Court of Appeal for Ontario

Date: May 24, 2017

Docket: C60969

Judges: MacFarland, van Rensburg and Huscroft JJ.A.

Parties

Between

OrthoArm Incorporated Plaintiff (Appellant)

and

GAC International, LLC Defendant (Respondent)

Counsel

Andrea J. Sanche and Daniella Murynka, for the appellant

J. Alan Aucoin and Ankita Kapur, for the respondent

Hearing

Heard: February 13, 2017

On appeal from: The judgment of Justice Wendy M. Matheson of the Superior Court of Justice, dated August 13, 2015, with reasons reported at 2015 ONSC 5097, and from the costs order, dated October 23, 2015, with reasons reported at 2015 ONSC 6539.

Reasons for Decision

van Rensburg J.A.:

[1] Introduction

[1] The appellant commenced an action against the respondent for damages and other relief for breach of a licensing agreement. The action went to trial. The principal issue, which was decided against the appellant, was whether the respondent infringed the appellant's patent in respect of an orthodontic bracket. The issue in this appeal is whether the trial judge made a reversible error in dismissing the appellant's action, and in awarding costs in favour of the respondent. I conclude that there was no such error, and therefore would dismiss the appeal.

A. Facts

[2] The background to the action is set out in detail in the comprehensive reasons of the trial judge. It is sufficient for the purpose of the appeal to provide only the following brief outline.

[3] The principal of the appellant, OrthoArm Incorporated ("OrthoArm"), invented a type of orthodontic bracket. The bracket is "self-ligating", which means that it is self-locking, using clips rather than elastic bands to trap the archwire (the wire conforming to the dental arch in a patient's mouth). There are many types of self-ligating brackets. OrthoArm's bracket is covered by U.S. Patent No. 5,630,715 (the "715 Patent").

[4] In 1997, OrthoArm licensed the worldwide rights to manufacture, use, market, and sell products covered by the 715 Patent to the respondent GAC International, LLC ("GAC"). Under the agreement, OrthoArm was entitled to receive a license fee based on net sales of such products (the "License Agreement"). The License Agreement governed the parties' relationship regarding the OrthoArm brackets until the 715 Patent expired on May 20, 2014.

[5] In 2007, GAC began to market and sell orthodontic brackets it had developed with a third party manufacturer, without accounting to OrthoArm for profits under the License Agreement. OrthoArm alleged that these brackets (the "Accused Products") were an extension of its original invention and were covered by the 715 Patent. GAC denied the allegation, and claimed that the Accused Products were developed by the third party in accordance with its own U.S. patent. OrthoArm commenced an action against GAC for breach of the License Agreement and to recover unpaid royalties and other damages.

B. Trial Decision

[6] The issue at trial was whether the Accused Products were covered by the 715 Patent and therefore infringed OrthoArm's patent. Because the 715 Patent is a U.S. patent, the trial proceeded on the basis of American patent law.

[7] The first task for the trial judge was to determine the applicable U.S. patent law, as a question of fact. The trial judge's second task was to construe the claims, which define the limits of the patent, to determine their meaning. Next, she had to undertake an infringement analysis and determine whether all of the elements of each of the patent claims contained in the 715 Patent were present in the Accused Products. If even one element of a claim is not found in an Accused Product, the product does not infringe the patent claim. Finally, if she found infringement of the 715 Patent, the trial judge was to determine damages and other relief.

[8] Two expert witnesses, both U.S. patent attorneys, provided evidence about U.S. patent law, including the principles of construction of patent claims. They also testified about the construction of the particular claims in the 715 Patent. This evidence was in the nature of submissions they would make to a U.S. judge if they were counsel appearing at a "Markman" hearing (the first step in a U.S. patent infringement action when the judge hears evidence and submissions and construes the claims at issue as a matter of law, before the issue of infringement goes to the trier of fact).

[9] GAC argued at trial that four elements of nine claims in the 715 Patent were not found in the Accused Products. The trial judge rejected GAC's arguments on the first three elements, however she accepted the argument that the fourth element – a "slidable locking shutter" – was not present in the Accused Products.

[10] The wording that the trial judge had to construe describes the shutter in the orthodontic bracket that locks the archwire. The trial judge focussed on the wording of claim 1, which provides as follows:

A twin edgewise orthodontic bracket for attaching an archwire to a tooth comprising:… a slidable locking shutter movable between open and closed positions having a guide bar slidably received in said occlusal-gingival opening, a locking body for engaging said locking recess without covering the labial or lingual faces of the sets of occlusal and gingival tie wings when in closed position, and an extension arm connecting said guide bar to said locking body and movable between said sets of tie wings, wherein said locking shutter is slidably mounted on said bracket between open and closed positions. [Emphasis added.]

[11] Although the trial judge focused her analysis on the language contained in claim 1, she noted that every claim in the 715 Patent contains language identical or similar to the requirement of "a slidable locking shutter movable between open and closed positions… wherein said locking shutter is slidably mounted on said bracket between open and closed positions".

[12] The trial judge interpreted "slidable locking shutter" to mean that the shutter must only slide in moving between the open and closed positions to trap the wire. She concluded that the term "slidable", and its variations used in the claims, are all connected with the movement of a locking shutter that has a guide bar that is slidably received in the occlusal-gingival (bite-gum) opening of the bracket. The trial judge stated at para. 60:

The ordinary, common sense construction of this aspect of the claims, as used in the claims and in the specification, requires a sliding motion from the open position to the closed position, not just for part of the movement between the open to the closed position. In the phrase "slidable locking shutter movable between open and closed positions", the word "slidable" ordinarily relates to the word "movable". There are numerous other references in the claims and specification to the slidable motion. For example, claims also refer to the locking shutter being "slidably mounted on said bracket between open and closed positions,…" and "a locking means slidably carried by the bracket member between open and closed positions… and said locking means being slidable between open and closed positions,…". The other words used, and the figures, are consistent with the conclusion that the sliding motion must take the locking shutter from the open to the closed position and back again. The only thing in the claims, or the entire patent for that matter, that gives the locking shutter the ability to slide between the open and closed positions, is the guide bar sliding in the occlusal-gingival opening.

[13] The trial judge applied this construction of the claims in the 715 Patent to the Accused Products. She found that "there is a small sliding action when the locking shutter is moved in the Accused Products within the occlusal-gingival opening but, for the most part, the locking shutter moves from open to closed position and back through a rotating motion" (at para. 61). The trial judge rejected the appellant's argument that the locking shutter movement need not be entirely a sliding motion, and could include rotational movement. She concluded that, since all of the claims in the 715 Patent include the "slidable locking shutter" element, the Accused Products do not infringe any of the claims, and she therefore dismissed the appellant's action.

[14] The trial judge awarded costs against the appellant of $300,000 for fees and $90,000 for disbursements, plus HST.

C. Issue on Appeal

[15] There is no question as to the correctness of the trial judge's statement of the applicable legal principles. The parties agreed on the relevant U.S. patent law principles, including the principles of patent interpretation. The appellant, however, asserts that the trial judge erred in the application of these principles in construing the claims in the 715 Patent, and therefore in her conclusion that the Accused Products did not infringe the claims.

[16] The appellant contends that the trial judge erred in concluding that the patent claims required a slidable locking shutter that may only be moved from open to closed positions and back again by way of a sliding motion. The appellant says that, when properly construed, nine of the claims in the 715 Patent cover the Accused Products, which has a locking shutter that both slides and rotates. Therefore, the question before this court is whether a bracket that contains a locking shutter with a slight amount of sliding followed by rotation on a pivot point infringes the appellant's patent.

[17] OrthoArm also requests leave to appeal the trial judge's costs award.

D. Discussion

[18] The standard of review is correctness, as the construction of patent claims is a question of law: Mylan Pharmaceuticals ULC v. AstraZeneca Canada Inc., 2012 FCA 109, 101 C.P.R. (4th) 275, at para. 20. However, the evidentiary assessments that trial judges make in reaching conclusions on the construction of the patent are entitled to deference: Mylan Pharmaceuticals, at para. 20. The issue on appeal concerns only the trial judge's construction of the claims in the 715 Patent. No one challenges the trial judge's factual finding that the Accused Products' locking shutter slides slightly but, for the most part, moves between the open and closed positions through a rotating motion. Accordingly, the standard of review on this appeal is correctness.

(1) Meaning of "Movable", "Slidable" and "Between"

[19] The appellant's principal argument is that the trial judge erred in not applying the plain and ordinary meanings of the words "slidable", "movable" and "between" when she interpreted "a slidable locking shutter movable between open and closed positions" to mean a "locking shutter slidably movable from the open to the closed position and back again." The appellant says that "movable between open and closed positions" is properly construed as meaning the locking shutter must be capable of moving between the open and closed positions, whether through a sliding or rotating movement, or both. The appellant argues that the trial judge's construction of the claims erroneously gave the words "movable" and "between" narrow meanings and imported limitations not found in the claims.

[20] The appellant's other arguments, which will also be addressed below, were either referred to in the appellant's factum and not expanded upon in oral argument, or raised briefly in oral argument.

[21] First, the appellant says that the trial judge erred in equating the word "movable" with "slidable" and in failing to give these words their common, ordinary and distinct meanings. The appellant says that the word "movable" is broader than "slidable", and describes various motions, including both sliding and rotating. The appellant points to the different dictionary meanings of the adjectives "slidable", meaning "able to slide or be slid", and "movable", meaning "capable of being moved", and asserts that "movable" cannot mean "movable only by sliding". Rather, the term "movable" captures both a sliding and a rotating motion.

[22] The appellant also takes issue with the trial judge's interpretation of the words "between open and closed positions" as meaning "from open to the closed position and back again." The appellant says that the trial judge erred by concluding that the sliding motion must take the locking shutter from the open to the closed position. The appellant submits that the word "between" describes a spatial movement that is more flexible than "from/to" and leaves room for variations in movement when the locking shutter is opened and closed. The appellant refers to the dictionary meaning of "between" as "at, into or across the space separating [two objects, places or points]" and says that, if the locking shutter is movable between the two positions, it is simply movable "at, into or across the space separating" the open and closed positions. In other words, it need not be slidable across the entire space, from one position to the other, but slidable at some point between those positions.

[23] The respondent asserts that the appellant is advocating interpretations of the words "slidable," "movable" and "between" that are divorced from the specification – which is the entirety of the patent, including the text and figures of the patent claims – by relying on dictionary definitions, a form of extrinsic evidence. The term "slidable" and its variations all refer to the movement of a locking shutter that is connected to a guide bar that is slidably received in the occlusal-gingival opening of the bracket, and moves between the open and closed positions.

[24] Further, the respondent contends that the appellant did not rely on dictionary meanings of words in the claim at first instance and, in any event, it was unnecessary for the trial judge to consider this extrinsic evidence because the plain meaning can be derived from the intrinsic evidence in the specification.

[25] I agree with the respondents' submissions. It is not sufficient to simply look at the words "slidable," "movable" and "between" in isolation or in the abstract. The words must be considered within the context, which is the specification: Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005, en banc). In Retractable Technologies, Inc. v. Becton, Dickinson and Company, 653 F.3d 1296 (Fed. Cir. 2011), at p. 1305, cited by the trial judge here, the U.S. Court of Appeals for the Federal Circuit exhorted that the court must "strive to capture the scope of the actual invention, rather than strictly limit the scope of claims to disclosed embodiments or allow the claim language to become divorced from what the specification conveys is the invention." In this case, it is unnecessary to resort to dictionary meanings, particularly because doing so isolates the words in question and gives them a meaning divorced from the context of the claims within the specification.

[26] The trial judge did not ignore the fact that "slidable" and "movable" are two different words with different meanings. Nor did she interpret the word "movable" too narrowly. Rather, she interpreted the terms in the context of the specification. She looked at how the terms were employed together in claim 1, as well as in the other claims that were part of the specification, noting that the claims also referred to the locking shutter being "slidably mounted on said bracket between open and closed positions" and "a locking means slidably carried by the bracket member between open and closed positions".

[27] The term "between", in the context in which it is used, means from a point to a point. The trial judge correctly concluded that the words and the figures were "consistent with the conclusion that the sliding motion must take the locking shutter from the open to the closed position and back again". She observed that the only thing that gives the locking shutter the ability to slide between the open and closed positions is the guide bar sliding in the occlusal-gingival opening. In this context, "between" does carry the meaning of "from and to", and does not reasonably carry the alternative meaning argued by the appellant of "at", "into" or "across".

[28] The trial judge interpreted the claims language to "capture the scope of the actual invention". I see no error here and agree with the trial judge's analysis.

(2) Consideration of Figures 38 and 39

[29] The appellant asserts that the trial judge, in construing the claims in the 715 Patent, failed to consider or give effect to the intrinsic evidence in the specification. In particular, the trial judge ignored figures 38 and 39, which depict an embodiment of the 715 Patent with a locking shutter that both slides and rotates.

[30] The figures cannot, however, be considered without their corresponding description, which is included in the specification. The description states, "[a]ccordingly, the guide arm is slidably received in the opening… to permit occlusogingival movement of the closure member." The description does not refer to the rotational movement that the appellant contends is apparent in the figures.

[31] As such, figures 38 and 39 offer no assistance in construing what is meant by "a slidable locking shutter movable between open and closed positions".

(3) Reference to CAD Drawings

[32] Third, the appellant contends that the trial judge erred in analyzing the computer-aided design ("CAD") drawings of the Accused Products, which were excerpted in her reasons, rather than by reference to the Accused Products themselves in determining whether the Accused Product infringed the claims of the 715 Patent. The CAD drawings, which are static, exaggerate the rotational movement of the locking shutter and minimize the sliding movements. Such evidence, which is extrinsic, may only be used to assist the court to understand a claim; it cannot vary or contradict the language of the claim itself. The appellant further contends that the trial judge erroneously relied on the CAD drawings to vary the claim language to require that the locking shutter only slide from the open to the closed positions.

[33] I am not persuaded by this argument. The Accused Products are very small. The parties provided the court with enlarged models of the Accused Products, which were referred to by the witnesses and examined by the trial judge. The CAD drawings were provided as part of the respondent's expert report and referred to in argument. There is nothing in the trial judge's reasons to suggest that she used the CAD drawings of the Accused Products to determine the movement of the Accused Products, or to construe or vary the claim language. The CAD drawings appear in her reasons following her analysis construing the claims, and only as an illustration.

(4) "Improvement" on the Claims of the 715 Patent

[34] Next, the appellant says that the trial judge failed to consider whether the Accused Products were an "improvement" on the claims of Patent 715, in which case they would violate the patent. The appellant says that the additional rotational movement of the locking shutter is an improvement on the necessary sliding function of the shutter.

[35] There is no merit to this contention, which was not pressed in oral argument. The 715 Patent is not for a self-ligating orthodontic bracket, but only for a certain type of self-ligating bracket with an engagement mechanism – a locking shutter – for retaining wire, as defined in the patent. The Accused Products utilize a different type of engagement mechanism than the one covered by the 715 Patent. The Accused Products are a rotating bracket, not a better type of slidable bracket.

(5) Failure to Consider All Nine Claims

[36] The appellant asserted in oral argument (but not in its factum) that the trial judge erred by failing to consider each of the nine claims alleged to have been infringed by the respondent. The appellant submits that some of the claims did not contain the same language as claim 1, and that the trial judge needed to construe each of the other claims and determine whether they were infringed, even though the respondent succeeded in respect of claim 1.

[37] I note that the trial (and the appeal for that matter) proceeded on the basis that each of the nine claims contains similar language as in claim 1, and that the construction issue was whether the words describing the locking shutter were meant to describe only a sliding movement, or whether rotational movement was included.

[38] In any event, the appellant did not explain how, if the trial judge was correct in her construction of claim 1 and her conclusion that the Accused Products did not infringe that claim, she might have arrived at a different interpretation and conclusion with respect to any of the remaining eight claims.

[39] There is no merit to this argument.

E. Costs

[40] The appellant says that the costs awarded to the respondent were disproportionate for a trial that lasted only four days, where such costs greatly exceeded its own partial indemnity costs. The appellant also says that the trial judge erred in not taking into account its success in resisting three of the four defences raised by the respondent, and reducing the amount of costs awarded to the respondent accordingly.

[41] The trial judge's reasons demonstrate that she considered and applied the relevant factors under rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. She addressed the appellant's concern about proportionality when she awarded the respondent less than 65% of its claim for partial indemnity costs. She took this into consideration, stating that GAC's bill of costs in comparison to OrthoArm's, for a four day trial, "is the most significant factor justifying a substantial decrease in the amount sought" (at para. 20).

[42] As for the appellant's contention that this was a case of divided success, and warranted a reduction in the costs awarded to the respondent, I disagree. The respondent was entirely successful in the proceedings. It would have been an error for the trial judge to focus on individual issues in the litigation and to disregard the overall success achieved by the respondent: Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, [2015] O.J. No. 279, at paras. 20-21.

[43] Eastern Power Ltd. v. Ontario Electricity Financial Corp., 2012 ONCA 366, [2012] O.J. No. 2414, a case relied on by the appellant, does not contradict this general principle. In Eastern Power, this court allowed an appeal of the dismissal of a number of claims at trial, with the result that a new trial was ordered but only on one of the claims that was worth a relatively small part of the amount originally claimed. The court recognized that "when a party succeeds on appeal, that success ordinarily must be imputed as success at trial" (at para. 16). However, the court concluded that "on the particular facts of this case, [the appellant's] success on appeal does not transform it into the successful party at trial" (at para. 16). This court confirmed the general rule against "distributive" costs awards, but reduced the trial costs in part to reflect the success on the one issue on appeal. There are no similarities between that case and the present, which would warrant any reduction in the respondent's trial costs, nor does Eastern Power establish any general rule that would assist the appellant.

[44] Neither argument presents "strong grounds upon which [this court] could find that the judge erred in exercising [her] discretion": Brad-Jay Investments Ltd. v. Szijarto, 218 O.A.C. 315 (C.A.), at para. 21. Accordingly, leave to appeal costs is refused.

F. Disposition

[45] For these reasons, I would dismiss the appeal, with costs to the respondent fixed at $25,000, inclusive of HST and disbursements.

Released: May 24, 2017

"K. van Rensburg J.A."

"I agree. J. MacFarland J.A."

"I agree. Grant Huscroft J.A."