In Pollard Banknote Limited v BABN Technologies Corp (2016 FC 883), the Canadian Federal Court put a spotlight on the risks created by Canada’s rule against file wrapper estoppel in claim construction. This case may signal a shift in attitude at the bench, which could one day lead to the common law rule’s demise.

This case concerned security features on instant lottery tickets. The plaintiff, Pollard challenged the validity of Canadian Patent No. 2,752,551 (the ‘551 patent). The patent owner and defendant, Scientific Games made a counterclaim for infringement.

The ‘551 patent claims a scratch-off lottery ticket including a play area, a non-play area with a 2D barcode to authenticate the ticket, and a “removable continuous scratch-off coating covering both” the play area and the non-play area. During prosecution with the Patent Office, Scientific Games argued that the claim was limited to tickets with one single scratch-off coating which covers both the play and non-play areas, which distinguished the claim from the prior art in which the play and non-play areas are covered by two separate scratch-off coatings.

However, in an attempt to capture Pollard’s scratch card, Scientific Games took the reverse position at trial. Scientific Games argued that the claim was broad enough to cover one or more scratch-off coatings so long as collectively the coating(s) completely covered (i.e. are “continuous over”) the play and non-play areas. Such inconsistency is allowed by the rule against extrinsic evidence (such as the prosecution file wrapper) in claim construction.

While accepting the claim construction put forward by Scientific Games, the Federal Court commented that the result would have been different in the U.S. where file wrapper estoppel is alive and well:

[238] I would expect that SG’s argument would never have made it to a trial in the US where the principle of file wrapper estoppel applies. There, SG would likely not have been allowed to argue a claim construction that attempts to recapture ground conceded during prosecution of the patent application to avoid prior art.

[239] This case highlights a potential risk in taking a simpler approach to claim construction by ignoring extrinsic evidence, such as the prosecution history of the patent in suit.

The claim construction Scientific Games relied upon during prosecution, distinguished the claims from the prior art. Predictably, with this construction now reversed, the claims became vulnerable to invalidity. In finding the claims invalid for obviousness over the very same prior art, the Court expressed shock at Scientific Games’ position:

[237] […] [I]t is breathtaking to see SG now attempt not just to take a different position on the construction of claim 1, but also to argue that, by doing so, it does not reintroduce the problem of obviousness in light of the [prior art] that it had previously argued was avoided applying its first position.

Ultimately, the Federal Court upheld the rule against extrinsic evidence in Pollard Banknote Limited v BABN Technologies Corp, but not without criticism over the rule’s consequences.

In the common law, change can happen quickly. Although Justice Locke's ruling on obviousness was ultimately made without reliance on the file wrapper in this case, his comments suggest that the Court will not look favourably on a patentee who proposes one construction to overcome an objection during prosecution and subsequently takes the opposite position at trial. As a result, Canadian patent applicants should be mindful when making statements to the Canadian Patent Office just as they would when making statements before the United States Patent Office, where file wrapper estoppel is well established. There is now a very real risk that such statements made during prosecution in Canada would come back to bite a patentee when advancing a proposed construction before the court.

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