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PATENTS - Pleadings - Amendment

Friday, January 04, 2019 @ 6:28 AM  

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Appeal by Progress Energy and Enercorp Sand Solutions from a Federal Court judgment affirming a case management ruling by a Prothonotary. The appellants were defendants in patent infringement litigation commenced by SDI. The appellants allegedly breached three patents for a device to remove sand from a fluid stream exiting a gas well. The appellants each filed a statement of defence and counterclaim denying infringement and seeking a declaration of invalidity by way of counterclaim. In the judgment under appeal, Enercorp sought leave to amend its defence and counterclaim to allege invalidity on the basis of prior disclosure. The Prothonotary refused the amendment on the basis of insufficient supporting material facts showing what information was disclosed, where it was disclosed, and how the alleged disclosure would have enabled a person skilled in the art to practice the invention. The Prothonotary found the proposed amendment had no reasonable prospect of success and was also frivolous and vexatious. On appeal, the Federal Court affirmed the Prothonotary's ruling. Progress and Enercorp appealed to the Federal Court of Appeal.

HELD: Appeal allowed. The Prothonotary erred in concluding that a legally sufficient amendment was not possible. The appellants relied upon discovery evidence showing that the inventors designed a prototype of what was manufactured by a third party, that the prototype was tested and found to work as intended, and that the test was performed in the presence of a third party in 2001. The evidence provided a credible basis for an allegation of disclosure to the appellants. The existence of possible defences to the allegation was a matter going to defence rather than a basis for refusing amendment. The fact that the appellants' counsel was not immediately able to provide further particularity at the hearing was not grounds for refusing leave to reapply for the amendment. Enercorp was granted leave to reapply to amend its pleading by way of a fresh notice of motion.

Specialized Desanders Inc. v. Enercorp Sand Solutions Inc., [2018] F.C.J. No. 1179, Federal Court of Appeal, J.D.D. Pelletier, Y. de Montigny and M.J.L. Gleason JJ.A., November 23, 2018. Digest No. TLD-January22019005