Uponor AB v Heatlink Group Inc et al, 2016 FC 320
Canadian patent filers will celebrate this ruling that an improper priority claim is not an untrue material allegation, and will not result in a patent being rendered void under s. 53 of the Patent Act.
In this case, the Federal Court (“FC”) found that many of the claims in Uponor AB’s (“Uponor”) patent were invalid, rejected the untrue material allegation argument and found that several of the remaining claims were infringed by Heatlink Group Inc. (“Heatlink”) and Pexcor Manufacturing Company Inc. (“Pexcor”). 
Canadian Patent 2,232,376: “Method for Heating and/or Cross-Linking of Polymers and Apparatus Therefor”
Uponor is the owner of Canadian Patent No. 2,232,376 (“the ‘376 Patent”), which relates, in general terms, to a uniform, fast, and contactless method of crosslinking polymers using infrared radiation.  The wavelengths corresponding to absorption peaks for the polymer material are eliminated in the infrared radiation using either a filter or using an infrared radiation source with a wavelength at 1.2 μm. [38-39] The ‘376 Patent also pertains to an apparatus used for carrying out the process of polymer crosslinking. 
Uponor claimed that Pexcor and Heatlink directly infringed the ‘376 Patent and that Crosslink Finland OY (“Crosslink”) directly and indirectly infringed the ‘376 Patent. [6-10] The defendants counterclaimed, challenging the validity of all 50 claims of the ‘376 Patent on the grounds of anticipation, obviousness, insufficiency of description, ambiguous claims, lack of utility, overbreadth, unpatentable subject matter and non-entitlement to priority claims, and notably alleged the ‘376 Patent was void under s. 53(1) of the Patent Act. 
Improper Priority Claims Not Untrue Material Allegation under Section 53 of the Patent Act
The PCT application, from which the ‘376 Patent was issued, claimed priority from three earlier Uponor patent applications.  The FC found that the claim for priority, as asserted by Uponor, was not justified, as the prior applications did not contain the essential elements of the current application. 
The defendants alleged that the ‘376 Patent was void since the inventors knew, or were reckless in not knowing, that the priority applications did not disclose the necessary subject matter.  Pursuant to subsection 53(1) of the Patent Act, a patent is void if the court finds that there is an untrue allegation made in the petition of an applicant that is material and was willfully made for the purpose of misleading.  The FC found, however, that the inventors were never “applicants” as contemplated by the Patent Act or involved in patent drafting and, therefore, there is no duty under s. 53 imposed against them.  Moreover, the FC determined that an improper priority claim is not material in that it did not affect how the public could make use of the invention taught by the ‘376 Patent. The only implication of the improper priority claim in this case is that the applicant is not entitled to the benefit of the early claim date.  Finally, the FC stated there was no evidence to suggest the allegations were made with any intent to mislead the public.  As such, the patent was not deemed void under section 53(1).
Other Validity Issues: Five Claims Remain Valid
Only claims 1-38 were at issue. While no claims were deemed invalid on the grounds of unpatentable subject matter, the FC deemed most of the claims at issue were invalid for lack of utility, insufficient disclosure, anticipation, and/or obviousness. The FC found that none of the filters disclosed in the claims would substantially eliminate the absorption peak wavelengths and therefore the claims pertaining to such filters were invalid on the basis of inutility. [161-163] The filter claims were also found to be invalid on the basis of insufficient disclosure, as they do not enable a person of skill in the art to understand what type of filter to use in order to get the benefits promised. 
The FC found that one piece of prior art, the IR Handbook, not only anticipated using an infrared radiation source with a wavelength at 1.2 μm, but actually provided more detail than the ‘376 Patent regarding selection and operation of infrared radiation lamps.  The FC also found that there is little, if any, inventive step required by a skilled person who considers the IR Handbook along with U.S. Patent No. 4,234,624 to reach the inventive concept in many of the ‘376 Patent’s claims, and as such were deemed invalid on the grounds of obviousness. 
The FC concluded that all but five of the claims at issue were invalid. 
Infringement: Heatlink and Pexcor Infringed
The FC found the remaining five claims to be directly infringed by Pexcor’s process of polymer crosslinking  and Heatlink’s pipes to be used in Pexcor’s process.  The FC determined that Crosslink did not directly infringe the ‘376 Patent, as their products were sold in Finland, not in Canada.  Crosslink was also found not to have indirectly infringed the ‘376 Patent, as the evidence was not sufficient to prove that Pexcor and Heatlink’s direct infringement would not have taken place without Crosslink’s influence. 
Remedies: Injunction Awarded
The FC enjoined Pexcor and Heatlink from manufacturing, using, offering for sale and selling the infringing apparatus for heating polymer material until the expiry of the ‘376 Patent.  The quantum of damages was left to be determined at a later date.  The FC found no basis for aggravated, punitive or exemplary damages and also found that Uponor was not entitled to an accounting of profits, as they did not show a basis for the exercise of equity. [305-306]
For comparison, it is worth noting that in 2011, Pexcor filed a suit in the U.S. against Uponor, seeking a declaratory judgment of non-infringement of U.S. Patent No. 6,106,761, which has nearly identical claims to the ‘376 Patent. In response, Uponor filed a motion to stay the case pending resolution of the Canadian case regarding the ‘376 Patent. In Civil Action No. 11-2034, the United States District Court accepted Uponor’s motion to stay after considering factors such as the similarity of the issues, the adequacy of the alternate forum, and the potential prejudice to either party.
On April 5, 2016, Uponor announced in a press release that it had reached an intellectual property licensing agreement with Heatlink and Pexcor. This agreement resolved the ongoing litigation between the parties in both Canada and the U.S.