February 21, 2020
Bauer Hockey Ltd. (“Bauer”) and Sport Maska Inc., d.b.a. CCM Hockey (“CCM”) are competitors in the hockey equipment industry. In Bauer Hockey v Sport Maska, 2020 FC 212, the Federal Court of Canada dealt with three motions brought by the parties to the patent infringement action commenced by Bauer.
The parties were met with divided success. While the Court dismissed CCM’s motion to strike portions of one of Bauer’s expert reports, it struck the reply report of another expert. The Court then proceeded to dismiss Bauer’s motion to strike two of CCM’s expert reports, concluding that they constituted proper response and reply, respectively.
Striking Evidence Under Rule 248
Under Rule 248 of the Federal Court Rules, a party cannot tender evidence of certain facts at trial if it refused to answer questions concerning those facts on discovery.
In seeking to exclude Bauer’s expert report, CCM relied on Bauer’s representation that its claim for damages would be limited to a reasonable royalty and would not include lost profits. CCM argued that Bauer introduced evidence of profits in its expert report, despite having refused to answer questions on this matter during the discovery phase.
The Court dismissed CCM’s motion on the basis that the impugned report relied on documents that Bauer had actually produced during discovery. Notably, the Court held that Bauer’s undertaking not to claim any lost profits did not exclude any consideration of lost profits in establishing a reasonable royalty. The Court explained that damages for lost profits and reasonable royalty are generally considered as separate manners of assessing damages for patent infringement. As such, a potential licensor’s expectation of losing profit may be relevant to the methodology used when determining a reasonable royalty.
Striking Reply and Response Evidence
In determining whether each parties’ respective motion to strike the other’s expert reply report was valid, the Court discussed the limited scope of reply evidence. The Court noted that these limits foster trial fairness and efficiency, and the primary purpose of reply evidence is to enable the plaintiff’s expert to respond to unanticipated issues arising from the defendant’s evidence.
(a) CCM’s Motion to Strike Reply Reports
In granting CCM’s motion to strike the reply report of Dr. Berkman, Bauer’s expert, the Court accepted CCM’s argument that the impugned report contained new evidence that would allow Bauer to “split its case.” The Court held that CCM’s responding report did not provide any unanticipated evidence to which Dr. Berkman should have been permitted to reply. As such, while Bauer was free to cross-examine CCM’s expert on her response, it was inappropriate to file a reply merely because it disagreed with her opinion. Accordingly, Dr. Berkman’s reply report was deemed improper and CCM’s motion to strike was granted.
On the other hand, the Court dismissed CCM’s motion to strike the reply report of Bauer’s other expert, Dr. Ross. CCM had argued that Bauer’s expert simply restated his previous opinion and expressed disagreement in his reply report. While declining to resolve the issue of whether this argument had merit, the Court exercised its discretion to admit the report “in spite of a potential breach of the rules regarding reply evidence.” The Court held that the impugned report would be “very useful” to the Court in comparing the parties’ positions regarding accounting for profits. The Court admitted the reply report, concluding that accepting the reply report would not prejudice CCM.
(b) Bauer’s Motion to Strike Reply and Responding Reports
Prior to the motions at bar, the parties were required to exchange their expert reports in accordance with a scheduling order. Bauer argued that the responding report, filed by CCM’s expert, contravened this order because the expert’s initial report did not contain a specific section dealing with essential elements of the claims. Bauer relied on the Supreme Court of Canada’s decision in Whirlpool stating that claims construction issues should be addressed before issues of validity or infringement.
The Court rejected Bauer’s argument and held that the proposition in Whirlpool relates to the intellectual process, as opposed to the sequence of adducing evidence. Based on this reasoning, there was no requirement for parties to provide opinions regarding claim construction before opinions concerning other subjects.
The Court also found that the reply report filed by CCM’s expert constituted a legitimate response to an unanticipated opinion. Accordingly, Bauer’s motion to strike portions of CCM’s reply report was dismissed.
Authors: Sam Galway and Clara Ryu