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Canadian Federal Courts Consider When “Prior Use” Invalidates a Patent

Disclosure of an invention prior to the filing of a patent application can have disastrous consequences for an inventor.  In order to obtain a valid Canadian patent, the Canadian patent application must, among other requirements, be filed within one year of the date that an inventor (or person deriving knowledge from the inventor) makes the subject matter of the invention available to the public anywhere in the world, and before the date any other person does so.  In recent cases, Canadian courts have been asked to decide whether prior use constitutes making subject matter “available to the public”.

2013 Oct 21 SAM-JAM_Canadian Federal Courts Consider When Prior Use Invalidates a PatentWhat is meant by making the subject matter of the invention “available to the public” can be a complex issue, particularly where the inventor makes a “black box” disclosure of the invention in which the public may see the invention at work, but not have access to the invention to understand how it works.  This scenario was considered by the Canadian Federal Courts in Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2012 FCA 333 (“Wenzel”) and more recently in Varco Canada Limited et al v Pason Systems Corp et al, 2013 FC 750 (“Varco”).

Wenzel is an appeal from the decision of Justice Snider of the Federal Court in 2011 FC 1323 allowing National-Oilwell’s counterclaim invalidating Canadian patent No. 2,026,630 (the “‘630 Patent”) belonging to Wenzel Downhole Tools.  The ‘630 Patent relates to a bearing assembly for a drilling motor used in the oil and gas industry.  Justice Snider found the patent invalid on the basis of prior public disclosure, amongst other things.

The allegation of prior public disclosure in Wenzel related to the use of a bearing assembly (the “3103 assembly”) designed by a third party and rented to and used by Ensco Technology Company (“Ensco”) without any obligation of confidentiality prior to the filing of the application for the ‘630 Patent.   Justice Snider concluded that the 3103 assembly contained the subject matter of the claims of the ‘630 Patent and went on to consider whether the rental constituted a disclosure that made the subject matter of the 3103 assembly available to the public.  In this case, the 3103 assembly was encased in a steel tube and a visual inspection of the units rented to Ensco would not have disclosed their inner workings.  However, the inner workings of the units could be discerned if the drilling tool was dismantled.  It would not have been usual or easy for the user to open the casing and there was no evidence that the user made any effort to do so.

Justice Snider equated this situation to the availability of a book in a library that discloses a patent even though no one has read the book.  She stated that the 3103 assembly could have been dismantled and Ensco was free to use the resulting information.  Accordingly, the ‘630 Patent was invalid for a lack of novelty since the 3103 assembly was available for more than a visual inspection by Ensco, thus making the subject matter of the ‘630 Patent available to the public before the patent’s filing date.

The decision was appealed to the Federal Court of Appeal where the court was split on the issue of whether the invention was made available to the public.  Justice Gauthier for the majority agreed with Justice Snider’s approach to determining whether a prior use of an invention made it available to the public.  At paragraph 69 she stated:

The book in the public library could be in Japanese, even though the library is located in a remote village where no one speaks Japanese. This would still be a disclosure that would make whatever information it contained available, even though accessing the information that is available requires the use of a dictionary or even an interpreter that would not be available in that village.

Thus, according to this legal test, access to the information does not need to be easy if there has been an opportunity to access the information using known methods and instruments.

Justice Mainville disagreed with the majority’s finding of a lack of novelty on the grounds of prior disclosure.  He noted that special tools would be required to take apart a drilling motor at a rig site and the evidence was that this was never done in practice.  He concluded that the subject matter of the 3103 assembly had not actually been made available to the public.

In qualifying the opportunity necessary to access the relevant information in order to satisfy making an invention “available to the public”, the Federal Court of Appeal was split.  The majority affirmed the trial court’s decision that the public must simply have a theoretical opportunity to access the invention in order to constitute disclosure.  Justice Mainville required something more and considered access in this case to be difficult enough that there was no disclosure.

The Federal Court of Appeal also considered disclosure to the public in Bauer Hockey Corp. v. Easton Sports Canada Inc., 2010 FC 361, aff’d 2011 FCA 83 (“Bauer”).  At trial, Justice Gauthier held that the act of wearing hockey skates in a hockey arena open to the public during a practice did not amount to making the invention “available to the public”.  The players were subject to confidentiality obligations, but the people watching the event were not.  This decision could be considered to be at odds with Wenzel in that a theoretical opportunity to access the invention was not sufficient to make the subject matter of the invention available to the public.  However, the decisions may be reconcilable.

In the Bauer case, the skate was available to the public in a manner that prevented any member of the public to do anything more than make a visual inspection from afar.  In contrast, on the facts of Wenzel, the 3103 assembly was available to Ensco for dismantle and inspection without any obligation of confidentiality.  Thus, it appears that the possibility that someone could dismantle and inspect the item disclosed will be sufficient to make subject matter available if that subject matter could be ascertained by doing so.

Earlier this summer, the Federal Court followed this approach and upheld the validity of a Canadian patent for an autodriller system for directional drilling used in the petroleum industry.  In Varco, the inventor tested a new design in downhole rig equipment on an operating well owned by a third party prior to filing a patent application for the invention.

Similar to Wenzel and Bauer, visual inspection of the exterior of the autodriller system did not itself reveal the workings of the invention or enable a skilled person to describe how the invention worked.  However, in contrast to the disclosure in Wenzel, the inventor in Varco took steps to ensure that the device could not be inspected by locking the device.  Despite the absence of any confidentiality agreement, the Court found that the inventor had intended to keep the invention confidential.  Further, there was no evidence that the inventor told or showed any third party how the device worked and the Court was therefore able to distinguish Wenzel on the facts and find that there was no opportunity for the public to inspect the inner workings of the device.

In summary, based on these decisions a Canadian patent may be declared invalid for a lack of novelty by prior disclosure if a member of the public has an opportunity to access information that would enable a person skilled in the art to be in possession of the invention.  Thus, it is of paramount importance to protect an invention from public disclosure by ensuring the proper safeguards are in place, including non-disclosure and other confidentiality agreements.

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