IP NEWS

Jurisdiction of the Federal Court over IP contract disputes

22/01/2019

The Federal Court has both concurrent and exclusive jurisdiction over various IP matters and is the most common forum to bring IP disputes. This is for a host of legal and practical reasons including:

  • Experienced Judiciary – Given the volume of IP cases before the Court, Judges are highly experienced in various areas of IP. Additionally, there are no jury trials in the Federal Court and therefore litigants are assured of a qualified decision-maker adjudicating disputes.
  • Case Management – Case management in IP disputes before the Court is common. This results in more efficient litigation including the timely resolution of procedural steps, which facilitate earlier trial dates.
  • Summary Trial – The Federal Court Rules enables parties to bring a summary trial motion to further expedite a hearing of issues on the merits.
  • Canada-Wide Jurisdiction – The Federal Court sits across the country and litigants can commence litigation in any province. Furthermore, any relief granted by the Court would be enforceable Canada-wide, as opposed to the limited jurisdiction of the respective provincial courts.

However, the Federal Court’s jurisdiction can be limited with matters not specifically relating to the enforcement or validity of IP. For example, contractual disputes, including contracts relating to the ownership, sale or licensing of IP, may fall under the provincial courts’ jurisdiction.

This issue was recently canvassed by the Federal Court in Farmobile, LLC v. Farmers Edge Inc. In this case, Farmobile sought to enforce its patent relating to a relay device for tracking farming operations for a farming business, and a farming data exchange program for collecting and processing farming operation data for a farming business. In its Defence, Farmers Edge alleged that it was the rightful owner of the patent at issue having been assigned all of the rights to the invention claimed.

Farmers Edge also sought relief via a counterclaim for: (a) a declaration that it is the owner of the subject matter described and claimed in patent at issue, and (b) an order pursuant to section 52 of the Patent Act directing that the records of the Canadian Patent Office to be varied to remove the current listed owner and applicant and identify Farmers Edge as the sole owner and applicant of the patent at issue.

Farmobile brought a motion to strike portions of the Defence and Counterclaims relating to the ownership of the patent at issue. Case Management Judge Ring assessed the Defence separately from the Counterclaim. The Court held that the portions of the Counterclaim relating the ownership of the patent were struck, but the respective portions of the Defence were not.

This follows from jurisprudence stemming from the Supreme Court and the Federal Court of Appeal, which stands for the proposition that a purely contractual claim for ownership of a patent in a counterclaim can be viewed as a standalone action for breach of contract that is appropriately under the jurisdiction of the provincial courts. That is, a counterclaim is a sword. Whereas a pleading of contractual ownership of a patent found in a defence is a shield to a claim of patent infringement, which can appropriately be determined by the Federal Court.

Furthermore, the Court noted the Supreme Court’s decision in Kellogg Co. v. Kellogg:

[34]  Kellogg stands for the proposition that the Federal Court may resolve incidental contractual issues where the overall claim is, in “pith and substance”, within the Court’s jurisdiction. However, this Court has no jurisdiction to adjudicate a claim (or in this case, a counterclaim), where the claim is “purely and simply” a contractual dispute (Kellogg), or where an issue over which the Court may have jurisdiction is “secondary to and dependent upon” the resolution of a contractual issue (Salt).

Therefore, the impugned portions of Farmers Edge’s Counterclaim were struck.

For more information or for questions on the appropriate jurisdiction of IP disputes, please contact one of our litigation professionals.

This article is for information purposes only and does not constitute legal or professional advice.

Author: Abbas Kassam

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