Paul Lishman Limited v. M.T. Beauty Co. Ltd., docket T-1297-96

     T-1297-96

BETWEEN:

     PAULA LISHMAN LIMITED and PAULA LISHMAN

     Plaintiffs

     - and -

     M.T. BEAUTY CO. LTD. and MICHAEL MOSLER

     Defendants

     REASONS FOR ORDER

JEROME A.C.J.:

     These motions by the plaintiffs and the defendants pursuant to Rule 336(5) of the Federal Court Rules, appealing the Order of the Associate Senior Prothonotary Giles, dated November 27, 1996, came on for hearing at Toronto, Ontario on January 13, 1997. At the close of argument, I took the matters under reserve and indicated that these written reasons would follow.

BACKGROUND

     The plaintiff, Paula Lishman, is the owner of Canadian patent 1,107,487 issued August 25, 1981 for an invention entitled "Fabric of Fur and Method of Production". The plaintiff, Paula Lishman Limited, is the sole licensee of the patent owned by Paula Lishman. In an Amended Statement of Claim, filed September 4, 1996, the plaintiffs claim patent infringement by the defendants. This patent was the subject of prior litigation involving different defendants: Court File No. T-1265-93, a decision of Rothstein J., Lishman v. Erom Roche Inc. (1996), 68 C.P.R. (3d) 72 (F.C.T.D.). The plaintiffs' Amended Statement of Claim makes reference to, and relies upon, the result obtained in the prior action.

     Associate Senior Prothonotary Giles ordered that portions of paragraphs 23, 24, 26 and 33(c)(iv) of the Amended Statement of Claim be struck and that paragraphs 27 and 33(b) be struck in their entirety. Both parties have brought motions appealing this decision. The plaintiffs are appealing the striking of paragraphs 23, 24, 26, 27, and 33(b) of the Amended Statement of Claim. The defendants are appealing the Prothonotary's refusal to strike paragraph 33(a) of the Amended Statement of Claim and his refusal to order particulars of the allegations contained in paragraphs 20 and 21.

SUBMISSIONS OF THE PARTIES

Plaintiffs' Appeal

     The plaintiffs submit that, with the exception of paragraph 33(b) of the Amended Statement of Claim, the paragraphs struck out all allege material facts relating to Federal Court Action No. T-1265-93, the injunctions issued in that action, and the relationship of the defendants to that action. The plaintiffs further submit that these paragraphs plead material facts and have relevance to the issue of punitive damages and to the declarations sought in the Statement of Claim. As such, the plaintiffs state that the Prothonotary erred in striking these allegations. With regard to paragraph 33(b) of the Amended Statement of Claim, the plaintiffs submit that such a declaration is within the jurisdiction of the Court and, therefore, the Prothonotary erred in striking this paragraph.

     The defendants argue that the Prothonotary was correct in deciding to strike the relevant paragraphs. The defendants state that the Prothonotary, by only striking portions of the paragraphs, maintained the broader pleadings and their factual underpinnings.

Defendants' Appeal

     The defendants submit that the Prothonotary erred in law in failing to strike paragraph 33(a) as the Court lacks jurisdiction under either the Federal Court Act or the Patent Act to grant the declaratory relief claimed in that paragraph, being an in personam judicial decree as between subject and subject. They also contend that further and better particulars of paragraphs 20 and 21 should have been ordered by the Prothonotary because the plaintiffs are seeking to rely upon an alleged finding of validity of the patent in a previous action involving different parties, rather than relying upon the presumption of validity under the Patent Act. The defendants state that they are entitled to full particulars of all material and legal bases relied upon in support of the plaintiffs' allegation of patent validity.

     The plaintiffs' position is that the Federal Court has jurisdiction to grant the requested declaration that "the Defendants are privies of and to Erom and R.B. Management and are thereby bound by the determination of fact and law by this Honourable Court in the Action" and, as such, the decision of the Prothonotary should be upheld. They further submit that the defendants are obliged to prove the invalidity of the patent and, as a result, no further particulars are warranted and the decision of the Prothonotary should be upheld.

ANALYSIS

     In Cornerstone Securities Canada Inc. v. North American Trust Co. (1994), 86 F.T.R. 53 at 58 Richard J. discussed the standard to be applied on an appeal pursuant to Rule 336(5) of the Federal Court Rules:

     Both appeals must fail. The portions of the Amended Statement of Claim which were struck all relate to the claim that the defendants are bound by the terms of the interim and/or permanent injunction granted in Lishman v. Erom Roche Inc.. This allegation does not have relevance to either the claim for patent infringement or for exemplary damages. The Prothonotary's Order, by striking only portions of the paragraphs in question, has maintained the broader factual basis. As such, I find no reversible error on the part of the Prothonotary.

     The claim that a declaration should be granted stating that the defendants are privies of and to the parties in Lishman v. Erom Roche Inc. is an issue which should proceed to the trial judge for consideration and determination. As the recent decision of Richard J. in Hoffmann-La Roche Limited et al. v. The Minister of Health and Welfare and Nu-Pharm Inc. (February 17, 1997, T-1437-96) makes clear, the issue of privies is a complex one and, as such, it is not plain and obvious that this claim by the plaintiffs cannot succeed. Further, I am of the view that the Prothonotary did not err in failing to order further particulars of paragraphs 20 and 21 of the Amended Statement of Claim. The defendants have sufficient information, as contained in the Amended Statement of Claim and the plaintiffs' Response to Demand for Particulars, upon which to plead their defence.

     For these reasons, the appeals of the plaintiffs and the defendants from the Order of the Associate Senior Prothonotary Giles are dismissed. Costs in the cause.

O T T A W A

March 24, 1997                      "James A. Jerome"

                             A.C.J.