The company’s unqualified Federal Court of Appeal victory in a Sept. 27 decision in Munchkin, Inc. v. Angelcare Canada Inc., 2024 FCA 156, even expanded on the Federal Court’s 2022 finding of patent infringement, granting an appeal by Angelcare, Edgewell Personal Care Canada ULC and Playtex Products LLC that argued that California-based Munchkin Inc.’s more recent generation 4 products also infringed multiple patents on Angelcare’s Diaper Genie diaper disposal system.
The Federal Court in Angelcare Canada Inc. v. Munchkin Inc., 2022 FC 507, found that Munchkin’s older products also infringed six Angelcare patents.
In addition, the three-judge appeal court panel made up of Justices George R. Locke, Mary J.L. Gleason and Elizabeth Walker dismissed an appeal by Munchkin Inc. and Munchkin Baby Canada Ltd., its Canadian subsidiary, challenging the validity of the Angelcare patents and its liability for infringement.
In upholding the April 2022 Federal Court ruling, the appeal court affirmed that Munchkin directly and indirectly infringed the Angelcare patents by inducing consumers on its product labels to use its plastic bag refill cassettes with both its own disposal system and Angelcare’s Diaper Genie product.
In a significant finding, the Federal Court of Appeal agreed that the patent infringement liability encompassed not only Munchkin Baby Canada Ltd. but the U.S. parent. Munchkin argued that the extent of liability should not be considered in the appeal because Angelcare was only raising it for the first time.
But the Federal Court had already found that Munchkin Inc. shared in the liability, noted Justice Locke for the panel.
“It is true that, to infringe a Canadian patent, infringing activities must take place in Canada,” wrote Justice Locke. “However, a person cannot avoid liability for infringement by setting itself up outside Canada and then making arrangements from there that result in infringement of a patent in Canada.
“The evidence cited by the Federal Court was sufficient, in my view, to permit it to conclude that Munchkin, Inc. had participated in the infringing activities sufficiently to be liable for infringement,” he added.
The appeal court’s confirmation that liability for patent infringement may extend beyond Canadian borders is an important reminder for intellectual property lawyers, said Mark Penner, a Toronto-based trademark and patent lawyer with Fasken Martineau DuMoulin LLP.
“In this case, the courts found that even though the U.S. entity was not doing anything, was not conducting any activities in Canada, it made itself liable because it had what they referred to as common cause with the Canadian actor,” he told Law360 Canada.
“What is interesting to me is that now, if you are a U.S. entity, you can’t just say, ‘Hey, I’m free from infringement because I’m located in the U.S.,’” he added. “There is a possibility that if you are otherwise just a party to the infringement, as the Federal Court of Appeal found, then you are potentially liable for infringement.”
In another significant development, the Federal Court of Appeal affirmed the Federal Court’s finding that 2008 communications between Diaper Genie inventor Michel Morand, his design firm and a prototype manufacturer were inherently bound by an obligation of confidentiality, even though it was not subject to a written non-disclosure agreement. Decisions in the case have referred to the exchange as the “Morand Disclosure.”
The court’s conclusion on the confidentiality issue was very fact-driven, noted Penner, and could be difficult to argue in other IP law cases.
“Obviously, having a non-disclosure agreement (NDA) is the best thing,” he added. “But sometimes you can argue that there was an expectation of confidentiality.
“What I would say to clients is always get an NDA,” he said. “But then if you didn’t get an NDA, we might be able to, in the circumstances, argue that it’s confidential, and it’s a confidential disclosure.”
Pointing to jurisprudence such as Corlac Inc. v. Weatherford Canada Inc., 2011 FCA 228, the Federal Court of Appeal confirmed that the expectation of confidentiality is based on the reasonable person test and hinges on the perspective of the recipient.
Penner said he was also struck by the fact that the Federal Court of Appeal judges made their determination on infringement based on the facts before them, instead of following the appeal court’s usual practice of remitting the matter to the Federal Court for a determination.
“That was a little bit different in this decision,” he noted. “And I think really the reason for that was because there had already been a finding of infringement.”
Angelcare’s patent battle is also notable for the Federal Court’s followup finding in August 2023 — in Angelcare Canada Inc. et al. v. Munchkin Inc. et al., 2023 FC 1111 — that the infringement ruling should be met with a permanent injunction on Munchkin and that damages should take the form of a portion of profits earned by Munchkin as a result of the infringement.
“The Court reiterated that a permanent injunction is a natural remedy available under s. 57 of the Patent Act, and that barring any equitable reasons, it should be granted,” according to an April 2024 analysis by Ottawa-based Smart & Biggar LLP, which served as counsel for Angelcare Group.
In the case of damages, “the Court reiterated that an accounting of profits is an equitable remedy to which the successful party is not automatically entitled,” wrote Smart & Biggar lawyers Denise Felsztyna and Guillaume Lavoie Ste-Marie. “However, in the absence of compelling reasons, such as the lack of ‘clean hands,’ undue delay by the plaintiff in commencing or prosecuting the proceedings, or complexity, the Court should not deny that option.”
François Guay, who served as lead counsel for Smart & Biggar, did not respond to a request for comment. Angelcare spokesperson Lina Racaniello also declined to comment on the Federal Court of Appeal decision.
Vincent de Grandpré, a Toronto partner with Bennett Jones LLP who served as lead counsel for Munchkin Inc., also declined to comment.
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