Sword in the stone: Demystifying the concept of ‘use’ in patent infringement dispute

Law360 Canada (October 1, 2024, 10:53 AM EDT) --

Manasi Iyer

The recent ruling by the Federal Court of Appeal in Steelhead LNG (ASLNG) Ltd. v. Arc Resources Ltd., (2024 FCA 67), navigates through the complexities surrounding patent infringement claims. Much like the legendary challenge of drawing the sword from the stone, this case meticulously unpacks the scope and concept of “use” in the context of infringement under s. 42 of the Patent Act.

At the heart of the dispute, Steelhead LNG accused Arc Resources Ltd., Rockies LNG Limited Partnership, Rockies LNG GP Corp. and Birchcliff Energy Ltd. of infringing on Canadian Patent No. 3,027,085, which covers a floating liquefied natural gas (FLNG) facility using an air-cooled liquefaction process and electrically driven compressors. The crux of the dispute? Whether sharing the preliminary study with potential partners counted as “use” of the patented invention.

Steelhead LNG argued that the preliminary study, which included engineering drawings, specifications and cost estimates, represented the conceptual stage of the FLNG facility project, with many design details still undecided. They contended that sharing this plan with potential partners infringed their exclusive rights, even though no physical facility had been constructed. In their view, such disclosures violated their patent rights.

The motion judge, however, ruled against the infringement of the 085 Patent. The ruling clarified that the patent aims to protect the subject matter of the invention — the physical apparatus and not the conceptual design. Since no such apparatus had been made or sold in Canada, the court concluded that no infringement occurred. Steelhead LNG appealed, claiming the motion judge had misinterpreted s. 42 of the Patent Act.

In their appeal, Steelhead LNG raised three central issues:

1. The motions judge’s failure to apply a purposive interpretation of s. 42, as endorsed in the Supreme Court’s Monsanto Canada Inc. v. Schmeiser, [2004] S.C.J. No. 29, arguing that “use” should encompass the commercial exploitation of the patented invention’s goal or advantage.


2. The misinterpretation of the case’s distinction from Eurocopter v. Bell Helicopter Textron Canada Ltée, [2012] F.C.J. No. 107, where certain uses of patented technology were deemed infringing even without a physical product.


3. The claim that the judge’s interpretation deprived them of the full benefits of their patent’s limited monopoly, allowing competitors to undertake preliminary steps toward building an infringing facility without consequence.

The Federal Court of Appeal dismissed these arguments. It clarified that the Patent Act grants exclusive rights only over the invention as claimed, not its potential uses or advantages. In the context of a patent for an apparatus, actual use or construction of the patented invention is essential for establishing infringement.

Notably, the court pointed out that the respondents had not built or used the claimed apparatus but had only circulated conceptual designs. Therefore, under s. 42, there was no “use” of the patented invention. The court also addressed the French version of s. 42, clarifying that the term objet designates the subject matter of the invention rather than its purpose or advantage.

Furthermore, the court distinguished this case from Eurocopter, noting that the previous case involved the physical usage of patented materials, which did not apply here. In conclusion, the court rejected the notion that the motions judge’s interpretation of s. 42 undermined the “patent bargain.” The ruling suggested that Steelhead’s interpretation would extend their monopoly unreasonably, preventing competitors from conducting preliminary work on an LNG facility until the patent expired.

This ruling is significant because it emphasizes that a patent’s protection is confined to the specific invention as claimed — not the broader commercial opportunities that may arise from it. While this may leave some patent holders feeling their rights are limited, it provides a measure of reassurance to competitors. The decision clarifies that sharing designs or specifications does not equate to infringement if no physical version of the invention has been created.

Ultimately, the case underscores a critical principle in patent law: for infringement to occur, there must be a physical embodiment of the invention. Simply discussing or sharing designs is insufficient; you need to build it.

In Steelhead LNG (ASLNG) Ltd. v. Arc Resources Ltd., the Federal Court of Appeal has provided much-needed clarity on the nuances of patent infringement in Canada. The ruling highlights the limitations of patent protection concerning unbuilt or conceptual designs, reinforcing the idea that a patent’s scope is directly tied to the invention as described, not to its commercial potential or conceptual advantages. This case offers valuable insights into how courts interpret “use” under s. 42 of the Patent Act — an essential understanding for both patent holders and competitors alike.

Manasi Iyer is an advertising sales development representative at LexisNexis Canada working in paid advertising for the Ontario Reports department. She is a foreign-trained lawyer with a B.L.S. LL.B. from India, and she has six years of sales and business development experience from working in Hong Kong and Canada.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.   

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