COURT FILE NO.: 2447-16
DATE: 20200203
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Loops, L.L.C. and Loops Flexibrush, L.L.C.
A. Sulzenko and K. MacDonald, for the Plaintiffs
Plaintiffs
- and -
Maxill Inc.
S. Dimeo, for the Defendant
Defendant
HEARD: September 16, 2019
R U L I N G
Templeton J.
[1] This is a Motion by the Plaintiffs (‘Loops’) for an interlocutory injunction prohibiting the Defendant (‘Maxill Canada’) from challenging either directly or indirectly, the validity of a U.S. patent owned by Loops.
The Law
[2] S. 101 of the Court of Justice Act R.S.O. 1990, c.C.43 governs interlocutory injunctions:
An interlocutory injunction may be granted where it appears to a judge of the Court to be just or convenient to do so.
[3] The Supreme Court of Canada held in Google Inc. v. Equustek Solutions Inc., 2017 SCC 34 that “Interlocutory injunctions are equitable remedies that seek to ensure that the subject matter of the litigation will be preserved so that effective relief will be available when the case is ultimately heard on the merits. Their character as “interlocutory” is not dependent on their duration pending trial. Ultimately, the question is whether granting the injunction is just and equitable in the circumstances of the case.”
[4] The test for granting an interlocutory injunction had been defined by the Supreme Court of Canada in RJR — MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), as a three-part test for determining whether a court should exercise its discretion to grant an interlocutory injunction:
(a) is there a serious issue to be tried;
(b) would the person applying for the injunction suffer irreparable harm if the injunction were not granted;
(c) and is the balance of convenience in favour of granting the interlocutory injunction or denying it.
[5] The Court goes on to observe,
The fundamental question is whether the granting of an injunction is just and equitable in all of the circumstances of the case. This will necessarily be context specific.
[6] Courts have further held as follows[^1]:
In answering the first branch of the test, the standard is whether there is a serious issue to be tried rather than higher standard of a “strong prima facie case”. However, in cases where the injunction sought involves the enforcement of a restrictive covenant, the higher test is imposed, namely, whether there is a strong prima facie case;
If the moving party demonstrates a clear breach of a negative covenant, the second and third parts of the test may not need to be proven;
The restrictive covenant must be reviewed in light of the circumstances surrounding the contract and the applicable principles regarding the enforceability of restrictive covenants. The court is to consider whether the restrictive covenant is reasonable both in the interests of the parties to the covenant and the interests of the public;
The onus is on the party seeking to enforce the restrictive covenant, to establish that it is reasonable in the interests of the parties. The onus for establishing that it is not reasonable in the public interest, is on the party opposing the enforcement;
If the court finds that the contract is ambiguous, it may resort to extrinsic evidence to clear up the ambiguity;
The issue of irreparable harm refers to the nature of the harm suffered, namely, whether it is a harm that cannot be quantified in monetary terms or cannot be cured;
In considering whether damages would be adequate compensation for the harm suffered, the court may consider the defendant’s ability to compensate the plaintiff in damages for any loss suffered until the time of trial;
Evidence of harm must be clear and not speculative;
The balance of convenience refers to which of the parties will suffer the greater harm from the grant of or refusal to order the injunction sought.
The Evidence
[7] Loops L.L.C. sometimes does business as Floss Loops, L.L.C. Both companies who are the Plaintiffs in the action before me (the Canadian action’) were incorporated in Delaware, United States.
[8] Maxill Canada is a Canadian company. Maxill Canada also has a subsidiary company in the U.S. called Maxill Inc. (‘Maxill Ohio’).
[9] Both Loops and Maxill Canada are in the business of designing, manufacturing and distributing toothbrushes.
[10] On December 7, 2012 Loops commenced an action against Maxill Canada in the Federal Court of Canada in British Columbia. Loops alleged, inter alia, that the distribution, sale and offering for sale by Maxill Canada of a toothbrush identified by Maxill Canada as its “Supermaxx” were an infringement of a registered Canadian patent (No. 2,577,109) owned by Loops.
[11] Maxill Canada served and filed a Statement of Defence and Counterclaim in which it alleged that the said Canadian patent owned by Loops was invalid.
[12] On October 23, 2013 the President of the Plaintiffs and the President of Maxill attended supervised mediation with their lawyers. The mediation took a day at the end of which they reached a settlement which they agreed to keep confidential.
[13] Between October 23, 2013 and April 8, 2014, some changes were made to the terms of the settlement. The parties continued to be represented by counsel throughout.
[14] This settlement was reduced to writing in an agreement entitled “Confidential Settlement Agreement” (hereinafter referred to as ‘the Agreement’). The Agreement was ultimately signed by the parties on April 8, 2014.
[15] In the Agreement, the parties agreed, inter alia, that
(a) effective October 31, 2013, Maxill Canada would not import, export, make, have made, sell or offer for sale the Supermaxx Toothbrush …anywhere in the world;
(b) effective October 31, 2013, Maxill Canada would not import, export, make, have made, sell or offer for sale a toothbrush falling within the scope of Claims 1, 18 and 20 of Canadian Patent No. 2,577,109 worldwide;
(c) Maxill Canada would be permitted to supply the Supermaxx Toothbrush from inventory presently in its possession (the “Existing Inventory”) under two identified tenders for no more than two years; and, within 30 days of the last shipment under the tenders report the remaining inventory on hand to the Plaintiffs who would then have the right to destroy or obtain title to the remaining inventory for the purpose of donation to a third world country; and Maxill would give an accounting to the Plaintiffs of all inventory sold under the tenders ever six months; and
(d) Maxill Canada and John Shaw, the President of Maxill Canada would not directly or indirectly assist any person attacking the validity of:
Canadian Patent No. 2, 577, 209 or any corresponding patents worldwide as set out in Schedule B attached to the Agreement.
[16] Significantly, for the purpose of this motion, Schedule B included reference to a patent owned by Loops in the U.S. identified as U.S. Patent No 8,448,285 (referred to below by some as Patent ‘285).
[17] The issue before me concerns the restriction set out in subparagraph (d)(i) above (which constitutes paragraph 13 of the Agreement) and this U.S. patent.
[18] On April 15, 2014 the Federal Court issued a consent Judgment which included
(a) a declaration that Maxill Canada had used a get-up that is confusingly similar with the Loops get-up and directed public attention to its wares in Canada in such a way as to cause or be likely to cause confusion in Canada between its wares and the wares and business of Loops;
(b) a declaration that Maxill Canada had infringed each of claims 1 – 32 in Canadian Patent No. 2,577,109 entitled “Toothbrush and Methods of Making and Using Same” (‘the ‘109 Patent’); and
(c) an order permanently restraining and enjoining Maxill Canada from
(i) importing, exporting, making, having made, selling or offering for sale the toothbrushes listed in an attached schedule;
(ii) further using the Loops Get-Up or a get-up that is confusingly similar to the Loops Get-Up; and
(i) further infringing any of claims 1 – 32 of the ‘109 Patent
[19] In accordance with the Agreement, Maxill Canada destroyed the moulds used to manufacture the Supermaxx Toothbrush that Loops had alleged infringed their Canadian patent.
[20] Sometime thereafter, Maxill Canada created another toothbrush which is described as a “design-around” the Loops’ Canadian patent. This new toothbrush was also named “Supermaxx” . Maxill Canada soon began marketing and selling their new Supermaxx.
[21] On or about October 30, 2015 Loops commenced this Canadian action against Maxill Canada on the basis of breach of the Agreement. Specifically, Loops alleged, inter alia, that Maxill Canada had sold toothbrushes prohibited by the Agreement.
[22] In September 2017, Loops also commenced an action in Utah, United States against Maxill (Ohio) for alleged infringement of its U.S. Patent No. 8,448,285. The focus of the controversy in that action was the distribution and sale of Maxill Canada’s newly designed Supermaxx toothbrush un the U.S..
[23] On December 5, 2017 Maxill (Ohio) commenced an action in the state of Washington, United States seeking a judgement declaring that
(a) Maxill (Ohio) was not infringing Loops’ U.S. Patent No. 8,448,285; and, in any event
(b) U.S. Patent No. 8,448,285 is invalid.
[24] Loops’ action in Utah and Maxill (Ohio)’s action Washington were consolidated and are proceeding in Washington (‘the U.S. action’).
[25] A protective order has been made in both the Canadian and the U.S. actions sealing any confidential disclosures. A motion by Loops for an order granting a stay of the U.S. proceeding pending conclusion of the Canadian lawsuit was denied by the Washington Court in July 2019. However, the parties were thereafter able to agree to a stay pending resolution of this action.
[26] On November 9, 2018 Loops’ Statement of Claim in the Canadian action was amended to include the following allegations;
(i) that, contrary to the Agreement, Maxill Canada had breached the confidentiality clause in the Agreement and disclosed, discussed or referenced materials it was obligated not to disclose; and further
(i) that, contrary to the Agreement, Maxill Canada had directly or indirectly attacked the validity of or assisted another person in attacking the validity of intellectual property owned by Loops which it agreed it would not attack the validity of or assist any person in attacking the validity of, either directly or indirectly.
[27] Maxill duly amended its Statement of Defence.
[28] In summary, Loops has sued Maxill Ohio in the U.S. for infringement of its U.S. Patent. Maxill Ohio has responded by denying both the infringement alleged and the validity of the U.S patent referred to and relied upon by Loops. This U.S. action is pending. In the meantime, Loops has also sued Maxill Canada in Canada for breach of the Agreement with respect to Maxill Canada’s undertaking not to assist any person in attacking the validity of its U.S. patent. In the motion before me, Loops seeks an injunction barring the advancement of the defence in the U.S. by Maxill Ohio which Loops refers to as an attack.
The Position of the Parties
[29] It is the position of Loops that
(a) the Agreement is a legally binding contract between Loops and Maxill;
(b) the Agreement settled a dispute that included allegations of invalidity with respect to Loops’ Patents;
(c) the terms of the contract are clear and unambiguous. Neither Maxill nor Mr. Shaw are to attack, directly or indirectly, the validity of Loops’ Patents as listed in Schedule B of the Agreement which includes U.S. Patent No. 8,448,285;
(d) there is no exception in the Agreement that permits Maxill to challenge the U.S. Patent if an action were brought against Maxill by Loops for infringement of that Patent;
(e) the restrictive covenant in paragraph 13 of the Agreement not to challenge the validity of the U.S. Patent is absolute;
(f) the restrictive covenant is internally consistent with the remaining provisions in the Agreement;
(g) in clear breach of the Agreement, Maxill has filed Preliminary Non-infringement and Invalidity Contentions in the U.S. action asserting the invalidity of the U.S. Patent;
(h) the U.S. market for Loops’ toothbrushes is its largest market. If Loops were to lose its rights in U.S. Patent No. 8,448,285, the loss would be devastating, and the impact would be impossible to calculate.
[30] It is the position of Maxill that
(a) the validity of Loops’ U.S. Patent 8,448,285 is only being challenged as a defence to the claims of infringement made against Maxill;
(b) the intention of the restriction that Maxill not directly or indirectly assist any person attacking the validity of Canadian Patent No. 2,577,209 or any corresponding patents worldwide, was to preclude Maxill and Shaw from taking positive steps to attack the validity of Loops’ Patent outside of any existing litigation;
(c) the restriction was not intended to “muzzle” Maxill and prevent it from defending itself to the full extent of the law in a different country in the event of another lawsuit brought by Loops on the basis of patent infringement;
(d) if an order is granted restraining Maxill from challenging the validity of Loops’ U.S. Patent in defence of litigation commenced by Loops in the United States, irreparable harm will be caused to Maxill because it will effectively restrain Maxill from being able to properly and fully defend itself in the Washington action and any other litigation that Loops may decide to commence.
Analysis
(a) Is there a serious issue to be tried/ strong prima facie case?
[31] As noted above, in cases where the injunction sought involves the enforcement of a restrictive covenant, the higher test is imposed, namely, whether there is a strong prima facie case.
[32] Having reviewed all of the evidence before me and considered the submissions of counsel, I am not satisfied on a balance of probabilities that there is a strong prima facie case. I am of this opinion for the following reasons.
(i) The parties
[33] The Defendant in the Canadian action before me is a Canadian incorporated company identified as Maxill Inc. It is this Canadian company that is the corporate party to the Agreement upon which the Canadian action is based.
[34] The alleged infringements about which Loops’ claims of breach of contract in the Canadian action were perpetrated by Maxill (Ohio), the Canadian company’s subsidiary. But these two companies are separate and distinct legal entities.
[35] On the face of the Agreement before me, there was no agreement between Loops and Maxill (Ohio) or even refence to Maxill (Ohio). The Agreement appears to refer solely to the Canadian company Maxill and Loops as the parties.
[36] It appears therefore that this Canadian action against Maxill is for the conduct of a legal entity that (a) is separate and distinct from Maxill; and (b) was not a party to the Agreement on which the lawsuit is based.
[37] This concern was also raised in Knorr-Bremse Systems for Commercial Vehicles Ltd. v. HaldexBrake Products GmbH [2008] EWHC 158 (Pat) (‘Knorr’). In this case, Knorr-Bremse Systems for Commercial Vehicles Ltd. (‘Knorr’) had applied to the English High Court (Chancery Division) (Patents Court) for a “non-infringement declaration”.
[38] Knorr was a wholly-owned subsidiary of a German company that was identified in the decision as KBS GmbH. HaldexBrake Products GmbH (‘Haldex’) had applied for a stay of proceedings[^2].
[39] As in the case before me, the parent company, KBS GmbH had previously been involved in a dispute with Haldex concerning patent(s) owned by Haldex with respect to valves in brake systems. Their dispute was settled by way of written agreement. In this agreement, KBS GmbH agreed not to challenge the patents owned by Haldex.
[40] Knorr then developed a new valve for distribution and marketing in England. Haldex refused to agree that this new valve did not infringe its patent. Knorr sought a declaration from the Court that its new design did not infringe the patent owned by Haldex.
[41] The first issue for the Court was whether Knorr was subject to the terms and provisions of the agreement signed between its parent company and Haldex. The High Court noted among other things that
Knorr was not involved in the prior litigation between the parties;
Knorr was not involved in the signing of the settlement agreement; and
both Knorr and its parent company KBS GmbH had a common director but this director did not represent to Haldex that Knorr was consenting to the agreement or that Knorr would be bound by it.
[42] The High Court ultimately found that the agreement between Haldex and KBS GmbH was not binding on Knorr and, therefore, Knorr was not bound by the non-challenge clause.
[43] For these reasons, I am not satisfied that there is a strong prima facie case against the Canadian corporation, Maxill that it has breached the Agreement on the basis that another company, albeit a subsidiary, has advanced an “attack” on the validity of Loops’ patent.
(ii) The language of the restrictive covenant
[44] I turn now then to the wording of the negative covenant in the Agreement.
[45] In this regard, I also find that I am not satisfied that the wording of the restrictive covenant is so “clear and unambiguous” that it supports the interpretation sought by Loops.
[46] Loops submits that the meaning of paragraph 13(a) of the Agreement is clear and unambiguous, namely, that “Maxill and Mr. Shaw are not to attack, directly or indirectly, the validity of Loops patents as listed…”
[47] But this is not what the covenant says. It does not say, “Maxill and John Shaw, the President of Maxill shall neither attack either directly or indirectly nor assist any person either directly or indirectly to attack the validity of Canadian Patent No. 2,577,209 or any corresponding patents worldwide as set out in Schedule B attached to the Agreement.”
[48] In my view, the language required to achieve the objective sought by Loops in its submissions is found in the agreement that was signed between KBS GmbH and Haldex, noted in the case cited above, namely,
KB[^3] undertake neither to challenge PATENTS w and 2 or national parts of these patents themselves nor to support third parties in challenging these patents.
[49] This is a two-part undertaking by the party signing the agreement, namely, to not take any personal action in challenging the validity and to not assist others in challenging the validity. In the Agreement before me, the undertaking by Maxill itself has not been included.
[50] The question then becomes whether the court will be satisfied that, in breach of the Agreement, the Canadian company Maxill assisted its subsidiary Maxill (Ohio) in attacking the validity of U.S. Patent 8,448,285.
[51] The specified conduct in the restrictive covenant refers only to the provision of assistance by the parties to the Agreement to “any person”. The ordinary meaning of the word “assist” is to “aid”, to “help” or to “support” any person.
[52] On the basis of a strict reading, it could be argued that this term of the Agreement merely prohibits the Canadian company Maxill and John Shaw from providing help to other person(s) who seek to attack the validity of the Loops’ U.S. Patent.
[53] I note that John Shaw is not a named Defendant in either the American or the Canadian lawsuits. It is not alleged therefore that he personally assisted Maxill (Ohio).
[54] When and how the Canadian company Maxill Inc. has assisted its subsidiary Maxill (Ohio) with respect to the attack on the validity of U.S. Patent 8,448,285, if it did, is for the trial Court to determine.
[55] I cannot be satisfied on a balance of probabilities on this motion, however, that there has been a clear breach of the restrictive covenant in this regard by the Canadian company, Maxill Inc. at least sufficient to meet the test that Loops has a strong prima facie case sufficient for the injunction sought.
[56] It will be for the trial Court to decide these issues but in my view for the purpose of this motion, Loops has not met its onus with respect to a breach of the restriction with respect to assistance either.
(iii) The reasonableness of the restrictive covenant
[57] I accept that from Loops’ perspective, the restrictive covenant is reasonable. On reading the caselaw provided, it appears that in many patent cases, the argument has been advanced that without it, nothing prevents a licensee from attempting to avoid or bypass the cost and restrictions of a license by invalidating the underlying patent or assisting a third party to do so. It also appears that such covenants are common in patent licences.
[58] I also accept that this type of clause provides a benefit under the Agreement to Loops and forms part of the consideration provided by Maxill. The intended effect of such a clause is to allow the Loops to make an estoppel argument in the event there is a challenge to the validity of the patent.
[59] This type of restrictive covenant has been described as a “No Challenge Clause”. It has also been referred to as “the estoppel rule. Apparently in the United States, a No Challenge Clause can be used in a litigation settlement agreement to preclude a defendant’s future use of affirmative defenses in other litigation including invalidity and noninfringement. Of course, therefore, it is a reasonable provision for Loops.
[60] However, that is not the end of the analysis. The next question is whether the restrictive covenant is reasonable in the public interest. In my view, Maxill has satisfied its onus in this regard.
[61] Unfortunately, counsel were unable to assist me with any binding authority concerning this issue in Canada.
[62] In his ruling regarding Loops’ motion for a stay of the American action, the Washington judge, the Honourable Judge T. Zilly, wrote the following,
Moreover, the “no-challenge” clause contained in the agreement is unenforceable in this patent legislation with regard to the ‘285 Patent…[W]ith respect to the ‘285 Patent, the -no-challenge clause constitutes an attempt to resolve a dispute about patent validity prior to any litigation, which runs contrary to the “strong federal policy favouring the full and free use of ideas in the public domain…In contrast to final judgments, consent decrees and settlement agreements contain “no-challenge” clauses threaten to “muzzle” those who might be the only entities with “enough economic incentive to challenge the patentability of an inventor’s discovery” and thereby force the public to continue to “pay tribute to would-be monopolists without need or justification”.
[63] Judge Zilly relied on primarily two American decisions, namely, Lear, Inc. v. Adkins, 395 U.S. 653 (1969) and Massillon-Cleveland-Akron Sign Co. v. Golden State Advert Co., 444 F. 2d 425
[64] In Lear, the U.S. Supreme Court reviewed the role the estoppel rule had played in the past. The Court found that in the past the “grant of monopoly power to a patent owner had constituted a limited exception to the general federal policy favouring free competition”.
[65] The Court went on to observe that the uncertain status of licencee estoppel in the caselaw was a “product of judicial efforts to accommodate the competing demands of the common law of contracts and the federal law of patents. On the one hand, the law of contracts forbids a purchaser to repudiate his promises simply because he later becomes dissatisfied with the bargain he has made. On the other hand, federal law requires that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent”.
[66] In its decision, the U.S. Supreme Court held that enforcing the contractual estoppel provision in that case would “undermine the strong federal policy favouring full and free use of ideas in the public domain.”. The Court observed that “[I]t is as important to the public that competition should not be repressed by worthless patents as that the patentee of a really valuable invention should be protected in his monopoly.” It concluded that the equities of the licensor under contract law were outbalanced by “the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.”
[67] In Massillon, the U.S. Court of Appeals held in 1971 that the rationale of Lear required the Court to hold that the “no challenge clause” in the agreement between the parties which estopped a challenge by one party to the validity of a patent held by the other party, was void on its face and unenforceable.
[68] In paragraph 21 of the Agreement, Loops and Maxill agreed that the Agreement would be “construed, enforced, performed. and in all respect governed by and in accordance with the laws of Canada and the Province of Ontario and in the Court of Canada and the Province of Ontario”. But I find the reasoning of the U.S. courts helpful and informative with respect to the approach to be taken to this issue here.
[69] In my view, to preclude a subsequent perhaps valid defence for the personal gain, profit or protection of one party to an agreement would run counter to the proper administration of justice, regardless of the consent of the other party to that agreement. It is trite law that the power to enter into a contract is broad but not without limit.
[70] In a contract that includes a “No Challenge Clause”, the price to pay by one party is access to a potentially valid legal position that has potential to affect the public at large. In my view, that price is simply too high if public trust and confidence in the administration of justice are to be maintained.
[71] For these reasons and the public policy reasons cited by the American courts above with which I concur, I find that the restrictive covenant in the Agreement is not reasonable in the public interest.
[72] Even if I were wrong in this regard, I also make the following observations.
[73] Loops’ lawsuit against Maxill (Ohio) for infringement of its U.S. Patent 8,448,285 presupposes or by inference assumes, the validity of the patent that has allegedly been infringed. The validity of the patent is therefore a fundamental issue that the Court is required to address prior to any finding of facts with respect to an alleged infringement. By alleging an infringement, the complainant inexorably raises the existence, nature and validity of the patent it is referring to, like it or not.
[74] By way of comparison, Loops alleges in this action that there has been a breach of the contract entered into. But this allegation assumes the validity of the contractual term that has been breached. A Court is unable or ought not to consider whether a Defendant has in fact breached a term of a contract without reference to or consideration of the legality/validity of the term of the contract. Loops has recognized this inextricable conceptual link because it has made meaningful submissions with respect to the circumstances in which the Agreement itself was entered into and the binding nature of its provisions.
[75] This issue has also been addressed in England. The Court in Knorr referred to the following judicial comments,
As I have said, validity is frequently in issue, and sometimes the most important issue, in English patent infringement proceedings…We have always taken the view that you cannot infringe an invalid patent…
[76] If the Court failed to look at or was precluded from considering the legal foundation on which a complaint is based, surely the Court would fall into error notwithstanding the consent of the parties or the administration of justice would be brought into disrepute.
[77] I agree with the reasoning in Windsurfing International Inc. v. Commission of the European Communities [1986] E.C.R. 611 in which the Court considered the effect of a non-challenge clause in a patent licensing agreement,
It must be stated that such a clause clearly does not fall within the specific subject-matter of the patent, which cannot be interpreted as also affording protection against actions brought in order to challenge the patent’s validity, in view of the fact that it is in the public interest to eliminate any obstacle to economic activity which may arise where a patent was granted in error.
[78] For all of these reasons, I find that the restrictive covenant is not reasonable in the public domain within the context of the test for an injunction set out above.
[79] With respect to the ordinary (lower) standard, however, I find for all of the foregoing reasons that there is a serious issue to be tried.
[80] Given my finding that Loops has not demonstrated a clear breach of the negative covenant, the second and third parts of the test need to be addressed.
(b) Would Loops suffer irreparable harm if the injunction were not granted?
[81] On all of the evidence before me, I am not satisfied that Loops would suffer irreparable harm if an injunction prohibiting Maxill from challenging the validity of its US patent were not granted. The validity of Loops’ U.S. patent remains a live issue for the U.S. courts to determine.
[82] Loops carries on the business of designing, manufacturing and distributing dental care products, including toothbrushes designed for the safety of inmates and correctional facilities at adult and juvenile correctional facilities, psychiatric hospitals and mental health facilities. Loops holds patent rights in a number of countries around the world.
[83] The President of Loops has indicated that the U.S. market is its largest market and that the loss of its rights in the U.S. patent would be devastating for Loops’ business.
[84] Even if I were to accept Loops’ submission that Maxill itself seeking to attack or is assisting Maxill (Ohio) to attack the validity of Loops’ U.S. Patent 8,448,285, I am not satisfied that refusing to prohibit Maxill from advancing a defence based on which the validity of the patent is questioned, would result in irreparable harm to Loops.
[85] Refusing to grant an injunction preventing Maxill to raise this defence simply allows the U.S. Court to receive evidence and hear submissions with respect to the patent itself. It does not and cannot result in a finding that the patent is invalid.
(c) Is the balance of convenience in favour of granting the interlocutory injunction or denying it?
[86] In my view, Maxill would suffer the greater harm from the grant of the injunction (assuming that Loops’ submission is correct that Maxill is itself seeking to attack or is assisting Maxill (Ohio) to attack the validity of Loops’ U.S. Patent 8,448,285).
[87] Should the injunction be granted, Maxill would be restrained from advancing this defence and risks having to pay damages for infringement of a patent that may or may not be valid.
[88] On the other hand, Loops suffers no harm to the extent that a denial of the injunction sought simply means that the issue may be raised but in no way presupposes the outcome.
Conclusion
[89] As indicated above, ultimately, the question is whether granting the injunction is just and equitable in the circumstances of the case.
[90] In all of the factual circumstances of this case and for the foregoing reasons, I find that granting the injunction sought in this case would not be just and equitable.
[91] The motion by Loops for an interim and interlocutory injunction prohibiting Maxill from challenging the validity of its U.S. patent is therefore dismissed.
[92] The parties may make written submissions as to costs of not more than 5 pages each should they be unable to reach an agreement in this regard.
“Justice L. C. Templeton”
Justice L.C. Templeton
Released: February 3, 2020
COURT FILE NO.: 2447-16
DATE: 20200203
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Loops, L.L.C. and Loops Flexibrush, L.L.C.
Plaintiffs
- and –
Maxill Inc.
Defendant
Ruling
Templeton J.
Released: February 3, 2020
[^1]: See: Hargraft Schofield LP v. Schofield, [2007] O.J. No. 4400; Singh v. 3829537 Canada Inc. [2005] O.J. No. 2402; Miller v. Toews 1990 CanLII 2615 (MB CA), [1991] 40 C.P.R. (3d) 424; Tank Lining Corp. v. Dunlop Industrial Ltd. (1982) 1982 CanLII 2023 (ON CA), 40 O.R. (2d) 219; Stephens v. Gulf Oil Canada Ltd. (1975) 1975 CanLII 711 (ON CA), 11 O.R. (2d) 129; Salah v. Timothy’s Coffees of the World Inc. 2010 ONCA 673; Rogers Cable TV Ltd. v. 373041 Ontario Ltd. [1994] O.J. No. 844; Synex Inc. v. Novopharm Ltd. (1991) 1991 CanLII 14290 (FCA), 36 C.P.R. (3d) 129; American Cyanamid v. Ethicon Ltd. 1975 CanLII 2598 (FC), [1975] A.C. 396
[^2]: Haldex advanced is application for a stay on the ground that Germany not England had jurisdiction over the proceedings. The application by Haldex was denied.
[^3]: referring to KBS GmbH