[2000] 3 F.C. 3
A-352-97
Thomas & Betts, Limited (Appellant) (Plaintiff)
v.
Panduit Corp., Panduit (Canada) Limited (Respondents) (Defendants)
Indexed as: Thomas & Betts, Ltd. v. Panduit Corp. (C.A.)
Court of Appeal, Décary, Létourneau and Noël JJ.A. —Montréal, November 22, 1999; Ottawa, January 7, 2000.
Trade marks — Infringement — Appeal from F.C.T.D. judgment granting summary judgment — Appellant holding expired patent for cable tie having oval-shaped head — Patent neither claiming oval-shaped head as innovative feature nor referring to oval-shaped head — Patent expired in 1984 — When respondent introducing virtually identical cable tie in 1994, appellant commencing trade-mark infringement action — Motions Judge holding patentee could not, after expiration of patent, assert trade-mark rights to prevent public from making same preferred embodiment as described in patent — Motions Judge not referring to Trade-marks Act — Appeal allowed — Could not reconcile Patent Act, Trade-marks Act having regard to only Patent Act — No authority for proposition any element described in preferred embodiment, regardless of whether claimed or of importance to claimed invention, automatically disqualified from trade-mark protection — According to doctrine of functionality, any combination of elements primarily designed to perform function not fit subject-matter for trade-mark — Issue whether oval-shaped head distinguishing guise within meaning of Trade-marks Act, requiring examination of facts in light of trade-marks principles including doctrine of functionality — Summary judgment premature — American case law in this area should not be relied upon as U.S. trade-marks legislation differently drafted, doctrine of functionality may not have evolved in same way in Canada as in U.S.A.
Patents — Appeal from F.C.T.D. judgment granting summary judgment — Appellant patentee for cable tie having oval-shaped head — Patent neither claiming oval-shaped head as innovative feature nor referring to oval-shaped head — Patent expired in 1984 — Appellant commencing trade-mark infringement action in 1996 when respondent manufacturing virtually identical cable tie — Motions Judge holding patentee cannot, after expiration of patent, assert trade-marks rights to prevent public from making same preferred embodiment as described in patent — Appeal allowed — Motions Judge erred in focussing on “invention” under Patent Act, rather than on “wares” under Trade-marks Act — Validity, scope of patent not at issue — Issue whether oval-shaped head distinguishing guise within meaning of Trade-marks Act, requiring examination of facts in light of trade-marks principles including doctrine of functionality — Summary judgment premature.
This was an appeal from the decision of a Motions Judge granting the respondent’s motion for summary judgment. The appellant and the respondent manufacture electrical products. In 1962 T & B developed a cable tie which was the subject of a patent which expired in 1984. The patent claims neither cited an oval-shaped head as an innovative feature of a cable tie, nor referred to the oval shape of a cable tie head. In 1994 Panduit introduced a cable tie which was virtually identical to T & B’s cable tie, including the oval shape of the cable tie head. T & B commenced an action for a declaration that Panduit had infringed its unregistered trade-mark consisting of a distinctive oval shape for the head of a cable tie, and for a declaration that Panduit was passing off its wares and business for those of T & B. Panduit filed a motion for summary judgment which was granted on the ground that the oval-shaped cable tie was the preferred embodiment of a patent, now expired and was therefore not subject to trade-mark rights. The Motions Judge held that the patentee could not, after the expiration of the patent, assert any trade-mark rights in the very way an expired patent directs the public to make the invention. The only statutory provision referred to was Patent Act, subsection 27(3) which sets out the inventor’s duty of disclosure to the public. The Motions Judge relied principally on judgments of the Supreme Court of Canada, but also apparently gave considerable weight to a decision of the U.S. Federal District Court in a case involving the same parties and the same issue as in the present case. He made no reference to the Trade-marks Act.
The issue was whether a patentee can assert trade-mark rights after the expiration of the patent with respect to elements disclosed in the inventor’s preferred embodiment.
Held, the appeal should be allowed.
The Motions Judge made no reference to the Trade-marks Act. One cannot conclude that the Patent Act and the Trade-marks Act must co-exist and then attempt to reconcile them having regard only to one of them. The practical effect of the impugned decision is that any element described in the preferred embodiment, regardless of whether it is claimed or of its importance to the claimed invention, would be automatically, as a matter of law and without further inquiry, disqualified from trade-mark protection. There is no authority for such a proposition.
The patentee never had a monopoly over the oval-shaped head, and it would be unfair to later prevent it, as a matter of law, from asserting a trade-mark right with respect to the oval-shaped head. This would be tantamount to retroactively extending the expired patent monopoly to include the oval-shaped head. On the other hand, it would be unfair to the public if a patentee could, after the expiry of its patent, use the Trade-marks Act to give itself a monopoly over the shape of its invention when that shape is so closely related to the invention as to be for all practical purposes an element essential to making full use of the invention. Therefore the Court, in interpreting the Trade-marks Act, has ensured that it not be used to perpetuate a patent monopoly that would otherwise have expired by implementing the doctrine of functionality, according to which any combination of elements which are primarily designed to perform a function is not fit subject-matter for a trade-mark.
The Motions Judge erred in focussing on the “invention” under the Patent Act rather than on the “wares” under the Trade-marks Act. Neither the validity of the patent nor its specific scope was at issue. The issue was whether the oval-shaped head was a distinguishing guise within the meaning of the Trade-marks Act. In addressing that issue, the Motions Judge would have had to examine the facts of the case in the light of trade-marks principles, including the doctrine of functionality. Any conclusion with respect to the specific issue of functionality must come at the end of a trial and would be premature at the stage of a motion for summary judgment. The Motions Judge could not decide the merits of the action without applying general trade-mark principles to the wares at issue and without examining the doctrine of functionality.
The American decision on which the Motions Judge relied has since been overturned by the U.S. Court of Appeals for the Seventh Circuit. The American counterpart of our Trade-marks Act is differently drafted and the doctrine of functionality may not have evolved in the United States the same way it has in Canada.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Federal Court Rules, C.R.C., c. 663, R. 432.3 (as enacted by SOR/94-41, s. 5).
Federal Court Rules, 1998, SOR/98-106, r. 216.
Lanham Trade-Mark Act, 15 U.S.C. § 1051 (1994).
Patent Act, R.S.C., 1985, c. P-4, s. 27(3) (as am. by S.C. 1993, c. 15, s. 31).
Trade-marks Act, R.S.C., 1985, c. T-13, ss. 7(c).
CASES JUDICIALLY CONSIDERED
APPLIED:
Remington Rand Corp. v. Philips Electronics N.V. (1995), 64 C.P.R. (3d) 467; 191 N.R. 204 (F.C.A.); Imperial Tobacco Co. of Canada Ltd. v. Registrar of Trade Marks, [1939] Ex. C.R. 141; [1939] 2 D.L.R. 65; Pizza Pizza Ltd. v. Canada (Registrar of Trade Marks), [1989] 3 F.C. 379 (1989), 24 C.I.P.R. 152; 26 C.P.R. (3d) 355; 101 N.R. 378.
CONSIDERED:
Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504; (1981), 122 D.L.R. (3d) 203; 56 C.P.R. (2d) 146; 35 N.R. 390; Catnic Components Limited and Another v. Hill & Smith Limited, [1982] R.P.C. 183 (H.L.); Thomas & Betts Corp. v. Panduit Corp., 935 F.Supp. 1399 (N.D. Ill 1996); revd 138 F.3d 277 (7th Cir. 1998); Tele-Direct (Publications) Inc. v. American Business Information, Inc., [1998] 2 F.C. 22 (1997), 154 D.L.R. (4th) 328; 37 B.L.R. (2d) 101; 76 C.P.R. (3d) 296; 221 N.R. 113 (C.A.).
REFERRED TO:
Minerals Separation North American Corporation v. Noranda Mines Ltd., [1947] Ex. C.R. 306; Pioneer Hi-Bred Ltd. v. Canada (Commissioner of Patents), [1989] 1 S.C.R. 1623; (1989), 60 D.L.R. (4th) 223; 25 C.I.P.R. 1; 25 C.P.R. (3d) 257; 97 N.R. 185.
AUTHORS CITED
Wadlow, Christopher. The Law of Passing-Off, 2nd ed. London: Sweet & Maxwell, 1995.
APPEAL from Trial Division decision granting a motion for summary judgment on the ground that the oval-shaped cable tie was the preferred embodiment of an expired patent and was therefore not subject to trade-mark rights (Thomas& Betts, Ltd. v. Panduit Corp. (1997), 74 C.P.R. (3d) 185; 129 F.T.R. 272). Appeal allowed.
APPEARANCES:
Marek Nitoslawski and Jean-Philippe Mikus for appellant (plaintiff).
Bruce W. Stratton for respondents (defendants).
SOLICITORS OF RECORD:
Colby, Monet, Demers, Delage & Crevier, Montréal, for appellant (plaintiff).
Dimock Stratton Clarizio, Toronto, for respondents (defendants).
The following are the reasons for judgment rendered in English by
[1] Décary J.A.: This appeal raises the issue, in Canadian law, of whether a patentee can assert trade-mark rights, after the expiration of the patent, with respect to elements disclosed or depicted in the inventor’s preferred embodiment. The Motions Judge, in a judgment reported at (1997), 74 C.P.R. (3d) 185, concluded that, at page 198:
… a patentee cannot assert trade-mark rights to the very way an expired patent directs the public to make the invention.
The facts
[2] The appellant Thomas & Betts, Limited (T & B) is a Canadian corporation which manufactures, distributes and sells electrical products in Canada. It is a subsidiary of Thomas & Betts Corporation, a Tennessee corporation that is a worldwide leader in the manufacture and supply of electrical products.
[3] The respondent Panduit Corp. is a Delaware corporation engaged in the manufacture and supply of electrical products. The respondent Panduit (Canada) Limited is a Canadian subsidiary of Panduit Corp., but it is inactive. Panduit Corp. carries on business directly in Canada. Both respondents will be hereinafter collectively referred to as “Panduit”.
[4] T & B and Panduit are competitors in Canada in the market for cable ties. One of the first cable ties on the market, introduced by T & B in about 1958, was a “twist-lock” cable tie, consisting of a plastic, integrally formed head and body. The “twist-lock” cable tie had an oval-shaped head.
[5] In about 1962, T & B developed an improved cable-tie which was composed of two pieces, the first piece being a plastic, integrally formed head and body, and the second piece being a metal tongue or “barb”. This improved cable tie is sometimes referred to as the “barbed” or “two-piece” cable tie.
[6] This improvement in cable ties was the subject of Canadian Patent No. 753,010 which issued on February 21, 1967 (the Schwester patent) and has now expired. The invention disclosed and claimed in the Schwester patent was a novel self-clinching mechanism for a cable tie, which is described in the claims as a “resilient metallic tongue … adapter for locking the body portion of [the tie]” (A.B., Vol. 1, at page 124). The invention was said to be “best understood from the following description of a specific embodiment thereof, when taken in connection with the accompanying drawing” (A.B., Vol. 1, at page 120). Referring to the drawing, the disclosure indicates that “the opposite or head-end portion… of the strap … terminates in an oval shaped clinching eyelet” (A.B., Vol. 1, at page 121). The drawing illustrates the invention by reference to a cable tie having an oval-shaped head. The claims of the Schwester patent do not claim an oval-shaped head of a cable tie as an innovative feature, and make no reference to the oval shape of a cable tie head. The only written reference in the specification to an “oval-shaped” head is the one referred to above.
[7] From 1958 on, throughout the life of the Schwester patent (1967 to 1984), and at least until 1994, T & B was the only manufacturer and supplier of two-piece cable ties with an oval-shaped head in Canada.
[8] In or about 1994, Panduit introduced a barbed or two-piece cable tie to the Canadian market. This cable tie was virtually identical to T & B’s barbed cable tie, right down to the oval shape of the cable tie head.
[9] On June 14, 1996, T & B filed an action against Panduit seeking, inter alia, a declaration that Panduit had infringed T & B’s unregistered trade-mark consisting of a distinctive oval shape for the head of a cable tie and a declaration that Panduit was passing off its wares and business for those of T & B, contrary to paragraph 7(c) of the Trade-marks Act, R.S.C., 1985, c. T-13 (A.B., Vol. 1, at page 9).
[10] Subsequent to the filing of a defence and counterclaim, to which T & B filed a reply and defence to counterclaim, Panduit, on November 4, 1996, served a motion for summary judgment (the motion) pursuant to Rule 432.3 [as enacted by SOR/94-41, s. 5] of the Federal Court Rules [C.R.C., c. 663] (the Rules), (now rule 216 [of the Federal Court Rules, 1998, SOR/98-106]), seeking, inter alia: (a) dismissal of the action; (b) in the alternative, dismissal of the cause of action respecting the trade-mark rights claimed by T & B in its oval-shaped head of a cable tie (A.B., Vol. 1, at page 28).
[11] Panduit invoked three grounds in support of its motion (A.B., Vol. 1, at page 29):
1. The oval shaped cable tie head alleged by [T & B] to be a trade-mark is functional and therefore not to be accorded trade-mark protection in Canada.
2. The oval shaped cable tie is the preferred embodiment of one or more patents, now expired, and is therefore not subject to trade-mark rights.
3. The Plaintiff [T & B] has alleged trade-mark rights in the words BARB TIE. The Plaintiff has made no use of this mark in Canada in association with its wares and therefore cannot assert trade-mark rights to that mark.
[12] At the beginning of the hearing of the motion on April 1, 1997, Panduit announced that it was abandoning the first ground (the “functionality” ground) and concentrating on the second ground (the “preferred embodiment” ground).
The Motions Judge’s decision
[13] On April 23, 1997, the Motions Judge granted Panduit’s motion for summary judgment. He did so on the basis of the “preferred embodiment” ground as well as on the basis of the third ground (use of the mark “barb tie”). T & B does not appeal that part of the decision which dismissed its claim with regards to the words “barb tie”. This appeal is concerned solely with the second ground, i.e. the “preferred embodiment ground”.
[14] In the reasons for judgment addressing that second ground, the only statutory provision the Motions Judge referred to was subsection 27(3) (formerly section 34 and formerly section 36) of the Patent Act, R.S.C., 1985, c. P-4, as amended [by S.C. 1993, c. 15, s. 31]. That subsection reads as follows:
27. …
(3) The specification of an invention must
(a) correctly and fully describe the invention and its operation or use as contemplated by the inventor;
(b) set out clearly the various steps in a process, or the method of constructing, making, compounding or using a machine, manufacture or composition of matter, in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it pertains, or with which it is most closely connected, to make, construct, compound or use it;
(c) in the case of a machine, explain the principle of the machine and the best mode in which the inventor has contemplated the application of that principle; and
(d) in the case of a process, explain the necessary sequence, if any, of the various steps, so as to distinguish the invention from other inventions.
[15] The Motions Judge, essentially, was of the view that the duty of disclosure imposed by the Patent Act requires the inventor to teach the public, having only the specification, how to make the same successful use of the invention as the inventor could and that, as a result, the patentee could not, after the expiration of the patent, assert any trade-mark rights to prevent the public from making the very same preferred embodiment as that described and depicted by the inventor in the patent. He relied principally on the judgments of the Exchequer Court of Canada in Minerals Separation North American Corporation v. Noranda Mines Ltd., [1947] Ex. C.R. 306, at page 316 and of the Supreme Court of Canada in Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504, at page 520; and Pioneer Hi-Bred Ltd. v. Canada (Commissioner of Patents), [1989] 1 S.C.R. 1623, at pages 1636-1638, and notably on the following statement by Dickson J. (as he then was) in Consolboard, supra, at page 520:
In essence, what is called for in the specification (which includes both the “disclosure”, i.e. the descriptive portion of the patent application, and the “claims”) is a description of the invention and the method of producing or constructing it, coupled with a claim or claims which state those novel features in which the applicant wants an exclusive right. The specifications must define the precise and exact extent of the exclusive property and privilege claimed.
Section 36(1) seeks an answer to the questions: “What is your invention? How does it work?” With respect to each question the description must be correct and full in order that, as Thorson P. said in Minerals Separation North American Corporation v. Noranda Mines, Limited
… when the period of monopoly has expired the public will be able, having only the specification, to make the same successful use of the invention as the inventor could at the time of his application.
[16] He also quoted from Lord Diplock, in Catnic Components Limited and Another v. Hill & Smith Limited, [1982] R.P.C. 183 (H.L.), at pages 242-243:
My Lords, a patent specification is a unilateral statement by the patentee, in words of his own choosing, addressed to those likely to have a practical interest in the subject matter of his invention (i.e. “skilled in the art”), by which he informs them what he claims to be the essential features of the new product or process for which the letters patent grant him a monopoly. It is those novel features only that he claims to be essential that constitute the so-called “pith and marrow” of the claim.
[17] He then appeared, [at page 197] to give considerable weight to the decision rendered by the U.S. Federal District Court in a case involving the same parties and dealing with the same issue as in the present case (Thomas& Betts Corp. v. Panduit Corp., 935 F.Supp. 1399 (N.D. Ill 1996) (the Denlow decision)). In that decision, Magistrate Judge Denlow had held that [at page 1407]:
… “the right to copy arising from the Patent Act entitles Panduit to copy the oval headed cable tie disclosed in the Schwester patent without fear” of violation of the U.S. federal trademark statute.
The merits of the Motions Judge’s decision
[18] After referring to subsection 27(3) of the Patent Act and to various cases dealing with patent law, the Motions Judge then reached a conclusion with respect to the trade-mark asserted by T & B in this trade-mark case without making any reference to the Trade-marks Act. This is an incorrect approach. One can simply not on the one hand conclude as the Motions Judge did, and correctly in my view, that the Patent Act and the Trade-marks Act must co-exist, and on the other hand attempt to reconcile them having only regard to one of them.
[19] The practical effect of the impugned decision is to tell a patentee that even though it never claimed nor had a specific monopoly with respect to the preferred embodiment of the invention described in the patent application, yet in exchange for the monopoly granted to it by the patent with respect to the invention, the public, when allowed to copy the invention at the expiry of the patent, can automatically use any guise depicted or described in the preferred embodiment which was never part of the monopoly to start with.
[20] I have found no authority for such a proposition which, reduced to its simplest or extended to its extreme, would mean that any element described or depicted in the preferred embodiment—regardless of whether it is claimed or of its importance to the claimed invention—is automatically as a matter of law and without further inquiry disqualified from trade-mark protection.
[21] As noted by Christopher Wadlow in The Law of Passing-Off, 2nd ed. (London: Sweet & Maxwell, 1995), at page 367:
It is more difficult for a plaintiff to prove that a mark has become distinctive of him when he has enjoyed a legal, natural or de facto monopoly of the goods in question …. It is wrong to say that distinctiveness cannot be acquired during a period of monopoly, but proof of acquired distinctiveness may be harder to come by, especially for a mark which has a low inherent capacity to distinguish. There is no rule of law that because goods were once patented the name or get-up given to them by the patentee can be copied with impunity. [My emphasis.]
[22] During the existence of the Schwester patent, T & B could not have used patent law to prevent a competitor from making a cable tie that used a different invention but which also featured an oval-shaped head. The patentee never had a monopoly over the oval-shaped head, and it would therefore be unfair to later prevent it, as a matter of law, from asserting a trade-mark right with respect to the oval-shaped head. This would be tantamount to retroactively extending or mischaracterizing the expired patent monopoly to include the oval-shaped head.
[23] On the other hand, it would be unfair to the public if a patentee could, after the expiry of its patent, use the Trade-marks Act to give itself a monopoly over the shape of its invention when that shape is so closely related to the invention as to be for all practical purposes an element essential to making full use of the invention.
[24] It is precisely to solve this dilemma that the Trade-marks Act comes into play and this is precisely why this Court, in interpreting that Act, has ensured that it not be used to perpetuate a patent monopoly that would otherwise have expired. The solution retained by this Court is the doctrine of functionality. I need only refer to Remington Rand Corp. v. Philips Electronics N.V. (1995), 64 C.P.R. (3d) 467 (F.C.A.), where MacGuigan J.A., at page 471, after observing that:
It is common ground … that the invalidity of a trade mark registration on the basis of functionality has no express statutory basis and has to be found in the case law ….
went on to confirm the “narrow-rule approach to functionality: some functionality is permissible”, (at page 474) first adopted by President Maclean in Imperial Tobacco Co. of Canada Ltd. v. Registrar of Trade Marks, [1939] Ex. C.R. 141, at page 145 in these words:
In my opinion any combination of elements which are primarily designed to perform a function … is not fit subject-matter for a trade mark, and if permitted would lead to grave abuses.
[25] MacGuigan J.A. also endorsed, at page 476, the view expressed by Pratte J.A. in Pizza Pizza Ltd. v. Canada (Registrar of Trade Marks), [1989] 3 F.C. 379 (C.A.), that:
If a mark is primarily functional as “part of the ware”, the effect would be to grant applicants for registration “a monopoly on functional elements or characteristics of their wares” [and that] “the applicants would, in effect, have obtained patents under the guise of trade marks”.
and he went on to deal with the distinguishing guise at issue in the Remington Rand case, supra, at page 478:
The trial judge may have been correct in stating that “a distinguishing guise necessarily possesses a functional element or component” (although I wonder about, say, a bottle shape which might not even be ornamental), but to the extent that such functionality relates primarily or essentially to the wares themselves it will invalidate the trade mark.
The distinguishing guise in the case at bar is in my opinion invalid as extending to the functional aspects of the Philip shaver. A mark which goes beyond distinguishing the wares of its owner to the functional structure of the wares themselves is transgressing the legitimate bounds of a trade mark.
[26] In the case at bar, the Motions Judge erred in focussing on the “invention” under the Patent Act rather than on the “wares” under the Trade-marks Act. The validity of the patent was not at issue nor was its specific scope as compared with a competing device. The issue in the action is whether the oval-shaped head was a distinguishing guise within the meaning of the Trade-marks Act. In addressing that issue, which is partly and perhaps essentially one of fact, the Motions Judge would have had to examine the very facts of the case in the light of trade-marks principles, including the doctrine of functionality. It may be that at the end of a trial a judge would reach the conclusion, with respect to the specific issue of functionality, that the description or depiction of the oval-shaped head as a preferred embodiment of the invention was evidence, perhaps conclusive evidence, of functionality, but any such conclusion would be premature in this case at the stage of a motion for summary judgment.
[27] As a result, the Motions Judge was in no position to dismiss the action brought by T & B under the Trade-marks Act on a motion for summary judgment. He was obviously led astray by Panduit’s decision not to argue before him the “functionality” ground it had raised in writing in its Motion for summary judgment. Whatever reasons Panduit might have had in abandoning that ground, which was the first ground on which it originally based its attack, the Motions Judge could not decide the merit of the action brought by T& B without applying general trade-mark principles to the wares at issue and without examining the doctrine of functionality.
[28] A word, in closing, on the use of American jurisprudence by Canadian courts when dealing with patent and trade-mark cases. I need only repeat here what I had said in Tele-Direct (Publications) Inc. v. American Business Information, Inc., [1998] 2 F.C. 22 (C.A.), leave to appeal dismissed by the Supreme Court of Canada at [1998] 1 S.C.R. xv (21 May 1998). It is permissible for Canadian courts to find some assistance in authoritative United States courts decisions, provided that Canadian courts proceed very carefully in doing so. Where, as here, the legal issue is the very issue that has been argued by the same parties in a U.S. court, it may be useful to have regard to the particular decision rendered.
[29] In this respect, the Denlow decision on which the Motions Judge relied has since been overturned by the U.S. Court of Appeals for the Seventh Circuit on March 4, 1998 (reported at 138 F.3d 277 (7th Cir. 1998). I have examined with interest that decision. It is remarkably well articulated and it contains some eloquent statements of policy and principle which are highly persuasive. I note, however, that the Lanham Trade-Mark Act (15 U.S.C. § 1051 (1994) et seq.), which is the American counterpart of our Trade-marks Act is differently drafted and that the doctrine of functionality, mentioned expressly in the Lanham Trade-Mark Act for the first time in 1998, may not have evolved in the United States the same way it has in Canada. I will therefore say no more than that I take some comfort from the approach adopted by the Court of Appeals and that there is a fortunate similarity in the end result achieved.
Disposition
[30] I would allow the appeal, set aside the order of the Motions Judge, dismiss the defendants’ motion for summary judgment and order the action to proceed to trial. The appellant should be entitled to its costs here and below.
Létourneau J.A.: I agree.
Noël J.A.: I agree.