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PATENTS - Defences to infringement - Lack of essential element - Procedure - Evidence - Costs - Assessment or fixing of costs

Tuesday, July 04, 2017 @ 8:37 AM  

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Appeal by OrthoArm Incorporated (Orthoarm) from the dismissal of its action against GAC International, LLC (GAC). OrthoArm’s principal invented a type of “self-ligating” orthodontic bracket. OrthoArm patented the bracket, and in 1997, licensed the worldwide rights to manufacture, use, market and sell products covered by the patent to GAC. Under the parties’ agreement, OrthoArm was entitled to receive a licence fee based on net sales of GAC’s products until the patent expired in May 2014. In 2007, GAC began to market and sell orthodontic brackets it had developed with a third-party manufacturer, without accounting to OrthoArm for profits under the license agreement. OrthoArm alleged that these brackets (Accused Products) were an extension of its original invention and covered by its patent. GAC claimed the Accused Products were developed by the third party in accordance with its own US patent. In OrthoArm’s breach of contract claim, the trial judge found that one element of OrthoArm’s patent, a “slidable locking shutter”, was not present in the Accused Products. She found that there was a small sliding action when the locking shutter was moved in the Accused Products within the occlusal-gingival opening but, the locking shutter mostly moved from the open to closed position and back through a rotating motion. Accordingly, OrthoArm was unsuccessful in its action and the judge awarded GAC costs of $300,000 and $90,000 for disbursements. The main issue on appeal was whether a bracket that contained a locking shutter with a slight amount of sliding followed by rotation on a pivot point infringed the appellant's patent.

HELD: Appeal dismissed. The trial judge did not ignore the fact that "slidable" and "movable" were two different words with different meanings. She did not interpret the word “movable” in OrthoArm’s patent too narrowly in finding that a sliding, not a rotating or otherwise moving, shutter was contemplated. She properly interpreted the terms in the context of the specification. She also noted that the claims referred to the locking shutter being slidably mounted on the bracket between open and closed positions. The trial judge properly interpreted the claims language as capturing the scope of the actual invention. Figures that depicted the OrthoArm shutter rotating were not referenced in the description of the patent and were of no assistance in interpreting the patent. The judge was entitled to reference computer-aided design (CAD) drawings of the Accused Products, which were very small, and did not place undue reliance on the CAD drawings in construing the claim language. The judge gave due consideration to the proportionality of GAC’s costs, in comparison to OrthoArm’s costs, by awarding only 65 per cent of claimed partial indemnity costs. Given GAC’s overall success, the judge was not obliged to consider the fact that GAC’s other three defences to OrthoArm’s claim were rejected in determining the appropriate costs award.

Orthoarm Inc. v. GAC International LLC, [2017] O.J. No. 2657, Ontario Court of Appeal, J.L. MacFarland, K.M. van Rensburg and G. Huscroft JJ.A., May 24, 2017. Digest No. TLD-July32017002