Date: 20220706  
Docket: T-1488-20  
Citation: 2022 FC 998  
Toronto, Ontario, July 6, 2022  
PRESENT: The Honourable Mr. Justice Manson  
BETWEEN:  
STEELHEAD LNG (ASLNG) LTD. and  
STEELHEAD LNG LIMITED  
PARTNERSHIP  
Plaintiffs  
and  
ARC RESOURCES LTD., ROCKIES LNG  
LIMITED PARTNERSHIP, ROCKIES LNG  
GP CORP., and BIRCHCLIFF ENERGY  
LTD.  
Defendants  
AND BETWEEN:  
ARC RESOURCES LTD., ROCKIES LNG  
LIMITED PARTNERSHIP, ROCKIES LNG  
GP CORP., and BIRCHCLIFF ENERGY  
LTD.  
Plaintiffs by Counterclaim  
and  
Page: 2  
STEELHEAD LNG (ASLNG) LTD.,  
STEELHEAD LNG LIMITED  
PARTNERSHIP, AZIMUTH CAPITAL  
MANAGEMENT IB LTD., AZIMUTH  
ENERGY PARTNERS IV (NR) LP, AND  
AZIMUTH ENERGY PARNTERS IV LP  
Defendants by Counterclaim  
PUBLIC JUDGMENT AND REASONS  
(Confidential Judgment and Reasons issued July 6, 2022)  
I.  
Introduction  
[1]  
This is a motion brought by the Defendants, ARC Resources Ltd., Rockies LNG Limited  
Partnership, Rockies LNG GP Corp., and Birchcliff Energy Ltd. (collectively, the Defendants),  
for a summary trial.  
II.  
Background  
[2]  
The proceeding underlying this motion is a patent infringement action brought by the  
Plaintiffs, Steelhead LNG (ASLNG) Ltd. and Steelhead LNG Limited Partnership (collectively,  
Steelhead or the Plaintiffs), pursuant to the Patent Act, RSC 1985, c P-4 asserting infringement  
of Canadian Patent No. 3,027,085 (the “085 Patent”).  
A.  
The Parties  
Page: 3  
[3]  
The Plaintiff Steelhead LNG Limited Partnership was formed in 2013 for the purposes of  
pursuing the development of liquefied natural gas (LNG) projects in British Columbia in order to  
increase opportunities for Canadian natural gas producers to sell natural gas to foreign markets.  
The Plaintiff Steelhead LNG (ASLNG) Ltd. is a wholly owned subsidiary of Steelhead LNG  
Limited Partnership.  
[4]  
The Defendant ARC Resources Ltd. is the successor in interest to Seven Generations  
Energy Ltd. (“7G”) by way of amalgamation in early 2021. ARC Resources Ltd. extracts and  
markets natural gas from gas fields in British Columbia and Alberta.  
[5]  
The Defendant Birchcliff Energy Ltd. explores, develops, and produces natural gas, light  
oil, and natural gas liquids mainly in Alberta.  
[6]  
The Defendant Rockies LNG Limited Partnership is a consortium of British Columbia  
and Alberta natural gas producers pursuing LNG export opportunities. The Defendant Rockies  
LNG GP Corp. is the general partner of Rockies LNG Limited Partnership, with ARC Resources  
Ltd. and Birchcliff Energy Ltd. as (two of seven) limited partners and each sharing one or more  
common directors with Rockies LNG Limited Partnership.  
B.  
The 085 Patent  
[7]  
The Plaintiff Steelhead LNG (ASLNG) Ltd. is the owner of the 085 Patent, which issued  
on November 3, 2020 for an invention entitled “Liquefaction Apparatus, Methods, and Systems.”  
The application for the 085 Patent was filed on December 10, 2018 and became open to public  
Page: 4  
inspection on February 8, 2019. The 085 Patent claims priority from PCT International Patent  
Application No. PCT/CA2018/050662 filed on June 1, 2018. The 085 Patent has been in full  
force and effect since its date of issue and expires on December 10, 2038.  
[8]  
Steelhead LNG (ASLNG) Ltd. licenses the 085 Patent to Steelhead LNG Limited  
Partnership.  
[9]  
The 085 Patent relates generally to apparatus, methods, and systems in respect to the at-  
shore liquefaction of natural gas and includes three key elements: a) a floating modular design,  
b) an air-cooled liquefaction process, and c) electric-driven compressors.  
[10] The 085 Patent includes four independent claims (1, 21, 56, and 67), all of which include  
an apparatus, either independently or used in a system or a method, for the liquefaction of natural  
gas. For example, independent claim 1 claims “a system for liquefaction of natural gas,”  
comprising of, among other things:  
1. a source of electricity;  
2. a source of “feed gas”; and  
3. a “water-based apparatus” comprised of  
a. a hull;  
Page: 5  
b. an air-cooled electrically-driven refrigeration (AER) system configured to,  
among other things, convert the feed gas into LNG and discharge  
substantially all thermal energy to ambient air with air coolers; and  
c. a “plurality of LNG storage tanks” in a single row configured to receive the  
LNG from the AER system and output it to an LNG transport vessel.  
C.  
The Relationship between the Parties  
[11] The following facts and timeline are uncontested and outline the business relationship  
and interactions between and within the Parties:  
1. In early 2014, Steelhead and 7G (the predecessor to the Defendant ARC Resources  
Ltd.) commenced discussions to further Steelhead’s development of its LNG  
facilities in British Columbia.  
As part of their business relationship and under the protection of applicable  
confidentiality obligations, 7G came into possession of Steelhead’s confidential  
information including, among other things, the design for their proposed LNG  
facility (the “Steelhead Design”).  
2. From February 2018 to November 2018, Steelhead (with 7G as their representative)  
began discussions with a group of natural gas producers (the “Consortium”) with a  
view to pursuing the design, development, and construction of an LNG export project  
in British Columbia. In addition to 7G, the Defendant Birchcliff Energy Ltd. was also  
a member of the Consortium.  
Page: 6  
On September 14, 2018, Steelhead disclosed to the Consortium confidential  
information, including the Steelhead Design.  
In November 2018, the Consortium unilaterally terminated discussions with the  
Plaintiffs.  
3. Meanwhile, in January 2018, the Consortium (which, as stated above, included the  
Defendants Birchcliff Energy Ltd. and 7G) hired the engineering, procurement, and  
construction (EPC) firm Advisian to prepare a preliminary feasibility study of an  
LNG facility.  
In May 2018, Advisian’s study was delivered to the Consortium and included broad  
outlines of an LNG facility – there were no engineering designs or drawings.  
In July 2018, the Consortium hired KBR, a second EPC firm, to prepare a  
preliminary Front End Engineering Design (pre-FEED) study.  
Between August 2018 and January 2019, KBR’s pre-FEED study was provided to  
the Consortium on a rolling basis. This study did involve some engineering designs  
and was classified as a “Class 4” design and cost estimate – “Class 5” being the  
earliest stage and “Class 1” being the latest stage.  
The KBR study was considered to be in the conceptual stage: it included significant  
optionality (including essential aspects of the Steelhead Design) and had a cost range  
from $5.67 to $11.83 billion, based on a variance of ± 30 per cent.  
Page: 7  
The KBR pre-FEED study marked the end of the Consortium’s conceptual LNG  
facility – no further development steps were taken in respect to this specific design.  
As stated above, the business relationship between the Consortium and the Plaintiffs  
ended in November 2018 – during the time that the KBR pre-FEED study was being  
provided to the Consortium.  
4. On December 10, 2018, the Plaintiffs filed their application for the 085 Patent, which  
claims the Steelhead Design as the invention.  
5. On February 8, 2019, the 085 Patent was published.  
6. From approximately February 2019 to May 2020, the Consortium showed a high-  
level summary of the KBR pre-FEED study design to third party potential investors,  
LNG off-takers, and large-scale industry contractors as part of large presentations,  
and allowed four of these third parties to see the KBR pre-FEED study itself.  
None of the third parties referred to above participated further with the Defendants in  
respect to the KBR pre-FEED study or design contained therein.  
The Consortium also met with Indigenous stakeholders throughout this period.  
7. In April 2019, the Consortium began discussions with Western LNG, a Houston-  
based company engaged in the development of North American LNG export  
facilities, regarding the design and development of a potential LNG facility.  
Page: 8  
At no time was the Plaintiffs’ Steelhead Design, the 085 Patent, the Advisian  
feasibility study, or the KBR pre-FEED study provided to Western LNG; Western  
LNG provided and relied upon its own LNG facility design.  
8. On July 4, 2019, the Plaintiffs commenced a civil claim in the British Columbia  
Supreme Court against the Defendants alleging breach of copyright and moral rights  
of the Steelhead Design.  
9. As of May 1, 2020, the Consortium was formalized as the Defendant Rockies LNG  
Limited Partnership with several limited partners including the Defendants 7G (now  
ARC Resources Ltd.), Rockies LNG GP Corp., and Birchcliff Energy Ltd.  
10. On November 3, 2020, the 085 Patent was issued.  
11. On December 9, 2020, the Plaintiffs commenced the underlying patent infringement  
action.  
12. On July 2, 2021, Western LNG, Rockies LNG Limited Partnership, and the Nisga’a  
First Nation entered into an agreement to develop the Ksi Lisims project, which is  
not the subject of this motion or the underlying action (see Steelhead LNG (ASLNG)  
Ltd. et al. v. ARC Resources Ltd. et al., 2022 FC 756 aff’g Steelhead LNG (ASLNG)  
Ltd. et al. v. ARC Resources Ltd. et al., T-1488-20, Order of Case Management  
Judge Tabib dated February 28, 2022 (unpublished)).  
D.  
The Underlying Action  
Page: 9  
[12] As stated above, the Plaintiffs commenced the underlying patent infringement action  
against the Defendants on December 9, 2020.  
[13] In their Amended Statement of Claim, the Plaintiffs allege that the Defendants have been  
making, constructing, using, and selling and/or offering for sale an infringing LNG project, being  
used for a liquefaction and export facility of the type described in the 085 Patent, contrary to  
section 42 of the Patent Act.  
[14] The Plaintiffs claim that the infringing activities include the design, development, and  
marketing of an LNG project in Canada and elsewhere to potential investors, LNG off-takers,  
First Nations, and large-scale industry contractors, among others.  
[15] The Plaintiffs are seeking monetary, declaratory, and injunctive relief for the alleged  
infringement of the 085 Patent.  
[16] It is important to note that there is no quia timet cause of action in the Plaintiffs’  
Amended Statement of Claim, and accordingly no issue with respect to forward-looking  
infringement or threat of infringement.  
III.  
Issues  
[17] The issues to be decided on this motion are:  
1. Have the Defendants established that this matter is appropriate to be decided by way  
of summary trial?  
Page: 10  
2. If yes, have the Defendants’ activities infringed the 085 Patent contrary to section 42  
of the Patent Act?  
IV.  
A.  
Analysis  
Have the Defendants established that this matter is appropriate to be decided by way of  
summary trial?  
[18] Motions for summary trial are directed in accordance with the Federal Courts Rules,  
SOR/98-106 (the “Rules”) 213 and 216.  
[19] Rule 213 permits a party to bring a motion for summary trial on all or some of the issues  
raised in the pleadings at any time after the defendant has filed a defence but before the time and  
place for trial have been fixed.  
[20] Pursuant to Rule 216(6), if the Court is satisfied that there is sufficient evidence for  
adjudication, regardless of the amounts involved, the complexities of the issues, and the  
existence of conflicting evidence, the Court may grant judgment, unless it would be unjust to do  
so.  
[21] Furthermore, Rule 3 provides that the Rules shall be interpreted and applied so that every  
proceeding is determined on its merits in the just, most expeditious, and least expensive way.  
[22] Ultimately, “the Court must be satisfied that the prerequisites in the Rules for summary  
judgment or summary trial, understood in light of Rule 3, are met and that it is able to grant  
Page: 11  
summary judgment, fairly and justly, on the evidence adduced and the law” (Viiv Healthcare  
Company v. Gilead Sciences Canada, Inc., 2021 FCA 122 at paragraph 42).  
[23] In addition to those conditions set out in Rule 216(6) above, there are a number of other  
factors to be considered on a motion for summary trial. These include, inter alia, the complexity  
and urgency of the matter; any prejudice likely to arise by delay; the cost of taking the case  
forward to a conventional trial in relation to the amount involved; whether credibility is a crucial  
factor and the deponents of the conflicting affidavits have been cross-examined; whether the  
summary trial involves a substantial risk of wasting time and effort, and producing unnecessary  
complexity; and any other matters which arise for consideration (Wenzel Downhole Tools Ltd. v.  
National-Oilwell Canada Ltd., 2010 FC 966 at paragraphs 36 to 37).  
(1)  
The Parties’ Positions  
[24] The Defendants, as the party moving for summary trial, bear the burden of demonstrating  
that summary trial is appropriate (Teva Canada Limited v. Wyeth and Pfizer Canada Inc., 2011  
FC 1169 at paragraph 35 [Teva Canada]).  
[25] The Defendants submit that all of the factors militating in favour of granting judgment  
following a summary trial are present in this matter:  
1. The issues are well defined and will permit the resolution of the case in its entirety.  
In fact, there is a single, narrow issue to be decided: based upon an uncontested set of  
facts as to the activities of the Defendants, did those activities amount to  
infringement of the 085 Patent;  
Page: 12  
2. There are sufficient facts and evidence to permit adjudication;  
3. The evidence is not controversial;  
4. The Plaintiffs have exercised their documentary and oral discovery rights; and  
5. There will be no issues in assessing credibility in this case because the fact and  
expert witnesses are available to testify viva voce and did so at the hearing.  
[26] Further, the Defendants submit that a summary trial will be the just, most expeditious,  
and least expensive determination on the merits.  
[27] The Plaintiffs submit that summary trial is not appropriate in this case for the following  
reasons:  
1. The Defendants’ legal proposition is an incorrect characterization of the law – the  
Patent Act must be interpreted purposively, not literally, and particularly with respect  
to what constitutes “use” of an invention in Canada;  
2. The question of whether any of the Defendants’ acts infringe the 085 Patent is a  
complex factual question unsuitable for summary trial and a more fulsome record is  
required; and  
3. In any event, the record supports a finding of infringement – the Defendants have  
leveraged Steelhead’s patented design and gained a commercial benefit from doing  
so.  
Page: 13  
[28] The only issue for determination on this motion is whether the Defendants’ activities  
constitute infringement of the 085 Patent contrary to section 42 of the Patent Act, by virtue of  
using the Steelhead patented design to obtain a commercial benefit.  
[29] Pursuant to Rule 216(6), I am satisfied that there are sufficient facts and evidence for the  
adjudication of the infringement issue put forward by the Defendants and it is an appropriate  
proceeding for summary trial.  
[30] Any issues concerning expert and fact witness testimony were addressed through the viva  
voce testimony offered at the hearing, which is outlined below.  
[31] With respect to a fulsome record, the Parties have exercised their rights to documentary  
and oral discovery. In addition, the Plaintiffs have not provided an indication of what further  
information it requires that would be pertinent to this motion. That is, the Plaintiffs have not  
indicated what information it perceives to be missing and how this information could influence  
whether the Defendants’ actions infringed the 085 Patent. I am satisfied that sufficient evidence  
has been provided at the hearing to determine the question of infringement in this matter.  
B.  
Have the Defendants’ activities infringed the 085 Patent?  
(1)  
Burden and Onus of Proof  
Page: 14  
[32] The burden for the determination of the merits of a summary trial reflects that of the  
underlying trial (Janssen v. Pharmascience, 2022 FC 62 at paragraphs 46 to 62; Janssen v.  
Apotex Inc. 2022 FC 107 at paragraphs 50 to 52).  
[33] Therefore, while on a motion for summary trial the burden is on the moving party to  
demonstrate that a summary trial is appropriate, once the onus of the merits of the matter (e.g.  
infringement) are before the Court for determination, the burden and onus of proof of the  
underlying action applies.  
[34] Moreover, the parties in a motion or summary judgment or summary trial are required to  
put their best foot forward, regardless of where the onus lies (Kobold Corporation et al. v NCS  
Multistage Inc., 2021 FC 1437 at paragraph 148).  
[35] As stated above, the Defendants argue that the sole issue in this motion is whether the  
Defendants’ activities amount to infringement of the 085 Patent, contrary to section 42 of the  
Patent Act. The Plaintiffs have the burden of proving infringement on a balance of probabilities.  
[36] The Plaintiffs acknowledge that:  
1. Infringement can only have taken place following the publication date of the 085  
Patent – February 8, 2019;  
2. The Defendants did not make, construct, or sell the invention claimed in the 085  
Patent. In fact, the claimed system, method, or apparatus does not exist anywhere in  
Canada;  
Page: 15  
3. The only question of fact and law is whether the Defendants have “used” the  
invention claimed in the 085 Patent; and  
4. The Defendants’ Ksi Lisims project does not infringe the 085 Patent.  
[37] Initially the Plaintiffs’ position appeared to be that: (1) commercial exploitation to obtain  
a benefit; (2) in disclosing key elements of the 085 Patent (a floating LNG (FLNG) system with  
AER) to prospective business parties/interests; (3) at any time, including pre-publication and pre-  
issuance of the 085 Patent; (4) can and will constitute infringement by unauthorized “use” of the  
invention. However, at the hearing, the Plaintiffs conceded that the Defendants’ activities pre-  
publication of the 085 Patent were not relevant, and that the only relevant period to be  
considered with respect to infringement was February 8, 2019 to May 2020.  
[38] In addition, for the purposes of this motion for summary trial only, the Defendants  
concede that the Court may assume the 085 Patent is valid and that, if the LNG facility that was  
included in the engineering drawings as part of the KBR pre-FEED study was made, constructed,  
used, or sold by the Defendants, then, at that time, an act of infringement would have occurred.  
[39] Thus, the issue is narrowed to whether the Defendants’ conceptual design for purposes of  
potential future development of an LNG facility (as set out in KBR pre-FEED study) and  
presentation of the same to third party stakeholders between February 8, 2019 (the publication  
date of the 085 Patent) and May 2020 (when the KBR pre-FEED study was abandoned)  
constitutes use of the 085 Patent, contrary to section 42 of the Patent Act.  
(2)  
The Expert and Fact Witnesses  
Page: 16  
(a)  
The Defendants’ Fact Witnesses  
(i)  
Ms. Charlotte Raggett  
[40] Ms. Raggett is the President and CEO of the Defendant Rockies LNG GP Corp., the  
general partner of the Defendant Rockies LNG Limited Partnership. She is a former executive  
with 7G (a predecessor of the Defendant ARC Resources Ltd.).  
[41] Ms. Raggett’s evidence provides a thorough background of the many stages involved in  
the design and development of an LNG facility, as well as the entire history of the Defendants’  
activities as relating to the underlying action and this motion.  
[42] Ms. Raggett was a credible and knowledgeable witness. On cross-examination, she  
highlighted that:  
1. Building a FLNG facility takes many years (upwards of ten years) and costs billions  
of dollars (potentially exceeding ten billion dollars);  
2. The crucial “go/ no go” decision for a FLNG project is referred to as the Final  
Investment Decision or “FID”;  
3. Pre-FID work can be broken down into three stages: the feasibility stage, the pre-  
FEED stage, and the FEED stage;  
4. The KBR pre-FEED was classified as a “Class 4” design and cost estimate, with  
“Class 5” being the earliest stage and “Class 1” being the latest stage – Class 4  
design and cost estimate was at a “conceptual stage” only;  
5. The KBR design had multiple options to be considered in the design, including:  
Page: 17  
Site selection;  
LNG technology (single or dual mixed refrigerant);  
Compressors driver selection (gas turbine or electric drive);  
Cooling medium (seawater or air); and  
Power generation strategy.  
6. During the relevant times, engagement with Indigenous stakeholders, specifically the  
Nisga’a First Nation, were facilitated by a team member with strong relationships to  
First Nations in Northern British Columbia; the Nisga’a First Nation gave a  
presentation to the Defendants, not the other way around; and discussions regarding  
an LNG project were more broadly focussed and did not include the specific KBR  
design.  
7. The reference in a presentation of a $70 to $100 million reimbursement from  
Western LNG to the Defendants was reference to a potential future payment for costs  
that may be incurred by the Defendants in the context of the Ksi Lisims project – not  
the subject of this motion or the underlying action.  
8. By the time the Defendants were engaged in discussions with Western LNG, Ms.  
Raggett believed that the Defendants had developed credibility with important  
stakeholders, including the government, regulators, First Nations, and local  
communities.  
(ii)  
Mr. Kyle Banbury  
[43] Mr. Banbury is a Manager, Legal at the Defendant ARC Resources Ltd. He was (senior)  
legal counsel at 7G from July 2016 to April 2021.  
Page: 18  
[44] Mr. Banbury’s evidence provided in his affidavits confirmed that provided by Ms.  
Raggett. Mr. Banbury was not examined and his affidavits was entered into evidence as read.  
(iii)  
Ms. Kristen Lewicki  
[45] Ms. Lewicki is Associate General Counsel at the Defendant Birchcliff Energy Ltd.  
[46] Ms. Lewicki’s evidence provided in her affidavit confirmed that provided by Ms.  
Raggett. Ms. Lewicki was not examined and her affidavit was entered into evidence as read.  
(iv)  
Ms. Lisa Ebdon  
[47] Ms. Ebdon is a Law Clerk employed by counsel for the Defendants. Her affidavit  
provided the answers to undertakings from the discovery examination of the Plaintiffs’ fact  
witness, Mr. Ryan Patryluk.  
[48] Ms. Lewicki was not examined and her affidavit was entered into evidence as read.  
(b)  
The Plaintiffs’ Expert  
(i)  
Mr. Willem Ravesloot  
[49] Mr. Ravesloot is a Project Executive Consultant and Owner of his own consultancy  
company, Gawwer BV, since June 2021.  
Page: 19  
[50] Mr. Ravesloot has a Masters in Mechanical Engineering from the Delft University of  
Technology, The Netherlands (1988). For 32 years, Mr. Ravesloot held various positions within  
Shell plc, including numerous positions within LNG projects at various stages of development  
and operation, in Canada and throughout the world.  
[51] Mr. Ravesloot was qualified as an expert as an engineer with particular expertise in  
project engineering, engineering management, and project development in relation to the  
liquefied natural gas industry.  
[52] Mr. Ravesloot was a credible and knowledgeable expert. While the Defendants raised  
preliminary objections asserting lack of expertise, improper hearsay, and/or speculative  
statements at the hearing, the Defendants withdrew their objections and put them to the weight of  
Mr. Ravesloot’s testimony.  
[53] Mr. Ravesloot’s evidence highlighted the extensive amount of work, time, financial  
backing, and complexity that comes with the design and development of an LNG facility,  
generally, including the importance of strong and credible relationships with stakeholders,  
Indigenous communities, pipeline proponents, regulators, among others.  
[54] Mr. Ravesloot outlined the seven stages of an LNG project, with a positive FID required  
after Stage 4:  
1. Initiate/Prefeasibility (identify an opportunity, consider conceptual designs, and  
assess economic viability).  
Page: 20  
2. Assess/Feasibility (consider in detail the viability and potential sites of the project.  
Stage 2 frequently includes a “preliminary design”).  
3. Concept Select/Pre-FEED (select a single design or concept to advance through more  
detailed engineering work).  
4. FEED (based on pre-FEED, more engineering work is used to finalize the scope of  
the project. As stated above, an LNG developer will make a FID at the end of this  
stage).  
5. Execute (fabrication, construction, and commissioning).  
6. Operate (actual operation of the LNG project).  
7. Demolition (and reclaiming the environment).  
[55] There is no real dispute on the seven stages outlined above.  
[56] In regards to the Defendants’ activities, Mr. Ravesloot stated that, at every stage of third  
party engagement, the Defendants relied upon the KBR pre-FEED study as part of their  
presentation to garner credibility with vital stakeholders for their organization as LNG  
developers with an achievable design concept.  
[57] On cross-examination, Mr. Ravesloot agreed that:  
1. At the pre-FEED study stage, an LNG facility cannot produce LNG.  
2. Though the mandate provided to KBR by the Defendants for their pre-FEED study  
may have included the elements of the 085 Patent, this mandate was given eight  
months before its publication date and the relevant period for this motion.  
Page: 21  
3. The presentations given by the Defendants were relatively early engagement to  
demonstrate to potential stakeholders that the Consortium are aware of and are  
addressing the challenges and are advancing components which must mature before a  
FID can be made.  
4. While he thought it would be unusual and unlikely that the Defendants would start a new  
development with a new design, he conceded that this appears to be what occurred with  
Western LNG and the Ksi Lisims project.  
(c)  
The Plaintiffs’ Fact Witnesses  
(i)  
Mr. Ryan Patryluk  
[58] Mr. Patryluk is the former Vice President, Commercial, of Steelhead and currently  
provides business advisory services to the same.  
[59] Mr. Patryluk’s affidavit evidence provides similar background information to Ms.  
Raggett, though ending in November 2018 – three months before the publication of the 085  
Patent and the relevant period for this motion. In addition, Mr. Patryluk provided evidence on the  
protests against the 085 Patent filed by various parties, which is not relevant to the issue in this  
motion.  
[60] Mr. Patryluk was not examined and his affidavit was entered into evidence as read.  
(ii)  
Mr. Victor Ojeda  
Page: 22  
[61] Mr. Ojeda is the former President of Steelhead and currently provides business advisory  
services to same.  
[62] Mr. Ojeda’s affidavit and oral testimony related to purported advantages of the 085  
Patent’s design – evidence irrelevant to the issue in this motion.  
[63] Mr. Ojeda was a credible and knowledgeable witness. While the Defendants raised  
preliminary objections asserting improper hearsay, opinion, and/or speculative statements, at the  
hearing the Defendants withdrew their objections and put them to the weight of Mr. Ojeda’s  
testimony.  
[64] Mr. Ojeda was not cross-examined.  
(3)  
Claims Construction  
[65] The Defendants assert that there is no issue of claim construction in this motion.  
[66] Nevertheless, the claims of the 085 Patent were alive in this motion and the applicable  
principles of claim construction have been summarized by the Federal Court of Appeal in  
Tearlab Corporation v. I-Med Pharma Inc., 2019 FCA 179 at paragraphs 30 to 34:  
[30] The general principles of claim construction are now well  
established and were set out by the Supreme Court in three cases  
(Whirlpool at paras. 49-55; Free World Trust v. Électro Santé Inc.,  
2000 SCC 66, [2000] 2 S.C.R. 1024 at paras. 31-67 [Free World  
Trust]; Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., 1981  
15 (SCC), [1981] 1 S.C.R. 504 at p. 520 [Consolboard]).  
These principles can be summarized as follows.  
Page: 23  
[31] The Patent Act promotes adherence to the language of the  
claims, which in turn promotes fairness and predictability (Free  
World Trust at paras. 31(a), (b) and 41). The words of the claims  
must, however, be read in an informed and purposive way (at para.  
31(c)), with a mind willing to understand (at para. 44). On a  
purposive construction, it will be apparent that some elements of the  
claimed invention are essential while others are non-essential (at  
para. 31(e)). The interpretative task of the court, in claim  
construction, is to separate and distinguish between the essential and  
the non-essential elements, and to give the legal protection to which  
the holder of a valid patent is entitled only to the essential elements  
(at para. 15).  
[32] To identify these elements, the claim language must be read  
through the eyes of a POSITA, in light of the latter’s common  
general knowledge (Free World Trust at paras. 44-45; see also Frac  
Shack at para. 60; Whirlpool at para. 53). As noted in Free World  
Trust:  
[51] …The words chosen by the inventor will be read  
in the sense the inventor is presumed to have  
intended, and in a way that is sympathetic to  
accomplishment of the inventor’s purpose expressed  
or implicit in the text of the claims. However, if the  
inventor has misspoken or otherwise created an  
unnecessary or troublesome limitation in the claims,  
it is a self-inflicted wound. The public is entitled to  
rely on the words used provided the words used are  
interpreted fairly and knowledgeably. [Emphasis in  
the original.]  
[33] Claim construction requires that the disclosure and the claims  
be looked at as a whole “to ascertain the nature of the invention and  
methods of its performance, … being neither benevolent nor harsh,  
but rather seeking a construction which is reasonable and fair to both  
patentee and public” (Consolboard at p. 520; see also Teva Canada  
Ltd. v. Pfizer Canada Inc., 2012 SCC 60, [2012] 3 S.C.R. 625 at  
para. 50). Consideration can thus be given to the patent  
specifications to understand what was meant by the words in the  
claims. One must be wary, however, not to use these so as “to  
enlarge or contract the scope of the claim as written and …  
understood” (Whirlpool at para. 52; see also Free World Trust at  
para. 32). The Supreme Court recently emphasized that the focus of  
the validity analysis will be on the claims; specifications will be  
relevant where there is ambiguity in the claims (AstraZeneca  
Canada Inc. v. Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 943 at  
para. 31; see also Ciba at paras. 74-75).  
Page: 24  
[34] Finally, it is important to stress that claim construction must be  
the same for the purpose of validity and for the purpose of  
infringement (Whirlpool at para. 49(b)).  
[67] The relevant date for construing the claims is the publication date: February 8, 2019.  
[68] That being said, I find that the Defendants’ position that there can be no infringement,  
given that there was no LNG system, apparatus, or method made, constructed, used, or sold, can  
be determined on the facts presented to the Court, particularly given that the sole issue is whether  
the Defendants’ impugned activities constitute “use” of the claimed 085 invention.  
(4)  
Infringement  
[69] To establish that the Defendants’ activities infringed the 085 Patent, the Plaintiffs must  
prove, on a balance of probabilities, that the Defendants used all the essential elements of one or  
more of the claims of the 085 Patent through making, constructing, using, and/or selling the 085  
invention as claimed in the claims in that patent. This is a question of mixed fact and law: (1)  
there is the legal question of what constitutes “use” of the claimed invention; and (2) there is the  
factual question of what were the Defendants’ activities that allegedly amount to infringement.  
[70] The Plaintiffs argue that section 42 of the Patent Act attracts a purposive interpretation,  
as opposed to a more literal reading, with respect to the sole issue of what constitutes “use” of a  
patented invention. They claim that any activity that delivers a commercial benefit to an alleged  
infringer, from use alone, constitutes an act of infringement. More specifically, the Plaintiffs  
claim that the Defendants’ presentation of the KBR pre-FEED study (which included a design  
Page: 25  
which the Defendants concede for the purposes of this summary trial only would have infringed  
the 085 Patent if made) to third parties between February 8, 2019 and May 2020 allowed them to  
gain credibility in the LNG field, leading to their business relationship with Western LNG, and,  
thus, constituted use of the 085 Patent resulting in a commercial benefit, contrary to section 42 of  
the Patent Act.  
[71] The Defendants argue that the Plaintiffs are attempting to “blur” the distinction between  
patent rights and purported copyright rights – behaviour that the Supreme Court of Canada has  
warned against (Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 SCR 302 at paragraphs 37 to 39). In  
addition, they assert that the Plaintiffs are attempting to ex post facto redraft the claims of the  
085 Patent to include the “design” of the invention, not the invention as claimed.  
[72] The Defendants further assert that, at best, the Plaintiffs’ allegations amount to “paper”  
acts of infringement, which are not actionable (Domco Industries Ltd. v. Mannington Mills Inc.,  
[1990] FCJ No. 269 (FCA) [Domco] at paragraphs 7, 18, 32, and 33, aff’g Domco Industries Ltd.  
v. Mannington Mills Inc., [1988] 24 FTR 234 (FC), leave to appeal ref’d [1990] SCCA No. 243  
(SCC)).  
[73] Pursuant to section 42 of the Patent Act, a patent grants to the patentee “the exclusive  
right, privilege and liberty of making, constructing and using the invention and selling it to  
others to be used.” A patentee may thus exclude others from exercising this exclusive right to  
make, construct, use, and sell the claimed invention.  
Page: 26  
[74] As stated above, patent infringement occurs when each of the essential elements of the  
claim of a patent are taken, through the unauthorized manufacture, construction, use, or sale of  
the claimed invention. There is no infringement if an essential element is different or omitted  
(Free World Trust v. Électro Santé, 2000 SCC 66 at paragraph 31(f)).  
[75] There is no dispute that in each of the independent claims of the 085 Patent, whether to a  
system (claim 1), an apparatus (claims 21 and 67), or a method (claim 56), there is a series of  
essential elements that comprise the claimed system for liquefying natural gas, including a water-  
based apparatus that comprises a floating hull, storage tanks, and an AER system. Thus,  
infringement can only occur if, and when, such a system, apparatus, and/or method includes an  
apparatus that is made, constructed, used, and/or sold in Canada.  
[76]  
Given that the claimed system, method, or apparatus does not exist in Canada and that  
the Ksi Lisims project (which is yet to break ground) does not infringe the 085 Patent, it  
necessarily follows that the Defendants have not made, constructed, or sold it. The Plaintiffs do  
not argue that their exclusive rights to make, construct, and sell the claimed invention have been  
infringed.  
[77] Rather, the only remaining question is whether reference to a conceptual design of an  
LNG project by the Defendants in promotional materials to third parties as outlined above in  
paragraph 11(7) during the period of February 8, 2019 to May 2020, which included a FLNG  
system with an AER system, constitutes “use” of the claimed invention in the 085 Patent.  
Page: 27  
[78] The Supreme Court of Canada has undergone a purposive and contextual examination of  
section 42 of the Patent Act, and more specifically, the meaning of “use” contained therein  
(Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 [Monsanto]). In Monsanto, the Supreme  
Court held, inter alia, that:  
1. “As a practical matter, inventors are normally deprived of the fruits of their  
invention and the full enjoyment of their monopoly when another person, without  
licence or permission, uses the invention to further a business interest. Where the  
defendant’s impugned activities furthered its own commercial interests, we should  
therefore be particularly alert to the possibility that the defendant has committed an  
infringing use.” (at paragraph 37)  
2. “A defendant’s commercial activities involving the patented object will be  
particularly likely to constitute an infringing use.” (at paragraph 38)  
3. “This confirms the centrality of the question that flows from a purposive  
interpretation of the Patent Act: did the defendant, by his acts or conduct, deprive the  
inventor, in whole or in part, directly or indirectly, of the advantage of the patented  
invention?” (at paragraph 44)  
4. “In determining whether the defendant “used” the patented invention, one  
compares the object of the patent with what the defendant did and asks whether the  
defendant’s actions involved that object.” (at paragraph 45)  
[Emphasis added].  
[79] The Plaintiffs’ argument takes principles contained in Monsanto – such as the purposive  
interpretation of the Patent Act – but does not account for the fact that the patented invention (i.e.  
Page: 28  
the Steelhead LNG facility), whether as an apparatus, system, or method, did not exist during the  
relevant time frame and therefore could not be used. The 085 Patent does not claim the  
conceptual design of the LNG facility invention. Moreover, during the relevant period of alleged  
infringement – February 8, 2019 to May 2020 – there was no commercial benefit obtained by the  
Defendants.  
[80] The Defendants admit for the purposes of summary trial that they obtained a drawing of a  
water-based apparatus for liquefaction of natural gas, which included an AER system. However,  
the claimed invention is an actual, physical apparatus, system, or method using such an  
apparatus, not a drawing of one. Indeed, simply a drawing of an invention for promotional  
purposes only does not make “use” of a patented invention.  
[81] Given that there is no dispute that there has not been any infringement by reason of  
making, constructing, or selling the 085 claimed invention, the Defendants’ position is simply  
that, on the facts and relevant law here, there has also been no use of a system, method, or  
apparatus as claimed in the 085 patent claims, and as such, they have not interfered with the  
Plaintiffs’ full enjoyment of the monopoly conferred on them by law, directly or indirectly.  
[82] Any marketing, offering, or promotional activity of the invention contained in the 085  
Patent would, at best, amount to “paper offers”, without actual use of the invention claimed in  
the 085 Patent, which does not amount to infringement (Domco at paragraphs 7, 18, 32, and 33).  
The Defendants’ expert, Mr. Ravesloot, agreed on cross-examination that the Defendants’  
presentation of the KBR pre-FEED study was an early engagement to demonstrate to potential  
Page: 29  
stakeholders, including potential third party investors, LNG off-takers, large-scale industry  
contractors, and First Nations, that the Consortium were aware of and were addressing  
challenges and are advancing potential options for an FLNG facility which must go through  
multiple stages of consultation and approval before a FID can be made in an LNG facility more  
broadly.  
[83] Those promotional efforts alone, in the pre-FEED stages of consultation, including even  
the patented depictions of infringing articles, do not constitute infringement in Canada. As stated  
in Pfizer Research and Development Co. v. v. Lilly Icos LLC, 2003 FCT 753 at paragraph 21,  
citing Faulding (Canada) Inc. v. Pharmacia S.p.A (1998), 82 CPR (3d) 435 (FC), aff’d (1999), 3  
CPR (4th) 575 (FCA): “Claims for infringement that are premised on indefinite acts in the future  
are in the realm of speculation.”  
[84] Based on the evidence, it appears that, if anything, the Consortium were marketing  
themselves to potential business partners with the KBR pre-FEED study design as proof of  
concept that an LNG facility was feasible in the area. This does not even amount to a “paper  
offer” as conceived in Domco. The Defendants’ business was and is seeking to supply natural  
gas to a FLNG facility; the Defendants did not use a FLNG facility at all, and certainly not one  
within the claims of the 085 Patent.  
[85] In addition, the Plaintiffs have not provided evidence that a commercial benefit was  
obtained by the Defendants through their presentation of the KBR pre-FEED study. As stated  
above, all third parties shown the KBR study did not engage in further business relationships  
Page: 30  
with the Defendants, and the testimony of Ms. Raggett revealed that relationships with  
Indigenous stakeholders were as a result of a team member and that the KBR pre-FEED study  
was never part of the discussions with First Nations. In addition, Western LNG approached and  
entered into a relationship with the Defendants accompanied by its own LNG facility design.  
[86] This matter can be distinguished from Dunlop Pneumatic Tyre Co v. British & Colonial  
Motor Car Co (1901), 18 RPC 313 (HCJ) and Eurocopter v. Bell Helicopter Textron Canada  
Ltée, 2012 FC 113. In both cases, the patented object was made, in the alleged infringer’s  
possession, and was exposed for sale. As stated above and as acknowledged by the Plaintiffs, the  
Defendants never made, constructed, or sold the invention claimed in the 085 Patent.  
[87] It should be reiterated that this is not a quia timet action and as such this action brought  
for patent infringement before infringement has occurred is, at best, premature (AstraZeneca  
Canada Inc. v. Novopharm Limited, 2010 FCA 112 at paragraphs 6 to 7).  
[88] Even an intention to infringe, if it can be shown, which I find it was not provided in the  
evidence here, does not establish infringement (Halford v. Seed Hawk Inc., 2004 FC 88 at  
paragraph 322).  
V.  
Conclusion  
[89] This is an appropriate case for determination by summary trial. The Plaintiffs have not  
shown, on a balance of probabilities, that the Defendants’ design, development, and presentation  
Page: 31  
of the KBR pre-FEED study designs constituted use, and therefore infringement, of the 085  
Patent contrary to section 42 of the Patent Act.  
[90] Following the hearing, the Parties provided submissions on costs. The Parties agreed that,  
based on the Court’s dispositive finding of non-infringement in the Defendants’ favour, 100% of  
reasonable disbursements of the action to date (inclusive of the summary trial, but exclusive of  
any motions for which costs have been fixed) be awarded to the Defendants.  
[91] In regards to reasonable legal fees, “where a defendant in the main action prevails with  
respect to… the plaintiff’s allegations of infringement…an assessment of an appropriate lump  
sum award should begin at the mid-point of the 25-50% range, plus reasonable disbursements”  
(Allergan v. Sandoz, 2021 FC 186 [Allergan] at paragraph 32).  
[92] The Plaintiffs’ position is that a lump sum award of 25% is appropriate because there is  
no unusual complexity and the Defendants were awarded security for costs based on a lump sum  
of 25%. The Defendants argue that recent case law of this Court have awarded 30% or more of  
the successful party’s reasonable fees (see, for example, Dow Chemical v. Nova Chemicals, 2016  
FC 91 at paragraph 29, aff’d 2017 FCA 25 at paragraph 21 (30%); Hospira Healthcare v.  
Kennedy Trust for Rheumatology Research, 2018 FC 1067 at paragraph 26 (50%); Apotex v.  
Shire LLC, 2018 FC 1106 at paragraph 30 (30%)).  
[93]  
I find that the Defendants will be awarded 30% of reasonable legal fees and 100% of  
reasonable disbursements for the action to date, inclusive of the summary trial, but exclusive of  
Page: 32  
any motions for which costs have been fixed. As stated in Allergan, the starting point for analysis  
is 37.5%. Given that this motion for summary trial was brought at an early stage in the litigation,  
required less than three full days of hearing, and focused on a discrete issue, an award of 30% of  
reasonable legal fees is appropriate.  
[94] As agreed between the Parties, within 45 days upon receipt of the Court’s decision on the  
summary trial, they will endeavour to agree on a reasonable costs quantum in accordance with  
the foregoing parameters, failing which they may seek guidance from the Court in respect of any  
discrete issues that they cannot agree upon.  
Page: 33  
JUDGMENT in T-1488-20  
THIS COURT’S JUDGMENT is that:  
1. The Defendants’ motion for summary trial is granted.  
2. The Defendants have not infringed the 085 Patent.  
3. The Plaintiffs’ action is dismissed in its entirety, with the Defendants’  
counterclaim continuing.  
4. The Defendants’ are awarded 30% of reasonable legal fees and 100% of  
reasonable disbursements, inclusive of the summary trial, but exclusive of any  
motions for which costs have been fixed.  
5. Within 45 days of receiving this decision, the Parties will endeavour to agree on a  
reasonable costs quantum in accordance with the foregoing parameters, failing  
which they may seek guidance from the Court in respect of any discrete issues  
that they cannot agree upon.  
"Michael D. Manson"  
Judge  
FEDERAL COURT  
SOLICITORS OF RECORD  
T-1488-20  
DOCKET:  
STEELHEAD LNG (ASLNG) LTD. ET AL. V. ARC  
RESOURCES LTD. ET AL.  
STYLE OF CAUSE:  
VANCOUVER, ONTARIO  
JUNE 1-3, 2022  
PLACE OF HEARING:  
DATE OF HEARING:  
MANSON J.  
PUBLIC JUDGMENT AND  
REASONS:  
JULY 6, 2022  
DATED:  
APPEARANCES:  
TIM GILBERT  
FOR THE PLAINTIFFS  
VIK TENEKJIAN  
NISHA ANAND  
KEVIN SIU  
ANDREA RICO WOLF  
THOMAS DUMIGAN  
ANDREW BRODKIN  
DANIEL CAPPE  
JACLYN TILAK  
FOR THE DEFENDANTS  
SOLICITORS OF RECORD:  
GILBERT’S LLP  
FOR THE PLAINTIFFS  
TORONTO, ONTARIO  
GOODMANS LLP  
FOR THE DEFENDANTS  
TORONTO, ONTARIO  


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