Lantech Inc. v. Wulftec International Inc., 2004 FC 228

Date: 20040213

Docket: T-2106-01

Citation:2004 FC 228

BETWEEN:

                                                              LANTECH, INC.

                                                                                                                                               Plaintiff

                                                                         - and -

                                             WULFTEC INTERNATIONAL INC.

                                                                                                                                          Defendant

                                          REASONS FOR ORDER AND ORDER

                                       (Delivered from the Bench in Montréal, Québec

                                                            on February 12, 2004)

HUGESSEN J.

[1]                 This is a motion to amend brought by the defendant seeking to add a counterclaim to the pleadings in this action. The action, although pending for some time now, has not yet been set down for trial and no pre-trial conference has been ordered. The action is subject to special management.

[2]                 The action is a claim for patent infringement. The statement of defence as it presently stands denies infringement but does not contest the validity of the patent. The amendment would add by counterclaim a claim of invalidity with respect to rather more than half the claims of the patent, namely claims 25 to 58 on the grounds of over claiming.

[3]                 At the start, I must say that I am satisfied that the proposed amendment is not frivolous, is not doomed to failure or in the classic words of the cases, it is not plain and obvious that the counterclaim will not succeed. While the question which the counterclaim seeks to raise is at bottom one of law, I would find it difficult to construe the patent in suit without the aid of some evidence. The patent, like every patent, is addressed to persons skilled in the art as at the time of issue, and despite plaintiff's counsel's valiant attempt to convince me otherwise, I do not think that its construction is that simple a matter and that it can be achieved by simply sitting and looking at the patent itself. In fact, given some of the prior art which had been drawn to my attention in the pleadings, and the fact that the defendant apparently holds a United States patent for substantially the matters covered by the contested claims, I suspect that Court at trial will require a good deal of expert evidence and there is presently none.

[4]                 Second, the plaintiff has not shown me, assuming that it could properly do so, that the amendment is not being sought on proper instructions from the defendant. There has been an attempt to go behind the instructions given to defendant's solicitors and to look into the internal management of the defendant but in my view, that is improper and there is no ground shown upon which I could properly refuse the amendment for that reason.

[5]                 Third, it is perfectly clear that if the proposed amendment is allowed, it will have a serious impact on the plaintiff's pending motion for summary judgment which after a number of adjournments, all of them I may say brought about for one reason or another by the defendant, has been set down for hearing today. That summary judgment motion, which I have of course read, including the memorandum of fact and law, because it is set down for today, makes much of the fact that the validity of the patent in suit is not impugned. If the proposed amendment is allowed, it is clear to me that the summary judgment motion, if not altogether withdrawn, will have to be completely redone and will not be able to proceed today.

[6]                 This brings me finally to what I consider to be the principal question raised by the motion to amend, namely what prejudice will be caused to the plaintiff in allowing the amendment at this late stage and can that prejudice be properly compensated by an award of costs.

[7]                 Relevant to that assessment are two important facts, first that the case is not yet set down for trial and second, that I am informed that the defendant, if it has infringed, has ceased to do so for some time.

[8]                 There will be prejudice caused to the plaintiff by allowing the proposed amendment and the filing of the counterclaim, but that prejudice in my view is entirely related to recent procedures which have been incidental in the action. In particular, the summary judgment motion, as I have said, which not to put too fine a point on it, would appear to have a good many of the props if not all knocked out from under it by an allegation of invalidity. Also, I am informed that there have been settlement negotiations between the parties subsequent to the filing of the summary judgment motion and in relation thereto they necessarily have come to nought and plaintiff will have loss the time, effort and costs which have gone into those negotiations.

[9]                 Finally, there is the present motion; I am quite unable to fault the plaintiff for unsuccessfully resisting the motion to amend and therefore, in my view, the costs associated with that will also be for the defendant's account.

[10]            In my view, all these sources of prejudice to the plaintiff can be compensated by an award of costs, but before I invite counsel to make submissions, I want to make it quite plain, that in my view, an award of costs in the circumstances of this case must be truly compensatory to the plaintiff. I think, probably subject to what counsel may tell me, that will mean an award of costs on a full indemnization solicitor and client basis. I invite submissions from counsel on that point.

[Later]

[11]            Having now heard counsel on the question of costs, I learned that despite my expression of hope to the contrary they have been unable so far to agree upon an appropriate lump sum award. I shall simply have to refer the question of costs to assessment in accordance with the terms of the reasons for order already given. I will also continue the summary judgment motion sine die. The order will go in the following terms:

ORDER

1. The defendant has leave to amend its statement of defence and to add a counterclaim, all to be served and filed within 10 days.

2. The plaintiff's motion for summary judgment is continued sine die.

3. The defendant shall pay the plaintiff's costs to be assessed on a solicitor and client basis in accordance with the reasons previously given herein.

4. Once assessed, such costs shall be payable forthwith and in any event of the cause.

                                                                                                                                                    Judge                 

Ottawa, Ontario

February 13, 2004

                                                            FEDERAL COURT

                        NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:       T-2106-01

STYLE OF CAUSE: LANTECH, INC. v. WULFTEC INTERNATIONAL INC.

PLACE OF HEARING:         Montreal, Québec

DATE OF HEARING:           February 12, 2004

REASONS FOR ORDER:    THE HONOURABLE MR. JUSTICE HUGESSEN

DATED:          February 13, 2004

APPEARANCES:

Mr. John Harris

Ms. Constance Too                                              PLAINTIFF

Mr. Bob Sotiriadis                     

Ms. Alexandra Steele                                           DEFENDANT

SOLICITORS OF RECORD:

Gowling Lafleur Henderson LLP

Ottawa                                                     PLAINTIFF

Léger Robic Richard

Montréal                                                               DEFENDANT