• Non-Infringing Alternative not Found Where Manual Alternative Still Used in the Industry and the Invention Creates a Significant Improvement Over the Alternative
  • March 24, 2017 | Authors: Jillian Brenner; Adrian J. Howard; Beverley Moore; Chantal Saunders
  • Law Firm: Borden Ladner Gervais LLP - Ottawa Office
  • Frac Shack Inc. v. AFD Petroleum Ltd., 2017 FC 104

    This decision concerned the validity and/or infringement of a number of claims of the '567 Patent, which discloses an apparatus and method for delivery of fuel to equipment or fuel tanks at well sites. Prior to 2010, the refueling of fracturing equipment was done by a worker pulling fuel-laden hoses to each piece of equipment's fuel tank and manually discharging diesel fuel into the tank ("manual hot fueling").

    In a decision that turned on the facts, the Court held that some of the impugned claims were valid and infringed by the Defendant. At trial, the Defendant maintained three defences of invalidity, namely that the patent was invalid because: (i) it was obvious; (ii) there was insufficient disclosure in the patent; and/or (iii) the claims were broader than the invention made or disclosed. The Court held that the patent was not obvious or insufficient. However, based on the patent's construction, the Court found that a number of claims were broader than any invention made or disclosed, and therefore, invalid.

    The Court also found that both versions of the Defendant's product infringed various claims that remained valid in the action. The Court awarded the Plaintiffs an accounting of profits. The profits awarded did not include profits made from fuel sales associated with the use of the infringing device since the Plaintiff Frac Shack is not in the business of selling fuel.

    The Defendant tried to argue the availability of a non-infringing alternative and provided evidence that many companies still do manual hot refueling, despite Frac Shack's system. The Plaintiffs argued that a system with significant risk to worker safety and health could not be a true non-infringing alternative, when the purpose of the invention is to minimize the risks to operators. The Court agreed with the Plaintiffs that manual hot refueling is not a non-infringing alternative to using the ‘567 invention.

    In addition to an accounting of profits, the Court awarded injunctive relief, as well as an estimated royalty rate of 29% for infringement during the pre-grant period. On the issue of punitive damages, the Court noted that the evidence showed that while the infringing actions of the Defendant were blameworthy, the Defendant's conduct did not merit the condemnation of the Court. This included the fact that the period of infringement was short, and a significant portion of the marketing of the infringing device highlighted by the Plaintiffs was conducted prior to the issue date of the '567 Patent.