Date: 20030613
Docket: T-278-03
Citation: 2003 FCT 745
BETWEEN:
SOBEYS GROUP INC.
Plaintiff
- and -
TOLIX HOLDINGS INC. and
ATLANTIC LOW TEMPERATURE SYSTEMS LIMITED
Defendants
REASONS FOR ORDER
MacKAY J.
[1] The defendants apply for an order to stay proceedings in this action which commenced by plaintiff's statement of claim filed on February 17, 2003. They also seek an extension of time to file a defence, up to 30 days following the lifting of any stay that may be granted. The motion is brought following an action initiated by the defendants in January 2002 in the Supreme Court of Nova Scotia which claimed against the plaintiff, Sobeys Group Inc., and three related companies, for breach of licensing and confidentiality agreements, and for infringement of Canadian Patent No. 2,268,241, issued November 27, 2001 to the defendant, Tolix Holdings Inc., which it has licensed for exclusive use to Atlantic Low Temperature Systems Limited, the other applicant on this motion.
[2] Tolix Holdings Inc. ("Tolix") and Atlantic Low Temperature Systems Limited ("ALTS") are corporations incorporated under the laws of Nova Scotia. The plaintiff, Sobeys Group Inc. ("Sobeys"), is also a corporation created under the laws of Nova Scotia. It carries on business principally in the operation of retail grocery stores, distribution centres, and operations of refrigerated trucks. That business is carried on not only in Nova Scotia but in the provinces of Prince Edward Island, New Brunswick, and Ontario.
[3] In this action, Sobeys seeks a declaration that it did not infringe the defendants' patent and a declaration that claims 6 to 19 of the patent in suit are invalid and void.
[4] The patent in issue relates to the maintenance of optimum storage temperature for biological materials. In 1999 and 2000, ALTS and Sobeys concluded two license agreements, incorporating confidentiality agreements, relating to use by Sobeys of the defendants' patented hypothermic storage technology. Breach of those agreements and infringement of the patent is claimed in the action commenced in the Supreme Court of Nova Scotia.
[5] In that action, Sobeys sought and received further and better particulars of allegations by the defendants, Tolix and ALTS. It also brought an unsuccessful application in the Nova Scotia Court for additional particulars, and it filed its defence to that action on April 26, 2002. In part, the defence claims that the patent in issue is invalid and void, in all of its claims. Sobeys also defends in that action by denying infringement of the patent. Lists of documents have been exchanged, and the parties have served interrogatories but have not commenced discoveries.
[6] In this action commenced by Sobeys in this Court, no steps have yet been taken to move the action forward and no defence is yet filed, though a draft defence has been made available to the plaintiff.
[7] Tolix and ALTS seek a stay, pursuant to s-s. 50(1) of the Federal Court Act, R.S.C. 1985, c. F-7, as amended (the "Act"), pending final conclusion of Action S.H. No. 176564 in the Supreme Court of Nova Scotia and they seek an extension of time to file a defence to Sobeys' statement of claim for a period of 30 days following the lifting of any stay that may here be granted. Under the Act, s-s. 50(1) provides:
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50. (1) The Court may, in its discretion, stay proceedings in any cause or matter,
(a) on the ground that the claim is being proceeded with in another court or jurisdiction; or
(b) where for any other reason it is in the interest of justice that the proceedings be stayed.
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50. (1) La Cour a le pouvoir discrétionnaire de suspendre les procédures dans toute affaire:
a) au motif que la demande est en instance devant un autre tribunal;
b) lorsque, pour quelque autre raison, l'intérêt de la justice l'exige.
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[8] A stay pursuant to s. 50 of the Act is granted only in the clearest of cases where the moving party establishes that continuing the action would be oppressive or vexatious or an abuse of process, and where a stay would not cause an injustice to the responding party (see Apotex Inc. v. AstraZeneca (Canada), [2003] FCJ No. 224 at para. 12, upheld on appeal [2003] FCA 235). In that case, the Court of Appeal upheld the grant of stay in a Federal Court action which commenced within three weeks of commencement of an action in a provincial Court, where in both actions the same parties were involved, the same facts and the same causes of action and defences were in play, and the same issues were defined by similar pleadings and similar claims for relief, except for a claim by Apotex in the Federal Court for expungement of copyright registrations, a form of relief not available in the provincial Court.
[9] Tolix and ALTS urge that the Apotex case, and others to the same effect, should here be followed and the stay granted. It is urged that substantial progress has been made in the Nova Scotia court case, though it is acknowledged that no discoveries have been initiated. While it appears that the Nova Scotia action is against more parties than Sobeys Group Inc., the other defendants in that case are related companies with similar shareholders, similar directors and all defendants are represented by one counsel. No third party would be adversely affected by any stay. Moreover, while it is acknowledged that there are more issues raised in the Nova Scotia court action than in this proceeding, i.e. issues relating to the licensing and confidentiality agreements, insofar as issues can be perceived in this case, the issues of infringement and validity of the patent are raised in both actions. The defendants urge that only the claim to an in rem remedy, the striking from the register of the patent which is available only in this Court, distinguishes the claims in the two courts in relation to those issues.
[10] The latter suggestion is somewhat speculative since in this action, no statement of defence has been filed and the issues are not yet determined. It is urged by the applicants that Sobeys has raised the issue of validity in the Nova Scotia action and a successful defence in that action would make this proceeding unnecessary. As between the parties res judicata or abuse of process would provide an effective response by Sobeys. This of course, ignores Sobeys' claim to in rem relief in this Court proceeding. That claim is not here met, as was the case in Apotex where the issues were defined by the pleadings, and AstraZeneca had given an undertaking that it would abide by any decision of the provincial Court in relation to validity and would consent to proceedings by Apotex to seek expungement from the record if the provincial Court should decide in Apotex' favour.
[11] It is urged in this case by the plaintiff that it will be prejudiced if a stay is now granted, by denial of access to an in rem remedy, by denial of a proceeding in the court of its choice, and denial of access to a declaration, even if it were successful in the Nova Scotia court action, that would relate to its operations in several provinces. Moreover, if the Nova Scotia case were determined on some basis other than validity of the patent in issue, then the validity of the patent remains an open issue between the parties (see Dominion Mail Order Products v. Weider, (1976), 28 C.P.R. (2d) 27; Figgie Int. Inc. V. Citywide Machine Wholesale, (1993), 50 C.P.R. (3d) 89 at 92 (F.C.T.D.)).
[12] While the Court must be concerned to ensure that there is not undue inconvenience and extra costs by continuing two actions in different fora at this stage, since the issues remain undefined with no defence filed in this proceeding and since there is no undertaking that would meet Sobeys' claim to in rem relief, I am not persuaded that a stay would be in the interests of justice. The Court must be satisfied of that if a stay is to be granted.
[13] The factors I consider inadequacies in the current circumstances may yet be met before this proceeding moves on to trial. I would expect that it will be case managed and I will so recommend to the Associate Chief Justice, pursuant to the Court's Rules. The case management judge or prothonotary can then ensure that there is not undue duplication of effort in this Court for issues which may prove to be similar to those in the Nova Scotia action. Indeed, it may be that a case management judge at a future date would consider it appropriate to stay these proceedings if great progress is made in the Nova Scotia action. If that is not the case, the process in this Court may move forward without undue delay.
Conclusion
[14] Thus, I decline at this stage to grant a stay sought by the defendants' motion and I decline to grant the extension of time to file a defence, which was to be dependent on a stay if it were granted. The order now issued does provide an extension of time, up to 21 days from the date of the order, for the defendants in this action to file a statement of defence.
"W. Andrew MacKay"
J.F.C.C.
Ottawa, Ontario
June 13, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-278-03
STYLE OF CAUSE: SOBEYS GROUP INC.
- and -
TOLIX HOLDINGS INC. and
ATLANTIC LOW TEMPERATURE SYSTEMS
LIMITED
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: Thursday, May 1, 2003
REASONS FOR ORDER OF MacKAY J.
DATED: Friday, June 13, 2003
APPEARANCES:
Gary O'Neill and Jane Clark
FOR PLAINTIFF
Aidan Meade
FOR DEFENDANTS
SOLICITORS OF RECORD:
Gowling Lafleur Henderson LLP
Suite 2600
160 Elgin Street
Ottawa, Ontario
K1P 1C3
FOR PLAINTIFF
McInnes Cooper
1601 Lower Water Street
P. O. Box 730
Halifax, Nova Scotia
B3J 2V1
FOR DEFENDANTS
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