patent, by reason of
such infringement; and
(b) liable to pay reasonable compensation to the patentee
and to all persons claiming under the patentee for any
damages sustained by the patentee or by any such person by
reason of any act on his part, after the application for the
patent became open to the inspection of the public under
section 10 and before the grant of the patent, that would
have constituted an infringement of the patent if the patent
had been granted on the day the application became open to
the inspection of the public under that section. [Underlining
is mine.]
Mapro submits that as a result of its present
inability to claim damages, it is and continues to
suffer irreparable harm for so long a time as
Cactus continues to sell a product which Mapro
believes infringes a patent that it will, one day,
receive.
With respect, I do not agree with this submis
sion. This submission presupposes that the Federal
Court will decide that Mapro will receive a judg
ment in its favour ordering the Commissioner of
Patents to issue to it the patent requested. The
appeal as I have stated, is a trial de novo. It is not
clearly apparent to me from the evidence filed that
Cactus has no chance of convincing a trial judge
that a judgment should be given in its favour. The
evidence before me is such, and because both
parties claim patent rights to an invention invented
by the same person, that either party may be able
to show that it has certain rights to the invention.
A trial judge having the benefit of hearing wit
nesses, both expert and otherwise and new evi
dence if called would be in a better position to
determine to whom the patent should issue. This
issue, to make a determination pursuant to subsec
tion 45(8), should not be made on a temporary
basis.
Mapro thus submits that by allowing Cactus to
continue to sell the product it presently is selling,
whatever rights Mapro will eventually have in the
invention for which their patent application is
pending, will diminish in value and thus, the filing
of the present application pursuant to Rule 470 of
the Federal Court Rules [C.R.C., c. 663] which
relates to the preservation of property.
Rule 470. (1) Before or after the commencement of an action,
the Court may, on the application of any party, make an order
for the detention, custody or preservation of any property that
is, or is to be, the subject-matter of the action, or as to which
any question may arise therein; and any such application shall
be supported by an affidavit establishing the facts that render
necessary the detention, custody or preservation of such prop
erty and shall be made by motion upon notice to all other
parties.
(2) Notwithstanding paragraph (1), in case of urgency, an
application under that paragraph may be made without notice
and the Court may grant it provisionally for a period not
exceeding 10 days.
(3) The plaintiff may not make an application under para
graph (I) before commencement of the action except in case of
urgency, and in that case the order may be granted on terms
providing for the commencement of the action and on such
other terms, if any, as seem just.
(4) An order under paragraph (1) shall identify the property
to be detained, kept or preseved, shall state where, by whom,
for how long and at whose cost, the property is to be detained,
kept or preserved, and shall contain such other terms, if any, as
seem just in the circumstances.
(5) An order under paragraph (1) shall have as its sole
purpose the protection of the property pending suit.
(6) An order under paragraph (1) shall be carried out, in so
far as applicable, in the same way as seizure after judgment
and the rules applicable to seizure after judgment shall apply to
the carrying out of such an order in so far as such rules are
applicable.
(7) Where the right of any party to a specific fund is in
dispute in an action, the Court may, on the application of a
party, order the fund to be paid into court or otherwise secured.
(8) An order under this Rule may be made on such terms, if
any, as seem just.
Mapro submits that it is the patent which is to
be preserved. Counsel submits "it is the value of
the invention which is sought to be preserved by
having a patent granted until the hearing" (of the
appeal).
I am satisfied that there are no patent rights to
protect until the patent issues. Thus Rule 470
cannot be used to "preserve" rights that do not yet
exist.
I am satisfied that there does not exist, in the
present Patent Act, any section that would enable
me to issue an order ordering the Commissioner of
Patents to allow the issuance of a "temporary
patent" or a patent on an "interlocutory" basis. I
do not believe that Rule 470 of the Federal Court
Rules allows me to make the substantive change to
the Patent Act that Mapro presently requests.
What is required is an amendment to the Patent
Act. Only Parliament can make amendments to
the Patent Act and these amendments are now
pending before Parliament (the ability to claim
damages before a patent is issued).
If I were to issue the order requested by Mapro,
I would, in fact, decide the issue that only a trial
judge should decide. This, I believe, should not be
done, in a summary fashion pursuant to a motion.
In that Cactus' appeal is a trial de novo, only after
a full hearing should the Court determine which
party is entitled to the issuance of the patent.
I was referred to the case Sankey v. Minister of
Transport, [1979] 1 F.C. 134 (T.D.). It was an
application for an interim interlocutory injunction
until final disposition of the action. Counsel sought
leave to amend his application so as to ask, as well,
interim declarations. Thurlow A.C.J., as he then
was, states, at page 135:
I know of no authority or rule under which an interim declara
tion, which in substance would accomplish the whole purpose of
the action without a trial on the merits, may be made. If a case
for a declaration were shown to exist or to be fairly arguable,
the Court might perhaps intervene by injunction, in an appro
priate case, to hold matters in status quo until the right could
be tried but that is by no means the same thing as granting an
interim declaration of right. The likelihood of ultimate entitle
ment to the declaratory relief would help to persuade the Court
to issue an injunction but the Court would do so without
determining the right to the declaration either temporarily or at
all.
As can be seen, Mr. Justice Thurlow states that
the Court should not make determinations on a
temporary basis. I am satisfied that the Court
cannot and should not make a temporary determi
nation under subsection 45(8) of the Patent Act.
This would, in effect, allow for a summary judg
ment of what is a very complex issue.
Mapro also submits that Cactus is doing every
thing in its power to purposely delay the proceed
ings presently pending before the Court, that Cac
tus' appeal is vexatious, frivolous and is, as well
time barred.
There is no evidence before me to indicate that
Cactus has done anything to purposely delay the
proper proceedings of the appeal. All that was
shown to me is that Cactus is using the time
allotted to it by the Rules of the Court or the
delays as stated in the Patent Act to do what it is
required to do. This does not constitute, "purpose-
ly delaying proceedings".
If Mapro is of the view that Cactus' appeal is
frivolous or vexatious then it should file an
application pursuant to Rule 419(1)(c). With
regard to Mapro's claim that Cactus is "time
barred" from claiming any rights in the invention,
I am satisfied that, unless the parties hereto are
prepared to file an agreed statement of facts, the
judge hearing the case on the merits would be in
the best position to decide this issue.
I am also satisfied that the evidence placed
before me is such that I would not issue the order
that Mapro desires making the assumption that I
had the jurisdiction to do so. I believe the evidence
is such that the "status quo" should remain until a
final determination is made after a full hearing.
The application is dismissed with costs in favour
of Cactus Machinery Inc.
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