Weatherford Canada Ltd. v. Corlac Inc. 2012 FC 76 (Phelan J.)

Summary – By providing its customers with an instruction manual and waiving warranty protection if the manual was not followed, Corlac Inc. (“Corlac”) was found to have induced infringement of method claim 17 of Weatherford Canada Ltd.’s (“Weatherford”) Canadian Patent No. 2,095,937 by the Federal Court (“FC”).  The FC had previously found that Corlac directly infringed claim 17 (2010 FC 602), but this was reversed on appeal by the Federal Court of Appeal (“FCA”) because Corlac did not themselves practice the claimed method (2011 FCA 228).  The issue of inducement was then returned to the FC for determination.

Analysis – The FC applied the three part test for inducement which is:

  1. The act of infringement must be completed by the direct infringer.
  2. The completion of the acts of infringement must be influenced by the acts of the alleged inducer to the point that without the influence, direct infringement would not take place.
  3. The influence must knowingly by exercised by the inducer, that is, the inducer knows that the influence will result in completion of the act of inducement.  However, it is not necessary to have knowledge of actual patent infringement (see Easton Sports Canada Inc. v. Bauer Hockey Corp.2011 FCA 83).

The FC considered the non-exhaustive list of questions outlined by the FCA and established answers as follows:

  1. Were the oil well operators customers of the defendants?  Yes.
  2. Were the customers the end users?  Yes.
  3. Was the instruction manual provided to the end users?  Yes, along with the warranty waivers/provisions.
  4. Was the instruction manual provided in the normal course of business?  Yes.

Considering the answers to the FCA’s questions and following the three part test for inducement, the FC found that:

  1. The oil companies practiced claim 17 and therefore directly infringed this claim.
  2. Corlac’s instruction manual instructed customers as to how the wellhead drive was to be operated in the field (this was the infringing method used by the oil companies).  The manual was addressed to customers and contained warnings about operating outside the manual’s parameters.  The warranty offered by Corlac contained waivers of coverage designed to ensure compliance with the manual.  However, there was no direct evidence that customers had actually followed Corlac’s manual.  Notwithstanding the absence of specific examples of influence, the FC found that it was more likely than not that, customers purchased the infringing product and used it in accordance with the instruction manual provided.  The FC also stated that, absence evidence to the contrary, the warranty waivers and the large and sophisticated nature of oil companies also implied that the manual was followed.
  3. Corlac hired an expert to create a product that they knew or ought to have known would infringe the patent.  The FC stated that it is impossible to believe that Corlac produced an instruction manual with warranty waivers, without intending their customers would act in accordance with the manual and the method of operation outlined in it.

Practice Point – Although there was no direct evidence that Corlac’s customers followed the instruction manual that was provided, the FC concluded that Corlac influenced its customers to infringe based on the implication and inference that it was more likely than not that the customers used the infringing product in accordance with the instruction manual.  This case indicates that direct evidence of customer influence may not be necessary to establish influence in the inducement test.  The presumption that customers follow instruction manuals and are concerned with warranty waivers may be sufficient to establish influence.  As such, companies must be cautious with the information and instructions they provide to their customers.