Saturday, June 16, 2018

Unclear Whether Location of Server Outside Canada Avoids Infringement

Canadian National Railway Co v BNSF Railway Co 2018 FC 614 Locke J
            2,922,551 / 2,880,372 /2,958,024

CNR’s patents at issue claim a system for conducting an online rail-shipment inquiry system, which CNR alleges are infringed by two of BNSF’s online rail-shipment tools. The claims are variously framed as being to a method, a server arrangement and a computer [15]. BNSF brought a motion to strike based in part on the fact that its server is located in Fort Worth, Texas, where it is based, and consequently many of the steps in the claims in issue would be performed outside Canada [36]. Locke J held that this argument would not sustain a motion to strike, on the basis that it is not clear as a matter of Canadian law whether such claims may be infringed even if the server is located outside Canada:

[46] I agree with CN that the debate over whether all steps of the claims in issue must be put into effect in Canada for there to be infringement is a question of law, which should not be decided on a motion to strike. In my view, the jurisprudence on this question is not sufficiently settled that CN should be prevented at this stage from advancing its position. BNSF relies on Varco Canada Limited v Pason Systems Corp, 2013 FC 750 at paras 265-266, for the principle that patents are territorial and that Canadian patents cannot be infringed outside Canada. I agree with this general principle, but there remains the more specific question of whether infringement of a claim to a method (or a sever arrangement or a computer) can be avoided by locating one component thereof (a server) outside Canada. BNSF cites a US authority (Home Gambling Network, Inc v Piche, 2013 US Dist Lexis 141595 at 5-6 (D Nev)) in support of its view that this is indeed sufficient to avoid infringement. However, CN cites a UK authority (Menashe Business Mercantile Ltd v William Hill Organisation Ltd, [2002] EWCA Civ 1702, [2003] 1 All ER 279 at para 32) for the opposite conclusion. There does not appear to be a Canadian decision directly on point. BNSF argues that the UK law concerning the territoriality of patents is different from Canada’s, and that the US authority should be preferred. Having considered the authorities cited by the parties, I am not convinced that it is plain and obvious that CN’s position is without merit.

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