Putting the Brakes on Summary Disposition?

Gemak Trust v Jempak Corporation 2022 FCA 141 Mactavish JA: Gleason, Roussel JJA revg Gemak v Jempak 2020 FC 644 Lafrenière J

            2,276,428 / 2,337,069

The past couple of years have seen a significant shift in practice related to summary judgment and summary trial. The old practice, as I understand it, is that summary judgment was almost never granted, on the view that patent trials normally turn on the expert evidence and the credibility of expert witnesses can only properly be assessed in a viva voce trial. As Manson J put it in Canmar v TA Foods 2019 FC 1233 [45]–[46], for a decade after the FCA restricted the availability of summary judgment in MacNeil Estate 2004 FCA 50, “summary judgment as a just, efficient and expeditious means to resolve disputes on a proportionate basis was lost” [45], until Hryniak v Mauldin 2014 SCC 7 resulted in “a culture shift” that “opened the door for a more reasoned approach to the use of summary judgment motions” [46]. I believe Canmar, affd 2021 FCA 7, was the first in the new wave, but since then we have seen an upsurge in decisions granting summary disposition. The FCA decision in Gemak v Jempak suggests that the brakes might need to be applied.

In the decision under appeal Lafrenière J granted summary judgment dismissing Gemak’s action for patent infringement against Jempak. Lafrenière J acknowledged that the court has been reluctant to grant summary judgment in patent cases, because they often turn on the credibility of expert witnesses [77], [FC 4], but he nonetheless held that summary judgment was appropriate in this case because “there is no substantial conflict of opinion evidence. Jempak’s expert is the only witness who provides an informed and purposive claim construction of the terms at issue from the perspective of a skilled person” [FC 4], [78]. Lafrenière J entirely dismissed the evidence of Gemak’s expert, Dr Frankenbach [FC 110], [81]–[82], on the basis that she gave “evasive and defiant responses”, “conducted herself like an advocate instead of a neutral objective expert” and generally “failed to provide fair, objective and non-partisan opinions” [FC 104], [FC 110], [80]–[81]. However, Mactavish JA pointed out that much of the difficulty in Dr Frankenbach’s testimony was due to the combative stance taken by counsel for Gemak, and the conduct of counsel should not reflect negatively on the credibility of the witness [84]–[85].

Further, Lafrenière J remarked on “evasive and defiant responses from Dr. Frankenbach” and found the evidence of Dr. Frankenbach to be “wanting and problematic in many respects.” But Mactavish JA stated that

[86] a review of the transcript of her cross-examination suggests other possible interpretations of her evidence. Rather than being ‘evasive and defiant’, the transcript could be read to suggest that Dr. Frankenbach was a careful witness, one who wanted to be sure that she understood questions before answering them, and one who would not allow herself to be pushed around by counsel.

Importantly, she went on to state that “it is very difficult to infer a hostile attitude on the part of a witness from a bare review of a transcript, in the absence of an ability to evaluate his or her viva voce testimony” [87].

The FCA consequently held that it was “a palpable and overriding error on the part of the Federal Court to make the negative credibility findings that it did with respect to the evidence of Dr. Frankenbach based on a transcript of her testimony, and to decide the case in reliance on those findings” [90]. The FCA directed that the matter proceed to trial [112].

The interesting question arising from this decision is whether it is a signal from the FCA that the recent enthusiasm for summary disposition needs to be tempered, or whether the decision simply turned on the facts of the particular case.

In support of the view that it turned on the facts of the case, the key point in the FCA holding was that Lafrenière J’s decision explicitly turned on a negative credibility findings, and it was an error to make such a finding based on a transcript. On the other hand, the FCA took the opportunity to review the principles governing summary judgment at some length [61]–[74], even though there was no dispute between the parties as to those principles [61]. Many of Mactavish JA’s statements were phrased in general terms, and she emphasized the importance of viva voce evidence: “The jurisprudence is clear that issues of credibility ought not to be decided on motions for summary judgment” [68]; “the difficulty in assessing the credibility of expert witnesses in complex patent cases on the basis of voluminous paper records was long recognized” as a defect in the old PM(NOC) procedure [69]; and “ the lack of viva voce testimony provided for in the NOC Regulations was one of the inadequacies in the old regime” that led to it being modified to provide for a full trial [70]. These are exactly the reasons why summary judgment was traditionally avoided. Further, Mactavish JA summarized by saying that “[c]ases should therefore go to trial where there are serious issues with respect to the credibility of witnesses” [71]. This was phrased as a general propostion. Moreover, in support she cited, inter alia, MacNeil Estate 2004 FCA 50—the decision which, in Manson J’s account, put the brakes on summary trial in the first place. She also relied on Suntec v Trojan Tech 2004 FCA 140, which also predates Hryniak. Mactavish JA made the general observation that “while patent infringement issues are not by definition excluded from the ambit of the summary judgment process, they tend to raise complex issues of fact and law that are usually better left for trial” [91]. While she did go on to say that “this is not a hard and fast rule” and “there will be cases where use of the summary judgment process is appropriate,” this is a clear statement of a general principle, not a point that was confined to the facts of this case.

While the FCA discussion focused entirely on summary judgment, it seems to me that many of the observations, such as those related to the need for viva voce evidence, apply with equal force to summary trial; the FCA’s central holding was that it was “a palpable and overriding error on the part of the Federal Court to make the negative credibility findings that it did with respect to the evidence of Dr. Frankenbach based on a transcript of her testimony, and to decide the case in reliance on those findings” [90].

Time will tell, but for now my sense is that the FCA is sending a message that the Federal Court should be more cautious in granting summary disposition, at least when the credibility of witnesses is involved—but that will often be the case.

The problem is a difficult one. On the one hand, it would be desirable to reduce the cost of patent litigation, particularly in contexts where the expense of patent litigation is exploited to extract unjustifiable settlements. On the other hand, assessing patent validity and infringement on a reduced record may be unfair. Encouraging access to justice is certainly desirable, but the ‘justice’ aspect is as important as the ‘access’ part. Flipping a coin would be much cheaper than trial as a means of settling patent disputes, but no one thinks it is better for that reason. How to strike the balance is a very difficult question, as the cost and complexity of patent litigation cuts both ways.

With all that said, I will end with a very tentative proposal. Before American Cyanamid [1975] UKHL 1, a motion for an interlocutory injunction required a showing of a prima facie case on the merits. My understanding is that parties would use this to get what amounted to a non-binding opinion on the merits, on an abbreviated record, from the judge who would ultimately be hearing the case. The parties would often then settle in light of that opinion, but a party who thought they could do better on a full record was fully entitled to go to trial. (Over time the abbreviated record got longer and longer—the hearing in Cyanamid was three days at first instance and eight days in the Court of Appeal. One solution to that problem is better case management, rather than doing away with consideration of the merits, and it seems that most jurisdictions are now going that way.)

I wonder if it might be possible to adapt the motion for summary disposition to a similar effect. (I expect this would require an amendment to the Federal Courts Rules.) In particular, if the judge hearing the motion for summary disposition is of the view that one side had a prima facie weak case, but the matter was not suitable for summary disposition because, eg it was necessary to assess credibility viva voce, the judge might dismiss the motion, but at the same time issue what would amount to a non-binding direction on costs, to the effect that if the case turned out to be as weak as it appeared to be, costs would be assessed against the party with the weak case at a substantially elevated scale — say 75% rather than 25%. It would be non-binding, in the sense that the elevated costs award would not be automatic if the party against whom it was issued lost at trial. Rather, the trial judge would take it into account and award elevated costs if the party against whom it was issued had not improved their case at trial. If the party lost, but the judge was of the view that the full trial really had improved the court’s ability to assess the evidence, it would be open to the judge to ignore their prior directive and award costs on the normal scale. The party with the weak case would thereby be put on notice that there would be significant costs consequences if it proceeded to trial, unless it was confident that a trial really was necessary to present it’s position fairly. As with the old interlocutory injunction practice, this would provide an incentive to settle, based on a non-binding opinion on the merits from the judge who would ultimately hear the case. The difference is that in the interlocutory injunction case, the question was whether the plaintiff had a strong case, and in this suggestion, the question is whether one of the parties has a weak cases; but the basic concept of a preliminary assessment of the merits on reduced record is the same. Of course, a judge hearing a summary disposition motion would not be required to issue any such directive in dismissing the motion; it would remain open to the court to simply hold that the matter was not suitable for summary disposition.

I’m not a litigator, so I don’t have a good sense of whether this would work in practice. Indeed, I hesitated to post the suggestion at all. But I decided I might has well make the suggestion for consideration.