On April 7, 2022, the Federal Court issued its judgment and reasons in Angelcare Canada Inc et al v Munchkin Inc et al (2022 FC 507), finding that Munchkin, Inc and Munchkin Baby Canada Ltd (the “Defendants” or “Munchkin”) had infringed numerous valid patents owned by Angelcare Canada Inc related to their diaper disposal system sold under the brand name “Diaper Genie”.


In addition to providing relief for the patent owners, the Federal Court's comprehensive decision covered a lot of ground on various infringement and invalidity principles, providing clarity for patent owners in the competitive consumer products space.


The Plaintiffs were successfully represented by Smart & Biggar litigators François Guay, Guillaume Lavoie Ste-Marie, Jeremy Want, Denise Felsztyna and Matthew Burt.


Background


The Plaintiffs Angelcare Canada Inc, Edgewell Personal Care Canada ULC and Playtex Products LLC (the “Plaintiffs” or “Angelcare”) commercialize the well-known Diaper Genie disposal system in Canada. The Diaper Genie system involves a reusable diaper pail and a disposable refill that contains the bag used by the system. Angelcare owns a number of patents covering the Diaper Genie system related to the pail, refill, or their combination.


In 2012, Munchkin started selling refills that were specifically designed to be compatible with the Diaper Genie system. Over time, Munchkin sold four models of refills, and eventually also sold its own diaper pail system compatible with its refills.


In 2016, Angelcare launched an action for patent infringement against Munchkin with regard to six Canadian patents: 2,640,384, 2,855,159, 2,936,415, 2,936,421, 2,937,312, and 2,686,128. Munchkin in turn counterclaimed alleging that the patents-in-suit were all invalid.


The Federal Court ruled in favour of the Plaintiffs, confirming that the Defendants’ first three refill models directly infringe certain claims, and that all four refill models infringe additional claims when combined with select pails of the Plaintiffs and/or of the Defendants. Only four claims of one of the patents were held to be anticipated, and all other claims were held to be valid despite the various invalidity arguments raised by the Defendants.


Key findings of the Federal Court


POSITA


As is true for all patent litigations, claim construction is done through the eyes of the person of ordinary skill in the art in the field to which the patent relates (POSITA). While this fictitious person has the qualifications, training, experience and skills required to be the addressee of the patent, it does not benefit from inventiveness.


In this case, the experts generally agreed on the high-level description of the POSITA (i.e., a person with a university or college-level degree in industrial design or a related field like engineering), but fundamentally disagreed on how much experience the POSITA would have and on its “common general knowledge”. The Plaintiffs’ expert described the POSITA’s experience in number of years, depending on its educational background, whereas the Defendants’ expert explained that the POSITA would have personally designed two to four plastic-molded and consumable products and thus gained specific knowledge on aesthetics, user interaction, and manufacturing cost optimization trade-offs.


In accordance with the jurisprudence, the Court preferred the definition provided by the Plaintiffs’ expert, noting that the Defendants’ expert’s definition would be more in line with the considerations associated with developing the invention, rather than understanding and practicing it. In other words, a designer who has independently developed multiple products would have significantly more experience (and inventiveness) than what is required to merely understand and practice the patents-in-suit.


Inducement


In addition to their claim for direct infringement, the Plaintiffs also raised infringement by inducement, alleging that Munchkin actively encouraged consumers to use their products in a manner that infringes the combination claims of the patents-at-issue. On this ground, the Federal Court reiterated the three-part test laid out by the Federal Court of Appeal in Corlac Inc v Weatherford Canada Inc (2011 FCA 228): (i) that there be direct infringement, (ii) that the completion of the acts of infringement be influenced by the alleged inducer, and (iii) that the influence be knowingly exercised by the inducer. 


The evidence in this case, including testimony of senior employees at Munchkin, clearly established that Munchkin’s business model was to use the Plaintiffs’ well-established Diaper Genie pails in order to sell their own refills. The Munchkin refills were built specifically to fit in the Plaintiffs’ pails and, at least from 2012 to 2016, the Defendants did not sell any pails compatible with their own refills. In addition, the labels affixed to the Munchkin refills unmistakably encouraged end-users to assemble combinations that infringed the patents-in-suit. 


In line with the decision of the Federal Court of Appeal in MacLennan v Produits Gilbert Inc (2008 FCA 35), which was issued on similar facts, the Court, in this case, found that by actively encouraging consumers to assemble infringing combinations, Munchkin’s activities amounted to infringement by inducement.


Liability of US. Defendant Munchkin Inc


The Defendants also argued that because it had no role in the manufacture, use or sale of the infringing products in Canada, the US-based Defendant Munchkin, Inc (the parent of co-Defendant Munchkin Baby Canada, Ltd) could not be liable for patent infringement.


The Federal Court quickly dismissed this argument, confirming that the evidentiary record demonstrated that all product design and marketing decisions came from Munchkin, Inc in California, which resulted in the infringing products sold in Canada. As such, it found that Munchkin, Inc, would be just as liable as its Canadian subsidiary for any proven infringement in Canada.


Non-disclosure agreements and confidentiality


In the context of its anticipation arguments, the Defendants alleged that the claims related to refills were anticipated pursuant to para. 28.2(1)(a) of the Patent Act, because the inventor of five out of the six patents had disclosed a computer-aided design (CAD) file of a refill to two companies, Initial and Plasti-Lax, more than a year before the patents’ filing date. The Plaintiffs denied there was any public disclosure and argued that the CAD file was protected under an obligation of confidentiality, despite the absence of any formal non-disclosure agreement.


The Court reviewed the question of public disclosure and confidentiality both from a common law and civil law perspective. Citing respectively the Canadian and UK decisions Lac Minerals International Corona Resources (1989 2 SCR 574) and Coco (1969 R.P.C. 41(Ch.)) and the Quebec jurisprudence Wrebbit Inc c Benoit (1998 RJQ 3219) and Positron inc c Desroches (1988 RJQ 1636), the Federal Court summarized the confidentiality test as follows: information is considered to have been exchanged in a confidential relationship where any reasonable man standing in the shoes of the recipient of the information would have realized that upon reasonable grounds the information was being given to him in confidence. Essentially, the test asks whether the information was imparted in circumstances in which an obligation of confidentiality reasonably arises. This same test also finds support in art. 1434 of the Civil Code of Quebec, pursuant to which contracts formed in Quebec will not only contain what is specifically mentioned, but also what is incidental to it according to its nature, usage, equity and law.


The Court concluded that because the recipient companies were in the business of making prototypes, they were inherently bound by an obligation of confidentiality despite the lack of any written NDA. Any reasonable person at Initial or Plasti-Lax, receiving information relating to prototypes, would have had ample ground to realize that the inventor’s CAD files were shared in confidence. Further, the CAD files only showed part of a refill, with limited features, such that the POSITA would never have been able to understand and practice the invention as claimed in the patents.


Concluding remarks


The Federal Court’s accurate reiteration and application of the tests for infringement (including determination of the POSITA), anticipation, obviousness, overbreadth, sufficiency and ambiguity, utility, and double patenting provides clarity and stability for patent owners operating in the ruthless and competitive consumer-products industry. The Federal Court’s decision also offers an interesting perspective on questions of inducement, the jurisdiction of the Court over foreign infringing parties, and the obligation of confidentiality, which have not often been addressed as such in the context of patent litigations.


Should you have any questions, please do not hesitate to contact a member of our firm's Litigation Group.


The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.