Imperial Oil Ltd v. Lubrizol Corp.
A-737-90
Mahoney J.A.
4/12/92
38 pp.
Appeal from trial judgment finding patent valid and appellants guilty of infringement-Cross appeal from refusal of exemplary damages-Lubrizol Corp. owning U.S. patent (LeSuer patent) for ashless dispersant used to accumulate impurities in motor oil in suspension since 1965-Patent and any other patents owned by Lubrizol containing material subject of LeSuer patent i.e. patent in issue, licensed to Exxon and Imperial-Meinhardt patent at issue-Imperial submitting new trial must be directed as Trial Judge missed so many issues in dealing with validity of patent and infringement-Reference to cases on standard of appellate review-Prior to Lubrizol's application for interlocutory injunction in these proceedings, Exxon had confessed to judgment in U.S. District Court, agreeing to pay Lubrizol $86 million-Judgments declaring patent valid-Trial Judge stating defendant faced near impossible task in endeavouring to argue patent invalid-Confession of judgment in foreign jurisdiction re: counterpart patent always significant, but never conclusive of particular issue-Although foreign patents may be practically identical, foreign law unlikely to be so and must be proved-That U.S. law accorded priority to first to file while Canadian law accorded priority to first to invent critical difference-Conclusions of this Court in interlocutory injunction proceeding, where issue whether Lubrizol making out sufficient arguable case for validity to support grant of injunction, not whether patent valid, not conclusive-Trial Judge treating neither U.S. nor interlocutory judgments as determinative-Although Trial Judge making no express finding as to date of invention, concluding validity of patent not overturned by allegations of anticipation-Imperial arguing invention date actual date of Canadian patent application based on Patent Act, s. 61(1), or priority date-Contest between priority date and Lubrizol's claimed date in 1969-Trial Judge apparently accepting Lubrizol's claimed invention date-That parameters of claim not committed to writing until U.S. patent application finalized not leading to conclusion as to date of invention contrary to Trial Judge's finding-Claims of patent not legally required to be formulated before invention found to be made-If relying on invention date earlier than priority date, inventor must prove date on balance of probabilities, by cogent evidence-Evidence composition made according to invention may be accepted as proof of date of invention-By late 1969 several compositions within ultimately defined parameters being made and commercialization proposed-Supporting finding invention date not later than 1970-Since Exxon's infringing product not first manufactured until mid-1971, Trial Judge not erring in failing to deal expressly with it as anticipating invention-Since invention date not later than 1970, Trial Judge not erring in failing to consider patentability of class of substances in view of prior use of substance falling within class-No error in finding patent valid-Trial Judge finding specification and claims expressed precisely constituting finding speak adequately for themselves-Not failing to construe claims-No palpable and overriding error shown in Trial Judge's acceptance and rejection of evidence to calculate succination ratio-Trial Judge not erring in finding infringement-Licence agreement to expire when LeSuer patent expired or on 60 days notice by Lubrizol if default-No error in Trial Judge's finding licence agreement not granting to defendant right to use lubricating composition without infringing plaintiffs' patent-In absence of finding by Trial Judge, date of notice of termination by Lubrizol nominated as last date upon which product made by Imperial not infringing by reason of licence-Trial Judge finding plaintiffs reacted immediately upon learning of likely infringement and brought action within time limits imposed on them-Award of option of election of profits discretionary with which appellate court will not interfere unless error of principle, misapprehension of facts, or where order not just and reasonable-No error in awarding Lubrizol option to elect accounting of profits-As some products produced and sold out of Alberta, Imperial arguing two-year limitation period in Alberta Limitation Act, s. 51(f) applied-Arguing as right to recover damages for patent infringement given by Patent Act, s. 51, cause of action arising from "breach of statutory duty"-S. 51(f) not covering pure economic loss, but applying to physical injury-Since action for patent infringement action for something happening to patentee, not patent, not applying to subject-matter of action-Pertinent limitation period established by Alberta statute six years-As no infringement until licence terminated and action commenced within six years of that date, Trial Judge not erring in concluding nothing turning on limitation period-No reference in reasons to prejudgment interest-Courts of Justice Act, s. 138(1)(b) giving person entitled to order for payment of money right to prejudgment interest from date gave notice in writing of claim-S. 140 making award of pre-judgment interest rate discretionary-Imperial not having written notice of Lubrizol's claim until served with statement of claim-Onus on party seeking interest for period other than that provided in s. 138(1)(b) to justify deviation from that provided-Trial Judge's discretion must be exercised in reasoned fashion-Imperial's infringement deliberate-Award of prejudgment interest from date damage suffered or profits made appearing just and reasonable-Judgment varied accordingly-Trial Judge expressing concern about defendant's conduct, but holding insufficient evidence to conclude situation of callous disregard for plaintiff's rights and for patent system to warrant exemplary damages-Misapprehended issue-Callous disregard for interlocutory injunction giving rise to exemplary damages-Improperly exercised discretion in refusing exemplary damages-Lubrizol entitled to have claim for exemplary damages dealt with-Absent relevant findings of fact by Trial Judge, Court of Appeal unable to resolve issue of exemplary damages and matter referred back to Trial Judge-Patent Act, R.S.C., 1985, c. P-4, ss. 28(1), 34(2), 43(1), 61(1)-Limitation of Actions Act, R.S.A. 1980, c. L-15, ss. 4(1), 51-Limitations Act, R.S.O. 1980, c. 240, s. 45(1)(g),(h)-Courts of Justice Act, 1984, S.O. 1984, c. 11, ss. 138(1)(b), 140(c)-Federal Court Act, R.S.C., 1985, c. F-7, s. 52(b)(iii)-Federal Court Rule, C.R.C., c. 663, R. 337(2)(b).