Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J
2,919,561 / Bottomhole assembly
As outlined in my last post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1), provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. This turns out to be a very difficult question. I’ll suggest that there is some internal tension in Zinn J’s approach; but I don’t see any flaws in his reasoning, and I don’t have anything better to suggest. The facts are outlined in my previous post. I won’t repeat them here, but some of the examples in the following discussion assume familiarity with the invention.
As discussed in the last post, it is clear that the prior user right is not confined to the same specific article that had been used prior to the claim date. On the other hand, the fact that the person did an ‘infringing’ act before the claim date does not give them carte blanche to carry out any infringing act after the claim date. Some halfway house is needed: the subsequent act must be the same as the prior act in a way that goes beyond the mere fact that both are infringing. (If the prior act is not infringing, 56(1) does not apply; and if the subsequent act is not infringing, there is no need to appeal to 56(1): [114].)
The question then, is as to the nature and degree of changes permitted before the subsequent act is no longer considered to be “the same” as the prior act and the protection of s 56 is lost.
Zinn J began with the following observation:
[101] If the prior user manufactured the infringing device prior to the patent and painted it green, would it be prevented from manufacturing the identical device but painting it red? I can see no practical, logical, or legal reason why the protection of section 56 of the Patent Act would be so restricted.
This is a simple point, but an absolutely crucial one, because it means that the test is not ‘exactly identical in every respect.’ This must be right. As Zinn J noted, the new provision was clearly intended to provide broader protection than the old provision, which protected only “the specific article” [71]–[72]. So it is perfectly clear that a physically new device can be “the same” as the old device within the meaning of s 56. But a physically new device is always somewhat different from a prior device, even if it is made from the same blueprint on the same production line; no matter how tight the tolerances, one car might be a lemon, and the next car off the production line could be fine. As Jacob J noted in Lubrizol [1997] 114 RPC 195 (Pat) 216, normally “there are inherent minor variations in starting materials or the like. If the protected act has to be exactly the same (whatever that may mean) as the prior act then the protection given by the section would be illusory.” Minor manufacturing tolerances no doubt include slight changes in paint colour from one batch to another, and it is hard to see any reason to draw the line at a switch to something we would call an entirely different colour.
So, a change in paint colour must be permitted; but what is the principle? After giving the paint example, Zinn J gave several reasons: “I see no reason why the prior user should be restricted from making changes to its device so long as those changes do not relate to what is disclosed by the patent. After all, the protection afforded the inventor is the invention as claimed in the patent” [101]; and the prior user can make changes to aspects of its device “part of the prior art or outside the claims of the patent” [102]; and the patentee cannot prevent changes to established steps, if it has “introduced no innovation to them” [103].
There are four slightly different tests here: whether the changes are (1) part of the prior art; (2) outside the disclosure; (3) outside the claims; (4) outside the inventive concept. The paint example satisfies all four.
Zinn J then gives a second example, relating to a method of locating the tool (see here for a summary of the facts):
[102] For example, in claim 1 of the ‘561 Patent, a reference is made to locating the sealing element below a zone of interest in the wellbore. This element must be included in the claim in order to provide a complete description of a method of completing a wellbore. However the claims give no mention as to how this is step in the method is performed and it could be done in any number of ways that are previously known.
This example shows that the test is not whether the change is (2) outside the disclosure (like paint) or even (3) outside the claim. But this example involves a change that is both (1) part of the prior art and (4) outside the inventive concept. The next example narrows it down further:
[103] If, for example, a new, more efficient fracking fluid was developed, should NCS be prevented from using it because it would represent a change in the step of “treating the zone of interest” as set out in claim 1? I think it should not. To do so would grant Kobold protection for more than what has been invented.
The new and improved fracking fluid in this example is not (1) part of the prior art, but it is (4) outside the inventive concept.
Thus Zinn J’s position is that changes are permitted unless they “relate to the inventive concept of the patent” [115]; similarly the patentee cannot prevent changes to steps if it has “introduced no innovation to them” [103]. These statements are articulated in terms of the permitted changes; conversely, s 56(1) provides a defence if the prior act is “the same” as the subsequent act in the sense that “the relevant (i.e. relating to the inventive concept) part of the invention is identical” [111].
There is no inconsistency between the first three tests mentioned by Zinn J and his ultimate emphasis on the inventive concept. The other three tests are helpful specific sub-tests for when a change is not related to the inventive concept. Simply asking whether the change relates to the inventive concept requires us to identify the inventive concept, which can be dificult and controversial. These subtests are ways of determining whether a change relates to the inventive concept, which, when applicable, are easier to apply than asking the main question directly. So, if a variant was part of the prior art, then clearly it cannot relate to the patent’s inventive concept, or the patent would be invalid. If the aspect that was changed is not mentioned in the disclosure, then clearly it cannot be part of the contribution to the art disclosed in the specification. The point remains even when an element is actually included in the claims; as Zinn J pointed out, many claim elements are purely conventional, and are necessary only to define an operable practical embodiment of the inventive concept, as is illustrated by Zinn J’s example of the element “locating the sealing element.” One such method is mentioned in the disclosure, (“such as using a casing collar locator CCL 84") but the claims are clearly not confined to that particular method. A broad claim element, such as “locating the sealing element,” or a bulking agent in a pharmaceutical patent, encompasses a variety of specific methods many of which are known in the prior art; an element that is part of the prior art cannot be part of the inventive concept, and that does not change merely because the broad element is mentioned in the claim. Recall from the summary of the facts that the inventive concept “is the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure” [153]. None of the above examples related to pressure equalization through an annular ring.
Zinn J’s example of “a new, more efficient fracking fluid” [103] raises another point. The fluid was not just new, but also more efficient. These are separate points. Let me go back to the more basic paint example. Suppose the the new red paint was better, because it is easier to see in the crowded and dirty rig environment. Both were part of the prior art, and the prior user switched from green to red because of general trend of an increased emphasis on safety in the industry. The change to red paint is permitted both because (1) it is part of the prior art and because (4) the switch to the safer colour had nothing to do with the inventive concept. As before, the point that the red paint was part of the prior art is a specific reflection of the broader point that it was not part of the inventive concept. The improved fracking fluid example is the same.
The same is true even if the new paint was not part of the prior art. Perhaps it was not just red, but an entirely new high-visibility red with special reflective properties making it easy to see in poor conditions that had been developed in response to the increased industry emphasis on safety. The logic remains the same: the safety trend and the development of the new paint had nothing to do with the patent. It is mere happenstance that the paint was developed after the claim date rather than before. And recall, the ultimate question is whether the subsequent article is “the same” as the prior article. The subsequent device is exactly the same whether the red paint was developed before or after the claim date, so it doesn’t make sense to say that it is “the same” for the purposes of s 56(1) in the first case but not the second. The claim date is the cut-off for acts that establish prior user rights; the claim date is not important for deciding sameness.
Perhaps I’ve belabored the point, which all follows from Zinn J’s fracking fluid example, but it is important to recognize the subsequent device can be “the same” as a prior device, even though it is a substantially improved device. I hope the paint example shows why this is intuitively correct.
The twist in the fracking fluid example is that the use of fracking fluid is actually part of the invention as claimed. Otherwise the logic is the same. Suppose the fracking fluid in the subsequent method is more efficient, but not new; perhaps the user had previously been using an inferior fluid, because the better fluid, while widely known, was more expensive, or not widely available. The method would still be “the same” if the user switched to the more efficient fluid, on both the prior art test and the inventive concept test. And as with the paint, it doesn’t matter whether the more efficient fluid was developed before or after the claim date; either way, the patentee contributed nothing to the more efficient fluid.
So, in Zinn J’s view, the subsequent method can be very different from the prior method while still being protected by s 56. The BHA can be painted with a new improved paint, a better fracking fluid can be used, and a different and better location method can also be used. These changes can all add up; so it is clear that a subsequent method can be “the same” as the prior method, even though it is a substantially improved method.
What are the limits? What does it mean for a change to relate to the inventive concept? Recall that Zinn J described the inventive concept as “the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure” [153]. What if the mandrel in the subsequent device uses a different steel that is more corrosion resistant than the mandrel in the prior device. If the steel was known in the prior art (and was not used because it was more expensive, or not widely available), it would seem that the subsequent device would still be “the same” for the same reasons as with the fracking fluid or the method of location; it was known in the prior art, and the patentee made no contribution to the corrosion resistance. On the other hand, the mandrel is part of the inventive concept—at least in the sense that the mandrel is expressly mentioned by Zinn J in his description of the inventive concept. But nonetheless, the inventive concept of the 561 patent is not related to the corrosion resistance of the steel in the mandrel, any more than it is related to the quality of the fracking fluid.
What about the elastomer, used as the sealing element. Suppose that after the claim date, the prior user switched to a different elastomer, one that was known and regularly used in the prior art, with a different composition but exactly the same properties as the old elastomer. Perhaps the new elastomer was cheaper, but functionally identical; or perhaps the new elastomer is more expensive, but the prior elastomer was no longer available. It would seem that the subsequent device should be considered the same: it functions in exactly the same way, the new elastomer was known in the prior art, the inventors didn’t contribute anything to the properties of the new elastomer. It is analogous to switching to a different location method. It is true that the elastomer is closely connected to the inventive concept, as least in the sense of its implementation. Nonetheless, this change seems, if anything, less significant than the new corrosion resistant steel for the mandrel; the corrosion resistant mandrel is functionally a better mandrel, while the new elastomer is functionally identical.
Now suppose that after the claim date, the prior user switched to a different elastomer, one that was known and regularly used in the prior art, with a different composition and different properties—it is more malleable but also more elastic, so it forms a better seal than the prior device but it also disengages more readily, leading to faster pressure equalization. This is arguably an improvement to the inventive concept, because the annular passageway forms and releases pressure more quickly, and the releasing pressure by the formation of the annular passageway is the heart of the inventive concept. But on the other hand, the definition of the inventive concept provided by Zinn J at [153] applies equally to the method using the new elastomer; not a single word needs to be changed. Moreover, it is clear that the inventors of the 561 contributed nothing to its properties. In that respect it seems indistinguishable from the elastomer with the same properties, or the improved steel, or the improved fracking fluid or paint. Further, the better elastomer was known in the prior art, so we can go back to Zinn J’s first test: “the prior user has the ability to make changes to aspects of its device or process that are part of the prior art” [102]. As discussed above, this is a subtest that helps us determine whether a change relates to the inventive concept: if the change substitutes one prior art element for a different prior art element, the change can’t be part of the inventive concept. This test confirms that in this hypothetical, the change did not relate to the inventive concept.
Now, it is certainly true that the better elastomer improves the claimed method; but the improvements to the fracking fluid and method of location also improve the claimed method. It might be suggested that improving the claimed method is different from improving the inventive concept. But what if the new, more efficient fracking fluid, also happens to be less viscous, so that it flows more rapidly through the annular passageway, and equalizes more rapidly—perhaps the improvement in equalization time is the same as with the new elastomer. To the extent that the improved elastomer improves the inventive concept, the new fracking fluid does also. (Though it may well be that Zinn J implicitly assumed that the more efficient fracking fluid did not improve the equalization time.)
With all that in mind, we can turn to Zinn J’s application of his approach to the facts. Many of the issues were left for trial, but Zinn J did point to two changes as relating to the inventive concept:
[153] In my opinion, it is clear that the inventive concept of the ‘561 Patent is the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure.
[154] [T]he additional set screw on the Innovus BHA and the addition of a split ring on the SFC 2 BHA both relate to the connection between the mandrel and the sealing element, which is part of the inventive concept of the ‘561 Patent.
[155] The addition of the split ring on the SFC 2 would constitute a different act than those prior to the claim date
The facts are not as clear to me as they no doubt are to the parties, but I don’t see how these changes are any different from changes in the mandrel or the elastomer or the location method. Yes, “the connecting of the sealing element to the mandrel” is part of Zinn J’s statement of the inventive concept, but so far as I understand, the key advance made by the inventors was the concept of pulling on the mandrel to open an annular passageway: “[t]he novel aspects involve pulling on the sealing element to create an annular passageway [15]; and [t]he inventive concept of the ‘561 Patent is a new way of equalizing pressure in the BHA by pulling on the sealing element. In so doing, the sealing element can be disengaged from the wall of the well, creating an annular (i.e. ring shaped) passageway on the outside of the sealing element for fluid to flow through” [13]. This requires the mandrel and sealing element to be connected, but the inventive concept, as I understand it, did not lie in the method of connection. Consequently, I find this holding on the facts difficult to reconcile with Zinn J’s previous more general discussion.
The issue goes back to Zinn J’s basic test: 56(1) provides a defence if the prior act is “the same” as the subsequent act in the sense that “the relevant (i.e. relating to the inventive concept) part of the invention is identical” [111]. But if the prior act infringes, and the subsequent act infringes the same claim, then they will inevitably share the same inventive concept.
My sense is that in applying his test, Zinn J was focusing on whether the changes related to the implementation of the inventive concept. This is different from changes to the inventive concept itself; the change in steel in the mandrel is a change in the implementation of the inventive concept, even though it does not involve any change to the inventive concept itself, at least as I understand it. So if we focus on changes to the implementation of the inventive concept, then the new elastomer would not be the same—even if it had exactly the same properties as the old elastomer—and a device with the new steel for the mandrel would not be the same. But then I don’t see how to draw the line with the new fracking fluid or location method. The claimed invention, after all, is the practical embodiment of the inventive concept: Shell Oil [1982] 2 SCR 536. So any change to the original implementation of the claim is a change in the implementation of the inventive concept. The improved location method or new fracking fluid are also changes to the implementation of the inventive concept. Once we start unwinding the examples, I don’t see a principled stopping point.
The problem is that once we move beyond protecting the specific article, as we clearly must, then we have to allow changes, and that means we have to allow improvements, it is difficult to conceptually distinguish improvements to the inventive concept from other improvements. The closest think to a technical definition of improvement in patent law is the notion of blocking patents, reflected in s 32, which implies that an invention is an improvement if a person who wishes to practice it must get permission from the both the patentee of the improvement and the original patentee. But that sense of improvement does not allow us to distinguish between the red paint improvement and an improvement to the inventive concept. It seems intuitive that a spoked wheel is an improvement on the inventive concept of the wheel, and wheel painted with a new red paint is not an improvement on the inventive concept of the wheel; but both the spoked wheel and the red wheel would infringe a patent on the wheel. So the simple concept of blocking patents doesn’t help us out.
So, to change the example, if the basic wheel was patented, disclosing a solid wheel, and the prior user had also been using a solid wheel prior to the claim date, I suspect that Zinn J would consider a spoked wheel to be an improvement to the inventive concept and so not protected by s 56(1), while a solid wheel made out of a bronze instead of wood would not be an improvement to the inventive concept, and so would be protected. It may seem intuitive that adding spokes relates more directly to the inventive concept of the wheel than does the bronze, I don’t think that intuition has any principled basis. The spoked wheel and the bronze wheel both embody the same inventive concept as the solid wooden wheel—a circular body mounted on an axle—and they are both improved wheels.
This is not to say that I disagree with Zinn J. I don’t see any flaws in his reasoning, and I don’t have a better test to suggest. I entirely agree that the provision doesn’t require strict identity in every respect—expanding the protection under the old provision was the main point of the amendment. But once we go beyond that, I don’t see any easy place to draw the line. Zinn J’s emphasis on the inventive concept makes sense in the abstract, but I have difficulty seeing how it works in practice.
A more radical solution would be to adopt the “carte blanche” theory. This is actually consistent with the text of the provision, if we consider the “act” to refer to the type of infringement, ie make, sell or use. On this interpretation, the “same act” requirement means that if the prior user only used before, but did not sell, it can continue to use any device that infringes the same claims, but cannot sell those new devices. I acknowledge that it seems intuitive that the act must be the same in some kind of narrower sense, as requiring the acts themselves to be somehow the same. But on that view—the view adopted by Zinn J—the word “same” is interpreted as importing two different restrictions: the act must be the same type of infringement, and the act itself must be the same. It does seem a bit strained to have the single word import two such distinct meanings; but on the other hand, it is strain that the text can readily bear.
In summary, there are three broad possibilities for the meaning of “the same”: (1) exactly identical in every respect—which would effectively protect only the specific article; (2) the same type of infringement; (3) a halfway house. I think (1) must be ruled out in light of the text and legislative history. Option (2) is intuitively unappealing, but it is internally coherent and consistent with the text. Option (3) is initially the most appealing, but it is difficult to find a conceptually coherent approach. I doubt the drafters had any particular test in mind and it may well be that there simply isn’t any principled basis for drawing the line, which implies that the outcome of any individual case will be ad hoc. Of course, it may be that I’m just missing something.
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