Norac Systems International Inc. v. Prairie Systems And Equip. Ltd.

Norac Systems International Inc. v. Prairie Systems And Equip. Ltd. Court (s) Database Federal Court of Appeal Decisions Date 2003-04-10 Neutral citation 2003 FCA 187 File numbers A-223-02 Notes Digest Decision Content Date: 20030410 Docket: A-223-02 Citation: 2003 FCA 187 CORAM: DÉCARY J.A. LINDEN J.A. SHARLOW J.A. BETWEEN: NORAC SYSTEMS INTERNATIONAL INC. Appellant and PRAIRIE SYSTEMS AND EQUIP. LTD. Respondent Heard at Winnipeg, Manitoba, on April 10, 2003. Judgment delivered from the Bench at Winnipeg, Manitoba, on April 10, 2003. REASONS FOR JUDGMENT OF THE COURT BY: DÉCARY J.A. Date: 20030410 Docket: A-223-02 Citation: 2003 FCA 187 CORAM: DÉCARY J.A. LINDEN J.A. SHARLOW J.A. BETWEEN: NORAC SYSTEMS INTERNATIONAL INC. Appellant and PRAIRIE SYSTEMS AND EQUIP. LTD. Respondent REASONS FOR JUDGMENT OF THE COURT (Delivered from the Bench at Winnipeg, Manitoba, on April 10, 2003.) DÉCARY J.A. [1] The trial judge found that the patent at issue (No. 2,096,761, issued on July 4, 1995) was "invalid for lack of utility but that if it is valid, it is not infringed as it lacks a tension load cell and the [respondent's] load cell is not pivotally attached to the linkage assembly" ((2002) 19 C.P.R. (4th) 360; (2002) 218 F.T.R. 186, at para. 75). [2] With respect to the finding of invalidity for lack of utility, the appellant first argues that the trial judge should not have entertained argument on the issue of inutility as it was not properly raised in the pleadings. The issue, according to the appellant, arose only during the course of cross-examination of Professor Schoenau, an expert witness for the appellant, in the form of a "surprise question on a new matter never before reviewed by the expert". As inutility was the only basis for invalidity accepted by the trial judge, it is an essential finding upon which the appellant was unable to produce any evidence. [3] The respondent argues that the utility issue is implicit in the general claim of invalidity, which it expressly put into issue in the pleadings. It also asserts that the appellant discovered early in the trial that its device lacked utility, but failed to make submissions on the issue. [4] It is not disputed that the respondent's original and amended statement of defence make no explicit reference to inutility as a ground of the claim of invalidity. It is not disputed, either, that the respondent did not, during the trial, seek leave to further amend its amended statement of defence. [5] On this point, we agree with the appellant. [6] It is clear that plaintiffs are entitled to fair warning of attacks on the validity of a patent. In TRW Inc. v. Walbar of Can. Inc. (1991), 39 C.P.R. (3d) 176; 123 N.R. 161 ("Walbar"), Stone J.A. overturns the trial judge's finding of validity on several grounds, one of which was rejected as not having been expressly pleaded. Stone J.A. wrote at pp. 196-197: I agree with TRW that because the so-called "false trail" was not expressly pleaded, this argument is not available to Walbar. As it represented a major attack on the validity of the Patent, it should have been expressly pleaded. To my mind, the views of Lord Normand as to the value of pleadings, in Esso Petroleum Co. v. Southport Corp., [1956] A.C. 218 (H.L.) at p. 239, are applicable. He stated: I wish to associate myself with the observations of my noble and learned friend, Lord Radcliffe, on the value of the pleadings. To condemn a party on a ground of which no fair notice has been given may be as great a denial of justice as to condemn him on a ground on which his evidence has been improperly excluded. See also Glisic v. The Queen, [1988] 1 F.C. 731, 80 N.R. 39 (C.A.). [7] Similarly, in Pengo Hydra-Pull of Can. Ltd. v. Leithiser, [1972] F.C. 1201, 7 C.P.R. (2d) 17 ("Pengo"), our Court dealt with an appeal of an order of the trial judge requiring particulars for a claim of ambiguity. Jackett C.J. held that where a claim of invalidity is not pleaded, the Court must give an opportunity to prepare a defence if the claim later arises. He wrote at paras. 2-4: While it has always been open to the Court to hold a claim in a patent invalid for ambiguity even though it was not pleaded, and it must continue to be so, it does not follow that an argument based on ambiguity that has not been pleaded will be acted on without giving the opponent a fair opportunity to prepare to answer it on such terms as to costs as seem appropriate. Pleading of ambiguity has always been regarded as proper in order to avoid taking an opponent by surprise and is certainly necessary if it involves a question that calls for evidence. A pleading of ambiguity, like any other pleading, must be framed with sufficient particularity. In our view, it is not sufficiently particular unless it identifies the ambiguity or ambiguities on which it is proposed to rely. [8] The trial judge, therefore, decided that the patent was invalid for a ground - inutility - which was not properly raised in the pleadings. This finding cannot be allowed to stand. As the other grounds for invalidity were not accepted by the trial judge and as the respondent has not challenged the judge's findings with respect to these other grounds, the appeal with respect to invalidity will be allowed and the finding of invalidity on the ground of inutility will be quashed. [9] With respect to the finding of non infringement, we are of the view that the trial judge did not commit any palpable or overriding error in holding that the respondent's device did not infringe claim 6 of the patent. (His finding that claim 7 has not been infringed has not been challenged by the respondent.) [10] It is not disputed that tension forces are "stretching" forces, or forces acting in opposite directions away from each other. Both devices provide an output which correlates with the downward force of a load against the upward pressure of a lifting mechanism. For ease of reference, we shall call these forces the "load tension forces". Thus it is clear that both load cells provide a measurement of the load tension forces. The appellant would have us end the analysis here, finding that a tension load cell is any device which is used to measure load tension forces. The trial judge rejected this characterization and went further to examine how each load cell provides its measurement of the load tension forces. Here he found a substantial difference between the two load cells. In the appellant's load cell, tension forces applied vertically from end to end create tension within the cell to provide an output which represents a direct measurement of the load tension forces. In the respondent's cell, however, the load tension forces applied to the cell create shear forces (and not tension forces) which are then correlated to the load tension forces. Thus the measurement in the respondent's load cell is indirect; shear forces provide an output which varies predictably with the load tension forces. The trial judge found a difference between the two devices which was soundly based on the evidence before him. [11] The trial judge further held that the patent's specification of a "tension load cell" did not include a "shear beam load cell". By calling for a "tension load cell" instead of simply a "load cell", the patent identified a specific sub-class of load cells which provide an output based on internal tensile forces. While this may have been a rather restrictive interpretation of the patent, it was open to the trial judge to so find on the facts of this case, and that finding should not be disturbed. [12] The appeal will be allowed in part, the finding of invalidity on the ground of inutility will be set aside and the finding of non-infringement will be confirmed. The award of costs in the Trial Division will remain unchanged. [13] Although success was divided, the respondent was successful on the primary dispute between the parties, which was the infringement issue. In these circumstances, we will award the respondent costs on the appeal in the amount of $5,000.00 plus disbursements including reasonable travelling costs incurred by the respondent's counsel in attending the hearing of the appeal. "Robert Décary" J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-223-02 STYLE OF CAUSE: Norac Systems International Inc. v. Prairie Systems and Equip. Ltd. PLACE OF HEARING: Winnipeg, Manitoba DATE OF HEARING: April 10, 2003 REASONS FOR JUDGMENT OF THE COURT: Décary J.A., Linden J.A., Sharlow J.A. DELIVERED FROM THE BENCH BY: Décary J.A. APPEARANCES: Ms. Lynn Cassan FOR THE APPELLANT Mr. Grant Carson FOR THE RESPONDENT SOLICITORS OF RECORD: Cassan Maclean Ottawa, Ontario FOR THE APPELLANT Carson & Co. Melfort, Saskatchewan FOR THE RESPONDENT