Executive Summary: Key Legal and Evidentiary Issues

• Dispute centers on the validity and infringement of Canadian Patent No. 2,657,755.

• Allegations were raised under subsection 53(1) of the Patent Act, focusing on false or misleading statements made during US patent prosecution.

• The question was whether these US statements could be "incorporated by reference" into the Canadian application through the Patent Prosecution Highway (PPH).

• LSPI filed a pre-trial motion to have this legal question determined in advance under Rule 220(1)(a).

• The Court held the issue required factual context and expert input, making it unsuitable for early resolution.

• Costs totaling $10,000 were awarded to Baker Hughes and Flowchem due to the late and unsuccessful motion.

Facts and outcome of the case

Background and parties involved

This decision, 2024 FC 1571, arises from two consolidated actions before the Federal Court of Canada involving disputes over Canadian Patent No. 2,657,755 (the "755 Patent"). The patent is owned by LiquidPower Specialty Products Inc. (LSPI), who alleged infringement in action T-1429-21 against Baker Hughes Canada Company and Baker Hughes Company. In turn, Baker Hughes counterclaimed, asserting that the patent is invalid.

In a separate but related action (T-786-21), Flowchem LLC initiated proceedings seeking to impeach the same patent on several grounds, including subsection 53(1) of the Patent Act. Flowchem and Baker Hughes allege that the patent is void because of untrue and misleading statements made by the inventor during the prosecution of the priority U.S. patent application, which they claim were incorporated by reference into the Canadian application through the Patent Prosecution Highway (PPH) process.

The motion and legal question

LSPI brought a pre-trial motion under Rule 220(1)(a) of the Federal Courts Rules seeking to determine a single legal question before trial: whether material allegations made in the U.S. application could be incorporated into the Canadian patent application for purposes of subsection 53(1) of the Patent Act. LSPI argued this was a pure question of law that, if resolved early, would simplify or eliminate issues at trial.

However, the Court found that the question posed was too broad and lacked sufficient factual consensus. Justice Furlanetto determined that answering whether a foreign patent prosecution statement could be incorporated by reference required an evaluation of factual context, including expert evidence about the operation of the PPH. The Court also noted that the question would not be determinative of the case, as several other patent validity issues—such as anticipation, obviousness, and overbreadth—were also being litigated.

Outcome of the decision

Justice Furlanetto dismissed LSPI’s motion, ruling that it did not meet the Rule 220(1)(a) threshold. Specifically, the motion would not expedite or narrow the trial issues and was brought too late, less than six weeks before the scheduled trial. The Court emphasized that the proposed question could not be resolved without a full evidentiary record and that its resolution might, in fact, add to trial complexity rather than reduce it.

Due to the motion’s late timing, its lack of utility, and the resulting inefficiency, the Court awarded elevated lump sum costs to the successful responding parties. Baker Hughes received $7,500 and Flowchem $2,500, reflecting their joint opposition to the motion and the Court’s view that the motion should have been raised much earlier.

The matter now proceeds to trial, with the broader patent validity and infringement issues still to be resolved.