Faurecia Automotive Seating Canada Ltd. v. Lear Corporation Canada Ltd., 2004 FC 421

Date: 20040319

Docket: T-51-01

Citation: 2004 FC 421

Vancouver, British Columbia, Friday, the 19^th day of March, 2004

PRESENT:      THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE

BETWEEN:

                                 FAURECIA AUTOMOTIVE SEATING CANADA LTD.

                                                                                                                                                          Plaintiff

                                                                              - and -

                                          LEAR CORPORATION CANADA LIMITED

                                                                                                                                                      Defendant

                                               REASONS FOR ORDER AND ORDER

O'KEEFE J.

[1]                 This is a motion by the plaintiff (defendant by counter-claim), Faurecia Automotive Seating Canada Ltd. ("Faurecia") to set aside Prothonotary Aronovitch's order denying the motion to amend its statement of claim alleging patent infringement by Lear Corporation Canada Limited ("Lear Canada"), along with leave of this Court to make the contested amendments to its allegations.

[2]                 Faurecia requests an order:

1.          setting aside paragraphs 2 and 3 of the order of Madam Prothonotary Aronovitch signed July 23, 2003;

2.          granting leave to make the proposed amendments to paragraph 19 and subparagraph 19(a) of the statement of claim in this matter; and

3.          granting costs in favour of Faurecia for this motion and the motion below.

Background

[3]                 Faurecia designs and manufactures automobile components, including vehicle seating systems, and distributes them to various major automakers. Faurecia states that it holds Canadian Patent No. 2,198,674 (the "'674 Patent") entitled "Roll-In/Roll-Out Vehicle Seat System with Fixed Wheel Members" which was granted on December 19, 2000.

[4]                 The '674 Patent relates to removable seat systems for use in multi-seat vehicles such as minivans and sport utility vehicles.

[5]                 Lear Canada manufactures and sells wheeled vehicle seat assemblies.

[6]                 On January 12, 2002, Faurecia filed a statement of claim which alleged that the vehicle seat assemblies manufactured, used and sold in Canada by Lear Canada infringe claims 1, 2, and 3 of the '674 Patent. Specifically, Faurecia alleges that Lear Canada manufactured and sold infringing seat assemblies to the Ford Motor Company of Canada Ltd. for assembly into Windstar minivans. The claim alleged at paragraph 19 that:

[f]urther and in the alternative, the Defendant knowingly and for its own ends and benefit and to the damage of the patentee has induced or procured and aided and abetted Ford Motor Company of Canada Ltd. to infringe the '674 patent, and, is thus a party to each infringement committed by Ford Motor Company of Canada Ltd. The Defendant has agreed to indemnify and hold Ford Motor Company Ltd. harmless with respect to the infringement of the '674 patent.

[7]                 Lear Canada requested and received particulars to the statement of claim. Lear Canada then made a motion to, inter alia, strike out paragraphs 1(b)(ii) and 19 of the statement of claim on the grounds that the allegations contained therein did not disclose a reasonable cause of action. Subsequently, Lear Canada amended its notice of motion seeking, in the alternative, to only strike out the phrase "aided and abetted" from paragraph 19 of the statement of claim.

[8]                 By order dated April 3, 2001, Madam Justice Hansen struck the phrase "aided and abetted" from paragraph 19 of the statement of claim but dismissed Lear Canada's request to strike paragraph 19 in its entirety.

[9]                 In its statement of defence and counterclaim filed April 17, 2001, Lear Canada denies that its seat assembly design is infringing and attacks the validity of the '674 Patent on a number of grounds, including lack of novelty, inventiveness and utility.

[10]            In June 2003, Faurecia sought to file an amended statement of claim. Lear Canada consented to all of the proposed amendments except for certain amendments to paragraph 19 of the statement of claim. Lear Canada did not consent to the following additions to paragraph 19:

Further, and in the alternative, the Defendant aids and assists in and contributes to the infringement by Ford.

...

The Defendant aids and assists in and contributes to the infringement by Ford in at least the following respects: by using Ford owned tooling in the manufacture of the said seat assemblies, and, by selling complete seat assemblies for final assembly into the vehicle.

[11]            Madam Prothonotary Aronovitch heard oral argument on July 21, 2003 and denied Faurecia's motion for leave to make the contested amendments.. The endorsement to the order states:

In this instance I am persuaded by the submissions of the defendant.

When particulars were provided, they formed part of the pleadings, as they then stood before Hansen J. on April 13, 2001.

As "aiding" and "assisting" as synonymous with "aiding" and "abetting" they may be said to have been struck or deemed to have been struck by virtue of the latter having been ordered struck from a pleading that the particulars were meant to explain and nourish.

As to whether the proposed current amendment including "aiding", "assisting" and "contributing" will withstand a motion to strike, it is accepted that pleadings are not to be struck where the law, in a particular area, is unsettled and the cause of action, (or as in this case, theory of the cause of action) though novel, remains arguable.

I am not persuaded that the plaintiff has an arguable, albeit difficult case to make that the motion of contributory infringement may be recognized in Canada. To the contrary, it is a theory of indirect infringement soundly rejected in Beloit Canada Ltd. v. Valmet Oy (1988), 21 C.P.R. (3d) 1 (F.C.A.) leave to appeal to the Supreme Court of Canada refused (1988), 21 C.P.R. (3d). There is neither conflict in the jurisprudence nor in the scholarship on this point.

[12]            By order dated July 23, 2003, Prothonotary Aronovitch denied Faurecia's motion and awarded costs, fixed at $1000, to Lear Canada in any event of the cause.

[13]            By this motion, Faurecia is appealing Prothonotary Aronovitch's July 23, 2003 order (paragraphs 2 and 3).

Moving Party's (Faurecia's) Submissions

[14]            Relying on Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33">2002 SCC 33, Faurecia states that the standard of review on pure questions of law decided by the Prothonotary is correctness, therefore this Court is free to re-decide such questions.

[15]            After citing the familiar case of Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), Faurecia submits that striking parts of a claim or denying amendment of a claim are issues vital to the final outcome of the case, therefore this Court should exercise its own discretion and is not bound on appeal by the Prothonotary's opinion (see Telefonaktiebolaget LM Ericsson v. Harris Canada Inc., [2002] F.C.J. 789 (QL), 2002 FCT 599; Louis Bull Band v. Canada, [2003] F.C.J. No. 961 (QL), 2003 FCT 732).

[16]            Faurecia submits that the Prothonotary erred in law and exceeded her jurisdiction by making an order that effectively varied the April 3, 2001 order of Justice Hansen. In Faurecia's view, Justice Hansen struck the particular phrase "aiding and abetting", no more, and the Prothonotary was in error when she stated that "aiding and assisting" are synonymous with "aiding and abetting", since aid and abet have distinct meanings under Canadian law. Faurecia also states that Justice Hansen refused to strike any sentence, phrase or words from its response to the demand for particulars and dismissed Lear Canada's motion to strike paragraph 19 from the statement of claim altogether, orders that the Prothonotary had no power to vary but which the impugned decision effectively does vary.

[17]            In Faurecia's view, Justice Hansen accepted the factual allegations in its response to Lear Canada's demand for particulars, a decision that gives rise to the doctrine of issue estoppel. Faurecia submits that the Prothonotary was estopped from re-deciding this issue or varying the effect of Justice Hansen's order.

[18]            Faurecia submits that the Prothonotary applied the incorrect test for determining leave to amend a pleading and therefore erred in law. The Prothonotary, argues Faurecia, erred by raising the threshold test from "legally viable" or "tenable" pleading to requiring a conflict in the jurisprudence or scholarship to grant leave to amend.

[19]            Faurecia submits that amendments should not be denied unless the Court is satisfied that the proposed pleading is manifestly futile and without any chance of success, an onerous burden of proof that lies with the party opposing the amendment (here, Lear Canada). Furthermore, Faurecia submits that the Court is required to take a broad and generous approach to the interpretation of pleadings, contested facts or law are not appropriate for determination in the context of a motion to strike, and states that a wide berth is to be given to pleadings that are novel, untested, or arise in unsettled areas of the law. Applying these principles, in Faurecia's view, the proposed amendment was proper such that leave to amend should be granted.

[20]            Faurecia further submits that the issues regarding indirect infringement should be determined on their merits based on a complete factual matrix, not dismissed on a motion for leave to amend pleadings.

[21]            Faurecia submits that since the categories of indirect patent infringement are not closed and there is no binding jurisprudence from the Supreme Court of Canada that rejects "contributory infringement" as actionable, it is not plain and obvious that its proposed amendments are untenable. Citing Urie J. in Windsurfing International Inc. v. Trilantic Corporation (1985), 63 N.R. 218, 8 C.P.R. (3d) 241 (F.C.A.), Faurecia submits that indirect patent infringement, often described as "inducing and procuring" infringement, is still a developing doctrine in Canadian jurisprudence. Given the unsettled nature of the law, Faurecia objects to the Prothonotary's reliance on the decision in Beloit Canada Inc., supra, which it argues is not a final and binding authority, it dealt with a contempt of court proceeding, and is not a decision from the Supreme Court of Canada.

[22]            Finally, Faurecia argues that Lear Canada must be taken to accept Faurecia's position on this motion because counsel for Lear Canada advanced a substantially similar argument in Trojan Technologies Inc. v. Suntec Environmental Inc., 2003 FC 825. Faurecia submits that counsel for Lear Canada, as an officer of this Court, is bound by that position, even though it was advanced in another proceeding.

Responding Party's (Lear Canada's) Submissions

[23]            Citing Aqua-Gem, supra, for the standard of review to be applied to the Prothonotary's decision, Lear Canada states that the decision is not clearly wrong and there is no basis for suggesting that the decision to refuse leave to amend the statement of claim was incorrect. Lear Canada submits that the Prothonotary's exercise of discretion was based on correct principles of law and correct facts, therefore it must stand.

[24]            Furthermore, Lear Canada states that the Prothonotary should be accorded some deference by this Court since her order dealt with a matter partially under her case management (see Microfibres Inc. v. Annabel Canada Inc. (2001), 16 C.P.R. (4^th) 12 (F.C.T.D.)). Lear Canada also submits that a refusal to allow an amendment to a pleading is not vital to the final issue of the case, so following Aqua-Gem, supra, this appeal may be allowed only if the Prothonotary was clearly wrong.

[25]            Lear Canada submits that the Prothonotary did not err in law, nor did she exceed her jurisdiction. Lear Canada argues that Justice Hansen's order did not specifically address Farcenia's "response to demand for particulars" as the issue was not put before her by the parties, so the Prothonotary's order in no way varies an order of a judge. Further, Lear Canada denies that the Prothonotary "accepted the adequacy of the allegations" in Faurecia's response to demand for particulars, contrary to Faurecia's submissions.

[26]            Lear Canada submits that the Prothonotary applied the correct test for determining leave to amend a pleading, namely that a pleading is not to be struck where the law is unsettled or the cause of action, although novel, remains arguable. Lear Canada states that the Prothonotary was correct in deciding that the theory of indirect infringement proposed by Faurecia had been soundly rejected by the Federal Court of Appeal in Beloit Canada Inc., supra, which held that the U.S. concept of contributory infringement is not part of Canadian patent law. Since "aids and assists in and contributes to" discloses no cause of action recognized by Canadian law, and inducement was already pled by Faurecia, the proposed amendments could be struck under Rule 221 as not disclosing a reasonable cause of action, argues Lear Canada. Therefore, the proposed amendments are impermissible.

[27]            Lear Canada states that it is not infringement of a patent to aid and abet another person to infringe it, and that aiding and abetting are not distinct from inducing. Relying on three different dictionaries, Lear Corp Canada further argues that 'aid', 'abet' and 'assist' are all synonyms of one another and that Faurecia's arguments that rely on a distinction between these terms must fail.

[28]            Lear Canada submits that when Justice Hansen struck "aided and abetted" from the statement of claim in April 2001, the particulars in relation to that pleading were, necessarily, also struck, which is in accordance with the Prothonotary's decision under appeal.

[29]            The submission of Lear Canada is that Justice Hansen refused to strike paragraph 19 of the statement of claim in its entirety because Faurecia had provided sufficient particulars of the claim of inducement. Lear Canada objects to Faurecia seeking to plead these particulars as a separate, alternative theory of a cause of action and not, as they were taken to be, particulars of the claim of inducement.

[30]            Lear Canada states that the particulars sought to be included as amendments to the statement of claim by Faurecia are either particulars of the 'aiding and abetting' allegation, which was struck, are particulars of inducement (not a separate, alternative cause of action), or are not recognized in patent law as a cause of action.

[31]            The Court's power pursuant to Rule 75 to grant leave to amend documents, Lear Canada states, must seek to protect the rights of all parties. Faurecia's proposed amendment to allege "aiding and assisting in and contributing to infringement" is not a recognized cause of action in Canada as it has been expressly rejected by the Federal Court of Appeal, and was therefore properly refused because Lear Canada would be prejudiced by not knowing the case against it which must be met.

[32]            Lear Canada states that the Prothonotary applied the correct principles in refusing Faurecia's motion for leave to allege contributory infringement, a doctrine which exists under U.S. but not Canadian law. Lear Canada emphasizes the Federal Court of Appeal's decision in Beloit Canada, supra, where it was decided that to induce infringement, one must actually do something that leads the other party to infringe. Inducement, Lear Canada states, is a narrow exception to the rule that someone selling non-infringing articles to be used by another (even for infringing purposes) does not constitute infringement.

[33]            In Lear Canada's view, the theory of indirect infringement proposed by Faurecia was certain to fail and was therefore properly refused as an amendment.

[34]            Lear Canada requests that this appeal be dismissed and that costs be awarded in its favour.

Issues

[35]            1.         What is the applicable standard of review?

2.          Should the appeal of the Prothonotary's order be allowed?

Relevant Statutory Provisions

[36]            The Federal Court Rules, 1998, S.O.R./98-106 state at Rule 51:

The general rule relating to amending documents is set out in Rule 75 as follows:

Analysis

[37]            Issue 1

What is the applicable standard of review?

Although the Federal Court Rules grant parties the flexibility to amend their pleadings as of right upon consent or before the other side has pleaded in response (see Rule 200), in this case Lear Canada had already filed its statement of defence when Faurecia sought to amend its allegations of infringement. Whether leave should be granted to permit the contested amendments, therefore, fell to the Prothonotary to decide pursuant to the discretion granted by Rule 75.

[38]            The degree of deference that should be afforded to prothonotaries' decisions on appeal was set out in Aqua-Gem, supra, where MacGuigan J.A. held at page 463 that:

. . . discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:

(a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or

(b) they raise questions vital to the final issue of the case.

Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo.

[39]            I note that the Aqua-Gem standard was recently cited with approval by the Supreme Court of Canada in Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, 2003 SCC 27">2003 SCC 27 at paragraph 18.

[40]            Applying the test in Aqua-Gem, supra, I am of the view that I must exercise my discretion de novo, as the issue decided by the Prothonotary raised a question vital to the final issue of the case, namely, whether a new and separate cause of action could be alleged by Faurecia. In reviewing the relevant case law, I note that amendments to pleadings which advance additional claims or causes of action have consistently been found to be "vital to the final issue" for the purpose of the Agua-Gem test. As I stated in Trevor Nicholas Construction Co. v. Canada (Minister of Public Works), [2003] F.C.J. No. 357 (QL), 2003 FCT 255, aff'd without comment on this point, [2003] F.C.J. No. 1706 (QL), 2003 FCA 428, (at paragraph 7):

In the present case, the Prothonotary's decision with respect to the amendment of the statement of claim is a question vital to the final issue of the case. It should be noted that only some types of amendments to a statement of claim are considered to be vital to the final issue of a case. A decision on the proposed amendment could have the result of preventing the plaintiff from advancing additional claims or causes of action against the defendant (see Stoicevski v. Casement (1983) 43 O.R. (2d) 436 (C.A.)). On the issue of amendment of the statement of claim, I must exercise my discretion de novo . . .

[41]            Similarly, in the case at bar, I must exercise my discretion de novo.

[42]            As a final point on the issue of standard of review, Lear Canada urged this Court, on the basis of Microfibres Inc., supra, to adopt a deferential stance towards the Prothonotary's decision since the impugned order dealt with a matter partially under her case management. I am not persuaded by this argument.

[43]            In my view, the principle set out by Gibson J. in Microfibres Inc., supra, is that where deference is owed to case management prothonotaries' decisions regarding "quintessential matters of case management", their decisions should not be disturbed on appeal unless they are "based upon a wrong principle or upon a misapprehension of the facts amounting to a demonstrably clear misuse of judicial discretion". The Microfibres Inc. rule does not extend to cases where a prothonotary's decision raises questions vital to the final issue of the case and the Court has determined that its discretion must be exercised de novo. I am supported in this view by the Federal Court of Appeal's recent decision to the same effect in Merck & Co. v. Apotex, [2003] F.C.J. No. 1925 (QL), 2003 FCA 488 at paragraphs 40 to 41.

[44]            I now turn to the substantive issue of whether Faurecia should be granted leave to file an amended statement of claim which includes allegations that Lear Canada "aids in and assists in and contributes to" patent infringement by a third party.    

[45]            Issue 2

           Should the appeal of the Prothonotary's order be allowed?

It is useful to refer again to the factual allegations that Faurecia contends details its claim of indirect infringement against Lear Canada:

The Defendant aids and assists in and contributes to the infringement by Ford in at least the following respects: by using Ford owned tooling in the manufacture of the said seat assemblies, and, by selling complete seat assemblies for final assembly into the vehicle.

[46]            In exercising my discretion de novo in this case, I would reach the same conclusion as the Prothonotary. Leave should not be granted for Faurecia to amend its statement of claim in the manner proposed. Faurecia's appeal must be dismissed.

[47]            By her April 3, 2001 order, Hansen J. struck the portion of paragraph 19 of the statement of claim which alleged that Lear Canada "aided and abetted" infringement by a third party. Lear Canada had argued in its written submissions before Hansen J. that aiding and abetting infringement did not give rise to a cause of action in Canada. Hansen J. struck the "aided and abetted" allegation, but dismissed the motion to strike the allegations relating to inducing and procuring infringement.

[48]            I agree with Lear Canada that the issue of the adequacy of the factual allegations found in Faurecia's response to the demand for particulars was not before Hansen J., and is therefore not res judicata. I do not see Lear Canada's opposition to the proposed statement of claim amendments as an attempt to reargue its motion to strike paragraph 19.

[49]            It is my view, however, that by seeking leave to amend its statement of claim to include allegations that Lear Corp. "aids and assists in" infringement (leaving aside "contributes to" for a moment), Faurecia is attempting to reargue an issue that was already decided by Hansen J. While I agree with Faurecia that "aid" and "abet" may have distinct meanings, "assist" has the same meaning as "aid", which was already struck from the statement of claim as disclosing no reasonable cause of action. The excerpt of R. v. Greyeyes, [1997] 2 S.C.R. 825 cited by Faurecia to support the argument that the Prothonotary erred in equating "aiding and assisting" with "aiding and abetting" confirms that "aid" means to assist or help. I therefore agree with Lear Canada that these portions of the proposed amendments were already struck and leave should not be granted to permit allegations of "aiding" or "assisting" infringement to be included in the statement of claim.

[50]            I would also deny leave to permit Faurecia to allege that Lear Canada "contributes to" infringement by a third party, on the basis that it is plainly and obviously an untenable pleading that is bound to fail (for the standard to strike pleadings, see for e.g. Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959). As held in Visx Inc. v. Nidek Co. (1996), 209 N.R. 342, [1996] F.C.J. No. 1721 (C.A.)(QL) at paragraph 16 and the cases that follow it under the amended Federal Court Rules, 1998, supra, amendments to pleadings that would be vulnerable to being struck out should not be permitted by the Court.

[51]            The crux of Faurecia's argument supporting its argument for leave is that the scope of indirect patent infringement is unsettled in Canadian law and that since there is no Supreme Court of Canada case that excludes contributory infringement under the umbrella of indirect infringement, the proposed amendments do not reach the high threshold of disclosing no reasonable cause of action. I disagree.

[52]            The Federal Court of Appeal in Valmet Oy v. Beloit Canada Ltd., [1988] F.C.J. No. 103 (C.A.) (QL), leave to appeal to the S.C.C. refused (1988) 21 C.P.R. (3d) v (note), laid out the exceptions to the general rule that dealing with components of a patented invention do not constitute infringement (at page 14):

Moreover, it is well established that there is no infringement of a patent in selling an article which does not in itself infringe the patent even when the vendor knows that the purchaser buys the article for the purpose of using it in the infringement of the patent. There seems to be only two exceptions to that rule, namely, that there is infringement:

(a) if the vendor, alone [Footnote: Windsurfing Internatonal Inc. et al. v. Trilantic Corporation (1985), 8 C.P.R. (3d) 241.] or in association with another person, [Footnote: Incandescent Gas Light Co. Ltd. v. New Incandescent Mantle Co. (1898), 15 R.P.C. 81.] sells all the components of the invention to a purchaser in order that they be assembled by him; and

(b) if the vendor, knowingly and for his own ends and benefit, induces or procures the purchaser to infringe the patent. [Footnote: Slater Steel Industries Ltd. et al. v. R. Payer Co. Ltd. et al. (1968), 38 Fox Patent Cases 139.]

[53]            Faurecia attacks the Beloit Canada, supra decision as not being a final and binding authority for the scope of indirect infringement, not being a Supreme Court authority and being a comment made in the course of a contempt proceeding, not an infringement action. For various reasons, I do not find such attempts to distinguish Beloit Canada, supra persuasive. First, Federal Court of Appeal decisions are binding on this Court, second, the Beloit Canada test was cited with approval by the Federal Court of Appeal in Beloit Canada Ltd. v. Valmet-Dominion Inc., [1997] 3 F.C. 497 (C.A.) and has been applied numerous times by this Court. Measured against Beloit Canada, supra, I find that Faurecia's allegation of contributory infringement is without merit such that it would be struck, therefore the request to amend its pleadings to include such an allegation must be refused.

[54]            Finally, I will comment briefly on Faurecia's argument contained in paragraph 68 of its written representations that, as an officer of this Court, counsel for Lear Canada is prevented from taking a position inconsistent with his stance in Trojan Technologies Inc., supra, so therefore must be deemed to accept Faurecia's position on this motion. I am not persuaded that any such duty exists to present consistent arguments before the Court, especially when a lawyer works for different clients in separate matters. Furthermore, since there are extensive factual differences between the two cases, and Faurecia did not provide any jurisprudence to support this argument, I find that there is no merit in this line of reasoning.

[55]            Faurecia's appeal of Prothonotary Aronovitch's order is dismissed. Costs are awarded in favour of Lear Canada.

                                                  ORDER

[56]            IT IS ORDERED that:

1.          Faurecia's appeal of Prothonotary Arnonovitch's order is dismissed.

2.          Costs are awarded in favour of Lear Canada.

(Sgd.) "John A. O'Keefe"

        J.F.C.                    

Vancouver, BC

March 19, 2004

                                       FEDERAL COURT

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                   T-51-01

STYLE OF CAUSE: FAURECIA AUTOMOTIVE SEATING

CANADA LTD.

                                                                                                        Plaintiff

- and -

LEAR CORPORATION CANADA LIMITED

                                                                                                    Defendant

PLACE OF HEARING:                                   Toronto, ON

DATE OF HEARING:                                     September 15, 2003

REASONS FOR ORDER AND ORDER: O'KEEFE J.

DATED:                                                             March 19, 2004

APPEARANCES:

Peter F. Kappel                                                    FOR PLAINTIFF

Martha J. Savoy                                                   FOR DEFENDANT

SOLICITORS OF RECORD:

Kappel Ludlow

Toronto, ON                                                         FOR PLAINTIFF

Gowling Lafleur Henderson LLP

Ottawa, ON                                                          FOR DEFENDANT