Seismotech Safety Systems Inc. v. Forootan

Seismotech Safety Systems Inc. v. Forootan
Court (s) Database
Federal Court Decisions
Date
2021-07-21
Neutral citation
2021 FC 773
File numbers
T-276-21
Decision Content
Date: 20210721
Docket: T-276-21
Citation: 2021 FC 773
Ottawa, Ontario, July 21, 2021
PRESENT: Mr. Justice McHaffie
BETWEEN:
SEISMOTECH SAFETY SYSTEMS INC.
Applicant
and
IRADJ FOROOTAN, SMART DISASTER RESPONSE TECHNOLOGIES, INC.
Respondents
ORDER AND REASONS
I. Overview
[1] Seismotech Safety Systems Inc seeks an ex parte anti-suit injunction to prevent Iradj Forootan from starting or continuing litigation in respect of six Canadian patents in any other court. The requested injunction targets in particular a claim started by Mr. Forootan on March 11, 2021 in California against Smart Disaster Response Technologies, Inc [SDRT], a dormant and suspended California company majority owned by Seismotech, and Reza (Mohammadreza) Baraty, a British Columbia resident who is the CEO and majority shareholder of Seismotech.
[2] For the reasons given below, I dismiss Seismotech’s motion. An anti-suit injunction is an extraordinary and discretionary remedy that should be granted rarely and with caution given its impacts on judicial comity. I do not consider the circumstances Seismotech has presented to meet the standard set for such an injunction. In particular, I do not accept this Court has exclusive statutory jurisdiction under the Patent Act, RSC 1985, c P-4 to decide the issues raised in the California litigation as they relate to the Canadian Patents and that an anti-suit injunction is necessary to “protect” that jurisdiction. Nor do I accept that the only reasonable conclusion the California court could reach—which to date it has not been asked to reach—is that the Federal Court is the clearly more appropriate forum. In the circumstances, I cannot conclude there would be an injustice to permit Mr. Forootan to continue with the proceeding in California.
[3] I am also not satisfied that granting the requested injunction would avoid a multiplicity of proceedings as Seismotech contends. To the contrary, it appears it would further increase the number of proceedings. As Seismotech admits, it would not end the California litigation. It would simply add a parallel Canadian proceeding regarding the same agreement and court judgment at issue in California.
[4] I recognize Seismotech’s concerns about the extent and nature of litigation to date. However, these concerns can be appropriately addressed in California. They do not make it appropriate for this Court to issue an order limiting Mr. Forootan’s ability to pursue litigation in that forum.
[5] The motion is therefore dismissed. There is no order as to costs.
II. Issues
[6] The overall issue raised on Seismotech’s motion is whether the Court should issue an anti-suit injunction enjoining Mr. Forootan from commencing or continuing litigation outside Canada pertaining to certain Canadian patents until adjudication of this application. This issue raises the following sub-issues:
(1) Should notice of this motion have been given to Mr. Forootan?
(2) Has Seismotech shown it meets the requirements for an anti-suit injunction, namely:
(a) Does the Court have personal jurisdiction over Mr. Forootan for the purpose of the requested order?
(b) Could the foreign court reasonably conclude that the Federal Court is not a clearly more appropriate forum?
(c) Would the requested injunction deprive Mr. Forootan of a legitimate juridical advantage it would be unjust to deprive him of?
(d) Does the fact that Seismotech has not sought a stay of the foreign litigation preclude the relief sought?
[7] I will address these issues in sequence after a review of the relevant facts and the general principles applicable to anti-suit injunctions.
III. Analysis
A. Factual Background
(1) Assignment of technology and patents from Seismotech to SDRT
[8] There are two individuals and two companies at the centre of this litigation. Reza Baraty is a BC resident who is and always has been the majority owner (directly or indirectly) of Seismotech, a BC company. Iradj Forootan is a California resident. He founded SDRT and was formerly a shareholder and its President and CEO, among other positions. Seismotech is now the majority owner of SDRT, although that company is suspended.
[9] The disputes involving these four parties stems from a Purchase and Sale Agreement [PSA] they all signed in January 2003. The PSA pertained to what was termed the “SUMS Technologies,” which was certain disaster management and utilities management technology invented by Mr. Baraty. The SUMS Technologies included the following patents and patent applications related to the technology:
Canadian Patent 2,199,189 [the ’189 Patent], which was issued in 1999 and has since expired;
a Canadian patent application that resulted in the later issuance of five further Canadian patents, namely Canadian Patent Nos. 2,364,081; 2,551,847; 2,551,854; 2,552,603; and 2,621,287 (together with the ’189 Patent, these six patents constitute the “Canadian Patents” at issue in this motion);
US Patent 6,266,579;
a US patent application the Court presumes similarly led to the five further US patents that are identified in the documents: US 6,842,706; US 7,353,121; US 7,729,993; US 7,774,282; and US 7,711,651 (I will call these six patents the US Patents); and
European and Japanese patent applications apparently related to the ’189 Patent.
[10] Mr. Baraty is the sole inventor of the Canadian Patents and the US Patents.
[11] At the time of the PSA, Seismotech owned the SUMS Technologies and Mr. Baraty largely owned Seismotech and was its President and CEO. Mr. Forootan was a shareholder and President of SDRT. It was apparently anticipated that Mr. Forootan could assist in raising capital to fund commercialization of the SUMS Technologies. Under the PSA, Seismotech assigned the SUMS Technologies, including the patents and applications, to SDRT. Mr. Forootan was to raise $2,000,000 in capital financing within 12 months of closing to develop the SUMS Technologies. If the funds were not raised, Mr. Forootan was to transfer 10% of his shares of SDRT to Seismotech, with a further 10% for each six-month period in which the $2,000,000 in funding was not obtained. Seismotech refers to this obligation in the PSA as the “Capital Promise.”
[12] As a result of the assignment in the PSA, SDRT is currently the registered owner of the Canadian Patents other than the ’189 Patent. Mr. Baraty is the registered owner of the ’189 Patent rather than SDRT, as an assignment from Mr. Baraty to Seismotech had not been recorded at the time the transfers from Seismotech to SDRT were filed with the Canadian Intellectual Property Office (CIPO).
[13] The PSA includes a choice of law clause, stating that the agreement “shall be governed by and construed in accordance with the laws of Canada, without giving effect to conflict of laws.” It was signed by Mr. Baraty, on his own behalf and on behalf of Seismotech, in British Columbia. It was signed by Mr. Forootan, on his own behalf and on behalf of SDRT, in Orange County, California.
(2) Disputes and the 2015 litigation in California
[14] Seismotech alleges Mr. Forootan and SDRT did not fulfill the “Capital Promise” since Mr. Forootan did not raise the $2,000,000 required. Mr. Forootan, for his part, alleges he made significant loans to SDRT to secure the patents. He also alleges Mr. Baraty improperly “colluded and conspired” against SDRT and Mr. Forootan, infringed the patents at issue, and formulated fraudulent business plans. It is clear from the limited record before me that between the 2003 PSA and the early 2010s, difficulties arose in the business relationship.
[15] In 2015, Mr. Forootan filed a complaint in the Superior Court of the State of California, County of Orange [California State Court], bearing Case No. 30-2015-00788310-CU-BT-CJC [2015 California Action]. The complaint in the 2015 California Action is not in the record, but according to later filings it alleged breach of fiduciary duty, breach of contract, and fraud. Mr. Forootan started the action on his own behalf and as a derivative action on behalf of SDRT, against SDRT and Mr. Baraty as well as a series of 100 unnamed “Doe” defendants.
[16] The 2015 California Action was settled in 2017. Mr. Forootan, Mr. Baraty, and SDRT signed a Stipulation for Settlement [Settlement Agreement], stipulating that the matter is deemed settled on certain terms and conditions. Since the obligations in the Settlement Agreement are contested, I will refrain from detailed comment on its contents. However, I reproduce the following passages from the Settlement Agreement:
1. Defendant SDRT shall pay to plaintiff Iradj Forootan, or to his attorney Ulwelling Siddiqui LLP, the total sum of $ $1,380,000 (One Million Three Hundred Eighty Thousand US Dollars) (see payment schedule below) in full settlement and compromise of this action and in release and discharge of any and all claims and causes of action made in this action, and in release and discharge of any and all claims and causes of action arising out of the events or incidents referred to in the pleadings in this action.
[…]
8. The Parties hereby agree that the Orange County Superior Court shall retain jurisdiction over the action for all purposes to enforce the terms of this Agreement pursuant to California Code of Civil Procedure § 664.6
9. The Parties hereby agree that Defendants SDRT and Baraty will sign a stipulated judgment, whereby in the event of a default by the Defendants of any payment listed above, after notice and 10 calendar days opportunity to cure, then, upon ex parte application of counsel, Judgment shall be taken and entered against Defendants SDRT for the full amount owed under this Agreement of $1,380,000 (One Million Three Hundred Eighty Thousand US Dollars), less any amounts previously paid pursuant to the Agreement.
10. The Parties hereby agree that Plaintiff FOROOTAN shall have the exclusive right to enjoin and prevent any sale of any SDRT patents and related intellectual property, unless such sale would fully and completely satisfy the outstanding balance owed to Plaintiff FOROOTAN under this agreement AND such proceeds are paid to Plaintiff FOROOTAN to satisfy the balance owed. The patents subject to this term include, but are not limited to, the following: [a list of patents including the US Patents and the Canadian Patents].
11. Plaintiff Forootan will surrender any and all SDRT shares under his control, including without limitation 6,050,000 shares, and relinquish any rights and ownership interests therein.
12. Any provisions of Evidence Code §§1115 - 1128 not withstanding, this agreement may be enforced by any party hereto by a motion under Code of Civil Procedure §664.6 or by any other procedure permitted by law in the Superior Court of Orange County.
[…]
[17] The parties signed an Amendment to the Settlement Agreement in June 2018. The Amendment clarified certain aspects of the Settlement Agreement, extended the first payment date, and attached an agreed draft Stipulation for Entry of Judgment, Stipulation for Dismissal, and other documents.
[18] On March 4, 2019, Mr. Forootan obtained an order from the California State Court entitled “Order re Plaintiff’s Ex Parte Application for Enforcement of Stipulation for Entry of Judgment Under CCP § 664.6 and Award of Attorneys’ Fees” [2019 California Order]. Paragraph 2 of the 2019 California Order states “The Court shall enter Judgment in favor of Plaintiffs in the sum of $1,380,000 pursuant to the Parties Stipulation for Entry of Judgment.” Costs of $2,235 were also awarded.
[19] A judgment was entered on May 14, 2019 [2019 California Judgment] by virtue of the 2019 California Order. The 2019 California Judgment states that judgment is entered for Mr. Forootan in the amount of $1,382,235, against both SDRT and Mr. Baraty.
(3) Litigation in the California District Court, BC Supreme Court, and this Court
[20] On January 23, 2020, Mr. Forootan filed a complaint in the United States District Court for the Central District of California, Southern Division [California District Court] against SDRT and Mr. Baraty, as well as 10 unnamed “Doe” defendants, bearing Case No. 8:20-cv-00146-JLS-DFM [2020 District Court Action]. The 2020 District Court Action alleged that under the terms of the Settlement Agreement, SDRT and Mr. Baraty agreed to pay $1,380,000 to Mr. Forootan, and that no payments had been made. It also alleged the 2019 California Judgment gave judgment against both defendants.
[21] The 2020 District Court Action raised two claims. First, it claimed a breach of contract, alleging a failure by the defendants to comply with the Settlement Agreement. In respect of that claim, Mr. Forootan sought primarily money damages and costs. Second, it made a claim for “declaratory relief,” seeking declarations about the parties’ obligations under the Settlement Agreement. In respect of the second claim, Mr. Forootan sought (i) a declaration conferring all rights and title in the “Patents” (defined to include the US Patents and Canadian Patents) to Mr. Forootan; (ii) a declaration transferring the Patents to Mr. Forootan; and (iii) a declaration and order to the United States Patent and Trademark Office (USPTO) to transfer ownership of the Patents to Mr. Forootan.
[22] About five months later, on July 9, 2020, Seismotech started an action against SDRT and Mr. Forootan in the Supreme Court of British Columbia, bearing Court File No. NEW-S-S-228726 [2020 BC Action]. That action seeks a declaration that the transfer of the “Seismotech Technologies” (i.e., the SUMS Technologies) to SDRT under the original 2003 PSA was or is void, on grounds of failure to fulfill the Capital Promise. Based on the definitions in the Notice of Civil Claim in the 2020 BC Action, the declaration sought by Seismotech pertains to both the Canadian Patents and the US Patents. Mr. Forootan apparently filed an application to challenge the jurisdiction of the BC Supreme Court, which was to be heard in February 2021, but did not proceed owing to Mr. Forootan’s failure to file necessary documents.
[23] On February 1, 2021, after issuing a show cause order, the California District Court dismissed the 2020 District Court Action for lack of subject matter jurisdiction. In essence, the California District Court found the matter related to enforcement of the Settlement Agreement, which was a matter for the state courts. It held that “Plaintiff seeks to enforce his alleged rights to various patents pursuant to the terms of the settlement agreement, but such claims do not arise under patent law” [emphasis added]. It therefore dismissed the claim without prejudice to refiling in state court. Mr. Baraty sought his costs of that action (including Mr. Baraty’s own jurisdictional motion, which was not decided) in the amount of about $25,800. However, since most of the costs claimed were based on a provision of the Settlement Agreement, over which the California District Court did not have jurisdiction, the California District Court awarded only $327.48 in costs on July 6, 2021.
[24] After the 2020 District Court Action was dismissed, but before Mr. Forootan filed a proceeding in state court, Seismotech started this application in Canada’s Federal Court on February 16, 2021. This application relates only to the Canadian Patents. It seeks declarations similar to those in the 2020 BC Action, namely that the assignment of the Canadian Patents to SDRT is void or voidable. It also seeks an order pursuant to section 52 of the Patent Act directing the Commissioner of Patents to vary the entries in the records of the Patent Office (i.e., CIPO) to record Seismotech as the registered owner of the Canadian Patents. Further or in the alternative, it seeks a declaration that paragraph 10 of the Settlement Agreement, reproduced at paragraph [16]
above, is not enforceable against SDRT, Seismotech, or the Canadian Patents, and does not preclude SDRT from assigning or licensing the Canadian Patents back to Seismotech.
[25] Seismotech concedes this application seeks overlapping relief to that in the 2020 BC Action. It states this arose in light of the Federal Court of Appeal’s conclusion in SALT Canada Inc v Baker, 2020 FCA 127, which was issued a few weeks after the 2020 BC Action was started. That decision confirmed that the Federal Court’s jurisdiction under section 52 of the Patent Act to “order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged” includes the jurisdiction to determine patent title issues that require interpreting agreements or other commercial instruments: SALT at paras 8–14, 47. Prior to SALT, there was concern this Court could not interpret agreements even if they related to title to a patent, so Seismotech commenced its action in the BC Supreme Court since it requires interpretation of the PSA. Seismotech says that in light of the present application in this Court, the 2020 BC Action is now in “abeyance.” This apparently only means Seismotech is not currently taking any steps. The proceeding has not been discontinued, and no stay or other order has been sought from the BC Supreme Court.
(4) The impugned claim in the California State Court
[26] On March 11, 2021—three weeks after this application was started, and about five weeks after the California District Court dismissed the 2020 District Court Action without prejudice to refiling in state court—Mr. Forootan filed a complaint in California State Court, bearing Case No. 30-2021-01188996-CU-BC-CJC [2021 California Action]. The 2021 California Action is largely the same as the 2020 District Court Action. Much of it reproduces verbatim the allegations first raised (in the wrong court) in the 2020 District Court Action. It defines the “Patents” in the same way to include the US Patents and the Canadian Patents.
[27] As with the 2020 District Court Action, the complaint in the 2021 California Action raises two claims, namely a claim for breach of contract and a claim for declaratory relief. Again, while asserting that the 2019 California Judgment was obtained against both SDRT and Mr. Baraty, the 2021 California Action as drafted is based primarily on the underlying Settlement Agreement rather than the 2019 California Judgment. It also seeks the same monetary and declaratory relief based on the Settlement Agreement, including as to ownership of the Patents and an order issued to the USPTO to transfer ownership of the Patents to Mr. Forootan.
[28] On May 4, 2021, the California State Court issued a show cause order to Mr. Forootan for failure to comply with rules regarding service. On July 1, 2021, Mr. Forootan filed a declaration saying Mr. Baraty and SDRT had been served by email on June 29. Counsel for Seismotech advised at the hearing of this application that Mr. Baraty (who he also represents) contests the validity of that service, but that is clearly an issue for the California State Court and not this one. Seismotech points to the show cause order and dilatory service as evidence of the tactical nature of Mr. Forootan’s litigation against Mr. Baraty and SDRT.
(5) Mr. Baraty’s motion to vacate
[29] In the meantime, on April 9, 2021, Mr. Baraty filed a motion in the 2015 California Action to vacate the 2019 California Judgment and/or the 2019 California Order on grounds of clerical error, the judgment being void, and/or equitable relief arising from extrinsic fraud or mistake. In essence, the motion to vacate argues that (i) under paragraph 1 of the Settlement Agreement, reproduced at paragraph [16]
above, it is only SDRT who is obliged to pay the settlement amount, not Mr. Baraty; (ii) the parties’ Stipulation for Entry of Judgment similarly provided that judgment would be entered only against SDRT; (iii) the 2019 California Order stated that judgment should enter pursuant to the parties’ Stipulation for Entry of Judgment; and (iv) the reference in the 2019 California Judgment to judgment being against Mr. Baraty was therefore in error, caused by Mr. Forootan.
[30] The motion to vacate is scheduled to be heard on August 10, 2021. Counsel advises the motion could not be set down sooner owing to a backlog of available hearing dates. Counsel gave their view that if that motion is successful, much of the litigation, including at least the 2021 California Action that relies on the 2019 California Judgment, will fall away.
[31] To summarize, the following is a timeline of the main events leading to this motion:
January 2003
Parties enter PSA
May 18, 2015
Mr. Forootan starts 2015 California Action
May 19, 2017
Mr. Forootan, Mr. Baraty and SDRT enter Settlement Agreement, settling the 2015 California Action
March 4, 2019
2019 California Order
May 14, 2019
2019 California Judgment
January 23, 2020
Mr. Forootan starts 2020 District Court Action
July 9, 2020
Seismotech starts 2020 BC Action
February 1, 2021
California District Court dismisses 2020 District Court Action
February 16, 2021
Seismotech starts this Federal Court application
March 11, 2021
Mr. Forootan starts 2021 California Action
April 9, 2021
Mr. Baraty brings motion to vacate 2019 California Order and 2019 California Judgment, which is set to be heard August 10, 2021
July 8, 2021
Seismotech brings this motion for an anti-suit injunction
[32] Against this background, I will address the general principles applicable to anti-suit injunctions, and then apply them to the facts and circumstances of this case.
B. Anti-Suit Injunctions: Principles
[33] An anti-suit injunction orders a party subject to the Court’s jurisdiction to cease litigation proceedings in a different jurisdiction. It does not purport to directly order the other court or tribunal to do anything. But the impact on proceedings in another jurisdiction, and on the other court to control its process, is clear. As the Federal Court of Appeal has described it, an anti-suit injunction is “an aggressive remedy, and contrary to judicial comity”: Apotex Inc v AstraZeneca Canada Inc, 2003 FCA 235 at para 13.
[34] The principles applicable to anti-suit injunctions in Canada remain those set out by Justice Sopinka for the Supreme Court of Canada in Amchem Products Incorporated v British Columbia (Workers’ Compensation Board), [1993] 1 SCR 897. Assessing whether an anti-suit injunction should issue involves a two-part analysis. First, the Court must determine whether the foreign court has assumed jurisdiction on a basis inconsistent with principles relating to forum non conveniens (inconvenient forum). Second, if it has, the Court must assess whether the requested injunction will deprive the plaintiff in the foreign court of a juridical advantage it would be unjust to deprive them of: Amchem at pp 931–933; Li v Rao, 2019 BCCA 264 at paras 46–48, 77.
[35] In addition to these two steps, Justice Sopinka referred to several “preliminary aspects of procedure.” As can be seen, the first branch of the Amchem analysis effectively assumes the foreign court has made a determination on jurisdiction. Given the importance of principles of comity, a Canadian court should not generally entertain an application for an anti-suit injunction that is merely theoretical because there is no foreign proceeding pending, and it is “preferable” that a stay or similar remedy has been unsuccessfully sought in the foreign court: Amchem at pp 930–931. These preliminary aspects are sometimes broken out as part of a five-part framing of the Amchem requirements for an anti-suit injunction: Bell’O International LLC v Flooring & Lumber Co, [2001] OJ No 1871 (SCJ) at para 9; Precious Metal Capital Corp v Smith, 2008 CanLII 64008 (ONSC) at para 18.
[36] In addition, since an anti-suit injunction is directed to an individual litigant rather than a foreign court, the Canadian court must have personal jurisdiction (in personam jurisdiction) over the individual in order to issue the order: Amchem at p 913; Veritas Investment Research Corporation et al v Indiabulls Real Estate Limited et al, 2015 ONSC 6040 at para 43; Google Inc v Equustek Solutions Inc, 2017 SCC 34 at para 38. Personal jurisdiction over an out-of-jurisdiction party may arise in three ways: presence-based jurisdiction (physical presence of the non-resident); consent-based jurisdiction (by submission, attornment, or prior agreement); or assumed jurisdiction based on the “real and substantial connection” test: Chevron Corp v Yaiguaje, 2015 SCC 42 at para 82, citing Club Resorts Ltd v Van Breda, 2012 SCC 17 (see para 79) and Muscutt v Courcelles, 2002 CanLII 44957 (ON CA) at para 19.
[37] The real and substantial connection test seeks to assess whether a Canadian court has jurisdiction over an action by considering objective factors that connect the litigation to the jurisdiction of the court. It is informed by concerns about fairness, flexibility, and consistency in resolving conflict of laws issues: Van Breda at para 66.
[38] While Van Breda focuses on principles applicable to tort cases, the real and substantial connection test is also relevant to (and indeed has its roots in) cases involving breach of contract: Morguard Investments Ltd v De Savoye, [1990] 3 SCR 1077 at pp 1106–1108; J Blom & E Edinger, “The Chimera of the Real and Substantial Connection Test” (2005) 38:2 UBC L Rev 373 at pp 374–375. It is also applicable in cases involving multiple claims and in assessing the territoriality of intellectual property rights: Van Breda at para 99; Society of Composers, Authors and Music Publishers of Canada v Canadian Assn. of Internet Providers, 2004 SCC 45 at para 60. As stated by my colleague Justice Denis Gascon, sitting as Judicial Member and Chair of the Competition Tribunal, “the ‘real and substantial connection’ test is flexible and should be adapted to the circumstances […] The specific factors that should be considered in any given case will vary based on the facts and issues of the case […]” [citations omitted]: The Commissioner of Competition v HarperCollins Publishers LLC and HarperCollins Canada Limited, 2017 CACT 10 at para 147.
C. Application to the Present Situation
(1) Should notice have been given to Mr. Forootan?
[39] Before turning to the Amchem requirements for an anti-suit injunction, I will briefly address the fact that Seismotech brought this motion ex parte under Rule 361 of the Federal Courts Rules, SOR/98-106, with no notice to or service on Mr. Forootan.
[40] Seismotech argues it was not required to serve Mr. Forootan with the motion because he was served with the notice of application and did not file a notice of appearance pursuant to Rule 305. A party who has not filed a notice of appearance within the time set out in the Rules need not be served with any further documents in the proceeding prior to final judgment: Rule 145(a). Seismotech points to the prayer for relief in its notice of application, which states it would be seeking an “interim, interlocutory and/or permanent injunction enjoining the Respondent Forootan from commencing any proceedings in relation to the Canadian Patents without leave of this Honourable Court.” It argues Mr. Forootan was therefore on notice of its intent to seek the relief sought in this motion and failed to take any steps to respond.
[41] At the same time, Seismotech recognizes the concerns raised by an ex parte anti-suit injunction motion. It suggests the Court could include in its order a safeguard permitting Mr. Forootan to return to the Court to seek a variation, referring to the approach of the British Columbia Court of Appeal in the Equustek litigation: Equustek Solutions Inc v Google Inc, 2015 BCCA 265 at paras 110–112.
[42] In my view, rather than the two-step process proposed by Seismotech, in which the Court issues an ex parte order and then permits Mr. Forootan to argue the matter subsequently, it would have been more convenient and appropriate for Mr. Forootan to have the opportunity to make arguments before any order is issued. There seems to be little reason Mr. Forootan or his counsel could not have been given specific notice of this motion and an opportunity to present any contrary arguments. While counsel for Seismotech made reference to concerns about Mr. Forootan “racing to judgment” in California in response, it is unclear how this could be achieved, or how this concern coincides with Seismotech’s position that Mr. Forootan was slow in serving the 2021 California Action and has even now not effected proper service.
[43] The principle in Rule 145(a), that parties who fail to appear are not required to be given notice of subsequent steps in the proceeding, is an important one for the orderly conduct of litigation in this Court. However, I have some concern that the prayer for relief in Seismotech’s notice of application pertains only to commencing litigation, whereas this motion also seeks an order enjoining Mr. Forootan from continuing the 2021 California Action. I do not believe Rule 145(a) can be read as allowing an applicant to seek substantive ex parte orders against a respondent that go beyond what is encompassed by the originating document, even if the respondent has not appeared.
[44] Given my conclusions on the merits of the motion, I need not address the potential deficiency in bringing it ex parte. However, I observe that given Seismotech’s suggestion that the requested anti-suit injunction provide for Mr. Forootan to return to the Court to vary the order, some form of prior notice to Mr. Forootan may have been more efficient notwithstanding Rule 145(a).
(2) The requirements for an anti-suit injunction are not met
(a) This Court has personal jurisdiction over Mr. Forootan
[45] To issue the requested injunction, the Court must have jurisdiction over Mr. Forootan, either by presence-based jurisdiction; consent-based jurisdiction; or assumed jurisdiction based on the “real and substantial connection” test: Veritas at paras 43–44; Chevron at para 82.
[46] Seismotech does not rely on presence-based jurisdiction. Mr. Forootan resides in California and the only evidence of his having been in Canada pertains to a social visit to Mr. Baraty in BC some time ago (Mr. Forootan is married to Mr. Baraty’s cousin). Mr. Forootan has also not consented or agreed to the jurisdiction of this Court with respect to the requested injunction or its subject matter. The PSA, which I will discuss further, includes a choice of law clause saying that it is to be interpreted under Canadian law, but it does not contain a choice of jurisdiction clause (otherwise known as a choice of forum or forum selection clause). The two are different in nature and effect, including in the context of anti-suit injunctions: see, e.g., Li at paras 49–60; ZI Pompey Industrie v ECU-Line NV, 2003 SCC 27 at paras 20–21; 687725 BC Ltd v Rakov, 2021 ABQB 462 at paras 77–78; Entreprise Publique Économique Air Algérie, Montréal, Québec v Hamamouche, 2019 FC 272 at paras 49–50.
[47] Seismotech argues the Court has jurisdiction based on the Court’s statutory jurisdiction in respect of Canadian patents, including the contractual interpretation jurisdiction confirmed in SALT, and the real and substantial connection between the subject matter and this Court. It points to the PSA, which it executed and performed in BC and which chooses Canadian law, and to the situs of the Canadian Patents in Canada: J Walker, Castel & Walker: Canadian Conflict of Laws, 6th ed (LexisNexis Canada: online) loose-leaf at §24.1(d).
[48] The requested anti-suit injunction targets the 2021 California Action as it pertains to the Canadian Patents. This is therefore the claim that should be the basis of the real and substantial connection analysis for purposes of considering jurisdiction, rather than this application. As noted above, the 2021 California Action seeks damages and declaratory relief based on asserted breaches of the Settlement Agreement. The declaratory relief sought includes declarations “conferring all rights and title in the Patents” and “transferring the Patents” to Mr. Forootan.
[49] The Settlement Agreement was made to settle the 2015 California Action in the California State Court. It resulted from a mediation conducted in California. It contains articles 8 and 12 reproduced at paragraph [16]
above which refer to the California State Court and the California Code of Civil Procedure. It resulted in the 2019 California Judgment from the California State Court. None of these factors point to a connection with this Court.
[50] At the same time, the 2015 California Action was based on the PSA and the conduct of Mr. Baraty and SDRT under the PSA. The PSA, while it has no forum selection clause, is subject to the laws of Canada, and Mr. Baraty’s actions pursuant to the PSA were undertaken in Canada. While the Settlement Agreement grants the California State Court jurisdiction to enforce it, it does not appear to expressly exclude the jurisdiction of any other Court. The 2021 California Action also alleges Mr. Forootan funded the Patents, including the Canadian Patents, and impugns alleged acts in Canada by Mr. Baraty before and after the Settlement Agreement.
[51] The declarations sought by Mr. Forootan include declarations conferring ownership of the Canadian Patents based on contractual agreements. These are matters closely related to this Court’s jurisdiction to make orders varying entries in CIPO records relating to title to Canadian patents under section 52 of the Patent Act: SALT at paras 8–10. Put another way, if a party to the Settlement Agreement were to come before this Court seeking declarations as to ownership of the Canadian Patents on the basis of the Settlement Agreement, as is being done in the 2021 California Action, I am satisfied on the basis of section 52 and the SALT decision that this Court would have jurisdiction to hear that case. On balance, I am satisfied that there is a sufficient “real and substantial connection” between the Canadian Patent issues raised in the 2021 California Action and this Court’s territorial and substantive jurisdiction that this Court has jurisdiction simpliciter over the claims raised in it.
[52] This is not to say that this Court is necessarily the only forum for such issues or the appropriate or convenient forum. That question will be addressed below. It is simply to say that I conclude the Court has sufficient jurisdiction over the claims asserted in the 2021 California Action to have the personal jurisdiction necessary to issue an anti-suit injunction if one were justified. I therefore turn to that question.
(b) The California State Court could reasonably, and in keeping with forum non conveniens principles, conclude it should maintain jurisdiction
[53] As set out above, the first step of the Amchem analysis requires the Court to determine whether the foreign court has assumed jurisdiction on a basis inconsistent with forum non conveniens principles. I note that the analysis is not whether the foreign court is a clearly more appropriate forum. Nor is it whether the domestic court is an appropriate forum. Rather, the test is, as stated by Justice Sopinka,
If, applying the principles relating to forum non conveniens outlined above, the foreign court could reasonably have concluded that there was no alternative forum that was clearly more appropriate, the domestic court should respect that decision and the application should be dismissed.
[Emphasis added; Amchem at p 932.]
[54] The question is thus whether the California State Court could reasonably have concluded there was no alternative forum (here, the Federal Court) that was clearly more appropriate: Li at para 47. Amchem contemplates that determination initially being made by the foreign court. Here, the California State Court has not made a determination about its jurisdiction over the 2021 California Action as it relates to the Canadian Patents, or whether the Federal Court is a clearly more appropriate forum, as Seismotech has not asked it to do so. I discuss that fact further below. The Court will therefore consider whether the California State Court “could reasonably” reach this conclusion, despite not having the guidance of that Court on the issue: Veritas Investment at para 49.
[55] Forum non conveniens principles arise when two or more potential forums have jurisdiction: Van Breda at paras 101–103. The California State Court will, of course, itself ultimately ascertain whether it has jurisdiction over the action brought before it, in accordance with the law and principles applicable to its jurisdiction. Nonetheless, the forum non conveniens analysis required by the Amchem approach to anti-suit injunctions is undertaken with reference to Canadian law, without assuming that the foreign law will necessarily apply those principles under that name or on the same basis: Amchem at pp 934–935, 937–939.
[56] As noted, the 2021 California Action primarily seeks remedies relating to breach of the Settlement Agreement and declarations regarding the parties’ obligations under that agreement. The Settlement Agreement arose from and resolved the 2015 California Action. The parties to the Settlement Agreement agreed the California State Court “shall retain jurisdiction over the action for all purposes to enforce the terms of this Agreement.” The Amendment to the Settlement Agreement did not change this, but rather confirmed the parties’ intent to file documents, including the stipulated judgment, in the California State Court. As discussed above, Mr. Forootan is a California resident and SDRT, the registered owner of the majority of the patents, is a (suspended) California company.
[57] Based on these factors, I find the California State Court could reasonably conclude that the Federal Court was not a clearly more appropriate forum for the 2021 California Action, including as it relates to the Canadian Patents.
[58] I reach this conclusion notwithstanding the fact that some of the assets over which Mr. Forootan seeks to enforce the agreements are Canadian patents. There is no question that patent rights are territorial. Relying on this principle, Seismotech cites Professor Walker’s statement that “no assignment or transfer [of patent rights] can take place except in accordance with the laws of that jurisdiction”: Castel & Walker at §24.1(d). While an assignment of a Canadian patent must take place “in accordance with” the laws of Canada, that does not mean that every dispute relevant to ownership of a Canadian patent must be determined in a Canadian court.
[59] Contractual agreements pertaining to intellectual property will frequently cover rights in multiple jurisdictions, and even globally. Contrary to Seismotech’s submission, there is no requirement that the same provisions in the same contract be litigated separately in every jurisdiction in the world in which those intellectual property rights arise. I note that courts in Canada have been willing to interpret contracts as they pertain to international intellectual rights, even where those contracts are made under foreign law: Verdellen v Monaghan Mushrooms Ltd, 2011 ONSC 5820 at paras 1, 9–15, 48; Quantum Leap Research Inc c Kay, 2010 QCCS 1449 at paras 2, 11–18, 38–60, 85, 106–109. A Canadian court may also be considered forum conveniens in respect of a transborder intellectual property dispute, even where relief is sought pursuant to the laws of the United States: Research in Motion Limited v Atari Inc, 2007 CanLII 33987 (ON SC) at paras 1–3, 32–37. As Professor Vaver summarizes, “IP-related activity that has a real and substantial connection with a country, province, or state can be handled by a court that is a convenient forum, whether or not the defendant accepts or is present within the jurisdiction”: D Vaver, Intellectual Property Law, 2nd ed (Toronto: Irwin Law,