Date: 20031021
Docket: T-1348-01
Citation: 2003 FC 1226
Vancouver, British Columbia, Tuesday, this 21st day of October, 2003
Present: THE HONOURABLE MADAM JUSTICE HENEGHAN
BETWEEN:
DIMPLEX NORTH AMERICA LTD.
Plaintiff
- and -
CFM MAJESTIC INC.
Defendant
REASONS FOR ORDER AND ORDER
[1] Dimplex North America Ltd. (the "Plaintiff") appeals from the order, dated June 13 2003, of the Prothonotary, upholding the refusal of CFM Majestic Inc. (the "Defendant") to provide an answer to question 2195 that was asked during the discovery examination of the Defendant.
[2] Schedule "E" to the order of the Prothonotary provides the following information about question 2195 and the reason for upholding the Defendant's refusal to answer it:
| Question No.
|
Question Not Ordered to be Answered
|
Reasons of the Court
|
| 2195
|
With respect to the electric fireplace products that CFM has sold since their introduction in the 1998/1999 time frame that will be identified by the defendants, inform of unit sales for each of those products on a monthly basis since their introduction to the present.
|
The commercial success of the Defendant's allegedly infringing products is not relevant to an assessment of the validity of the Plaintiff's patent, in the context of an allegation of obviousness made by the Defendant.
|
[3] The Plaintiff argues that the Prothonotary erred in principle by upholding the Defendant's refusal because the impugned question arises from the Defendant's statement of defence, specifically the allegation of "obviousness" pleaded by the Defendant. Relying on James River Corp. of Virginia v. Hallmark Cards, Inc. (1997), 72 C.P.R. (3d) 157 at 163, followed by Merck & Co. v. Apotex Inc. (2002), 19 C.P.R. (4th) 499 (F.C.T.D.), the Plaintiff argues that according to the jurisprudence of this Court, once the issue of obviousness is raised by a defendant in its pleadings, then that is a proper area for examination during discovery.
[4] The Plaintiff also submits that by failing to order the Defendant to respond to questions about its commercial sales of its allegedly infringing product, the Prothonotary committed an error in principle attracting a de novo standard of review on appeal: see Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.).
[5] The Defendant argues that the Prothonotary was not bound to follow James River Corp., supra, a case that was decided under the former rules of practice for the Federal Court, and in any event, says that that case was wrongly decided. The Defendant further submits that its defence does not put commercial success in issue and says that this issue in relation to obviousness arises in only in borderline cases. Finally, the Defendant says that in this case, a bifurcation order has been granted, separating the issue of damages from the primary issue of liability. It suggests that in the circumstances, the question of its commercial sales will not become an issue until the question of liability has been determined.
[6] This is an action for trade-mark infringement in which the Plaintiff claims that the Defendant is infringing Canadian Patent No. 2,175,442 which relates generally to electric fireplace technology. The Defendant made the following plea in its statement of defence at paragraph 11(b):
The claims asserted by the Plaintiff in respect of the '442 Hess Patent are and always have been invalid and void in that:
...
b)The alleged invention was obvious as at the priority date of the patent at issue, having regard to the prior art listed in Schedule "A";
[7] The statutory basis for a plea of obviousness is found in the Patent Act, R.S.C. 1985, c. P-4, as amended. Commercial success has been recognized in Canada as a measure of obviousness; see General Engineering Co. of Ontario v. Dominion Cotton Mills Co. (1899), 6 Ex. C.R. 304, The King v. Uhlemann Optical Co. (1951), 15 C.P.R. 99 (S.C.C.) and Almecon Industries Ltd. v. Nutron Manufacturing Ltd., [1997] F.C.J. No. 239 (F.C.A.). More recently, in Merck & Co. v. Apotex, supra, the Court said as follows:
Question 38 under this heading seeks to discover Apotex's sales figures for its lisinopril. Since in para. 19(m) of its defence Apotex argued that invention of the patent in question was obvious, it follows that in so doing Apotex raised commercial success. In James River Corp. of Virginia v. Hallmark Cards, Inc. At 163-64, the following comments were made:
That commercial success is a proper area for discovery is clear; ...in Unilever PLC v. Procter & Gamble, Inc., it was held that even though commercial success had not been expressly pleaded, questions on that subject related to a matter in issue and should be answered. The matter in issue is "obviousness". Obviousness had been pleaded by the defendants in their defence in the Unilever case and has been pleaded by the defendants in this action. The principle [sic] function of pleadings, as counsel notes, is to define with clarity the issues between the litigants and to give fair notice of the case tht has to be met, so that the opposing party may direct evidence to those issues. Once a defendant pleads obviousness it will know that questions relating to commercial success are relevant. I do not think it is necessary for the plaintiff to expressly allege such in its reply pleading. [citations omitted]
[8] The Plaintiff's argument, that the Defendant has put its commercial sales in issue by pleading obviousness, is persuasive. The strongest argument raised by the Defendant in response is that the parties have agreed to a bifurcation order, separating the issues of liability and damages. In other words, the Defendant suggests that its commercial sales are relevant in this action only in relation to the issue of damages. However, the question of damages only arises if the Defendant fails in its defences of non-infringement and invalidity.
[9] The Defendant has put the issue of validity in play and that includes a challenge on the basis of obviousness. According to the jurisprudence, commercial sales of both parties are relevant to the issue of obviousness and I conclude that the Plaintiff is entitled to pursue a line of questions about the Defendant's commercial sales.
[10] The appeal is allowed and the order of the Prothonotary, with respect to question 2195, is reversed. The Defendant shall answer question 2195 and the Plaintiff is entitled to further discovery in relation to the issue of the Defendant's commercial sales, subject to further orders of this Court. The Plaintiff shall have its costs on this motion.
ORDER
The appeal is allowed and the order of the Prothonotary, with respect to question 2195, is reversed. The Defendant shall answer question 2195 and the Plaintiff is entitled to further discovery relative to the issue of the Defendant's commercial sales, subject to further orders of this Court. The Plaintiff shall have its costs on this motion.
(Sgd.) "Elizabeth Heneghan"
J.F.C.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-1348-01
STYLE OF CAUSE:DIMPLEX NORTH AMERICA LTD.
Plaintiff
- and -
CFM MAJESTIC INC.
Defendant
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: MONDAY, AUGUST 11, 2003
REASONS FOR ORDER AND
ORDER BY:HENEGHAN J.
DATED:OCTOBER 21, 2003
APPEARANCES BY:Mr. Peter Choe
For the Plaintiff
Mr. Trent Horne
For the Defendant
SOLICITORS OF RECORD:Gowling Lafleur Henderson LLP
Toronto, Ontario
For the Plaintiff
Sim, Hughes, Ashton & MacKay LLP
Toronto, Ontario
For the Defendant