Friday, August 16, 2013

Anticipation and Obviousness in Varco v Pason

Varco Canada Ltd v Pason Systems Corp 2013 FC 750 Phelan J

Yesterday’s post looked at claim construction and infringement. The anticipation, obviousness and utility issues in Varco v Pason were also fairly straightforward, though the facts provide an interesting illustration of the problems of avoiding novelty-destroying disclosure of the invention during pre-filing field testing. The most interesting legal point is Phelan J’s comments regarding the relationship between the US and Canadian duties in disclosure to the patent office, made in relation to the abandonment argument, which I will discuss in a separate post.

The defendant’s anticipation attack based on the prior art wholly failed, as the closest prior art cited by the defendant did not come close to anticipating the essential elements of the invention [273-288]. The argument based on the inventor’s field testing [289]-[308] was more interesting, particularly when compared with Wenzel Downhole Tools 2012 FCA 333. New designs in downhole rig equipment have to be tested on operating wells, often wells operated by a third party, and the question is what steps have to be taken in order to avoid disclosing the invention during the testing process.

In Wenzel the question was whether a third party’s downhole bearing assembly had been disclosed during its testing. The assembly embodied all the essential elements of the invention and so would be anticipatory if it was made available to the public. Since the drilling company that had tested the assembly was not bound by any obligation of confidence, the question was only whether the assembly had been “made available.” The bearing assembly was enclosed in a metal casing giving no hint of what was inside. Had the user opened the casing and inspected the assembly, it would have been able to discern the essential elements of the invention, but it would not have been usual or easy for the user to open the casing and on the facts in Wenzel the user made no effort to do so. As discussed here, the FCA, in a split decision, held that this was anticipatory: “being available does not require that access to the information be easy, simply that it be possible using known methods and instruments” [69], and the test is “whether, in this case, there was an opportunity to access the relevant information during the rental” [74, original emphasis].

In considering whether the inventor’s field testing in Varco was anticipatory, Phelan J distinguished Wenzel on the facts. As in Wenzel, inspection of the exterior would not reveal the working of the invention, but in contrast to Wenzel, the inventor in this case took steps to ensure that the device could not be inspected, by locking the device when he was absent [297], [301]. And while there was no express confidentiality agreement with the driller, that was not fatal: “Although there was no evidence as to either industry practice or corporate understanding, Bowden’s actions to keep the invention from being observed or disclosed is consistent with his intent to keep it confidential. There is no suggestion that Union Pacific thought that the testing was not confidential nor is there evidence of enabling disclosure during the test period” [304].

While the facts do legitimately distinguish Wenzel, this case illustrates the potentially difficult nature of the “opportunity to access” test. Here, the driller had opportunity to access the invention in the sense of having physical access to the device in the inventor’s absence. It would no doubt have taken lock picking tools to access the device, which the driller presumably would not have had on hand, but in Wenzel it would also have taken special tools, available only off-site, to inspect the interior of the device. It seems to me that the real distinction between the cases is with respect to intent. In Wenzel it did not appear that the third party developer of the prior art device was attempting to keep the device secret, whereas the inventor in Varco clearly was, in anticipation of obtaining a patent. As I argued in my post on Wenzel, this is consistent with a purposive analysis of the novelty requirement. If the third party in Wenzel did not care whether the device was made public, it evidently did not think the lure of a patent was necessary to provide an incentive to develop the device. In this case, that the inventor took steps to the keep the device secret, shows that he was relying on the patent incentive. The difficulty with this analysis is that anticipation should be an objective test. I suggest that these cases show that while it is an objective test, in borderline cases subjective considerations may become relevant to tipping the balance one way or the other.

Phelan J relied heavily on long-felt need and commercial success in holding that the invention was not obvious: see [316], [319], [320], and especially [321]. He started his analysis with the question: “if it was so obvious, why was it not done before?” (See also Nichia v Argos [2007] EWCA Civ 741 [21], Beloit v Valmet 8 CPR (3d) 289, 295.) While these considerations are sometimes disparaged as being “secondary factors” which must be kept firmly in its place,” in my article "Secondary” Evidence of Obviousness is Not Secondary, (2012) 28 CIPR 279, I have argued in that when this question is not rebutted, as in this case, it speaks far more powerfully to non-obviousness than the evidence of expert witnesses, which is inevitably tainted by hindsight, as Phelan J pointed out [316].

Correction of Error in the Claim
The only utility argument of significance turned entirely on a drafting error: the words “increased” and “decreased” had been switched in Claim 9. Interpreted literally, the invention as claimed would not work. It was uncontroversial that a skilled reader would have readily recognized that “increased” should be read to mean “decreased”, and vice versa [336], and Phelan J accordingly interpreted the claim that way, with the result that the utility challenge failed. This is consistent with a long line of authority that the entire specification must be read with “a mind willing to understand,” and consequently readily discernable errors, even in the claims, will be read as corrected: see eg Procter & Gamble Co. v. Bristol-Myers Canada Ltd. (1979), 42 CPR (2d) 33, 36-37 (FCA); 2009 FC 991, [159]; 2010 FC 1265, [99].

(Thanks to Alan Macek's IPPractice blog for posting this decision before it has appeared on the FC website. )

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