Patent Disputes Was Contractual Rules Federal Court in Dismissal



DISPUTEBETWEENPARTIESWASPRIMARILYCONTRACTUAL,FEDERALCOURT
RULESINDISMISSINGACTION

by
BarryGamache
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
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Montreal,Quebec,CanadaH2Z2B7
Tel.:(514)9876242-Fax:(514)8457874
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TheFederalCourtofCanadarecentlydismissedaplaintiff’sactionforlackof
jurisdiction.Therealnatureoftheissuesputforwardbytheplaintiffinits
StatementofClaimraisedacontractualdebatebetweenprivatepartiesfor
whichtheCourtdidnothavejurisdiction(EngineeringDynamicsLtd.v.
ConstantinosJ.Joannou,T-2910-93,October17,1996,Morneau
Prothonotary).
Theplaintiff,EngineeringDynamicsLtd.,wasacompanyinvolvedinthe
developmentandfabricationofairfilteringsystems.InitsStatementofClaim
filedbeforetheTrialDivisionoftheFederalCourtofCanada,itallegedthat
betweenApril1982andJuly1987,defendantJoannouwasitsemployeeand,
assuch,developedfourtypesoffilteringsystemsforwhichpatent
applicationswerefiledinCanadaduringthesameperiod.Fourpatentswere
eventuallyissuedbetweenOctober1984andJanuary1992andnamed
Joannouasinventorandowner.EngineeringDynamicsLtd.therefore
requestedfromtheCourtadeclarationthatJoannouwasthesoleinventorof
theinventionsreferredtointhevariouspatentsbutthatEngineering
DynamicsLtd.wastheexclusiveownerthereofandthattheentriesforthese
variousCanadianpatentsbevariedsoastonameEngineeringDynamicsLtd.
asgranteeandownerthereof.
Initsdefence,Joannoudeniedbeingtheemployeeoftheplaintiffand
pleadedthat,inanyevent,thefourpatentswerenotconceivedwhilehe
wasallegedlytheplaintiff’semployee;heratherstatedthathewasplaintiff’s
shareholder(for50%oftheshares)andfurtheraddedthathewasrightly
indicatedasinventorandownerofthefourpatents.Inamotionpresented
totheCourt,JoannoufurtherraisedtheabsenceofjurisdictionoftheFederal
Courtinlightofthefactsraisedbytheplaintiff’scase.
InCanada,tosupportafindingofjurisdictionintheFederalCourt,theremust
beastatutorygrantofjurisdictionbytheFederalParliament(ITO-International



TerminalOperatorsLtd.v.MiidaElectronicsInc.[1986]1S.C.R.752(S.C.C.)).
Thistypeofgrantisfound,forexample,atSection20oftheFederalCourtAct
(R.S.C.1985,ch.F-7)whichprovidesthattheTrialDivisionhasexclusiveoriginal
jurisdiction,betweensubjectandsubjectaswellasotherwise,inallcasesof
conflictingapplicationsforanypatentofinvention,orfortheregistration,inter
alia,ofanycopyright,trade-markorindustrialdesign,andinallcasesinwhich
itissoughttoimpeachorannulanypatentofinventionortohaveanyentry
inanyregisterofcopyright,trade-marksorindustrialdesignsmade,
expunged,variedorrectified.
InsupportofitsmotioncontestingtheCourt’sjurisdiction,defendantJoannou
testifiedbyaffidavitthattheissuesraisedbytheplaintiffhadtheirsourcenot
inthepatentsbutinanumberofcontractualarrangementsmadebetween
thedefendantandaMr.WilliamPick,presidentandprincipaloftheplaintiff
corporation;defendantfurtherstatedthathisagreementswithMr.Pick
relatedtoinventionsanddesignshehaddevelopedandpatentedinthe
fifteenyearspriortotheirinitialdealingswitheachother.
Defendantraisedagoodpoint.ProthonotaryMorneau,beforewhomthe
debateoccurred,remindedthepartiesthatintellectualpropertydisputes
whichincludecontractualdisagreementsarenotunusual.Further,inhisview,
thisfactalonewouldnotprecludetheCourt’sjurisdiction,providedthe
subjectmatteroftheactionprimarilyconcernedapatent,trade-markor
copyrightastheFederalCourthasnojurisdictiontodetermineanissuewhich
concernspurelyandsimplyacontract(TitanLinkabitCorp.v.S.E.E.See
ElectronicEngineeringInc.(1992)44C.P.R.(3d)469(F.C.T.D.);KelloggCo.v.
Kellogg(1941)1C.P.R.30(S.C.C.)).Inotherwords,contractsallegedby
partieshavebeenreferredtoincidentallywhilethemainissueremained
centeredonreliefthatwaswithintheCourt’sjurisdiction.Inanyevent,
contractscannonethelessberaisedinordertosupport,orinsomecases
negate,anyreliefwithintheCourt’sjurisdiction.
Havingstatedthesegeneralrules,ProthonotaryMorneaufurtheraddedthat
whenconsiderationofthesoughtreliefinevitablyraisestheissueofthe
validityofacontractbetweenparties,inintellectualpropertymattersorin
anyotherfield,thismustautomaticallyleadtheCourttodeclinejurisdiction
andreferthemattertoprovincialCourts.
Inthedisputebeforeit,theCourttooknoteofthedefendant’sobjectionto
thewayplaintiffpresenteditscase:inthedefendant’sview,plaintiffomitted
animportantcontractualdimensiontothecase.TheCourtagreedwiththe
defendantafterreviewingdocumentssubmittedbytheparties.Acontract
betweenthepartiesfiledasevidenceshowedanassignmentofthefirst
patentmadebythedefendanttotheplaintiffin1984andafurther
assignmentofthesamepatentfromtheplaintiffbacktothedefendanton



July27,1987,uponterminationoftheiragreement.Itthereforeappeared
thatthedefendantactedasownerofthepatentwhenheassigneditin1984
toplaintiff.Further,in1987whenitassignedbacktothedefendantthesame
patent,plaintiffactedasthoughthe1984assignmentwerevalid.Ifnow,
plaintiffwantedtobedeclaredownerofthatpatent(andoftheotherthree),
itmusthavethesetwocontractsdeclaredinvalid.However,inlightofits
jurisdiction,theFederalCourtdidnotanddoesnotpossesssuchpower.In
theCourt’sview,thedeterminationofthecontractualissuedictated
ownershipofthepatent.Forthisreason,itwasconcludedthatthiswas
primarilyacaseincontractandthepatentissueswereancillary.The
plaintiff’sactionwasthereforedismissed.
Thisdecisionremindsusofthespecialcarewhichmustbetakenby
practionersbeforeinitiatinganysuitonbehalfoftheirclients.However,as
canbeseefromthefactsofthiscase,whetherthesubject-matterofan
actionprimarilyorincidentallyconcernsapatentisnotalwayscrystalclear.
Forattorneysthisisareminderthatallrelevantfactsshouldbeobtainedfrom
theclientbeforeadecisionismaderegardingjurisdiction;forclients,thisisan
invitationtoputforwardtotheirattorneysallfacts,whetherconsidered
relevantornot,inordertomakethisdecision.
Publishedat(1996),10W.I.P.R.384-385underthetitlePatentDisputeWas
ContractualFederalCourtRulesinDismissal.

LEGERROBICRICHARD,1996.



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