Defendants Avoid Oily Mess in Patent and Design Infringement Case

Published August 2nd, 2013

Zero Spill Systems (Int’l) Inc. et al. v. 614248 Alberta Ltd. et al., 2013 FC 616 (Barnes)

Summary

On June 7, 2013, the Federal Court of Canada delivered its decision in the case of Zero Spill Systems, in which Zero Spill Systems claimed infringement of its Canadian Patent Nos. 2,136,375 and 2,258,064 (the ‘375 and ‘064 Patents) and its Canadian Industrial Design No. 86,793 (the ‘793 Design), all of which are directed to products designed to capture fluids that either leak or are spilled during oil field operations.  The Court found one of the patents, namely the ‘064 Patent, invalid in view of prior art.  None of the products manufactured and sold by 614248 Alberta Ltd. were found to infringe the ‘375 and ‘064 Patents, or the ‘793 Design.

Analysis

The ‘375 Patent

The ‘375 Patent relates to a catch pan for a drilling rig.  The catch pan has an annular seal that is configured to engage the top of a “flow nipple”, namely the pipe entering the ground at a drilling site, and is positioned under a hole of the drilling rig floor to funnel spilled drilling fluid back into the flow nipple during use.

In construing the ‘375 Patent, the Court determined the inventive concept to be the ability of the catch pan to move axially along the flow nipple in a telescoping manner while maintaining a fluid seal, which allows settling of the drilling rig to be accommodated without compromise of the seal.

In determining validity of the ‘375 Patent, the Court found that while many features of the ‘375 Patent were disclosed by the prior art, the inventive concept of a catch pan having a telescoping seal was not.

In assessing infringement of the ‘375 Patent, the Court considered two of the Defendants’ catch pan products, one of which had a fixed seal and the other had no seal at all.  As neither product was found to have a telescoping seal, the Court determined that the Defendants’ catch pan products did not infringe the ‘375 patent.

The ‘064 Patent

The ‘064 Patent relates to a containment tray to be affixed to a center pipe of a completed oil well.  The containment tray is divisible into two sections, with each section having mating edges for providing a leak-proof seal when engaged to the other.

In construing the ‘064 Patent, the Court determined the claim language “mating edges” to refer to edges that join to provide a single containment tray having a fluid seal.

In determining invalidity of the ‘064 Patent, the Court found anticipation by two prior patents and either anticipation or obviousness by the prior use of various different trays used in the field, as described by industry witnesses.

In arriving at its decision of non-infringement, the Court found that none of the Defendants’ products involved mating two abutting tray edges to form a single containment tray having a leak-proof seal.  Rather, the Court found that the Defendants’ containment trays consisted of two separate trays brought into an abutting relationship, and having an overlapping flashing applied to the joint for preventing leakage.

The ‘793 Design

The ‘793 Design relates to a rectangular tray having four walls defining a ridge along the top of the walls, with the ridge having semi-circular depressions formed therein for supporting a string of drilling pipe.  The tray is used to capture fluid that spills out when a pipe fitting joining two sections of the string is hammered open.

In considering the many similarities between the ‘793 Design and the Defendants’ CAPP line pipe tray, the Court noted that Section 5.1 of the Industrial Design Act provides that statutory protection does not extend to “features applied to a useful article that are dictated solely by a utilitarian function of the article” [para. 127].  In support of this, the Court relied on the recent decision in Bodum USA, Inc. et al. v. Trudeau Corp. (2012 FC 1128, summarized here), in which Justice Boivin held that “in judging the question of infringement, the court will ignore similarities or even identities between the registered design and the alleged infringement which arise from functional matters included within the design”.

The Court dealt with the Plaintiffs’ assertion that the Defendants used the ‘793 Design as a model, by relying on Carr-Harris Products Ltd. v. Reliance Products Ltd. (1969, 58 CPR 62), and stating that “an attempt to imitate is not an infringement of an industrial design unless the imitator is trading on the aesthetic features of a competitor’s design” [para. 133].

The Court determined that the design features common to the ‘793 Design and the CAPP line pipe tray were solely functional in purpose.  To extent that there were appealing visual aspects of the ‘793 Design, the Court found that these features were not present on the CAPP line pipe tray.

In a further reliance on Carr-Harris Products Ltd. supra, the Court held that “when an industrial design incorporates fundamentally functional features, even small differences in ornamentation may be sufficient to take the second design out of the ambit of an earlier design registration” [para. 135].  In view of this, the Court determined that the differences that exist between the ‘793 Design and the CAPP line pipe tray were in themselves sufficient to establish a finding of non-infringement.

Practice Point

This was a fairly straightforward validity and infringement case that turned on the specific facts contained therein.  There was however, a somewhat interesting commentary by the Court with respect to the assessment of damages for lost profits.  Although the Court did not have to deal with the Plaintiffs’ claim to damages due to the findings of non-infringement, it did take issues with the Plaintiffs’ assessment of lost profits damages.  One issue concerned the Plaintiffs’ assumption that every sale by the Defendants of a competing containment product represented a lost rental to the Plaintiffs.  Another issue concerned the methodology used by the Plaintiffs to arrive at a utilization rate for the patented products that would, but for the alleged infringement, have been rented into the market.  The Court held that, without reliable evidence to measure the actual utilization of the Plaintiffs’ patented products in the field or even its failure to test the methodology that was used, it was impossible to assess damages on the basis of the Plaintiffs’ lost profits.