Friday, September 20, 2013

Ambiguity(?) in Scope of Settlement

Procter & Gamble Co v Brushpoint Innovations Inc 2013 ONSC 5747 Charbonneau J

The parties entered into a settlement agreement in which Brushpoint undertook to “not make, construct, use, or sell, or induce others to make, construct, use or sell the Products, in Canada, while any of the Patents are in force.” P&G submitted that Brushpoint or its agents, by acts in Canada, had induced parties in the US to make and sell the product in the US [13]. If, properly interpreted, the covenant restricted Brushpoint from carrying out acts in Canada which induced others to make or sell the Products anywhere, then there was a breach; on the other hand, if it only restricted Brushpoint from inducing (by acts anywhere?) others to make or sell the products in Canada, there was no breach.

Charbonneau J held that on the proper interpretation, there was no breach; the covenant restricted Brushpoint only from inducing others from infringing in Canada. He arrived at this conclusion primarily on the text of the covenant itself, which he found to be “clear and unambiguous” [11]. If he had found the clause ambiguous, he would have arrived at the same conclusion based on the context, as the settlement was presumably intended to prevent Brushpoint from infringing the Canadian patents [12].

John Golden has a very interesting article on the related issue of the scope of injunctions: Injunctions as More (or Less) than “Off Switches”: Patent Infringement Injunctions’ Scope , 90 Tex L Rev 1399 (SSRN here). Here is the abstract:

Injunctions have often been viewed as mere "off switches" that prevent future violations of rights protected by so-called property rules. But injunctions in fact come in a variety of forms having different objects, scopes, and degrees of effectiveness. In practical situations, an injunction might amount to little more than a threat of higher-than-normal monetary sanctions delivered at substantially higher-than-normal speed.

This article builds on these insights by investigating the potential and actual scopes of injunctions against patent infringement. An economic model for infringer incentives shows how concerns of injunction scope are substantially analogous to widely examined concerns of patent scope. A new taxonomy provides named classifications for different forms of injunctions. A systematic study of patent-infringement injunctions issued by U.S. district courts in 2010 indicates how often these different forms appear in practice. Startlingly, this study suggests that the majority of such patent-infringement injunctions take an "obey the law" form that violates the Federal Rules of Civil Procedure, at least as the U.S. Court of Appeals for the Federal Circuit has traditionally understood those rules. In another indication of patent law's technology specificity, only 12% of the injunctions directed to biomedical-substance technology feature such apparent error. Meanwhile, courts frequently issue specially tailored injunctions that protect patent rights more or less than a conventional "do-not-infringe" order would. Prophylactic injunctions and other specially tailored injunctions should be recognized as legitimate forms of relief that can enable better balancing of concerns of notice, rights protection, rights limitation, and administrability.

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