Pankhuri Malik is an IPilogue Writer, IP Innovation Clinic Fellow, and an LLM Candidate at Osgoode Hall Law School.
On April 07, 2022, the Federal Court of Canada released its judgment in favour of the plaintiffs in the patent infringement action against Munchkin Inc. and Munchkin Baby Canada Ltd.
Background
This suit concerned the well-known Diaper Genie system of disposing of soiled diapers. The Diaper Genie is used with a cassette which contains soiled diapers till the Genie can be emptied. Angelcare owns six patents related to the diaper pail cassettes and/or its assembly with its Diaper Genie. Until 2016, Munchkin was manufacturing and selling diaper pail cassettes that were only compatible with Angelcare’s diaper pails.
In 2016, the plaintiffs – Angelcare Development Inc., Edgewell Personal Care Canada ULD, Playtex Products, LLC and Angelcare Canada Inc. (the “plaintiffs’ or “Angelcare”) – filed a suit against Munchkin Baby Canada Ltd. and its American parent company Munchkin Inc. (the “defendants’ or “Munchkin”) for direct and induced patent infringement. Angelcare claimed that Munchkin directly infringed its patents by commercialising on four generations of cassettes and two diaper pails. Angelcare also claimed that Munchkin induced infringement of its patents by encouraging users to assemble Angelcare’s diaper pails with Munchkin’s cassettes. Angelcare’s claim was met with a counterclaim by Munchkin for invalidity of the suit patents on various grounds, including anticipation, obviousness, overbreadth, insufficiency, lack of utility and double patenting.
In its judgment, however, the court agreed with Angelcare holding Munchkin liable for direct and induced patent infringement. The court also rejected most of Munchkin’s claims of patent invalidity, except for four claims on one patent that were held to be anticipated.
Inducement
A salient feature of this judgment is the decision on indirect infringement or inducement. Under Canadian law, a person who induces or encourages another to infringe a patent is themselves responsible for infringement of the patent. The three-part test for inducement was laid down in Corlac Inc. v Weatherford Canada Inc. 2011 FCA 228 as:
- The act of infringement must be completed by the direct infringer;
- The act would not have been committed “but for” the inducement or encouragement; and
- The influence must have been knowingly asserted with this desired result.
In Canada, selling a component of a patented combination does not, by itself, constitute infringement of the patent. So, Munchkin’s sale of cassettes that are compatible with Angelcare’s Diaper Genie does not by itself constitute infringement. But in holding Munchkin liable for indirect inducement, the court considered a host of factors, including Munchkin’s products intentional proximity to the Diaper Genie and the discounted rate of its products compared to Angelcare’s cassettes. Most importantly, the court considered the label of Munchkin’s products which unambiguously claims to be compatible with the Diaper Genie.
The court concluded that Munchkin’s business model to use the Diaper Genie to sell its cassettes and Munchkin is as a result actively leading its customers to infringe the suit patent through its cassettes. Therefore, the infringement was done by the end user and would not have been done without Munchkin’s inducement. Satisfying Corlac’s three-part test, Munchkin was held liable for indirect patent infringement.
Liability of the US parent company
Aside from indirect infringement, the court also rejected Munchkin’s argument that its American parent company is not liable for infringement as it has no role in the manufacture, use or sale of the cassettes or diaper pails in Canada. The evidence indicated that the designs for the cassettes came directly from the parent company in California, which also made marketing decisions in Canada. As such, the parent company was held liable for infringement.
What’s next?
No action for an appeal has been taken yet, and Angelcare’s patents have not only been secured against Munchkin’s infringing activities but have also been accorded validity by the court for any impending patent disputes.