



COURT OF APPEAL FOR ONTARIO

CITATION: OrthoArm Incorporated v. GAC International LLC,
    2017 ONCA 418

DATE: 20170524

DOCKET: C60969

MacFarland, van Rensburg and Huscroft JJ.A
.

BETWEEN

OrthoArm Incorporated

Plaintiff (Appellant)

and

GAC International, LLC

Defendant (Respondent)

Andrea J. Sanche and Daniella Murynka, for the appellant

J. Alan Aucoin and Ankita Kapur, for the respondent

Heard: February 13, 2017

On appeal from the judgment of Justice Wendy M. Matheson
    of the Superior Court of Justice, dated August 13, 2015, with reasons reported
    at 2015 ONSC 5097, and from the costs order, dated October 23, 2015, with
    reasons reported at 2015 ONSC 6539.

van Rensburg J.A.:

[1]

The appellant commenced an action against the respondent for damages and
    other relief for breach of a licensing agreement. The action went to trial. The
    principal issue, which was decided against the appellant, was whether the
    respondent infringed the appellants patent in respect of an orthodontic
    bracket. The issue in this appeal is whether the trial judge made a reversible
    error in dismissing the appellants action, and in awarding costs in favour of
    the respondent. I conclude that there was no such error, and therefore would
    dismiss the appeal.

A.

Facts

[2]

The background to the action is set out in detail in the comprehensive
    reasons of the trial judge. It is sufficient for the purpose of the appeal to
    provide only the following brief outline.

[3]

The principal of the appellant, OrthoArm Incorporated (OrthoArm),
    invented a type of orthodontic bracket. The bracket is self-ligating, which
    means that it is self-locking, using clips rather than elastic bands to trap
    the archwire (the wire conforming to the dental arch in a patients mouth).
    There are many types of self-ligating brackets. OrthoArms bracket is covered
    by U.S. Patent No. 5,630,715 (the 715 Patent).

[4]

In 1997, OrthoArm licensed the worldwide rights to manufacture, use,
    market, and sell products covered by the 715 Patent to the respondent GAC
    International, LLC (GAC). Under the agreement, OrthoArm was entitled to receive
    a license fee based on net sales of such products (the License Agreement).
    The License Agreement governed the parties relationship regarding the OrthoArm
    brackets until the 715 Patent expired on May 20, 2014.

[5]

In 2007, GAC began to market and sell orthodontic brackets it had
    developed with a third party manufacturer, without accounting to OrthoArm for
    profits under the License Agreement. OrthoArm alleged that these brackets (the
    Accused Products) were an extension of its original invention and were covered
    by the 715 Patent. GAC denied the allegation, and claimed that the Accused
    Products were developed by the third party in accordance with its own U.S.
    patent. OrthoArm commenced an action against GAC for breach of the License
    Agreement and to recover unpaid royalties and other damages.

B.

Trial Decision

[6]

The issue at trial was whether the Accused Products were covered by the
    715 Patent and therefore infringed OrthoArms patent. Because the 715 Patent is
    a U.S. patent, the trial proceeded on the basis of American patent law.

[7]

The first task for the trial judge was to determine the applicable U.S.
    patent law, as a question of fact. The trial judges second task was to
    construe the claims, which define the limits of the patent, to determine their
    meaning. Next, she had to undertake an infringement analysis and determine
    whether all of the elements of each of the patent claims contained in the 715
    Patent were present in the Accused Products. If even one element of a claim is
    not found in an Accused Product, the product does not infringe the patent
    claim. Finally, if she found infringement of the 715 Patent, the trial judge
    was to determine damages and other relief.

[8]

Two expert witnesses, both U.S. patent attorneys, provided evidence
    about U.S. patent law, including the principles of construction of patent
    claims. They also testified about the construction of the particular claims in
    the 715 Patent. This evidence was in the nature of submissions they would make
    to a U.S. judge if they were counsel appearing at a Markman hearing (the
    first step in a U.S. patent infringement action when the judge hears evidence
    and submissions and construes the claims at issue as a matter of law, before
    the issue of infringement goes to the trier of fact).

[9]

GAC argued at trial that four elements of nine claims in the 715
    Patent were not found in the Accused Products. The trial judge rejected GACs arguments
    on the first three elements, however she accepted the argument that the fourth
    element  a slidable locking shutter  was not present in the Accused
    Products.

[10]

The wording that the trial judge had to construe describes the shutter
    in the orthodontic bracket that locks the archwire. The trial judge focussed on
    the wording of claim 1, which provides as follows:

A twin edgewise orthodontic bracket for attaching an archwire
    to a tooth comprising:
a slidable locking shutter movable between open and
    closed positions having a guide bar slidably received in said occlusal-gingival
    opening,
a locking body for engaging said locking recess without covering
    the labial or lingual faces of the sets of occlusal and gingival tie wings when
    in closed position, and
an extension arm connecting said guide bar to said
    locking body and movable between said sets of tie wings, wherein said locking
    shutter is slidably mounted on said bracket between open and closed positions.
[Emphasis
    added.]

[11]

Although the trial judge focused her analysis on the language
    contained in claim 1, she noted that every claim in the 715 Patent contains
    language identical or similar to the requirement of a slidable locking shutter
    movable between open and closed positions wherein said locking shutter is
    slidably mounted on said bracket between open and closed positions.

[12]

The trial judge interpreted slidable locking shutter to mean that the
    shutter must
only
slide in moving between the open and closed
    positions to trap the wire.
She concluded that
    the term slidable, and its variations used in the claims, are all connected
    with the movement of a locking shutter that has a guide bar that is slidably
    received in the occlusal-gingival (bite-gum) opening of the bracket.
The
    trial judge stated at para. 60:

The ordinary, common sense construction of this aspect of the
    claims, as used in the claims and in the specification, requires a sliding
    motion from the open position to the closed position, not just for part of the
    movement between the open to the closed position. In the phrase slidable
    locking shutter movable between open and closed positions, the word slidable
    ordinarily relates to the word movable. There are numerous other references
    in the claims and specification to the slidable motion. For example, claims
    also refer to the locking shutter being slidably mounted on said bracket
    between open and closed positions, and a locking means slidably carried by
    the bracket member between open and closed positions and said locking means
    being slidable between open and closed positions,. The other words used, and
    the figures, are consistent with the conclusion that the sliding motion must
    take the locking shutter from the open to the closed position and back again.
    The only thing in the claims, or the entire patent for that matter, that gives
    the locking shutter the ability to slide between the open and closed positions,
    is the guide bar sliding in the occlusal-gingival opening.

[13]

The trial judge applied this construction of the claims in the 715
    Patent to the Accused Products. She found that there is a small sliding action
    when the locking shutter is moved in the Accused Products within the
    occlusal-gingival opening but, for the most part, the locking shutter moves
    from open to closed position and back through a rotating motion (at para. 61).
    The trial judge rejected the appellants argument that the locking shutter
    movement need not be entirely a sliding motion, and could include rotational
    movement. She concluded that, since all of the claims in the 715 Patent include
    the slidable locking shutter element, the Accused Products do not infringe
    any of the claims, and she therefore dismissed the appellants action.

[14]

The trial judge awarded costs against the appellant of $300,000 for fees
    and $90,000 for disbursements, plus HST.

C.

Issue on Appeal

[15]

There is no question as to the correctness of the trial judges
    statement of the applicable legal principles. The parties agreed on the
    relevant U.S. patent law principles, including the principles of patent
    interpretation. The appellant, however, asserts that the trial judge erred in
    the application of these principles in construing the claims in the 715 Patent,
    and therefore in her conclusion that the Accused Products did not infringe the claims.

[16]

The appellant contends that the trial judge erred in concluding that the
    patent claims required a slidable locking shutter that may
only
be
    moved from open to closed positions and back again by way of a sliding motion.
    The appellant says that, when properly construed, nine of the claims in the 715
    Patent cover the Accused Products, which has a locking shutter that both slides
    and rotates.  Therefore, the question before this court is whether a bracket
    that contains a locking shutter with a slight amount of sliding followed by
    rotation on a pivot point infringes the appellants patent.

[17]

OrthoArm also requests leave to appeal the trial judges costs award.

D.

Discussion

[18]

The standard of review is correctness, as the construction of patent
    claims is a question of law:
Mylan Pharmaceuticals ULC v. AstraZeneca
    Canada Inc.
, 2012 FCA 109, 101 C.P.R. (4th) 275, at para. 20. However, the
    evidentiary assessments that trial judges make in reaching conclusions on the
    construction of the patent are entitled to deference:
Mylan Pharmaceuticals
,
    at para. 20. The issue on appeal concerns only the trial judges construction
    of the claims in the 715 Patent. No one challenges the trial judges factual
    finding that the Accused Products locking shutter slides slightly but, for the
    most part, moves between the open and closed positions through a rotating
    motion. Accordingly, the standard of review on this appeal is correctness.

[19]

The appellants principal argument is that the trial judge erred in not
    applying the plain and ordinary meanings of the words slidable, movable and
    between when she interpreted a slidable locking shutter movable between open
    and closed positions to mean a locking shutter slidably movable from the open
    to the closed position and back again. The appellant says that movable
    between open and closed positions is properly construed as meaning the locking
    shutter must be capable of moving between the open and closed positions,
    whether through a sliding or rotating movement, or both. The appellant argues
    that the trial judges construction of the claims erroneously gave the words movable
    and between narrow meanings and imported limitations not found in the claims.

[20]

The appellants other arguments, which will also be addressed below,
    were either referred to in the appellants factum and not expanded upon in oral
    argument, or raised briefly in oral argument.

(1)

Meaning of Movable, Slidable and Between

[21]

First, the appellant says that the trial judge erred in equating the
    word movable with slidable and in failing to give these words their common,
    ordinary and distinct meanings. The appellant says that the word movable is
    broader than slidable, and describes various motions, including both sliding
    and rotating. The appellant points to the different dictionary meanings of the
    adjectives slidable, meaning able to slide or be slid, and movable, meaning
    capable of being moved, and asserts that movable cannot mean movable only
    by sliding. Rather, the term movable captures both a sliding and a rotating
    motion.

[22]

The appellant also takes issue with the trial judges interpretation of
    the words between open and closed positions as meaning from open to the closed
    position and back again. The appellant says that the trial judge erred by concluding
    that the sliding motion must take the locking shutter
from
the open
to
the closed position. The appellant submits that the word between describes a
    spatial movement that is more flexible than from/to and leaves room for
    variations in movement when the locking shutter is opened and closed. The
    appellant refers to the dictionary meaning of between as at, into or across
    the space separating [two objects, places or points] and says that, if the
    locking shutter is movable between the two positions, it is simply movable at,
    into or across the space separating the open and closed positions. In other
    words, it need not be slidable across the entire space, from one position to
    the other, but slidable at some point between those positions.

[23]

The respondent asserts that the appellant is advocating interpretations
    of the words slidable, movable and between that are divorced from the specification
     which is the entirety of the patent, including the text and figures of the
    patent claims  by relying on dictionary definitions, a form of extrinsic
    evidence. The term slidable and its variations all refer to the movement of a
    locking shutter that is connected to a guide bar that is slidably received in
    the occlusal-gingival opening of the bracket, and moves between the open and
    closed positions.

[24]

Further, the respondent contends that the appellant did not rely on
    dictionary meanings of words in the claim at first instance and, in any event, it
    was unnecessary for the trial judge to consider this extrinsic evidence because
    the plain meaning can be derived from the intrinsic evidence in the
    specification.

[25]

I agree with the respondents submissions. It is not sufficient to
    simply look at the words slidable, movable and between in isolation or in
    the abstract. The words must be considered within the context, which is the
    specification:
Phillips v. AWH Corp.
415 F. 3d 1303 (Fed. Cir. 2005,
en
    banc
). In
Retractable Technologies, Inc. v. Becton, Dickinson and
Company,
    653 F. 3d 1296 (Fed. Cir. 2011), at p. 1305, cited by the trial judge here, the
    U.S. Court of Appeals for the Federal Circuit exhorted that the court must
    strive to capture the scope of the actual invention, rather than strictly
    limit the scope of claims to disclosed embodiments or allow the claim language
    to become divorced from what the specification conveys is the invention. In
    this case, it is unnecessary to resort to dictionary meanings, particularly because
    doing so isolates the words in question and gives them a meaning divorced from
    the context of the claims within the specification.

[26]

The trial judge did not ignore the fact that slidable and movable
    are two different words with different meanings. Nor did she interpret the word
    movable too narrowly. Rather, she interpreted the terms in the context of the
    specification. She looked at how the terms were employed together in claim 1,
    as well as in the other claims that were part of the specification, noting that
    the claims also referred to the locking shutter being slidably mounted on said
    bracket between open and closed positions and a locking means slidably
    carried by the bracket member between open and closed positions.

[27]

The term between, in the context in which it is used, means from a
    point to a point. The trial judge correctly concluded that the words and the
    figures were consistent with the conclusion that the sliding motion must take
    the locking shutter from the open to the closed position and back again. She
    observed that the only thing that gives the locking shutter the ability to
    slide between the open and closed positions is the guide bar sliding in the
    occlusal-gingival opening. In this context, between does carry the meaning of
    from and to, and does not reasonably carry the alternative meaning argued by
    the appellant of at, into or across.

[28]

The trial judge interpreted the claims language to capture the scope of
    the actual invention. I see no error here and agree with the trial judges
    analysis.

(2)

Consideration of Figures 38 and 39

[29]

The appellant asserts that the trial judge, in construing the claims in
    the 715 Patent, failed to consider or give effect to the intrinsic evidence in
    the specification. In particular, the trial judge ignored figures 38 and 39,
    which depict an embodiment of the 715 Patent with a locking shutter that both
    slides and rotates.

[30]

The figures cannot, however, be considered without their corresponding description,
    which is included in the specification. The description states, [a]ccordingly,
    the guide arm is slidably received in the opening to permit occlusogingival
    movement of the closure member. The description does not refer to the
    rotational movement that the appellant contends is apparent in the figures.

[31]

As such, figures 38 and 39 offer no assistance in construing what is
    meant by a slidable locking shutter movable between open and closed
    positions.

(3)

Reference to CAD Drawings

[32]

Third, the appellant contends that the trial judge erred in analyzing
    the computer-aided design (CAD) drawings of the Accused Products, which were
    excerpted in her reasons, rather than by reference to the Accused Products themselves
    in determining whether the Accused Product infringed the claims of the 715
    Patent. The CAD drawings, which are static, exaggerate the rotational movement
    of the locking shutter and minimize the sliding movements. Such evidence, which
    is extrinsic, may only be used to assist the court to understand a claim; it
    cannot vary or contradict the language of the claim itself. The appellant
    further contends that the trial judge erroneously relied on the CAD drawings to
    vary the claim language to require that the locking shutter only slide from the
    open to the closed positions.

[33]

I am not persuaded by this argument. The Accused Products are very small.
    The parties provided the court with enlarged models of the Accused Products,
    which were referred to by the witnesses and examined by the trial judge. The
    CAD drawings were provided as part of the respondents expert report and
    referred to in argument. There is nothing in the trial judges reasons to
    suggest that she used the CAD drawings of the Accused Products to determine the
    movement of the Accused Products, or to construe or vary the claim language.
    The CAD drawings appear in her reasons following her analysis construing the
    claims, and only as an illustration.

(4)

Improvement on the Claims of the 715 Patent

[34]

Next, the appellant says that the trial judge failed to consider whether
    the Accused Products were an improvement on the claims of Patent 715, in
    which case they would violate the patent. The appellant says that the
    additional rotational movement of the locking shutter is an improvement on the
    necessary sliding function of the shutter.

[35]

There is no merit to this contention, which was not pressed in oral
    argument. The 715 Patent is not for a self-ligating orthodontic bracket, but
    only for a certain type of self-ligating bracket with an engagement mechanism 
    a locking shutter  for retaining wire, as defined in the patent. The Accused
    Products utilize a different type of engagement mechanism than the one covered
    by the 715 Patent. The Accused Products are a rotating bracket, not a better
    type of slidable bracket.

(5)

Failure to Consider All Nine Claims

[36]

The appellant asserted in oral argument (but not in its factum) that the
    trial judge erred by failing to consider each of the nine claims alleged to
    have been infringed by the respondent. The appellant submits that some of the
    claims did not contain the same language as claim 1, and that the trial judge
    needed to construe each of the other claims and determine whether they were
    infringed, even though the respondent succeeded in respect of claim 1.

[37]

I note that the trial (and the appeal for that matter) proceeded on the
    basis that each of the nine claims contains similar language as in claim 1, and
    that the construction issue was whether the words describing the locking shutter
    were meant to describe only a sliding movement, or whether rotational movement
    was included.

[38]

In any event, the appellant did not explain how, if the trial judge was
    correct in her construction of claim 1 and her conclusion that the Accused
    Products did not infringe that claim, she might have arrived at a different
    interpretation and conclusion with respect to any of the remaining eight
    claims.

[39]

There is no merit to this argument.

E.

Costs

[40]

The appellant says that the costs awarded to the respondent were
    disproportionate for a trial that lasted only four days, where such costs
    greatly exceeded its own partial indemnity costs. The appellant also says that
    the trial judge erred in not taking into account its success in resisting three
    of the four defences raised by the respondent, and reducing the amount of costs
    awarded to the respondent accordingly.

[41]

The trial judges reasons demonstrate that she considered and applied
    the relevant factors under rule 57.01 of the
Rules of Civil Procedure,
R.R.O.
    1990, Reg. 194. She addressed the appellants concern about proportionality
    when she awarded the respondent less than 65% of its claim for partial
    indemnity costs. She took this into consideration, stating that GACs bill of
    costs in comparison to OrthoArms, for a four day trial, is the most
    significant factor justifying a substantial decrease in the amount sought (at para.
    20).

[42]

As for the appellants contention that this was a case of divided
    success, and warranted a reduction in the costs awarded to the respondent, I disagree.
    The respondent was entirely successful in the proceedings. It would have been
    an error for the trial judge to focus on individual issues in the litigation
    and to disregard the overall success achieved by the respondent:
W
esbell
    Networks Inc. v. Bell Canada
, 2015 ONCA 33, [2015] O.J. No. 279, at
    paras. 20-21.

[43]

Eastern Power Ltd. v. Ontario Electricity Financial Corp
., 2012
    ONCA 366, [2012] O.J. No. 2414, a case relied on by the appellant, does not
    contradict this general principle. In
Eastern Power
, this court
    allowed an appeal of the dismissal of a number of claims at trial, with the
    result that a new trial was ordered but only on one of the claims that was
    worth a relatively small part of the amount originally claimed. The court recognized
    that when a party succeeds on appeal, that success ordinarily must be imputed
    as success at trial (at para. 16). However, the court concluded that on the
    particular facts of this case, [the appellants] success on appeal does not
    transform it into the successful party at trial (at para. 16). This court
    confirmed the general rule against distributive costs awards, but reduced the
    trial costs in part to reflect the success on the one issue on appeal. There
    are no similarities between that case and the present, which would warrant any
    reduction in the respondents trial costs, nor does
Eastern Power

establish
    any general rule that would assist the appellant.

[44]

Neither argument presents strong grounds upon which [this court] could
    find that the judge erred in exercising [her] discretion:
Brad-Jay
    Investments Ltd. v. Szijarto
(2006), 218 O.A.C. 315 (C.A.), at para. 21. 
    Accordingly, leave to appeal costs is refused.



F.

Disposition

[45]

For these reasons, I would dismiss the appeal, with costs to the respondent
    fixed at $25,000, inclusive of HST and disbursements.

Released: (KVR) May 24, 2017

K. van Rensburg J.A.

I agree. J. MacFarland J.A.

I agree. Grant Huscroft J.A.


