Federal Court stays re-examination proceedings pending outcome of patent trial - International Law Office

In a rare decision relating to the interplay between an action before the Federal Court and parallel re-examination proceedings before the Canadian Intellectual Property Office (CIPO) involving the same patent, the Federal Court has granted a stay of re-examination proceedings pending the outcome of the court action. Conversely, on an earlier motion in the same action, the court had refused a request to stay the Federal Court action pending the outcome of re-examination.

These decisions are of particular importance not only due to the scarce jurisprudence dealing with re-examination proceedings, but also since they provide guidance with respect to the use by defendants to infringement actions of the strategic tactic of requesting re-examination of the patent at issue.

Prenbec Equipment Inc v Timberblade Inc(1) involved a motion by the plaintiffs, Prenbec Equipment Inc and Quadco Equipment Inc, seeking a stay of re-examination by the CIPO of Canadian Patent 2,084,013 pending the outcome of their Federal Court action against Timberblade Inc for infringement of the same patent. The patent related to a detachable sawtooth that could be mounted on a circular saw disc for a felling head or a feller buncher. The defendant had denied infringement and counterclaimed that the patent was invalid due to a publication by another party showing a prior sawtooth incorporating all essential elements of the patented sawtooth. One day before service of its statement of defence and counterclaim, the defendant filed a request for re-examination of the patent with the commissioner of patents, based on essentially the same arguments and prior art references as raised in its Federal Court pleadings.

A re-examination proceeding, as provided for in Sections 48.1 to 48.5 of the Patent Act, is a relatively inexpensive summary procedure by which any person can request that the commissioner of patents reconsider the claims of a patent in light of prior art publications submitted by the requesting party. If a re-examination board established by the commissioner concludes that a substantial new question of patentability has been raised, the patent is then re-examined in an ex parte summary proceeding between the patentee and the board.

In opposing the defendant's earlier motion, which had effectively sought a stay of the Federal Court action pending the outcome of re-examination, the plaintiffs had alleged that the prior sawtooth was either the actual tooth conceived by the patentee or a copy thereof. As a result, the plaintiffs alleged that the prior sawtooth publication was not citable prior art because it fell within the one-year grace period provided by the Patent Act for disclosures by the patent applicant or by those that derived their knowledge from the applicant. In dismissing the defendant's motion,(2) the court stated that:

"The Re-examination Board does not deal with credibility issues and cannot determine the real issue at play in this case as credibility is central to the dispute between the Plaintiffs and Timberblade. No cross-examination of witnesses or indeed the hearing of oral testimony from witnesses is contemplated in the re-examination process."

In considering the plaintiffs' subsequent motion for a stay of the re-examination proceedings pending the outcome of the Federal Court action, the court first addressed a number of preliminary issues. Notably, the court confirmed that Section 50(1)(b) of the Federal Courts Act, which authorizes the court to stay proceedings in any cause or matter, is not limited to Federal Court proceedings, but also encompasses other proceedings, including those of administrative tribunals. The court also concluded that the strict statutory deadlines for re-examination proceedings set forth in the Patent Act do not override the court's authority to grant a stay. The court further reiterated that the grant or refusal of a stay is within the discretionary power of the judge, and that the onus is on the party seeking a stay to satisfy the two-part test applied by the Federal Court, namely that (i) a continuation of the proceeding would cause it prejudice, and (ii) the stay would not work an injustice to the other party.

In granting the stay, the court recognized that while the Patent Act defines the procedure and framework for re-examination proceedings, it does not provide the board with the means for testing credibility to assess contested issues of fact. Accordingly, given that the board could not question the origin of the prior sawtooth or appreciate the credibility issues surrounding its disclosure, the court determined that the board would most likely invalidate the patent, considering that the prior sawtooth incorporated all the essential elements of the claimed sawtooth.

The court then concluded that the plaintiffs would suffer irreparable harm by the continuation of the re-examination proceedings since the prior sawtooth publication prima facie anticipated the claimed sawtooth and would render the patent invalid if it were treated as citable prior art. On the other hand, the court was of the view that the stay would not constitute an injustice for the defendant since the court could hear any and all invalidity arguments raised by the defendant and, unlike the board, could also hear witnesses and test credibility.

In its decision, the court also noted that preference should be given to the more comprehensive forum. Choosing between the re-examination proceedings and the infringement/validity action, the court concluded that the latter was the most comprehensive forum.

While this decision is useful in that it reaffirms the Federal Court's jurisdiction to stay proceedings other than its own, the court's decision was influenced by the significant issues of credibility that arose on the facts of this particular case. The extent to which this decision may be relied on to stay re-examination proceedings under different circumstances remains to be seen in future cases.

For further information on this topic please contact Marc Gagnon or Tomek Nishijima at Smart & Biggar/Fetherstonhaugh by telephone (+1 514 954 1500), fax (+1 514 954 1396) or email (mgagnon@smart-biggar.ca or tbnishijima@smart-biggar.ca).

Endnotes

(1) 2010 FC 23.

(2) 2009 FC 584.