Date:
20050714
Docket:
T-115-05
Citation:
2005 FC 985
Montréal, Quebec, the 14th
day of July 2005
Present: RICHARD MORNEAU, PROTHONOTARY
BETWEEN:
J.J.
MACKAY CANADA LIMITED
Plaintiff/
defendant
to counterclaim
and
SOCIÉTÉ
EN COMMANDITE
STATIONNEMENT
DE MONTRÉAL
Defendant/
plaintiff
by counterclaim
REASONS FOR ORDER AND ORDER
[1] This
case concerns a motion filed by the defendant and plaintiff by counterclaim
Société en commandite Stationnement de Montréal (hereinafter Stationnement de
Montréal) under Rule 107 of the Federal Courts Rules (the Rules),
essentially praying the Court to order the severance of the proceeding so that
the issue of the infringement and validity of patent ’677 be ruled on first and
the question of damages and loss of profits resolved in a separate proceeding,
should the Court find that the patent is valid and was infringed.
[2] The
relevant portion of Rule 107 reads as follows:
|
107.
(1) The Court may, at any time, order the trial of an issue or that issues
in a proceeding be determined separately.
|
107.
(1) La Cour peut, à tout moment, ordonner l’instruction d’une question
soulevée ou ordonner que les questions en litige dans une instance soient
jugées séparément.
|
Background
[3] Stationnement
de Montréal was sued for infringement of patent ’677; the invention covered was
a computerized system of parking charge collection.
[4] In its
defence, Stationnement de Montréal argued that patent ’677 was invalid in that
the invention covered by said patent had been anticipated. Stationnement de
Montréal submitted that the patent was an almost identical copy of a call for
tenders document prepared by Stationnement de Montréal and distributed to the
plaintiff/defendant to counterclaim J.J. MacKay Canada Limited (hereinafter
MacKay) on October 2, 2002.
[5] This
document was sent to MacKay as part of a bidding process the purpose of which
was to replace the parking meters that were then located on the streets in the
territory of the City of Montréal by a computerized system.
[6] According
to MacKay, a Canadian corporation based in Nova Scotia, it developed the
invention in issue in the course of its business, which consists in producing,
distributing, selling and maintaining parking meter systems.
[7] The
parties have reached the stage where they are filing their affidavits of
documents and this motion was filed, and opposed by MacKay, in the course of
discussions as to the content of the affidavit of documents of Stationnement de
Montréal.
Analysis
[8] Although
MacKay emphasized in its affidavit that, in the action at bar, it wished to
proceed as quickly as possible with the whole case, and it further objected to
this motion, these factors and the other prejudicial points raised by MacKay -
which cannot be ignored - should, I would think, be assessed in the light of
the test this Court set out in Illva Saronno S.p.A. v. Privilegiata Fabbrica
Maraschino “Excelsior” (T.D.), [1999] 1 F.C. 146 (hereinafter Saronno),
at page 154, paragraph 14, where the Court stated that:
Accordingly, on the basis of previous authority, and
in light of the changes introduced by the 1998 Rules, I would formulate the
test to be applied under Rule 107 as follows. On a motion under
Rule 107, the Court may order the postponement of discovery and the
determination of remedial issues until after discovery and trial of the
question of liability, if the Court is satisfied on the balance of
probabilities that in view of the evidence and all the circumstances of the case
(including the nature of the claim, the conduct of the litigation, the issues
and the remedies sought), severance is more likely than not to result in the
just, expeditious and least expensive determination of the proceeding on its
merits.
[9] For the
reasons that follow, I have found that Stationnement de Montréal has discharged
its onus by establishing on a balance of probabilities that time and money will
be saved and a just solution to the litigation will be achieved by severance;
therefore, departure from the general rule that all issues raised by a
proceeding should be considered together is warranted.
[10] MacKay
further noted, referring to decisions of provincial courts, that in its view
courts are slow to grant severance because this results, inter alia, in
additional costs, delays and duplication. In this Court, however, although
each case must be examined on its own merits, I cannot accept that the
submission of MacKay reflects the current trend, especially in matters of
intellectual property.
[11] Indeed,
in Apotex Inc. v. Bristol-Myers Squibb Co. (2003), 308 N.R. 152, at page
155, at paragraphs 8 and 9, the Federal Court of Appeal, by the following
comments, acknowledged that it is common practice at the intellectual property
bar to consent to a bifurcation order under Rule 107 in patent
proceedings:
8 Counsel
for the appellant suggested that no conclusion could be drawn from the evidence
that a number of bifurcation orders had been made on consent, on the ground
that each case stood on its own facts. However, such cases may also have
certain things in common. William L. Hayhurst Q.C., a distinguished member of
the intellectual property bar had this to say about the practice in patent
litigation:
Because the trial of an action for patent infringement
may be lengthy and complex (largely because of the technology involved rather
than because of any special difficulty about the applicable law), the parties
have commonly agreed to an order deferring an inquiry into damages or an
accounting until the court has decided whether the patentee has established its
right to any remedy. This may eliminate some needless pre‑trial discovery
and avoid premature disclosure of confidential financial information. If discovery
after trial is required, anything that may have been held not to infringe may
be ignored, at least if no appeal is pending.
Hayhurst, W.L. Remedies in Henderson, G., Patent
Law in Canada, Carswell, Toronto 1994 at p. 289.
9 When an experienced
specialist bar like the intellectual property bar commonly consents to the
making of a bifurcation order . . .
[12] I have
garnered hereunder the points of analysis mentioned in Saronno for
review.
A. Nature of litigation and issues
[13] In order
to establish, inter alia, that the issues of infringement and invalidity
were quite straightforward in the case at bar, Stationnement de Montréal
offered in evidence an affidavit from its counsel. MacKay submits that this
approach is inappropriate and that part of the affidavit should be struck out.
I do not intend to proceed with the total or partial striking out of this
affidavit in this case, but I will examine if I should give it some weight,
depending on the points reviewed below.
[14] In this
respect, I agree with MacKay that determining whether the issues of
infringement and invalidity are straightforward involves an interpretation of
the patent claims in issue, which is not for counsel for Stationnement de Montréal
to do. In this regard, the affidavit of Stationnement de Montréal will not be
followed.
[15] According
to MacKay’s written submissions (see at paragraph 39), the issue of
infringement, and thus quite possibly the issue of invalidity of the patent in
issue, are complex matters. However, MacKay did not offer any convincing
evidence in support of its view. In any event, even if the Court were prepared
to accept MacKay’s submission, the Court would be led to find that the issues
of infringement and invalidity are complex. Now, as Hayhurst, cited by the
Federal Court of Appeal (see paragraph 11), points out, the complexity of
such issues favours severance.
[16] Additionally,
through an affidavit from MacKay’s director of technology, Greg Chauvin, MacKay
sought to establish that the financial information about the Stationnement de
Montréal telecommunication expenses and network is required not only with
respect to the issue of relief but also to establish infringement by
Stationnement de Montréal. Thus, all these issues are said to be related and
no bifurcation order under Rule 107 should be contemplated.
[17] If I
understand MacKay correctly on this point, the invention protected by its
patent makes possible the transmission of a minimum volume of data to various
terminals. Stationnement de Montréal’s telecommunication and network expenses
are said to be directly proportional to the volume of data transmitted. If
MacKay were informed of Stationnement de Montréal’s expenses, it would be able
to see whether Stationnement de Montréal was infringing its invention through a
minimum transmission volume.
[18] However,
it seems to me that it is precisely the actual volume of data transmission
which could in theory be relevant to establish a possible infringement. If
this volume is still relevant in view of the written submissions, it seems to
me that the matter could be resolved directly by an investigation without
making an evaluation of Stationnement de Montréal’s expenses. I am of the view
that MacKay is indirectly seeking to create an artificial link between the
issues of liability and relief in order to avoid a bifurcation order.
[19] Further,
it appears from the submissions of Stationnement de Montréal that the only
defence raised by Stationnement de Montréal in response to MacKay’s action is
that its system had no function which enabled it to receive information about
space occupancy.
[20] Therefore,
this issue of data transmission volume is quite probably no longer in issue, in
view of the written submissions.
[21] As to
the claim for punitive damages made by Stationnement de Montréal in its
counterclaim, the facts in Carpenter v. Amherstburg (Town) Police Services
Board, [2003] O.J. No. 3101 (Ont. S.C.J.), to which MacKay referred
the Court, were totally different from this situation and is thus to be
distinguished. In my opinion, this aspect of the claim by Stationnement de
Montréal is not a bar to an order under Rule 107.
[22] Accordingly,
I find that the Court will not have to analyze in any way the issue of damages
or profits in order to rule, inter alia, on the issues of infringement
or patent validity, and conversely.
B. The proceeding and the relief sought
[23] It
appears that, at this stage of the proceedings, the parties have not devoted
much attention to the issue of relief.
[24] First,
it appears that the affidavits of documents of the respective parties are still
to be filed.
[25] In
addition, it should be noted that the examinations for discovery have not taken
place, either on the issue of liability or on the issue of relief.
[26] Further,
although, at the end of the day, an award of profits depends on the Court’s
discretion, the fact does remain that, at this stage, the issue of profits is
still in issue.
[27] Again,
MacKay has objected to the fact that Stationnement de Montréal filed in support
of its motion an affidavit from one of its counsel. Although this is the case,
I do not intend to exclude the allegations it contains. Although I am not
persuaded, as alleged in the affidavit, that the portion of the litigation
relating to the issue of relief would take the equivalent of a month, I am of
the view that the affidavit credibly tends to establish that the computation of
profits will be a lengthy and costly process.
[28] That
process should reflect what happened in the following intellectual property
cases, where it was held that, in order to assess a party’s profits, several kinds
of financial information of a business must be examined. (See Teledyne
Industries, Inc. v. Lido Industrial Products Ltd. (1982), 68 C.P.R. (2d)
56; Diversified Products Corp. v. Tye-Sil Corp. (1990), 32 C.P.R. (3d)
385.) In Depuy (Canada) Ltd. v. Joint Medical Products Corp. (1996), 67
C.P.R. (3d) 145, the Federal Court of Appeal stated at 146-147:
We are also of the view that had the motions
judge correctly instructed himself in the law he would have granted the order
sought. This is a patent infringement action in which the defence and
counterclaim raise serious issues of validity. The plaintiffs reserve the right
to seek an accounting of profits with the result that, if severance is not
ordered, discovery will necessarily range across the whole of the defendants'
business and not be limited to the single allegedly infringing item.
[29] Therefore,
this motion by Stationnement de Montréal for bifurcation is allowed with costs
and the Court orders the severance of the proceeding so that the issue of the
infringement and validity of patent ’677 will be ruled on first and the issue
of damages and loss of profits ruled on in a separate proceeding if the Court
concludes that the patent is valid and was infringed.
[30] In
addition, the parties will ensure that their affidavits of documents be served
on or before August 15, 2005.
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|
Richard Morneau
Prothonotary
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Certified true
translation
François Brunet,
LLB, BCL
FEDERAL
COURT
SOLICITORS
OF RECORD
DOCKET: T-115-05
STYLE OF CAUSE: J.J.
MACKAY CANADA LIMITED v. SOCIÉTÉ EN COMMANDITE STATIONNEMENT DE MONTRÉAL
PLACE OF HEARING: Montréal,
Quebec
DATE OF HEARING: July
11, 2005
REASONS FOR ORDER BY: Richard
Morneau, Prothonotary
DATED: July
14, 2005
APPEARANCES:
Michael Crichton FOR
THE PLAINTIFF/DEFENDANT TO COUNTERCLAIM
Julie Desrosiers FOR
THE DEFENDANT/PLAINTIFF BY COUNTERCLAIM
SOLICITORS OF RECORD:
Gowling, Lafleur, Henderson FOR
THE PLAINTIFF/DEFENDANT TO
Ottawa, Ontario COUNTERCLAIM
Fasken, Martineau, DuMoulin FOR
THE DEFENDANT/PLAINTIFF BY
Montréal, Quebec COUNTERCLAIM
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