Executive Summary: Key Legal and Evidentiary Issues

• Whether “overbreadth” includes a distinct ground of invalidity where a patent claim is broader than the invention actually made, as opposed to merely broader than what is disclosed in the specification.

• How to determine the “invention made,” and in particular whether courts may rely on inventor and expert evidence about pre-filing development work without reconciling it with the language of the patent specification.

• Territorial limits of patent infringement under section 42 of the Patent Act where design, engineering and related activities occur in Canada but the physical manufacture, assembly and use of the claimed articles take place entirely outside Canada.

• Whether detailed Canadian-based conceptual design work, computer-aided designs, provision of drawings, inspection of foreign-made parts, and supervision of installation amount to “making” or “using” a claimed physical invention in Canada.

• Scope of the “proper disclosure” requirement for sound prediction of utility under Apotex Inc. v. Wellcome Foundation Ltd., including whether explicit disclosure of the factual basis and line of reasoning is required in all cases.

• Whether the 552 Patent Family specifications sufficiently disclose the factual basis and line of reasoning (including computer-aided designs used to simulate ride paths) to support a sound prediction that riders can enter, traverse and exit the claimed slide features.

Background and parties

ProSlide Technology Inc. and WhiteWater West Industries, Ltd. are both based in Canada and are described as the largest competitors in the global market for water slides, with customers mainly consisting of water, theme and amusement parks worldwide.[7] The appeal and cross-appeal arise from a Federal Court decision, 2024 FC 1439, concerning several patents owned by ProSlide.[4] One of those patents, Canadian Patent No. 2,778,601, is no longer in issue.[4]

The remaining patents are Canadian Patent No. 2,951,552 (the 552 Patent), Canadian Patent No. 3,063,073 (the 073 Patent), and Canadian Patent No. 3,085,150 (the 150 Patent), collectively referred to as the 552 Patent Family.[4] The 073 and 150 Patents issued from divisional applications based on the parent application that issued as the 552 Patent, and all three share the same filing date of March 3, 2015.[4] They are each entitled “Water Ride,” were issued in 2020, and all name Richard D. Hunter, President and Chief Executive Officer of ProSlide, as inventor.[5]

Description of the patents

The Federal Court described the 552 Patent Family as having similar, but not identical, specifications that teach park owners’ desire for new and innovative rides providing exciting and thrilling experiences for consumers, cite several known water ride designs (including a closed loop section and a “bowl” with a bottom-centre exit), and then state that there is a need for water rides that resolve prior-art disadvantages and provide more exciting experiences.[5] Each specification summarizes embodiments of the claimed inventions, followed by drawings and descriptions.[5] Figures 1A and 1C from the patents were reproduced in the appellate reasons.[6]

Federal Court decision under appeal

In 2024 FC 1439, the Federal Court found that the asserted claims of the 552 Patent Family were invalid on several grounds, including overbreadth, and that they were not infringed by WhiteWater.[8]-[9], [11] It also rejected WhiteWater’s allegation that the asserted claims were invalid for lack of utility.[9], [19]-[21], [25]-[26] Some issues decided by the Federal Court, such as aspects of claim construction and invalidity grounds like ambiguity, anticipation and obviousness, were no longer in dispute on appeal.[8]

On overbreadth, the Federal Court adopted the legal principle that a claim is invalid if it is broader than what was disclosed or what was actually invented, citing Western Oilfield Equipment Rentals Ltd. v. M-I L.L.C. and Leithiser v. Pengo Hydra-Pull of Canada, Ltd.[10] It held that its conclusions on overbreadth for the 552 Patent applied equally to the 073 and 150 Patents.[11] Relying on testimony from Mr. Hunter and expert evidence on how a skilled person would understand his work, the Court identified four key aspects of the invention made—(A) the feature being part of a water slide; (B) combining a non-zero roll angle with a zero pitch angle; (C) a compounding outer wall; and (D) a substantially planar sliding surface—and concluded that each asserted claim omitted one or more of these aspects, rendering the claims overbroad.[12]-[13]

On infringement, the Federal Court recognized that under section 42 of the Patent Act a patentee has the exclusive right to make, construct, use and sell the claimed invention, and that, with limited exceptions, infringement occurs when a non-patentee makes, constructs, uses or sells an article that embodies all essential elements of the claimed invention, provided those acts take place within Canada.[14] WhiteWater’s defence was that the components of the allegedly infringing products were manufactured by third-party subcontractors outside Canada and that none of the products at issue were physically manufactured, assembled or used in Canada.[15] ProSlide responded that WhiteWater nonetheless infringed because most design and development activities occurred in Canada, including pre-contract conceptual designs, detailed computer-aided designs and mechanical drawings, provision of those drawings to subcontractors, inspection and auditing of moulds and parts, sending assembly instructions and supervising installation.[15] ProSlide argued that these activities gave rise to infringement based on a “real and substantial connection to Canada,” referring to SOCAN v. Canadian Assn. of Internet Providers.[16]

The Federal Court relied on Steelhead LNG (ASLNG) Ltd. v. ARC Resources Ltd., stating that, where a patent claims a physical object, the patentee’s exclusive right to “use” the invention extends only to that object and not to conceptual designs or drawings of it, and that there was no reason to depart from or expand on Steelhead.[17] It indicated that Steelhead’s discussion of “use” applied equally to “making” the invention.[18] On this basis, it held that WhiteWater’s Canadian activities did not constitute making or using the claimed slide features and that there was no infringement.

On utility, the Federal Court set out that an “invention” under section 2 of the Patent Act must be useful, that only a scintilla of utility is required, and that utility may be shown either by demonstration or by sound prediction as of the filing date, citing AstraZeneca Canada Inc. v. Apotex Inc. and Apotex Inc. v. Wellcome Foundation Ltd.[19]-[20] It reproduced Wellcome’s three-part test for sound prediction: factual basis, a sound line of reasoning, and proper disclosure.[20] The controversy on cross-appeal focused on the disclosure element.[21]

The Federal Court noted that a skilled person is taken to have common general knowledge when reading the patent and that, where the factual basis and line of reasoning are grounded in such knowledge and would be apparent to the skilled person, disclosure may be satisfied by describing the invention in enough detail to be practised, citing Bell Helicopter Textron Canada Limitée v. Eurocopter.[22] It added that, where the factual basis and line of reasoning are not immediately clear without explicit disclosure, failure to disclose them explicitly can lead to invalidity for lack of utility.[23] The parties ultimately did not dispute that ProSlide had not demonstrated utility prior to filing and that utility therefore depended on sound prediction.[24]-[25]

The Federal Court held that the asserted claims had the required scintilla of utility because a rider could enter, traverse and exit the slide feature and that it was not seriously disputed that there was a factual basis and sound line of reasoning for utility.[25] It concluded that the 552 Patent Family’s specifications disclosed both the factual basis and the line of reasoning, including references to computer-aided designs used to simulate ride paths, and therefore that the requirements for sound prediction were met.[26], [60]-[61] It dismissed WhiteWater’s attack on utility.[26]

Issues and standard of review on appeal

On appeal, ProSlide argued that overbreadth should not include claiming more broadly than the invention made, distinct from the invention disclosed, and further challenged the Federal Court’s infringement analysis.[1]-[2], [28] ProSlide also argued for a more flexible infringement test based on Canadian design and development activities in relation to unlicensed articles that embody all essential claim elements, even if the components are never physically in Canada.[2] WhiteWater, by cross-appeal, argued that the disclosure requirement for sound prediction is more rigorous than ProSlide maintained and that the 552 Patent Family did not meet it.[3], [55]-[57] The parties agreed that appellate standards of review apply: correctness for questions of law and palpable and overriding error for questions of fact or mixed fact and law without an extricable error of law.[27]

Appellate reasoning on overbreadth

The Court of Appeal declined to reconsider the validity of overbreadth as a ground of invalidity for claims broader than the invention made. It noted that this doctrine has been recently confirmed in Western Oilfield and Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC, and that departing from those decisions would require a finding that they were manifestly wrong or fell within specified exceptions for overruling precedent, referencing Miller v. Canada (Attorney General) and R. v. Sullivan.[28]-[33] The Court remained of the view that overbreadth arises from the statutory requirements that the specification correctly and fully describe the invention and that it include claims defining the subject-matter of the invention, and that if a patent claims more than it describes or more than the inventor has made, it gives the patentee more than the bargain permits.[32]-[33]

However, the Court found that the Federal Court erred in how it applied the doctrine in this case. It concluded that the lower court had determined the “invention made” mainly from testimony about pre-filing development work, without adequately considering the patent specification.[35]-[36] The Court of Appeal emphasized that the specification is an explicit and carefully written statement, at the filing date, of what the inventor had in mind and that it provides a reliable indication of the invention made.[36]

The Court pointed out that each of the four features the Federal Court had treated as key aspects of the invention was, according to the specification, not essential. It cited passages from the 552 Patent Family indicating that: (A) slide features may be lubricated with other substances or formed from low-friction materials; (B) roll and pitch angles may be adjusted to provide more or less thrilling ride experiences; (C) the sliding surface may have a constant or expanding radius rather than a compounding outer wall; and (D) the sliding surface may be uneven or textured, and convex or concave, in whole or in part.[37] WhiteWater did not dispute that these passages disclosed variations on the aspects the Federal Court had viewed as key.[38]

In the Court of Appeal’s view, no satisfactory explanation was given for ignoring these specification statements in favour of evidence about what the inventor contemplated during development. It held that the features identified by the Federal Court could not properly be treated as key aspects whose omission from the claims supported a finding of overclaiming and therefore reversed the conclusion that the asserted claims were invalid for overbreadth.[38]-[39]

Appellate reasoning on infringement

The Court of Appeal agreed with the Federal Court that section 42 of the Patent Act confers on patentees exclusive rights including making and using the claimed invention and that WhiteWater’s products in issue embodied all essential elements of the asserted claims.[40] It also agreed that only WhiteWater’s activities in Canada are relevant to infringement under Canadian law.[14], [40]

ProSlide argued that WhiteWater’s Canadian activities, which included conceptual designs, detailed computer-aided designs and mechanical drawings, provision of these designs to foreign subcontractors, inspection and auditing of moulds and parts, assembly instructions and supervision of installation, amounted to making and using the claimed invention in Canada.[15], [41] It referred to portions of Théberge v. Galerie d’Art du Petit Champlain inc. concerning the evolution of the concept of reproduction in copyright law and to SOCAN and its adoption of a “real and substantial connection” test based on Libman v. The Queen.[42], [44] ProSlide urged the Court to apply a similar approach to patent infringement where activities are split between Canada and other countries.[41], [44]

The Court of Appeal held that these copyright cases must be approached with care in the patent context. It observed that the Copyright Act has been amended in ways that the Patent Act has not and that the circumstances in SOCAN, involving music downloaded in Canada from servers abroad via the internet, differed from the present case, where making, assembling and using the products took place outside Canada.[43], [45] It concluded that the activities ProSlide relied on as infringement—physically making, assembling and using the claimed slide features—occurred abroad, while the Canadian activities did not themselves constitute infringing acts.[45]

The Court reviewed jurisprudence where foreign activities were linked to infringement in Canada, including Beloit Canada Ltd. v. Valmet-Dominion Inc., Pfizer Canada Inc. v. Canada (Health) (applying the Saccharin doctrine), and Bauer Hockey Corp. v. Easton Sports Canada Inc., and contrasted those with Domco, where extensive Canadian marketing and sales support activities did not amount to infringement because title to the products passed outside Canada.[47]-[50]

The Court then adopted the principle from Steelhead that, where a claim is directed to a physical object, infringement by “use” can occur only by use of that object, not by using conceptual designs or drawings.[51] It rejected ProSlide’s attempt to distinguish Steelhead on the basis that WhiteWater’s design process was more advanced, holding that the asserted claims here concern slide features for amusement rides and that WhiteWater’s Canadian activities did not extend to physically using the claimed slide features.[51] The Court agreed with the Federal Court that the same reasoning applies to “making” the invention and that generating detailed computer-aided designs and mechanical drawings in Canada is not “making” a claimed physical object.[52] It stated that any move to change the threshold for patent infringement would be for Parliament, not the courts.[52] Accordingly, it concluded that the Federal Court did not err in finding no infringement and noted that remedies for unlicensed use outside Canada may be available under corresponding foreign patents.[53]

Appellate reasoning on utility and sound prediction

Because the Court of Appeal set aside the overbreadth finding, the validity of the asserted claims turned on utility.[54] WhiteWater’s cross-appeal argued that the Federal Court misunderstood the disclosure requirement for sound prediction and made erroneous factual findings about the disclosure in the 552 Patent Family.[55]-[57]

On the legal standard, the Court of Appeal observed that much of the parties’ debate concerned whether there is a heightened disclosure requirement when utility is based on sound prediction and, if so, how broadly it applies.[58] It found it unnecessary to settle that question in this case because the Federal Court had already applied a heightened disclosure requirement—stating that failure to explicitly disclose factual basis and line of reasoning, when they are not otherwise apparent, could lead to invalidity—yet still concluded that the 552 Patent Family met the requirement.[23], [26], [58]

The Court treated WhiteWater’s remaining arguments as factually based, focusing on whether the specifications sufficiently informed a skilled reader of the factual basis and line of reasoning for predicting utility, and therefore reviewed them for palpable and overriding error.[59] WhiteWater argued that much of ProSlide’s testing was not included in the specifications and challenged the Federal Court’s findings that computer-aided designs used to simulate ride paths were disclosed in the figures and that a skilled person would understand from the patents that testing involving computer-aided designs had been performed and that the disclosed embodiments were the result of those tests and designs.[60]

The Court of Appeal was not persuaded that any palpable and overriding error had been shown. It noted the Federal Court’s observation that the claimed features were not fanciful, inoperable or speculative and that the required utility was that a rider could enter, traverse and exit the slide feature.[61] It agreed that not all testing methods used by ProSlide, such as testing relating to safety or enjoyment, needed to be disclosed because the claimed inventions concern slide features rather than testing methods.[62] It also accepted that there was evidence supporting the Federal Court’s conclusion that computer-aided designs used to simulate ride paths were disclosed in the figures, including a cited paragraph from the confidential second expert report of Jason Young.[63] On that basis, the Court upheld the Federal Court’s conclusion that the requirements for sound prediction were met and dismissed the cross-appeal on utility.[59]-[63]

Final disposition and costs

The Federal Court of Appeal allowed the appeal in part and dismissed the cross-appeal.[64] It struck paragraphs 3, 4 and 5 of the Federal Court’s judgment that had declared the asserted claims invalid for overbreadth, thereby restoring the validity of those claims, while leaving undisturbed the conclusion that WhiteWater did not infringe.[39]-[40], [53]-[54], [64] The Court invited the parties to attempt to agree on costs of the appeal and cross-appeal and, failing agreement, permitted each to file written submissions of up to eight pages within 15 days of the decision, with responsive submissions of up to five pages within 10 days thereafter.[65] The reasons do not specify any damages, costs amounts or other quantified monetary awards.