Judgments

[1996] 3 F.C. 751

A-539-93

Youssef Hanna Dableh (Appellant) (Plaintiff)

v.

Ontario Hydro (Respondent) (Defendant)

Indexed as: Dableh v. Ontario Hydro (C.A.)

Court of Appeal, Strayer, Linden and Robertson JJ.A.—Toronto, April 22; Ottawa, June 5, 1996.

Patents — Infringement — Appeal from trial judgment finding apparatus developed by Ontario Hydro to reposition misaligned spacers in nuclear reactors (SLAR apparatus) not infringing appellant’s patent — Trial Judge erred in considering prior art, disclosure in construing claim — Claim construction independent of assessment of defence of invalidity — Insufficient basis to set aside decision — As respondent not cross-appealing finding licensee receiving benefit under licence estopped from raising defence of invalidity, Court bound to accept validity of patent’s claims pursuant to Patent Act, s. 43 — Trial Judge erred in law in construing terms in claim by reference to disclosure as no ambiguity in terms — SLAR apparatus infringing claim — Respondent not liable for direct infringement as having licence to use patent in own business, undertakings — Use of tool by other public utilities with which respondent sharing technology not protected by licence as not within respondent’s business, undertakings — Injunction issued to prevent respondent from inducing use by others.

Torts — Pursuant to agreement under which Ontario Hydro undertaking, on cost-sharing basis, research to find solution to misaligned spacers in nuclear reactors, Ontario Hydro sharing with two other public provincial utilities technology developed by employee — Technology infringing appellant’s patent — Ontario Hydro having non-exclusive licence to use invention in own business, undertakings — In action for inducing infringement, must show act of infringement completed by direct infringer — Hydro Quebec, New Brunswick Power not using tool and method beyond experimental, testing phase — Testing not infringing use — Licence no defence to action for inducement — Respondent’s —business and undertakings— not encompassing business, undertakings of others.

Equity — Trial Judge holding appellant not entitled to equitable remedy of accounting of profits, citing objectionable conduct, indicating neither side’s hands entirely clean — Improper conduct should not deprive party of equitable remedy unless bearing directly on appropriateness of remedy — Appellant’s questionable conduct preceding issue of patent, involving amendments to patent, or personal hostility to fellow employee not even party — Not bearing directly on appropriateness of remedy — Permanent quia timet injunction granted — As no infringement yet, remedies of damages, accounting of profits, delivery up, interest, not applicable.

Injunctions — Real probability Ontario Hydro, licensee, would facilitate unlicensed use by other public utilities of apparatus found to infringe appellant’s patent — Permanent quia timet injunction issued to prevent Ontario Hydro from inducing such use.

This was an appeal from the trial judgment finding no patent infringement. The appellant was employed by Ontario Hydro when he obtained a patent for an invention relating to a method for repositioning misaligned spacers in a nuclear reactor using a varying electric current to achieve electromagnetic force. Pursuant to Ontario Hydro’s then “patent policy”, ownership of a patented invention developed in the course of employment was held by the employee. In return, Ontario Hydro received a royalty-free (non-exclusive) licence to use the invention in its “business and undertakings”. At the same time, Dr. Dableh’s superior, Dr. Cenanovic, was working on a method and apparatus for repositioning spacers through the application of a continuous current to achieve electromagnetic force, for which he also received a patent. Due to certain disadvantages of Dr. Dableh’s device, Ontario Hydro did not pursue its further development, opting instead to develop Dr. Cenanovic’s device. Ultimately, Ontario Hydro developed a tool and method for repositioning the misaligned spacers called SLAR which it “shared” with Hydro Quebec and New Brunswick Power pursuant to a formal agreement between the three public utilities. The appellant commenced an action for a declaration as to the validity of his patent and that the SLAR tool and method infringed it; a determination that Ontario Hydro was liable in tort for damages or an accounting of profits for inducing infringement by both Hydro Quebec and New Brunswick Power; and an injunction against Ontario Hydro to enjoin future breaches. The Trial Judge concluded that the whole of the patent read together evinced a “narrow” invention, based on a consideration of prior art and the patent’s disclosure, including the patent’s preferred embodiment (the apparatus which the appellant had actually built). He held that the SLAR tool and method did not infringe the claims of the patent. In light of that finding, he did not address the issue of inducement. The counterclaim of invalidity was dismissed on the ground that a licensee who had received a benefit under the licence was estopped from raising that defence. The Trial Judge also held that Dr. Dableh was not entitled to the discretionary remedy of profits, citing the objectionable conduct of both parties and the fact that Ontario Hydro was a government owned public utility.

The issues were: (1) whether the Trial Judge erred in his construction of the patent’s claims; and (2) assuming the SLAR tool and method infringed the patent, whether Ontario Hydro was guilty of the tort of inducement to infringe.

Held, the appeal should be allowed.

In construing claim 1 by reference to prior art and the concept of obviousness, the Trial Judge confused the task of determining a patent’s validity with that of claim construction, but that error was not a sufficient basis for setting aside the judgment. Whether a claim is invalid for obviousness or lack of novelty is irrelevant to its proper construction. Claim construction must be done before, and independent of, assessing whether the defence of invalidity is sustainable. Since Ontario Hydro did not cross-appeal the Trial Judge’s finding that it was estopped from alleging invalidity, the Court was obligated, pursuant to Patent Act, section 43, to accept the validity of the patent’s claims for purposes of this action. As validity was no longer in issue, the Court could not address the issue of whether the rule in Bayer Aktiengesellschaft v. Apotex Inc., that the prohibition against a licensee challenging a patent’s validity does not apply when defending an action for infringement, should be adopted by the Federal Court.

The Trial Judge erred in law in construing the meaning of the terms “varying electric current” and “electromagnetic coil” in the claim by reference to the embodiments illustrated and described in the disclosure of the patent. Recourse to the disclosure portion of the specification is: (1) permissible to assist in understanding the terms used in the claims; (2) unnecessary where the words are plain and unambiguous; and (3) improper to vary the scope or ambit of the claims. Where the words used in the claims are clear and unambiguous, they must not be narrowed or limited to a patent’s preferred embodiment. The terms “varying electric current” and “electromagnetic coil” were not ambiguous and on their face encompassed AC current and coils other than the type used by Dr. Dableh. The Trial Judge was not justified in resorting to the disclosure to resolve any ambiguity.

The SLAR apparatus clearly infringed claim 1 of the patent.

The tort of inducement was not established. One of the criteria which must be met in an action for inducing infringement is that the act of infringement was completed by the direct infringer. There was no evidence that the use of the SLAR tool by Hydro Quebec and New Brunswick Power had proceeded beyond the experimental and testing phase. Testing is not an infringing use. Therefore the respondent had not induced either utility to infringe the patent.

The respondent’s licence was no defence to an action for inducement. The development of a workable tool for relocating spacers, whether on the respondent’s own initiative or in conjunction with others, as well as actual use of the tool in the respondent’s own reactors, was within the scope of the respondent’s “business and undertakings”. The respondent’s business and undertakings did not encompass the business and undertakings of others. An interpretation of the licence which would protect use of the tool by others would unduly undermine the appellant’s patent rights as it would allow the royalty-free use of his invention in any reactor in Canada.

There was sufficient evidence to indicate a real probability that the respondent would facilitate an unlicensed use by Hydro Quebec and/or New Brunswick Power, and therefore a permanent quia timet injunction was issued to prevent the respondent from inducing the use of the SLAR apparatus by others. Improper conduct should not deprive a party of an equitable remedy unless that conduct bears directly on the appropriateness of the remedy. The appellant’s questionable conduct preceded the issue of the patent, involved amendments to the patent, or involved personal hostility to a fellow employee who was not even a party. Once the patent was issued, it presumptively conferred certain rights to its enforcement on the appellant. The conduct complained of did not bear directly on the appropriate remedy to give effect to those legal rights against the respondent. As no infringement had yet taken place, the remedies of damages, accounting of profits, delivery up, or interest did not apply.

The appellant was entitled to his costs here and below.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Patent Act, R.S.C., 1985, c. P-4, s. 43 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16).

CASES JUDICIALLY CONSIDERED

APPLIED:

American Cyanamid Co. v. Berk Pharmaceuticals Ltd., [1976] R.P.C. 231 (Ch. D.); Copeland-Chatterson Co. v. Hatton et al. (1906), 10 Ex. C.R. 224; Warner-Lambert Co. v. Wilkinson Sword Canada Inc. (1988), 19 C.P.R. (3d) 402; 19 F.T.R. 198 (F.C.T.D.); Frearson v. Loe (1878), 9 Ch. D. 48; Micro Chemicals Limited v. Smith Kline & French Inter-American Corporation, [1972] S.C.R. 506; (1971), 25 D.L.R. (3d) 179; 2 C.P.R. (2d) 193.

CONSIDERED:

Bayer Aktiengesellschaft v. Apotex Inc. (1995), 60 C.P.R. (3d) 58 (Ont. Gen. Div.).

REFERRED TO:

Dableh v. Ontario Hydro (1990), 33 C.P.R. (3d) 544 (F.C.T.D.); Xerox of Canada Ltd. et al. v. IBM Canada Ltd. (1977), 33 C.P.R. (2d) 24 (F.C.T.D.); Beecham Canada Ltd. et al. v. Procter & Gamble Co. (1982), 61 C.P.R. (2d) 1; 40 N.R. 313 (F.C.A.); leave to appeal to S.C.C. refused, [1982] 1 S.C.R. v; (1982), 63 C.P.R. (2d) 260; Unilever PLC v. Procter & Gamble Inc. (1995), 61 C.P.R. (3d) 499; 184 N.R. 378 (F.C.A.); TRW Inc. v. Walbar of Canada Inc. (1991), 39 C.P.R. (3d) 176; 132 N.R. 11 (F.C.A.); Nekoosa Packaging Corp. v. AMCA International Ltd. (1994), 56 C.P.R. (3d) 470 (F.C.A.); Electric and Musical Industries Ltd. et al. v. Lissen, Ltd. et al. (1939), 56 R.P.C. 23 (H.L.); Lovell Manufacturing Company et al. v. Beatty Bros. Limited (1962), 23 Fox’s Pat. C. 112 (Ex. Ct.); Molins and Molins Machine Co. Ltd. v. Industrial Machinery Co. Ltd. (1938), 55 R.P.C. 31 (C.A.).

AUTHORS CITED

Sharpe, Robert J. Injunctions and Specific Performance, 2nd ed. Aurora, Ontario: Canada Law Book, 1995.

APPEAL from trial judgment (Dableh v. Ontario Hydro (1993), 50 C.P.R. (3d) 290; 67 F.T.R. 241 (F.C.T.D.)) finding no patent infringement. Appeal allowed.

COUNSEL:

Donald M. Cameron for appellant.

Eric R. Finn and John M. Rattray for respondent.

SOLICITORS:

Smith & Lyons, Toronto, for appellant.

Eric R. Finn, Ontario Hydro, Law Division, Toronto, for respondent.

The following are the reasons for judgment rendered in English by

The Court:

I           INTRODUCTION

The appellant, Dr. Dableh, was employed as a research engineer with the respondent, Ontario Hydro, at the time he applied for and obtained Canadian Letters Patent No. 1224578 (the patent). The invention relates to a cost-saving method for repositioning misaligned spacers, located within a part of a nuclear reactor which is inaccessible by mechanical means. Proper spacer alignment is critical to the safe operation of a commissioned reactor. Under the method described in the patent, a realignment is effected by means of a tool which incorporates principles of electromagnetism. Pursuant to Ontario Hydro’s “patent policy” at the time the patent issued, ownership of a patented invention developed in the course of employment by an employee is held by that employee. In return, Ontario Hydro receives a royalty-free (non-exclusive) licence to make use of the invention in its “business and undertakings”. Ultimately, Ontario Hydro developed a tool and method for repositioning the misaligned spacers called SLAR, (an acronym for “spacer location and repositioning”). Ontario Hydro “shared” this technology with two other provincial utilities: Hydro Quebec and New Brunswick Power. In response, Dr. Dableh initiated an action in the Trial Division claiming a declaration as to the validity of his patent and that the SLAR tool and method infringe such; a determination that Ontario Hydro is liable in tort for damages or an accounting of profits for inducing infringement by both Hydro Quebec and New Brunswick Power; and an injunction against Ontario Hydro to enjoin future breaches.

The Trial Judge, in a decision which is now reported at (1993), 50 C.P.R. (3d) 290,[1] concluded, inter alia, that the SLAR tool and method do not infringe the patent and, therefore, Ontario Hydro is not liable in damages. He also concluded that as a licensee of the patent, Ontario Hydro is estopped from raising the defence of invalidity.

This is an appeal and cross-appeal from that decision. The cross-appeal concerns only the Trial Judge’s alternative finding that if on appeal liability is established, damages should be determined on a reference. Two principal issues arise for our consideration. The first focuses on whether the Trial Judge erred in his construction of the patent’s claims. The second issue arises only if it can be established that the SLAR tool and method infringes the patent. Assuming such, it remains to be determined whether the actions of Ontario Hydro satisfy the legal requirements necessary to establish the novel tort of inducement to infringe. Our analysis begins with the factual background necessary to place the Trial Judge’s decision in perspective.

II          BACKGROUND

Within the core of a CANDU reactor are found two types of tubes: pressure tubes and calandria tubes. Within a pressure tube flows heavy water which is heated by nuclear fuel bundles positioned therein. A pressure tube is then placed longitudinally, or coaxially, inside a calandria tube of somewhat bigger bore. It is essential that these two tubes not touch each other. If they do, the highly heated pressure tube is cooled at the point of contact, resulting in blistering, cracks or even ruptures. To eliminate this possibility the two tubes are separated by a series of annular spacers, otherwise known as garter springs, which encircle the pressure tube. However, it was discovered that these spacers tend to migrate towards the ends of the tubes, either during installation or operation of the reactor. When this phenomenon occurs the pressure tubes tend to sag, thereby giving rise to the problem that spacers were designed to eliminate. The problem first materialized in 1983 at Ontario Hydro’s Pickering facility. At that time, the only effective method of repositioning spacers required Ontario Hydro to take the reactor off-line and disassemble the entire calandria structure. The cost of such remedial action is in the millions of dollars.

In 1983, Dr. Dableh was employed by Ontario Hydro as a research engineer in Ontario Hydro’s Research Division which was attempting to find a cost-effective method of realigning the spacers. During that year he proceeded to pursue the idea that spacers could be realigned electromagnetically and without disassembling the tubal structures. Dr. Dableh’s invention is based on the principle of induction. Induction is the phenomenon whereby a current in one wire, whose flow varies in magnitude with time, causes a current to flow in a second nearby wire. The primary current and the induced current then interact so as to exert an electromagnetic force on each other. Two parallel wires carrying current in opposite directions repel one another. Two parallel wires carrying current in the same direction attract each other. The repulsion aspect of this phenomena was illustrated in the 1800’s by Sir John Fleming in his “jumping ring” experiment.

The method pursued by Dr. Dableh involved the insertion of an electromagnetic coil along the interior of the pressure tube. The coil is positioned adjacent to the spacer to be moved. A “varying electric current” is then passed through the coil in such a manner as to induce a current in the spacer and exert an electromagnetic repulsive force on the spacer in the direction of the required displacement. According to the evidence, to achieve the intended effect it is necessary to use a current of a frequency and magnitude low enough to penetrate the wall of the pressure tube, yet high enough to induce sufficient current in the spacer.

In October of 1983, Dr. Dableh turned to an alternating current (AC) source of electricity (wall outlet) and an air-cored (hollow) coil as a means of moving spacers, but without success. He then employed a capacitor bank, which is charged from a direct current (DC) source such as a battery. By employing a DC source of current coupled with a capacitor, Dr. Dableh was able to generate a current of sufficient frequency and magnitude to cause the spacers to move.

Dr. Dableh’s method envisioned the use of a varying electric current to achieve the required induction and electromagnetic force effects. As implemented, it made use of DC current with a magnitude of 17 kiloamps to 180 kiloamps, at a frequency of 1190 hertz to 2000 hertz. In order to offset the tremendous amount of heat created by his method, and to increase the viable life of the coils, Dr. Dableh included a diverter switch in his device. This switch is used to shunt the current away from the primary coil at a pre-determined point in time. Because of the short duration of the current pulse allowed to pass through the coil before the current is diverted, Dr. Dableh’s device was referred to by employees at Ontario Hydro as a “zapper”. Dr. Dableh’s method also envisioned the need to reposition spacers in a sequence of step-by-step movements generated by multiple firings of his apparatus as each current pulse, or “zap”, only moves the spacer a short distance. Finally, Dr. Dableh posited that an accelerating impulse could be exerted on the spacer by introducing a second coil into the apparatus. A second current pulse would be sent through the second coil in timed relation to the first current pulse, in order to give the spacer a second electromagnetic push while the spacer is still in motion from the first push.

With this technology Dr. Dableh was successful in moving thousands of spacers within non-commissioned nuclear reactors. However, his method of moving spacers was not without its disadvantages. As noted earlier, because of the amplitude of the current supplied by the capacitor, the amount of heat generated in a coil could destroy the coil itself, which could result in damage to the wall of the pressure tube. The diverter switch incorporated by Dr. Dableh reduced this problem, but there were still incidents of coil failure in some pressure tubes when Dr. Dableh’s method was used in non-commissioned reactors between February and April 1984, resulting in damage to those tubes. As a result, Dr. Dableh’s method was deemed too dangerous for use in commissioned reactors and it was never applied in that context.[2]

Ontario Hydro paid for and directed the prosecution of Dr. Dableh’s patent. The initial application was made in December of 1983 and the patent was issued in September of 1987. The nature of the invention is described in the disclosure of the patent specification. Reproduced below are those portions relied on by the Trial Judge and reproduced in his reasons at pages 295-298:

This invention relates generally to a method of repositioning metallic members which are constrained to move longitudinally with respect to a tube with which they are associated, the members being located on one side of the tube wall at which they are not directly accessible by mechanical repositioning means.

The invention is especially applicable to the repositioning of spacers in fluid-cooled nuclear reactors. In a fluid-cooled nuclear reactor, such as a Candu reactor, having a calandria comprising an array of calandria tubes each housing a coolant tube extending coaxially therethrough, the coolant tubes are generally spaced from the respective calandria tubes in which they are housed by annular spacers, such as “garter springs”. The spacers are necessary to maintain the coaxial relationship of the tubes, and above all to prevent them from coming into contact as local overheating would cause structural damage.

In the installation of such a reactor, or even during its operation, spacers may be displaced from their required positions with the result that the coolant tubes will lack the necessary configuration of supports to carry the distributed load in operation of the reactor, and serious problems may arise from sagging of these tubes. For safe operation of such a reactor it is therefore necessary to have some way of repositioning the spacers after installation or even after the reactor has been operating for some time. However, these spacers are seated between the coolant tubes and the calandria tubes and are not directly accessible by mechanical means and so repositioning of the spacers has hitherto necessitated extensive dismantling of the calandria.

The present invention provides an alternative method for repositioning the spacers which does not require direct mechanical access to them and which in consequence is simpler and much less costly than hitherto known methods.

The invention is based on the concept of accessing the spacers electromagnetically by means of an electromagnetic coil which is advanced interiorly along the respective coolant tube to a position at which, when a current is passed through the coil, an electromagnetic repulsive force will be exerted on the spacer. The annular spacers, and also the calandria tubes and coolant tubes, of a calandria type reactor are most commonly of a nonferromagnetic metal, typically a zirconium/niobium alloy.

Accordingly, the invention provides, in a fluid-cooled nuclear reactor having a calandria comprising an array of longitudinally extending calandria tubes each housing a collant [sic] tube extending coaxially therethrough, each coolant tube being spaced from its associated calandria tube by annular spacers seated therebetween, a method of repositioning a selected one of said spacers in situ by displacing it longitudinally from an initial position to a required position, which method comprises advancing an electromagnetic coil interiorly along the coolant tube to a position adjacent the spacer and passing a current through the coil, the position of the coil relative to the spacer and the magnitude and rate of change of current being such as to exert an electromagnetic repulsive force on the spacer in the direction of the required displacement and sufficient to overcome static friction at the seating of the spacer between the tubes. It is usually preferable for the coil to be oriented coaxially with the coolant tube in order to maximize the repulsive force which is exerted. However, in certain cases the coil may be arranged with its axis parallel to but displaced from the tube axis.

In order to increase the range of movement of the spacer an accelerating impulse may be imparted to the spacer during its displacement by means of a second current pulse passed through a suitably positioned second coil in timed relation to the first-mentioned current.

The method can be improved, so as to increase the life of the coil, by introducing a diverter switch into the circuit so as to divert current from the coil into a different path after a certain time, e.g. after the first period or two of the applied current.

In practice, and especially in cases where the spacer must be displaced by a large amount, it may be necessary to move the spacer step by step from its initial position to the required position by a succession of such displacements.

In order that the invention may be readily understood one method in accordance with the invention will now be described, by way of example, with reference to the accompanying drawings …

Referring to Figure 1, the calandria 10 of a Candu reaction comprises an array of parallel, longitudinally extending calandria tubes 11, only one of which is shown in Figure 1, extending between end walls 12, 13 of the calandria housing. Pressurized carbon dioxide serving as a coolant is circulated through the housing, filling the space between the calandria tubes 11. Heavy water, serving both as a coolant and as a moderator is circulated through coolant tubes 14, commonly referred to as “pressure tubes”, each coolant tube 14 extending coaxially through a respective calandria tube 11. The coolant tubes 14 are connected at their ends to end fittings 15, 16. The coolant tubes 14, in which fuel elements (not shown) are located, are supported in coaxial relationship with the calandria tubes 11 by means of annular spacers 17 distributed along their length. Such support is necessary since the tubes are typically about 20 feet long and would sag under the weight of the fuel elements if not supported intermediately between their ends. Moreover, the spacers must be positioned so as to provide adequate support for the distributed load along the entire length of a tube, since sagging or buckling of a coolant tube could result in contact between it and the calandria tube with serious consequences.

As previously mentioned, the annular spacers as well as the calandria tubes and coolant tubes are of nonferromagnetic metal, typically a zirconium/niobium alloy.

In the installation of the reactor, particularly in the installation of the coolant tubes 14 and in the subsequent heat treatment of the calandria as a whole, the annular spacers 17 may be displaced from their original positions, and if the displacement is substantial they will not provide adequate support for the distributed load after the fuel elements have been located in the coolant tubes. Clearly, since the spacers are not directly accessible they cannot be relocated by mechanical means without extensive dismantling of the calandria structure.

In order to minimize heat transfer between the coolant tubes 14 and the calandria tubes 11 at the points of support, the spacers 17 are most commonly of the form shown in Figure 2. A spacer of this type, commonly referred to as a “garter spring”, consists of an open-ended coil of wire coiled into a toroidal shape and retained in that shape by a retaining hoop 18. The hoop 18 is of the same kind of wire.

Although the spacers 17 are not accessible by mechanical means after the tubes 11 and 14 are installed, they can be accessed electromagnetically by means of an electromagnetic coil which is advanced inside the coolant tubes. Figures 3, 4 and 5 illustrate the principle of this method, in which an electromagnetic coil 19, oriented so as to be coaxial with the coolant tube 14 and the calandria tube 11, is advanced to a position adjacent the spacer 17. A current is passed through the coil 19, thereby producing a changing magnetic field and so inducing a back E.M.F. in the annular spacer 17. Since the latter forms a conductive path which is substantially coaxial with the coil 19, the resultant secondary current creates a magnetic field which interacts with the primary field thereby exerting an electromagnetically induced repulsive force on the space 17. This force is denoted in Figures 3, 4 and 5 by arrows F, each arrow representing a vector component of the force.

The direction and magnitude of the resultant force will depend upon the positions of the individual turns of the coil 19 with respect to the spacer 17. For the purpose of the present invention only the longitudinal component of the force is useful. Thus, in Figure 3, the turns of the coil 19 are equally distributed on both sides of the annular spacer; the resultant force is radially outward, there being no axial component. In Figure 4 the resultant repulsive force does have an axial component in one direction, and in Figure 5 the resultant force has an axial component in the opposite direction. In order to reposition to spacer, therefore, it is necessary to advance the electromagnetic coil 19 to a position adjacent the spacer such that the resultant force will act on the spacer in the direction in which the spacer has to be moved. Furthermore, the force must be such as to overcome the static friction at the seating of the spacer between the tubes.

Apart from the positioning of the electromagnetic coil 19 with respect to the spacer 17, the resultant force will depend upon the rate of change and duration of primary current in the coil 19. The primary current may be supplied by an AC line source, but in practice, to avoid possible overheating of the coil 19, an oscillatory current of short duration and finite energy more in the nature of a pulse may be used, as in particular embodiments described below. In more general terms, the methods of the invention employ coil currents which have the following characteristics:

(a) The frequency of the current waveform is selected to be low enough to penetrate the wall of the coolant tube 14 without suffering a severe decay, yet high enough to induce sufficient current in the annular spacer.

(b) The magnitude is high enough to induce sufficient current in the annular spacer, but not so high as to destroy the current carrying elements or present any risk of deforming or affecting the metallurgical structure of the coolant tube.

In any given case the frequency of the current waveform and the magnitude of the current must lie between upper and lower limits. These limits will depend upon the various electrical and other parameters of the particular system and can be determined analytically or empirically for a given installation.

The current pulse to be applied to the electromagnetic coil 19 may be obtained from any suitable source, for example a homopolar generator, but the appliant has been most successful in obtaining the necessary current pulse from a single discharge of a capacitor bank charged to a suitable energy level. The circuit employed is illustrated diagrammatically in Figure 6.

Referring to Figure 6, the capacitor bank 20 is charged from a D.C. source 21, the charging circuit including a switch 22 controlled by a remote control unit 23. Discharge of the capacitor bank 20 through the electromagnetic coil 19 is controlled by an ignitron switch 24 operated from a remote triggering unit 25. The resultant discharge is oscillatory, the frequency of the current waveform being determined by the capacitance of the capacitor bank 20, the inductance of the coil 19, and the inductance of the discharge circuit.

While Dr. Dableh was engaged in research, so too was his superior at Ontario Hydro, Dr. Cenanovic. Dr. Cenanovic had been working on an “AC device” for which he applied for a patent in July, 1986. He ultimately received Canadian Letters Patent No. 2227292 in September 1987. The essence of Dr. Cenanovic’s patent is a method and apparatus for repositioning spacers, in a controllable fashion, through the application of a continuous electromagnetic force. Dr. Cenanovic’s patent describes 3 contiguous coils, with 200 turns in 5 layers, made of standard magnet wire. The coils are each wound around a special type of core. The purpose of the high number of windings and the use of a high permeability core is to decrease the magnitude and frequency of current required to achieve the desired effect, thereby decreasing the amount of heat generated in the coils. The coils are energized by alternating current (AC) with a frequency of 50 hertz to 60 hertz, and a magnitude of approximately 100 amps. These currents induce a current in the spacer. The currents through the three coils are in a time-phased relationship so as to produce what is described by some experts as a travelling magnetic field, and to increase the overall magnetic effect on the spacer. Dr. Cenanovic’s method envisions the application of a continuous current to achieve this effect. In order to make the apparatus viable for use in a commissioned reactor, it is to be coated in a water resistant substance so as to make it impermeable to heavy water.

While Ontario Hydro recognized that Dr. Dableh’s method had been effective in repositioning spacers in non-operating reactors, it decided against pursuing further development of his device. Rather Ontario Hydro opted to proceed with the development of the SLAR based on the technology being pursued by Dr. Cenanovic. The minutes of a meeting of the SLAR review group held on November 19, 1984 reflect that it was aware of, and accepted the effectiveness of Dr. Dableh’s method in non-commissioned reactors.[3] These minutes also indicate that there were two principal concerns perceived with integrating Dr. Dableh’s method into the SLAR. The first was the potential consequence of a coil failure in a commissioned tube. The second was the incompatibility of Dr. Dableh’s apparatus with the SLAR machine caused by the size of the cable used in Dr. Dableh’s system. On the other hand, the committee concluded that Dr. Cenanovic’s AC device had demonstrated the repositioning abilities of Dr. Dableh’s, but had eliminated the major disadvantages associated with it. The committee therefore recommended that Dr. Cenanovic’s method be developed for use in the SLAR.

While the SLAR is described as a multifaceted tool, its principal function is to effect a repositioning of spacers. The claim of infringement relates only to the SLAR’s linear induction motors (LIM), of which there are two. LIM is SLAR terminology for the apparatus purportedly adapted from Dr. Cenanovic’s patent. As with Dr. Cenanovic’s patent, each LIM consists of three coils, and each of the coils has a ferromagnetic core.

As noted above, the SLAR project was conceived after the incident occurred at the Pickering facility in 1983. Prior to that time Ontario Hydro, New Brunswick Power, Hydro Quebec and the Atomic Energy of Canada Limited, (the developer and designer of the CANDU reactors operated by the three public utilities), had been involved in the sharing of technical information. After the 1983 incident the three public utilities and Atomic Energy entered into a formal agreement (the SLAR agreement). Under that agreement Ontario Hydro was to undertake, on a cost-sharing basis, the research necessary to find a cost-effective solution to the problem of misaligned spacers.

In May of 1990, Dr. Dableh commenced an action in the Federal Court against Ontario Hydro, Hydro Quebec and New Brunswick Power. The action against the latter two entities was struck on jurisdictional grounds.[4] The amended statement of claim alleges that Ontario Hydro induced and procured Hydro Quebec and New Brunswick Power to infringe the patent.

In his amended statement of claim, Dr. Dableh alleges that the SLAR method and tool developed by Ontario Hydro infringes claims 1, 2, 3, 5, 8, 9, 10 and 11 of his patent. It is common ground that the SLAR device does not infringe claims 4 and 6. Those claims relate expressly to the impulse technology employed by Dr. Dableh. The allegation that claim 10 was being infringed was abandoned at trial. Claims 1 to 11 inclusive read as follows:

1. In a fluid-cooled nuclear reactor having a calandria comprising an array of longitudinally extending calandria tubes each housing a coolant tube extending coaxially therethrough, each coolant tube being spaced from its associated calandria tube by annular spacers seated therebetween, a method of repositioning a selected one of said spacers in situ by displacing it longitudinally from an initial position to a required position, which method comprises advancing an electromagnetic coil interiorly along the coolant tube to a position adjacent the spacer and passing a varying electric current through the coil, the position of the coil relative to the spacer and the magnitude and rate of change of current being such as to exert an electromagnetic repulsive force on the spacer in the direction of the required displacement and sufficient to overcome static friction at the seating of the spacer between the tubes.

2. A method according to claim 1, wherein the annular spacers, the coolant tubes and the calandria tubes, are of nonferromagnetic metal.

3. A method according to claim 2, wherein a second electromagnetic coil is advanced interiorly along the coolant tube in fixed axial relationship to the first coil, the second coil being axially spaced from the first coil in the direction of the required displacement, and wherein a second varying electric current is passed through the second coil in timed relation to the first-mentioned current thereby to impart an accelerating impulse to the spacer during its displacement.

4. A method according to claim 2, further comprising the step of diverting current from the coil at a predetermined time after the initiation of the applied varying current.

5. A method according to claim 2, 3 or 4, wherein the spacer is displaced step by step from the initial position to the required position by successive such displacements.

6. A method according to claim 2, wherein the varying electric current is a current pulse derived from a capacitor external to the calandria and connected in circuit with the coil, the method comprising charging the capacitor to a predetermined voltage, advancing the coil to said position adjacent the spacer, and discharging the capacitor through the coil.

7. A method according to claim 2, wherein the varying electric current is derived from a homopolar generator connected in circuit with the coil.

8. A method according to claim 2, wherein the calandria tubes, the coolant tubes, and the annular spacers, are of zirconium/niobium alloy.

9. A method according to claim 2, wherein the annular spacers are garter springs.

10. In a fluid-cooled nuclear reactor having a calandria comprising an array of longitudinally extending tubes each housing a coolant tube extending coaxially therethrough, each coolant tube being spaced from its respective calandria tube by annular spacers, the spacers and the calandria tubes and coolant tubes all being of nonferromagnetic metal, a method of determining the positions of the spacers of a selected coolant tube which comprises advancing a first electromagnetic coil interiorly along the coolant tube while advancing a second electromagnetic coil interiorly along the coolant tube in fixed axial relation to the first coil, passing an alternating current through the first coil while examining the waveform of current induced in the second coil, and detecting changes in said waveform.

11. A method of repositioning a nonferromagnetic metallic member which is constrained to move longitudinally with respect to a tube, the tube having a wall of nonferromagnetic material and the member being located on one side of the wall at which it is not directly accessible, which method comprises advancing an electromagnetic coil along the tube on the other side of the wall to a position adjacent said member and, while maintaining the coil coaxial with the tube, passing a current pulse through the coil, the position of the coil relative to the member and the magnitude and rate of change of current being such as to exert an electromagnetic force on said member in the direction of the required displacement and sufficient to overcome any static friction to which the member is subjected.

III         DECISION BELOW

For purposes of this appeal, it is unnecessary to retrace all of the findings of the Trial Judge found within his extensive reasons. Specific findings relevant to the principal issues raised on appeal are set out more fully when required. However, the major conclusions may be summarized as follows.

With respect to the issue of claim construction, the Trial Judge concluded that the whole of the patent read together evinces a “narrow” invention. That is to say, a “DC electrical pulse method of moving the garter springs”.[5] In arriving at this construction of the claims the Trial Judge made recourse to prior art and the patent’s disclosure, including the patent’s preferred embodiment (which is the apparatus Dr. Dableh actually built) and the illustrations contained therein. Finally, the Trial Judge looked at the disclosure to determine that the patent “warns” against use of an AC source current.

With respect to the infringement issue, the Trial Judge determined that the SLAR was essentially an embodiment of Dr. Cenanovic’s patent, except for a reversed polarity in the middle coil. (As of the date of the trial there remained a basic question as to whether the SLAR tool worked. It is also alleged that there are significant differences between what Dr. Cenanovic’s patent claims, and the actual SLAR method and construction.) Comparing Dr. Dableh’s invention with the SLAR apparatus, the two were found to differ in several material respects. First, the Bitter or near-Bitter coil described and illustrated in the disclosures of the patent differs drastically in both form and appearance from the three contiguous coils of the SLAR. The coils so described in Dr. Dableh’s patent consist of approximately 8 and 5 turns. Each of the three coils of the SLAR’s two LIM’s consist of approximately 200 turns of insulated standard magnet wire. Second, the patent does not describe the use of a ferromagnetic core, which is used in the SLAR. Finally, the essence of Dr. Dableh’s invention was characterized by the Trial Judge in terms of an impulse technology method utilizing a high-energy varying DC pulse producing a “standing wave”, while the SLAR device uses an AC electromagnetic “travelling wave” method. Given these differences the Trial Judge concluded that Dr. Dableh did not invent or discover the SLAR tool, and the SLAR tool and method do not infringe the claims of the patent. In light of this finding, the Trial Judge did not address the issue of inducement.

With respect to the defence of invalidity of the patent, the Trial Judge dismissed Ontario Hydro’s counterclaim on the ground that a licensee who has received a benefit under the licence is estopped from raising that defence.

The Trial Judge turned to the issue of remedies in view of the possibility that his finding of non-infringement could be reversed on appeal. He held that Dr. Dableh was not entitled to the discretionary remedy of profits, based on equitable grounds and on the fact that Ontario Hydro is a government owned public utility. As to damages, the Trial Judge concluded that the evidence of Dr. Dableh’s witnesses was unreliable and inadequate. Therefore, in the event that his finding of non-infringement was reversed on appeal a reference for assessment of damages should be ordered by a referee designated by the Associate Chief Justice. The Trial Judge did not, however, make a finding as to whether Ontario Hydro is liable for inducement. The Trial Judge went on to determine that the “full” costs of the reference were to be borne by Dr. Dableh regardless of the amount of damages actually awarded.

IV        ANALYSIS

A myriad of issues were raised on appeal, both in the lengthy written submissions and in four days of oral argument. These ranged from the seven issues of claim construction to infringement, the novel tort of inducement, remedies, and the matter of costs. Ontario Hydro (hereinafter the respondent), however, did not initiate a cross-appeal with respect to the Trial Judge’s finding that it is estopped from challenging the validity of the Dableh patent. Therefore, we must assume the patent to be valid as between these parties, pursuant to section 43 [as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16] of the Patent Act, R.S.C., 1985, c. P-4. Within this framework, the success of this appeal hinges initially on the issue of infringement, and whether the Trial Judge erred in his approach to claim construction. In essence, the pivotal issue is whether the claims of the patent, and in particular claim 1, are worded broadly enough to embrace the AC technology used in the SLAR tool, or are limited to the DC device which Dr. Dableh (hereinafter the appellant), developed.

1.         Claim Construction

With respect to claim 1, the appellant alleges that the Trial Judge erred in two material respects. First, it is submitted that he erred in construing the claim by reference to prior art and focusing on the “obviousness” of what was being claimed. Consequently, it is argued that the Trial Judge failed to distinguish between the task of construing a patent and determining its validity. Second, it is alleged that the Trial Judge erred in construing claim 1 by reference to the disclosure and thereby narrowing the claim’s ambit to what the appellant had built, as opposed to what the words of the claim purport to encompass. There being no ambiguity in the meaning of any terms found within that claim, it is the position of the appellant that the Trial Judge failed to give its words their plain and ordinary meaning. Our analysis begins with the first of the alleged errors.

a)         Claim Construction v. Invalidity

Noting that claim 1 is simply a description of the relevant parts of a CANDU reactor and that it indicates that a varying electric current is used to exert a repulsive force on a spacer, the Trial Judge writes in terms of the claim’s validity rather than its scope. Specifically, the concepts of novelty and obviousness (and later on covetousness) appear to have informed the Trial Judge’s construction of claim 1. At pages 300-301 of his reasons he states:

The claim indicates that it is a varying electric current which exerts a repulsive force on the garter spring in the required direction, sufficient to overcome static friction on the spring in situ between the two concentric tubes.

This, with a possible exception, evinces no patentable invention for it is and was obvious, as can be seen from the general experiments of the 19th and early 20th century discoverers right along to the specific work and writings on the exertion of electromagnetic forces in Candu pressure tubes… [The exception referred to is limited to a DC device for moving garter springs in Candu reactor.]

The description in claim 1 is useful for the purpose of locating the technique in the cosmos, but the technique is not novel, is indeed clearly obvious, for it merely turns the long and well-known “jumping ring” onto a horizontal plane. [Emphasis added.]

Subsequently, the Trial Judge refers to certain prior art for the purpose of showing “that the idea of inserting a sturdy coil into a Candu pressure tube in order to effect repairs is, and was at all material times, not new”.[6]

The appellant maintains that in construing claim 1 by reference to prior art and the concept of obviousness the Trial Judge has confused the task of determining a patent’s validity with that of claim construction. We agree. Whether a claim is invalid for obviousness or lack of novelty is irrelevant to its proper construction. Claim construction must be done before, and independent of, assessing whether the defence of invalidity is sustainable. As was stated in American Cyanamid Co. v. Berk Pharmaceuticals Ltd.:[7]

The claims should be considered without reference to the effect that the giving of any particular meaning may have on any issue of infringement, without reference to the result and effect so far as the attack on validity is concerned. [Emphasis added.]

In the case under appeal, obviousness or novelty are not the only possible bases for challenging the validity of the patent. It is also open to attack on the ground of “covetousness”. Indeed, further on in his reasons the Trial Judge makes a number of oblique references to covetous claiming.[8]

However, that ground of attack also goes to the issue of validity. Since Ontario Hydro has not cross-appealed the Trial Judge’s finding that the respondent is estopped from alleging invalidity, the Court is obligated, pursuant to section 43 of the Patent Act, to accept the validity of the patent’s claims for purposes of this action. Parenthetically, we note that Lederman J. in Bayer Aktiengesellschaft v. Apotex Inc.,[9] concluded that although a licensee is estopped from challenging a patent’s validity that prohibition does not apply when defending an action for infringement. Query: should the rule in Bayer be adopted by the Federal Court, and if so, does its rule and reasoning apply to cases where a licensee is sued in tort for inducing infringement? We cannot address this question as validity is no longer in issue.

Accepting that the Trial Judge erred in law by introducing matters of validity into the task of claim construction, we are not prepared to hold that in the circumstances of this case that error, by itself, constitutes a sufficient basis for setting aside the judgment below. That error does, however, raise a prima facie concern in that it clearly had an effect on the Trial Judge’s approach to claim construction. The central issue is whether the Trial Judge erred in construing the terms of claim 1 by reference to the disclosure.

b)         Reference to Disclosure

The proper construction of claim 1 hinges on the meaning of two terms: “varying electric current” and “electromagnetic coil”. The Trial Judge held that the former term is not broad enough to embrace an AC current and, therefore, must be limited to a DC current. With respect to the latter term, the Trial Judge found it to be limited to a sturdy, heavy coil akin to a Bitter coil of the kind that Dr. Dableh had used.[10] In reaching both conclusions, the Trial Judge made recourse to the patent’s disclosure and in particular the preferred embodiment described and depicted by diagram therein; that is to say the device that Dr. Dableh had actually built. At this point claim 1 bears repeating:

1. In a fluid-cooled nuclear reactor having a calandria comprising an array of longitudinally extending calandria tubes each housing a coolant tube extending coaxially therethrough, each coolant tube being spaced from its associated calandria tube by annular spacers seated therebetween, a method of repositioning a selected one of said spacers in situ by displacing it longitudinally from an initial position to a required position, which method comprises advancing an electromagnetic coil interiorly along the coolant tube to a position adjacent the spacer and passing a varying electric current through the coil, the position of the coil relative to the spacer and the magnitude and rate of change of current being such as to exert an electromagnetic repulsive force on the spacer in the direction of the required displacement and sufficient to overcome static friction at the seating of the spacer between the tubes. [Emphasis added.]

It is a matter of settled law that recourse to the disclosure portion of the specification is: (1) permissible to assist in understanding the terms used in the claims; (2) unnecessary where the words are plain and unambiguous; and (3) improper to vary the scope or ambit of the claims.[11] It is equally clear that where the words used in the claims are clear and unambiguous, they must not be narrowed or limited to a patent’s preferred embodiment.[12] Against this legal framework, the issue is whether the terms “varying electric current” and “electromagnetic coil” were found to be ambiguous and, therefore, the Trial Judge was justified in resorting to the disclosure to resolve any ambiguity. In our view, the evidence clearly establishes that no ambiguity existed and that claim 1 is worded broadly enough to cover an AC source of electricity and coils other than Bitter or near Bitter coils.

We note that on appeal the respondent did not argue that the term “varying electric current” was ambiguous, but only that the Trial Judge was entitled to have recourse to the entire specification for purposes of claim construction.[13] Of greater relevance is the fact that none of the respondent’s witnesses perceived any ambiguity in the meaning and scope of the term in question. As stated by Dr. Laithwaite, a witness for Ontario Hydro “[an] alternating current is a varying electric current”.[14]

Despite the position adopted by Ontario Hydro’s expert witnesses, the Trial Judge concluded at page 345 of his reasons that the defendant misinterpreted the patent:

… the plaintiff and his witnesses simply misinterpreted his patent, as did the defendant. What they thought resided in the patent, the court holds does not so reside. [Emphasis added.]

It is a matter of accepted law that the task of construing a patent’s claim lies within the exclusive domain of the trial judge. In strict legal theory it is the role of expert witnesses, that is those skilled in the art, to provide the judge with the technical knowledge necessary to construe a patent as though he or she were so skilled. Where the experts disagree, it is incumbent on the trial judge to make a binding determination.[15] But in cases such as the one under appeal, where there is no disagreement among the witnesses as to the meaning of a technical term a finding to the contrary by a trial judge must be seen as being made without regard to the evidence.

In reaching this conclusion we are cognizant of the strict limitations placed on an appellate court when reviewing a trial judge’s findings with respect to expert evidence. Unless his or her assessment has been affected by some palpable and overruling error, an appellate court is not permitted to interfere. In the circumstances of this case the error identified must be deemed to fall within the exception. We are also cognizant of the fact that the Trial Judge’s finding that the disclosure warns against the use of an AC current might be perceived as undermining the position adopted by the parties and their respective witnesses. Given the significance attached to this finding by the Trial Judge it warrants further consideration. The Trial Judge’s conclusion on this part is found at page 345 of his reasons:

Whenever in this patent “a varying electric current” is expressed, it does not mean or include AC. The specific reference to AC line source is hereby interpreted to teach that alternating current is not to be used for purposes of the alleged invention ….

The portion of the disclosure which the Trial Judge interpreted to warn against the use of an AC line current reads:[16]

The primary current may be supplied by an AC line source, but in practice, to avoid possible overheating of the coil 19, an oscillatory current of short duration and finite energy more in the nature of a pulse may be used, as in particular embodiments described below. [Emphasis added.]

Standing by itself, we do not believe that that sentence justifies such an interpretation, particularly when regard is had to the following passage also contained within the disclosure:[17]

The current pulse to be applied to the electromagnetic coil 19 may be obtained from any suitable source, for example a homopolar generator, but the applicant has been most successful in obtaining the necessary current pulse from a single discharge of a capacitor bank charged to a suitable energy level. [Emphasis added.]

Reading these passages together, it is apparent that even if resort to the disclosure were proper for purposes of interpreting claim 1, it does not warn against the use of an AC source, but rather warns that the use of an AC source can lead to problems with over-heating. Although the disclosure suggests that the appellant’s preferred DC embodiment is one means of avoiding the over-heating problem, it is implicit that if the problem can be otherwise over-come, AC is also a viable current source. In effect, the creators of the SLAR system heeded Dr. Dableh’s warning. The SLAR system attempts to overcome the over-heating problem and make the use of an AC source viable by incorporating coils with a large number of turns and with ferromagnetic cores. This allows the desired electromagnetic effect to be created with markedly smaller current magnitude and frequency.

This brings us to the question of the proper construction of “electromagnetic coil” in claim 1. In his construction of that claim, the Trial Judge determined that the coil referred to is that which is illustrated in figures 3-5, 7-10, and 12 of the patent.[18] As a result, he construes the term to mean coil that is “of heavy construction as if machine-cut from a block, or billet, of copper.” The Trial Judge finds that Dr. Dableh’s choice of “heavy, sturdy air coil” is an essential feature of the patent, and limits the scope of the patent accordingly.[19] There is no indication in the reasons that the Trial Judge found the term electromagnetic coil to be ambiguous. Nor does the respondent argue that it is. The respondent, nonetheless, submits that the term must be construed by reference to the disclosure. We do not agree. As with the term varying electric current, the Trial Judge has erroneously narrowed the scope of the claim to what Dr. Dableh had built (the preferred embodiment or example) as opposed to what is claimed. Certainly, there is no indication that the coils used in the SLAR are not electromagnetic coils.

In summary, the Trial Judge erred in construing the meaning of the terms varying electric current and electromagnetic coil by reference to the embodiments illustrated and described in the disclosure of the patent. The terms are not ambiguous, and on their face encompass AC current and coils other than the type used by the appellant. In doing so he committed an error in law. We are also of the view that there is no need to pursue the arguments advanced with respect to the construction of the remaining claims in issue. As is discussed below, claim 1 is as broad a claim as one is likely to find in any patent and it if has been infringed, it is unnecessary to construe the others. We turn now to the perfunctory exercise of deciding the infringement issue.

2.         Infringement

Given the proper construction of claim 1, it is self-evident that the LIM part of the SLAR technology falls squarely within its ambit. Comparing the SLAR to the language of claim 1, it is designed for use in a fluid-cooled nuclear reactor, namely the CANDU. Such reactors have a calandria vessel comprised of pressure tubes arranged longitudinally within calandria tubes. A primary purpose of the SLAR is to reposition misaligned spacers. The methodology used to achieve this end is to position electromagnetic coils inside a pressure tube adjacent to a particular spacer. A varying electric current is passed through the coils with the current magnitude and rate of change being such that a repulsive force sufficient to move the spacer is exerted. In summary, the SLAR apparatus, clearly infringes claim 1 of the patent. In light of this conclusion, and although Ontario Hydro cannot be liable for infringement per se because of its licence, it remains to be decided whether the respondent is liable in tort for inducing infringement by Hydro Quebec and New Brunswick Power.

3.         Inducing Infringement of Patent

The appellant alleges that Ontario Hydro induced either Hydro Quebec, New Brunswick Power or both to infringe the patent, and that it thereby committed a tort.[20] The respondent counters that there was no inducement, and in the alternative, an exchange of technology between the utilities was within the scope of the respondent’s licence as set out in its “patent policy”. As the Trial Judge found no infringement in the SLAR tool, it was unnecessary for him to consider whether the joint arrangements among the provincial power utilities in respect of the LIM component of SLAR could be considered as inducing infringement by Ontario Hydro. We have in effect found that, assuming the validity of the patent, actual use of the invention could infringe claim 1. It is therefore incumbent on us to address these issues.

We turn first to the issue of inducement. An early Canadian precedent in this area is Copeland-Chatterson Co. v. Hatton et al.[21] The Exchequer Court had this to say, at page 245:

… it seems to me, that a declaration at law might be framed to meet the case of one who provided the materials for the infringement, and for his own ends and benefit procured or induced another to infringe a patent … I do not see that infringements of patents can in this respect be distinguished from other wrongs….

This early statement has been little qualified over the years and lists the essential ingredients in an inducement action. More recently they were confirmed in Warner-Lambert Co. v. Wilkinson Sword Canada Inc.[22] by Jerome A.C.J. who stated at page 407:

1)   That the act of infringement was completed by the direct infringer …

2)   Completion of the act of infringement was influenced by the acts of the inducer. Without said influence, infringement would not otherwise take place …

3)   The influence must knowingly be exercised by the seller, i.e. the seller knows his influence will result in the completion of the act of infringement.

These are the three criteria which must be met in an action for inducing infringement, and in each case it is a question of fact as to whether inducement is proved.

In the present case, it has not been established that the respondent induced either of the two utilities to infringe the patent. We need look no further than the first criteria to reach this conclusion. There is no evidence to suggest that, as of the date of the trial, the use of the SLAR tool by Hydro Quebec and New Brunswick Power had proceeded beyond the experimental and testing phase. The law does not regard testing to be an infringing use. Jessel M.R. summarized the law’s perspective on the use of patented technology for testing purposes in Frearson v. Loe:[23]

Patent rights were never granted to prevent persons of ingenuity exercising their talents in a fair way. But if there be neither using nor vending of the invention for profit, the mere making for the purpose of experiment, and not for a fraudulent purpose, ought not to be considered within the meaning of the prohibition, and if it were, it is certainly not the subject for an injunction.

This perspective has been accepted by the Supreme Court of Canada. In Micro Chemicals Limited v. Smith Kline & French Inter-American Corporation,[24] Hall J. stated:

The use Micro was making of the patented substance here was not for profit but to establish the fact that it could manufacture a quality product in accordance with the specifications disclosed in respondent’s application for Patent No. 612204 … Micro’s experiments … were not carried out for the purpose of improving the process but to enable Micro to produce it commercially as soon as the licence it had applied for could be obtained. I cannot see that this sort of experimentation and preparation is an infringement.

As we find no act of infringement was completed in the utilities’ joint testing of the SLAR tool, we need not consider the remaining criteria. In short, the tort of inducement has not been established. That being the case there is no need to deal with the cross-appeal pertaining to whether damages should be determined on a reference.

Our finding that there has been no inducement would lead one to believe that there is no need to determine whether the respondent’s licence is worded broadly enough to provide it with a complete defence. Yet, it is necessary to address this issue in view of the injunctive relief being sought by the appellant. If the exchange of the LIM technology (for non-developmental purposes) with Hydro Quebec and New Brunswick Power can be characterized as coming within the respondent’s “business and undertakings”, as submitted by the respondent, then it is protected by its licence as defined by the patent policy that was in place at the time the appellant sought to patent his invention. Accordingly, no injunctive relief could issue which would have the effect of prohibiting the respondent from sharing that technology with the two provincial utilities. Correlatively, use by the two provincial utilities could not give rise to liability for infringement of the patent as they would be able to shelter behind the respondent’s licence. While the matter of injunctive relief is addressed more fully below, our analysis with respect to the “defence” issue begins with the wording of the relevant portion of the patent policy:

1. Royalty-Free Licenses

(i)   Ontario Hydro … shall be entitled to royalty-free licence to make or cause to be made and to use in its … business and undertakings any invention made by an employee relating directly to or indirectly to his work or Ontario Hydro’s business….[25] [Underlining added.]

The respondent’s submission rests on the premise that its exchange of technology with the other utilities is part and parcel of its normal business and undertakings. The respondent, Hydro Quebec, New Brunswick Power and the Atomic Energy Commission are all parties to an arrangement known as the CANDU Owners Group (COG) agreement, which they entered into in 1983. When the incident at the Pickering facility occurred, the utilities entered into what is in effect a sub-agreement, namely the SLAR agreement, in order to address the problem. The purpose of the SLAR agreement is, as previously noted, to share information, technology and expenses among the three utilities in the development and testing of a solution to the problem of spacer migration. Thus, it is arguable that the sharing of the appellant’s invention with Hydro Quebec and New Brunswick Power in that context might fall within the parameters of the respondent’s business and undertakings, and therefore within the scope of its licence.

In our view, the development of a workable LIM tool for relocating spacers, whether on the respondent’s own initiative or in conjunction with others, is clearly within the scope of the respondent’s business and undertakings. Actual use of the tool in the respondent’s own reactors is also within its business and undertakings. However, to protect under the respondent’s licence the use of the tool by Hydro Quebec or New Brunswick Power in their respective reactors would extend the scope of the licence too far. Such an interpretation would unduly undermine the appellant’s patent rights as it would allow the royalty-free use of his invention in any reactor in Canada. The respondent’s business and undertakings cannot be construed so broadly as to encompass the business and undertakings of others. Accordingly, the respondent’s licence is no defence to an action for inducement.

4.         Remedies

The appellant sought various remedies which were denied him or granted in limited form by the Trial Judge in conformity with his reasons. Given the findings of this Court the remedies must be adjusted accordingly.

The appellant originally sought declarations of validity and infringement. We are bound by the conclusions of the Trial Judge that the respondent is estopped from challenging validity as the latter chose not to cross-appeal this finding. Like him, we would therefore declare that, as between the parties to this action, claims 1, 2, 3, 5, 8, 9, and 11 (the claims still in issue) of the patent are deemed to be valid pursuant to section 43 of the Patent Act. We find that there can be no liability for direct infringement by the respondent as the respondent has the right to use the patent in its own business and undertakings. We are also satisfied that the tort of inducing infringement has not been established. Thus, we cannot declare that infringement has occurred.

The appellant, however, also asked for an injunction to prevent prospective infringement. It follows from our reasons that we consider that authorization by the respondent of use by others in their businesses, of the LIM component of the SLAR, could constitute the inducing of an infringement of at least claim 1. The grant of an injunction after trial to protect a right confirmed by the Court is not subject to the same strict criteria as the grant of an interlocutory injunction. There appears to be enough evidence to indicate a real probability that the respondent would facilitate an unlicensed use by Hydro Quebec and/or New Brunswick Power, and therefore the issue of a permanent quia timet injunction is warranted. An injunction is, of course, an equitable remedy. The learned Trial Judge declined to grant the equitable remedy of an accounting of profits. He cited the somewhat objectionable conduct by both parties, including the appellant’s attitude in the development of his patent and the respondent’s refusal to acknowledge the appellant’s patent rights. The Trial Judge concluded that “neither side’s hands are entirely clean” and, therefore, felt equity did not favour either. Accordingly, he refused the remedy of accounting of profits and simply went on to say that “of course, the court does not grant the plaintiff any injunction.”[26] The “of course” may have related to the fact that he found no infringement and not to his assessment of the equities. Whatever the reason for, or merits of, the Trial Judge’s refusal of an injunction, it is our view that, finding as we do that there could be potential infringement, it is appropriate in a final judgment to grant a quia timet injunction. The “clean hands" doctrine must be applied with some care, and it is now accepted that improper conduct by a party should not deprive him or her of an equitable remedy unless that conduct bears directly on the appropriateness of the remedy.[27]

Here the questionable conduct of the appellant, as recounted by the Trial Judge, preceded the issue of the patent, involved amendments to the patent, or involved personal hostility to a fellow employee who is not even a party to this proceeding. Once the patent was issued, it presumptively conferred on the appellant certain legal rights to its enforcement. It is difficult to see how the conduct complained of can be said to bear directly on the appropriate remedy to give effect to those legal rights as against the respondent. Therefore, a permanent injunction will be issued preventing the respondent from inducing the use, other than in its own business and undertakings, of the LIM apparatus as part of a SLAR or any similar apparatus whose use would constitute infringement by a non-licensed user of the patent.

As we have found that no infringement has yet taken place, there is no place for the remedies of damages, accounting of profits, delivery up, or interest.

5.         Costs

The learned Trial Judge awarded costs to the respondent. In the light of our determination we would substitute for this an award of costs to the appellant, here and in the Trial Division. While the appellant has not established actual infringement, he has demonstrated potential infringement and has satisfied this Court that he is entitled to at least the remedy of an injunction. As the appellant has been substantially successful, he should have his costs.

V         CONCLUSION

In conclusion, we are of the opinion that this appeal must be allowed and the judgment of the Trial Division set aside. The appellant is entitled to an injunction enjoining the respondent from inducing the use by Hydro Quebec or New Brunswick Power of the LIM component of the SLAR. The appellant is also entitled to his costs here and in the Trial Division. The cross-appeal is dismissed without costs.

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