Federal Court Of Appeal Confirms MEG Energy Does Not Infringe An Invalid Patent

• Published date: 27 June 2022
• Subject Matter: Intellectual Property, Patent
• Law Firm: McCarthy Tétrault LLP
• Author: TechLex Blog, Timothy Ellam, Steven Tanner, Kendra Levasseur and Naina Khanna (Summer Student)

The Federal Court of Appeal ("FCA") dismissed the Appellants' ("Mr. Swist's") appeal in Swist v. Meg Energy Corp.,¹ this week in favor of MEG Energy Corp ("MEG"). In so doing, the FCA upheld Justice Fothergill's order dated 13 July 2020 which held that MEG did not infringe any of claims 1-6 and 8 of Canadian Patent No. 2,800,746 and invalidated claims 1 to 8.²

By way of backstory, Jason Swist and his company, Crude Solutions, sued MEG in 2014 for patent infringement. Mr. Swist argued that his patent described and claimed a method of improving steam assisted gravity drainage ("SAGD"). SAGD was a well-known method used to mobilize and produce bitumen from reservoirs. Mr. Swist's purported modification involved the use of a "third" well between the adjacent well pairs to generate a large singular zone of increased mobility by the early injection of fluid into the third well. Mr. Swist claimed that MEG's sustainable bitumen extraction methods carried on in Christina Lake, Alberta infringed claims 1-6 and 8 of his patent which were otherwise valid.

However, the Federal Court ("FC") did not agree. Mr. Swist's asserted claims were found to be anticipated by three separate prior art references, including patents from Encana (on wedge wells), AOSTRA (Alberta Oil Sands Technology and Research Authority), and Amoco Corporation (now BP). The patent was also found not to work - the claims included methods which resulted in no better bitumen recovery that provided by SAGD (and in some cases actually worked worse than SAGD)

The FCA held that the FC's holdings should not be overturned. Given MEG succeeded in defending the FC's findings on claim construction, anticipation and non-infringement, the FCA declined to address any errors related to the allegations of obviousness, inutility, and overbreadth.

The Court of Appeal's reasons provide guidance that will be helpful for future litigants, particularly at the appellate level:

1. The FC is not required to explicitly construe every claim it invalidates.

The FCA held that the FC need not construe every claim that it invalidates.

The FCA referred back to its discussion in Corlac Inc. v. Weatherford Canada Ltd.³ and confirmed that where the first instance court correctly determines that the validity of dependent claims rests on the inventiveness of the independent claim, it is not required to construe elements of the dependent claims that were not actually in dispute.⁴ The Court distinguished its decision in Zero Spill...