Blogging Break

I'll be taking a break until early in the new year, when I'll be back with a long post on the double patenting issues raised by NCS Multistage v Kobold 2023 FC 1486 and AbbVie v JAMP Pharma 2023 FC 1520. Enjoy the holidays!

Nova v Dow: Doctrinal Implications

Nova Chemicals Corp v Dow Chemical Co 2022 SCC 43 Rowe J: Wagner CJ, Moldaver, Karakatsanis, Brown, Martin, Kasirer and Jamal JJ concurring; Côté J dissenting affg Nova Chemicals Corporation v Dow Chemical Company 2020 FCA 141 Stratas JA: Near, Woods JJA affg Dow Chemical Co v Nova Chemicals Corp 2017 FC 350, 2017 FC 637 Fothergill J

2,160,705 / film-grade polymers / ELITE SURPASS

The Intuition / The Legal Background / Causation as a Matter of Fact / The Concession / What Role for “But For” Causation in Identifying the NIO? / Summary of the Summary / Causation Concept in the Absence of an NIO / What is the NIO? / The Value of the Invention / Rivett on the Facts / Three Policy Arguments / The Source of the Chilling Effect / Miscellaneous Policy Issues

In Nova v Dow, Rowe J, writing for an 8-1 majority, addressed the proper method of calculating an accounting of profits in the patent context. I have a two-part article on the decision forthcoming in the IPJ. Part I of that article analyzes Nova v Dow at a doctrinal level. What did Rowe J mean by “cause”? What did he mean by “the non-infringing option”? What did he mean by “the value of the invention”? I summarized Part I in a series of blog posts, listed above. Part II addresses the policy implications of Nova v Dow. In the first post summarizing Part II, I argued that the policy arguments advanced by Rowe J in support of his approach are either entirely misguided, or support a “but for” approach to an accounting. Further, while Rowe J asserted that his approach would not chill legitimate non-infringing competition because his approach is not intended to be punitive, the chilling effect does not depend on the label we attach to a remedy. In the next post I discussed the source of the chilling effect and showed that Rowe J’s departure from “but for” causation does indeed risk a chilling effect. That post left aside the question of the extent of that chilling effect and the appropriate policy implication, which will be discussed in the post following this one. In this, the fourth post on Part II, I will summarize my thoughts on the likely doctrinal implications of Nova v Dow. A subsequent post will consider the policy implications and the appropriate response to the decision. (The third post on Part II dismisses two minor policy arguments made by Rowe J.)

The accounting context

The most basic question is how Nova v Dow will impact the accounting of profits remedy in the patent context. This question is remarkably difficult to answer given that it was the focus of the entire decision. The problem is that Rowe J did not provide any guidance on the key issues. While he implicitly rejected “but for” causation, he did not specify any alternative. On the central issue of what constitutes an appropriate a non-infringing option, the key holding is that the NIO is “any product that helps courts isolate the profits causally attributable to the invention” [58]. In the absence of any clear causation concept, saying that the NIO is anything that is helpful is, well, unhelpful. Moreover, he held that both causation and the nature of the NIO are matters of fact. Since Rowe J did not articulate any guiding principle it is difficult to predict how the law will evolve. Ultimately, my best guess is that the courts will develop a non-exhaustive list of factors, including market substitutability, technical similarity, and “but for” causation, which are all considered and balanced in light of the facts of the case.

Many doctrines involve balancing a list of factors. This does not raise any problems in itself—so long as the factors are all relevant to some principled underlying inquiry. For example, a variety of factors may be relevant to reconstructing the hypothetical negotiation in assessing reasonable royalty damages, with more or less weight given to any particular factor on the facts of a case. That does not necessarily result in unpredictability, because the various factors all address the same principled question, namely what are the terms of the licence the parties would have entered into had they bargained ex ante. The weight to be given to each factor turns on the degree to which, on the facts, that factor is relevant to the ultimate inquiry. The difficulty in with Nova v Dow is that there is no underlying principle. This means that even if the courts develop a list of “relevant” factors, those factors will not be relevant to any underlying principle, because there is no underlying principle. This means that there will be no way to predict whether one factor rather than another will have more weight in any given case; that will likely turn on arbitrary and idiosyncratic factors such as the mannerisms and persuasiveness of the expert witnesses.

Consequently, if I suspect that Nova v Dow will result in long-term uncertainty, where there is really no way of predicting whether an NIO is appropriate other than going to trial.

In her dissent, Côté J stated that “[t]here must be some legal requirements or standards [for a non-infringing option] that guide courts and the parties to the litigation” [193]. The “must” in that sentence is aspirational rather than descriptive. There should be some legal requirements or standards to provide guidance—but, since Nova v Dow, there aren’t. No doubt the FCA would like to provide guidance, but only time will tell whether that will be possible in the face of Rowe J’s holding that it is purely a matter of fact as to whether a particular alternative is an NIO.

There will also be uncertainty as to the applicability of Rowe J’s approach to different heads of profit. Rowe J explicitly endorsed “but for” causation in the context of springboard damages, while he used a different causation concept in the context of the non-infringing option. So “but for” causation is used sometimes, but not always, when assessing the amount to be disgorged. There is an open question as to whether “but for” causation will be used in assessing products from convoyed goods (unpatented goods normally sold with the patented product), fixed costs (which were addressed in the FCA but not the SCC), and the cost of capital. The most likely scenario is that these heads of profits will be addressed on an ad hoc basis, in which “but for” causation may or may not be applied in each case. However, we can expect clarity to emerge as courts specifically address these heads of profit. 

In particular, in the Nova v Dow FCA decision Stratas JA held that "the full costs approach [to deduction of fixed costs] is principled and sound" [154]. This means that the infringer will always be able to deduct some portion of its fixed costs. This issue was not addressed by the SCC, but if the SCC had addressed some coherent causation principle, then Stratas JA's approach to fixed costs might have been subject to revision. As it is, I expect it will stand, even though it is not based either on "but for" causation or on whatever causation concept was being used by Rowe J. While we now have doctrinal clarity regarding the deductibility of fixed costs, I doubt this will lead to predictability. While Stratas J A clearly held that some proportion of fixed costs are always deductible, he did not provide any principle to determine what that proportion might be — except that whatever the principle is, it is not "but for" causation. In my view, "but for" causation is the only principled approach and consequently, Stratas JA's full costs approach is likely to also lead to long-term unpredictability and arbitrary results. I am coming around to the view that this may even more important in practice than the question of the appropriate NIO. An infringer will always be able to point to very substantial fixed costs and if any significant proportion of those costs is regularly deducted, this may significantly reduce the quantum of the accounting.

Further, in the article, I point out that there is a real puzzle in allowing for the cost of capital. It is possible that deductibility of the cost of capital will turn on whether the infringing product is funded with retained capital or external capital, even though this clearly has no bearing on whether the profits are caused by the invention.

The patent damages context

The next question is whether Rowe J’s approach to the NIO will extend to patent damages. The straightforward argument for extending it to the damages context is that prior to Nova v. Dow, patent damages and an accounting were symmetrical. As the Court of Appeal stated in Merck 2015 FCA 171 [60] in the course of holding that the Schmeiser differential profits approach extends to damages, “the significance of [Schmeiser] is that if a court may consider a defendant’s resort to a non-infringing alternative when calculating the infringer’s profit, there is no reason in principle to ignore such conduct when calculating the patentee’s lost sales.” If the Schmeiser approach applies to damages as much as an accounting, then it would seem to follow that the Nova v Dow approach does also. On the other hand, Rowe J focused throughout his decision on the accounting remedy, and there is not the slightest hint of a suggestion that the principles would extend to damages as well. Further, Stratas JA, whose judgment in the Court of Appeal was affirmed by the Supreme Court, expressly held that his approach to an accounting did not apply in the damages context: Nova v. Dow FCA 2020 FCA 141 [45], [67], [76]. Consequently, it would be entirely fair to read the SCC decision as being confined to the accounting context. I suspect that whether the Court of Appeal decides to extend Rowe J’s approach to the NIO to the damages context depends on the view it takes of the soundness of his decision. A similar question arises with respect to s 8 damages under the PM(NOC) regime. I expect that will go the same way as damages more generally.

Beyond patent law

An accounting or disgorgement of the wrongdoer’s profits is a remedy that is not limited to patent law, but I very much to doubt that Nova v Dow will have any influence beyond patent law. It is difficult to identify any principle which might be extended to other cases, and Rowe J’s focus on the profits causally attributable to “the invention” is a straightforward basis for holding that Nova v Dow does not apply more broadly.

Redundancy between Overbreadth and Utility

NCS Multistage Inc v Kobold Corporation 2023 FC 1486 McVeigh J

2,693,676 / 2,820,652 / 2,738,907 / 2,766,026 / 2,820,704 (NCS) / 3,027,571 (Kobold)

My last post provided an overview of this decision and address several miscellaneous issues. This post addresses the overbreadth argument. McVeigh J held a number of claims of the 704 patent to be invalid for overbreadth. I have argued that overbreath in Canadian law is almost always redundant with some other ground of invalidity. In this case, McVeigh J held most of the overbroad claims to also be invalid for lack of utility, and I will argue that overbreadth was indeed redundant. The details are interesting to see how the two separate tests for overbreadth and utility ended up functionally converging, and to see why some claims were overbroad but nonetheless useful.

The key question on overbreadth is whether a feature of the invention is essential, not in the sense of claim construction, but “whether that feature is so key to the invention described in the disclosure that a Claim that omits it encompasses embodiments that were not contemplated in the disclosure”: Seedlings 2021 FCA 154 [54], quoted at [167]. McVeigh J summarized this as asking whether the whether the feature in question is “at the core of the invention actually invented or disclosed” [1458]. This strikes me as a good summary of Seedlings, which puts the question in a positive form. In utility, the question is whether the invention is useful, which in this case boiled down to whether it was operable, ie whether it worked. In principle, these are two distinct questions. But what does it mean to ask whether the feature lies “at the core of the invention”?

To see how McVeigh J answered this question, we need to turn to the facts. There were five features implicated in the overbreadth and utility attacks, namely three components of the fracturing valve — the wedge, plug, and seal — as well as the the alignment mechanism and the means for holding the mandrel stationary. We can ignore the wedge, as both attacks failed.

Seals

On overbreadth, McVeigh J held as follows:

[1467] The placement of the seals and the number of seals goes to the very core of the 704 Patent invention. The 704 Patent discloses a fracturing valve and both parties agree that the lower seal is essential to allow the fracturing valve to operate as disclosed. The 704 Patent does not disclose any method by which the invention could operate without the described lower seal placement. The lower seal is an essential element that goes to the very core of the invention.

The claims that did not specify a seal were therefore invalid for overbreadth [1470]. That means that those claims were overbroad because they were inoperable. The claims without seals were also invalid for lack of utility [1514] for the same reason: “There are no operable embodiments of the 704 Patent Claims that do not include a seal” [1511]. It is not just that the claims happened to be invalid on both grounds: they were invalid on both grounds for the same reason, namely inoperability. Thus overbreadth was functionally redundant in light of the utility requirement.

(Note that Claim 15 was listed as being invalid for overbreadth [1470] but not lack of utility [1514], but in light of McVeigh J’s reasoning, I think this must have been an inadvertent omission from the utility list.)

Equalization Valve or Plug

The equalization plug “goes to the very core of the invention, such that the fracturing valve cannot operate without an equalization plug” [1475]. Again, it is “core” because it is necessary for operability. Consequently, “those claims that do not explicitly claim an equalization plug are invalid for overbreadth” [1478]. Those claims were invalid for lack of utility for the same reason: “the 704 Patent Claims that do not claim an equalization plug cannot perform the claimed fracturing function; they will not operate” [1517]. Again, overbreadth and the lack of utility are functionally the same — both turn on inoperabilty — and the overbreadth attack is redundant.

Alignment Mechanism

Similarly, McVeigh J found that the alignment mechanism goes to the core of the invention because it was necessary for the tool to work [1483], and the claims at issue lacked utility for exactly the same reason [1520]. Again, overbreadth was functionally redundant.

(In the listing of invalid claims at [1486], [1521] claims 24–27 were listed as being invalid for overbreadth but not lack of utility. In light of the reasoning, this seems to have been an oversight.)

Stationary Mandrel

McVeigh J found that a component for holding the mandrel stationary was core to the invention because “there must be some kind of component that provides frictional resistance against the wellbore that allows the mandrel to remain stationary for the invention to operate” [1494]. Claims that did not specify a means for holding the mandrel stationary were therefore invalid for overbreadth [1495].

However, lack of utility was not proven:

[1525] There was insufficient evidence on this issue to demonstrate that the 704 Patent will not work where the mandrel is not held stationary. This is likely due to the fact that Kobold raised this issue in construction and it was not argued substantively by either party in closing.

[1526] Therefore, without more evidence on this specific issue, I find that Kobold has not met its burden to demonstrate inutility on this issue.

So, in discussing overbreadth, McVeigh J found that the tool would not operate if the mandrel was not held stationary, but in discussing utility she could not arrive at that conclusion on the evidence. It is not clear to me why the evidence that McVeigh J relied on in the overbreadth context did not allow her to come to the same conclusion in respect of lack of utility. Nonetheless, it is clear that the functional question was the same under both overbreadth and utility — would the invention work if the mandrel was not held stationary — and the only difference was in respect of the evidence.

In summary, notwithstanding that McVeigh applied separate analyses with separate tests for overbreadth and utility, overbreadth is functionally redundant in light of the utility requirement. I would expect similar results in contexts where there is overlap with novelty or anticipation: eg it seems very reasonable to say that a feature that is the only point of distinction between the prior art and the claimed invention would be considered “core” to the invention.

Throwing Mud at the Wall

NCS Multistage Inc v Kobold Corporation 2023 FC 1486 McVeigh J

2,693,676 / 2,820,652 / 2,738,907 / 2,766,026 / 2,820,704 (NCS) / 3,027,571 (Kobold)

This case concerns six patents relating to downhole tools used in fracking. NCS sued Kobold for infringement of five NCS patents. In response, Kobold sued NCS for infringement of Kobold’s 571 patent. It did not go well for NCS — all the claims in issue for all five patents were declared invalid, while Kobold was successful in its infringement counterclaim.

In broad brush terms, this strikes me as a case where a major new technology created new problems with obvious solutions. Horizontal fracking is relatively recent. It presents some new problems, such as clearing debris away from the tool. In a vertical well, this is accomplished largely by gravity — debris falls to the bottom of the well — but in horizontal wells, some other methods are necessary. The methods claimed by NCS were generally obvious or had already been tried: for example, if debris is getting stuck in a moving part, machine out a bit more clearance to allow free movement of the debris [1191]. Several ancillary arguments were raised along the way, of which the most important is the discussion of double patenting. I’ll deal with double patenting and overbreadth in subsequent posts. This post will provide an overview and briefly address a few of the other legal issues.

This is a very long decision. That is a direct result of an “everything but the kitchen sink” approach: “[a]fter closing submissions, the parties had narrowed the scope of claims at issue down from approximately 145 claims across seven patents to approximately 123 claims at issue across six patents, still with 128 separate issues.” McVeigh J was not impressed. She quoted Locke JA’s comments in Western Oilfield 2021 FCA 24 [9] as to “the lack of wisdom of raising so many issues on appeal,” with the result that “the appellants’ approach suggests that they themselves cannot identify any issues that are particularly strong” [5]. She reiterated that “putting all these issues before the Court was an unwise litigation strategy” and warned that

[9] Lest this become a trend for this Court, or for the parties before it, I feel compelled to state that, in my view, putting these countless issues before the Court for simultaneous determination was detrimental to the aims of the parties in presenting the most clear and effective arguments. It is also contrary to the general principle of this Court to secure the just, most expeditious and least expensive outcome of every proceeding.

While McVeigh J directed her general comments at both parties, the fault lay primarily with NCS. Kobold successfully asserted one patent and four claims, which depended on three further claims [1623]. NCS asserted five patents and put over 120 claims in issue. NCS was comprehensively unsuccessful. All claims at issue — 128 in total — were declared invalid. Costs consequences followed: “There is a clear window here for an elevated lump sum costs award to incentivize efficiencies while sanctioning conduct with so many issues making it more complex.” Accordingly, McVeigh J awarded Kobold a lump sum of 45% of actual fees, up from the baseline of 37.5%, in significant part because “the multitude of claims and issues in this case unnecessarily enhanced the complexity of this case” [1671], [1674]. I must say that the 7.5% bump in the costs award strikes me as a modest sanction given the waste of judicial resources occasioned by NCS’s strategy. But maybe I am just inclined to be unsympathetic after having waded through 200 pages of claim construction.

While NCS’s strategy was certainly annoying, that doesn’t make it unwise. And while it failed in this case, that doesn’t necessarily mean it was a bad strategy; if you make a bet with good odds, it was a still a good bet to make, even if you lose. This is one of the most extreme versions of the kitchen sink strategy aka the “throw mud at the wall” strategy that I’ve seen, but that strategy is common enough in a more restrained form. This raises an interesting question about the ‘kitchen sink’ strategy: it makes the judges mad and risks an adverse costs award, but maybe that is worth it if it increases your chance of winning. I think it is pretty clear that the kitchen sink strategy sends a message to the court that you have a weak case. But given that you do have a weak case, is the kitchen sink strategy a good bet?

Of course, we can’t do a controlled study to see whether a more focused strategy is better, but I have to admit my eyes glazed over while reading hundreds of pages of claim construction, with each claim getting only a few paragraphs of analysis. And while I can’t see inside McVeigh J’s head, I have to suspect that it would have been easy for a few meritorious points to have been swamped by the routine of dismissing the unmeritorious arguments. This is particularly so because McVeigh J often found the evidence of NCS’s expert, Mr Lehr, to be wanting. He “took several positions which appeared at odds with expertise and historical facts” [92], and his arguments were regularly inconsistent with the documentary evidence: see eg [1286]. In some instances Mr. Lehr would read in new elements that were not in the claim at issue at all [1424]. I suspect NCS’s kitchen sink strategy had the effect of undermining the credibility of their own expert by inducing him to take unsupportable positions on weak claims that should never have been raised, rather than allowing him to take a stronger position on a smaller number of claims.

On the other hand, there were one or two places where the sheer volume of issues may have worked to NCS’s advantage. For example, Kobold did not carry its burden of showing that the 704 patent was obvious, because Kobold’s experts provided only conclusory statements and did not address inventiveness at the claim-by-claim level [1450]–[1452]. It is possible that these weaknesses in Kobold’s submissions were due to the sheer volume of arguments it had to deal with. (The claims were nonetheless invalid on other grounds.)

Some of the discussion was a bit difficult to follow because McVeigh J’s analysis sometimes plunged right into the weeds without making it clear why the issue mattered. Most of the hundreds of pages of claim construction were like that. While claim construction is antecedent to validity, without knowing “where the shoe pinches” it can be difficult to stay awake while reading about whether a “wedge” has to be wedge-shaped.

Priority and the use of file history

One argument that was particularly difficult to follow related to priority dates and the use of file history [1302]–[1337]. The Ravensberger patent (2,730,695), filed 11 Feb 2011 claimed an almost identical invention to the NCS 907 patent [1302], and claimed priority from US applications 12/842,099 (23 June 2010) and 12/971,932 (17 Dec 2010). The 907 patent was filed on 4 May 2011 and claimed priority to an 18 Oct 2010 US application (61/394,077). During prosecution of the 907 patent a protest was filed arguing that if the 907 patent could not claim priority from the US 077 application, then it was anticipated by the Ravensberger patent. (McVeigh J referred to the protest as being filed on 6 March 2012 [1305], but it appears she is referring to the protest filed on 26 March 2012.) The 907 patent nonetheless was granted, from which it might be inferred that the examiner had decided that it properly claimed priority from the 077 application. (Though I should say here that it is not clear to me why any of this mattered.) There was also a protest against the Ravensberger patent based on the 907 patent, apparently also raising a priority issue. NCS wanted to introduce the file history of the Ravensberger patent [1309]. (Again, I don’t understand what argument was being pursued and so I don’t know how the file history was supposed to be relevant.) McVeigh J reviewed this file history, and while she was of the view that the file history might in principle be used for purposes other than claim construction pursuant to s 53.1(1), she decided that she would not use the file history “essentially to re-argue the same protest in relation to the Ravensbergen when the Patent Office issued the patent with those priority dates” [1325]. That seems like a very reasonable conclusion, with the caveat that I don’t understand where the argument was going.

McVeigh J then stated that “[a]lthough Canadian jurisprudence does not appear to have directly addressed this question, priority can be asserted on a claim-by-claim basis” [1331]. I’m not aware of any caselaw on that point either, but nonetheless the point seems perfectly clear on the face of s 28.1(1): “The date of a claim . . . is. . . .” I expect that is why there is no jurisprudence on the point.

Then McVeigh J stated (my emphasis):

[1335] As such, it is possible for different claims to be subject to different priority dates relating to different, previously filed applications. However, I interpret this as taking place during the application process and not at the stage in an action where validity is being determined. This would amount to an ex post facto prosecution of the patent, and contrary to the role of this Court.

This is puzzling. On its face, the underlined sentence seems to to say that the Court cannot assess whether a claim can properly claim priority from a foreign filing. However, in the next paragraph McViegh J stated that “on this record with very limited argument and no expert assistance, I am not prepared to do a claim-by-claim review of priority dates” [1336]. That indicates that she would be prepared to assess priority, just not in the context of this particular patent and in particular given the (puzzling) reliance on the Ravensberger claim history. Further, in discussing Kobold’s 571 patent, McVeigh J did determine different claim dates for different claims [1586], saying “As stated earlier, I agree that it is possible to evaluate the claim date in the way NCS requests” [1580]. I take it the “earlier” is a reference to her discussion at [1302]–[1337] relating to the 907 patent. So, on the whole, it seems clear enough that McVeigh J is not suggesting that the claim date of different claims cannot be determined by the court. I would speculate that the underlined sentence was addressed to the specific argument being made by NCS — maybe to the effect that she was not prepared to review the priority date determinations made by the examiner in light of the prosecution history. That is a very reasonable position, which does not exclude the court reviewing the priority dates directly. I’ll just conclude by saying that it is perfectly clear from 28.2(1)(b) and 28.2(1), which governs anticipation generally, not just in the context of prosecution, that the claim date may be assessed by the court.

Grace Period

An invention must not have been obvious in light of the state of the art. Section 28.3(a) gives a one-year grace period which excludes information derived from the applicant from the state of the art. Kobold wanted to rely on a presentation referred to as “What up?” in attacking NCS’s patent. NCS objected that the presentation contained information derived from NCS and so could not be used [1258]. McVeigh J held that even if the presentation contained some information derived from NCS, 28.3(a) could not be used to exclude all information in the “What up?” presentation [1281]. That seems to be to be clearly correct. Both on the face of the Act and on a purposive analysis, it is only the information derived from the patentee that is excluded, not all information that is somehow associated with the information derived from the patentee.

Mosaicing art from different experts

NCS argued that in attacking the patent for obviousness, Kobold could only rely on references that were discussed by both of its experts, apparently on the view that where a piece of prior art is obvious, it should be obvious to both experts [1417]. McVeigh J rejected this: “I reject the proposition that references must be discussed by both (or all) experts where there is more than one expert giving their opinion for a single party. Once a piece of prior art forms part of the record, the Court is able to consider it under the obviousness analysis” [1418].

Inventive Concept

There has been a lot of controversy over the use of the inventive concept in claim construction: see here and here. My own view is that the EPO objective problem and solution approach is probably the best way: see here for my argument to that effect, and here, here and here describing the EPO approach. In this case, it seems that NCS’s expert generally wanted to characterize the inventive concept at a very abstract level, as being “active debris relief” [1097] (and see eg [1441]), but any real trouble was avoided by McVeigh J’s (clearly correct) insistence that obviousness must be addressed on a claim by claim basis: see eg [1435]–[1436]. In other instances, NCS’s expert described the inventive concept by simply paraphrasing the claims: see eg [1343]. That is a common approach, which is not necessarily a problem, but one has to ask what is gained by focusing on an ‘inventive concept’ that is just a paraphrase of the claims, as opposed to focusing on the claims themselves.

Ambiguity

It is difficult to establish ambiguity and consequently a successful attack based on ambiguity is rare, but in this case McVeigh J held two claims to be invalid as being “incapable of being meaningfully interpreted” [1530]; and see [1527]–[1532]. There is no new law here, but successful ambiguity attacks are rare enough that this one is noteworthy. (I did not review the claims myself so I do not have any independent opinion as to whether they were incapable of being meaningfully interpreted.)

Utility related to the nature of the invention

In AstraZeneca 2017 SCC 36 [53], the SCC stated that the utility of an invention must be “related to the nature of the subject-matter,” saying “a proposed invention cannot be saved by an entirely unrelated use. It is not sufficient for an inventor seeking a patent for a machine to assert it is useful as a paperweight.” We don’t see this argument used very often, but in this case NCS sought to save the 704 patent, which McVeigh J found to lack utility because it could not function without seals, by arguing that it would nonetheless be useful for cleaning the casing, presumably by pushing it through to shove debris, in the same way that a completely inoperative tool could be used. McVeigh J rejected this argument on the basis that cleaning did not relate to the nature of the invention [1512]. There is no new law, but as with ambiguity it’s noteworthy just because we don’t see this point raised very often. (NCS’s argument was a bit less absurd than the foregoing summary suggests, because an operable tool would clean the casing as part of its perforating and fracturing capabilities — but it was a desperate argument nonetheless.)

Remedy

McVeigh J allowed the successful patentee, Kobold to elect between an accounting and damages, saying “With respect to an accounting of profits, no evidence has been advanced to suggest the parties may not be entitled to this relief. With the bifurcated phase with respect to damages ahead, there is no reason to deny such relief given the Defendants came to the Court with clean hands” [1659]. The direct implication is that the successful patentee is presumptively entitled to an accounting, barring some reason for denying it, such as unclean hands. As I noted in a post on an earlier case, in a two part article forthcoming in the IPJ and summarized in a series of blog posts, I have argued that Nova v Dow 2022 SCC 43 wrought such a major change in the principles on which the quantum of an accounting is assessed that the courts should revisit the principles on which an accounting is granted.