Alpha Marathon Technologies Inc. v. Dual Spiral Systems Inc.

Alpha Marathon Technologies Inc. v. Dual Spiral Systems Inc.
Court (s) Database
Federal Court Decisions
Date
2017-12-08
Neutral citation
2017 FC 1119
File numbers
T-632-05
Notes
Digest
Decision Content
Date: 20171208
Docket: T-632-05
Citation: 2017 FC 1119
Ottawa, Ontario, December 8, 2017
PRESENT: The Honourable Madam Justice Kane
BETWEEN:
ALPHA MARATHON TECHNOLOGIES INC.
Plaintiff
and
DUAL SPIRAL SYSTEMS INC. AND
RAFAEL J. CASTILLO
Defendants
ORDER AND REASONS
[1] The Defendants, Dual Spiral Systems Inc. [DSS] and Rafael Castillo [Castillo] seek an Order, pursuant to Rule 221 of the Federal Courts Rules, SOR/98-106 [Federal Courts Rules] to strike the Plaintiff’s Statement of Claim and dismiss the Plaintiff’s action. The Defendants submit that this Court is without jurisdiction to determine this action, which is about the ownership of an invention that is not patented in Canada and is based primarily on a contractual dispute.
[2] The Defendants also seek an Order pursuant to Rule 118 to dismiss the action because of the Plaintiff’s failure to notify the Defendants of a transmission of interest in this litigation arising from the evolution in ownership and status of the Plaintiff, as required by Rule 117 of the Federal Courts Rules.
[3] Alternatively, in the event that the action is not dismissed, the Defendants seek an Order pursuant to Rule 416 requiring the Plaintiff to provide security for the Defendants’ costs in the trial of the action.
I. Overview
[4] The Plaintiff’s claim involves a dispute over the ownership of an invention that was patented by the Defendant, Castillo, in the United States. The Plaintiff claims to be a co-inventor of the invention due to the contractual relationship with the DSS and/or an employment relationship with Castillo. The Plaintiff also claims that its former principal, Alfredo Bentivoglio [Bentivoglio], “invented and/or discovered” the invention at issue, “together with” Castillo. In its Statement of Claim, the Plaintiff seeks declaratory and injunctive relief with respect to the invention claimed in the US Patent Application.
[5] The Plaintiff argues that because the claims relate to an invention made in Canada and by Canadians this Court has jurisdiction pursuant to subsection 20(2) of the Federal Courts Act, RSC 1985 c F7 [Federal Courts Act], which provides concurrent jurisdiction where the remedy sought is in law or equity with respect to “any patent of invention”. The Plaintiff further argues that there is a body of federal common law regarding inventorship and patents that applies.
[6] For the more detailed reasons that follow, I find that the Plaintiff has not established that this Court has jurisdiction to determine its action. The test established in International Terminal Operators Ltd. v Miida Electronics, [1986] 1 SCR 752, 28 DLR (4th) 741 [ITO, or the ITO test), and more recently explained and applied in Windsor (City) v Canadian Transit Co, 2016 SCC 54, [2016] 2 SCR 617 [City of Windsor], which first requires that there is a statutory grant of jurisdiction to the Federal Court, has not been met.
[7] The Plaintiff has not pointed the Court to any jurisprudence where this Court has found jurisdiction based on subsection 20(2) to grant relief regarding an invention that has not been patented in Canada, or that is not subject to any pending patent application in Canada, or with respect to an invention patented in another country.
[8] Even if subsection 20(2) could be interpreted to provide a statutory grant of jurisdiction, the other aspects of the ITO test are not met. In addition, the dispute is primarily based on a contractual dispute and/or a disputed employer-employee relationship, not on principles or concepts of inventorship. In order to resolve this dispute, the Court would first be required to interpret the contractual documents and other evidence that the parties might adduce regarding their agreements. It does not appear that the common law regarding inventions or patent law, even if applicable, would be essential to the determination of the claims.
[9] The parties have been engaged in this litigation since 2005, although it appears that the Plaintiff’s pursuit of its action has not been rigorous or consistent. Both parties acknowledge that they participated ‒ off and on – in settlement discussions, without success. Regardless of the passage of time or their earlier apparent assumption that the Federal Court had the jurisdiction to determine the Plaintiff’s cause of action, the parties cannot attorn to the jurisdiction of the Court where the jurisdiction does not exist. The Defendants’ delay in bringing this motion is curious given that both parties were represented by Counsel for most of the relevant period of the litigation, albeit with changes in counsel at various times. Ironically, in the Plaintiff’s Reply and Defence to the Defendants’ Counterclaim, filed on September 2, 2005, the Plaintiff raised, among other issues, the jurisdiction of the Court to address the Defendants’ claims that their Trade-mark and Copyright had been infringed. It appears that the Plaintiff did not turn its mind to the jurisdiction of the Court to adjudicate its own action and assumed, with confidence, that it did. Unfortunately, much time and effort has been spent without looking to the fundamental basis of the claim.
[10] Due to this history and the importance of determining the jurisdictional issue, the jurisprudence has been carefully considered as documented in these reasons.
[11] Given my finding that the Defendants’ Motion pursuant to Rule 221 will be granted because the Court lacks jurisdiction to determine the Plaintiff’s cause of action, there is no need to address the Defendants’ alternative relief. However, if I am wrong in finding that the Court lacks jurisdiction, I am not satisfied, based on the limited and conflicting evidence provided regarding the sale, bankruptcy and subsequent revival of the plaintiff corporation, that the action should be dismissed pursuant to Rule 118 as a result of the Plaintiff’s alleged failure to provide a notice of transmission of interest as required by Rule 117. I am also not persuaded that an Order for Security for Costs would be warranted if the trial were to proceed, although this issue could be revisited.
II. Background/Context
[12] The Plaintiff, Alpha Marathon Technologies Inc. purports to be an Ontario Corporation involved in the manufacturing and distribution of plastic molding equipment. According to the Corporate Record submitted by the Plaintiff at the hearing, Domenic Marzano is the President, Director and Secretary of a numbered company which, from 1997 until 2007, was previously known as Alpha Marathon Technologies Inc. The Defendants question the identity and legal status of the Plaintiff for this and other reasons.
[13] The Defendant, DSS is an Ontario Corporation involved in the design and development of plastic wrap production equipment. The Defendant, Castillo, is the principal of DSS.
[14] In or around November, 2000, the parties entered into a business relationship wherein Castillo would provide his research, design, and development services to the Plaintiff in exchange for payment. The Plaintiff alleges that this was an employment relationship. Castillo disputes this and maintains that he was an independent contractor, as clearly set out in the written Collaboration Agreement the parties later entered into.
[15] In addition, in or around August 20, 2001, the Plaintiff retained DSS to provide computer programming and modeling services. This arrangement was related to an Industrial Research Assistance Program Project, arising out of a contract between Alpha Marathon Technologies Inc. and the National Research Council of Canada [the IRAP Project].
[16] It appears that as a result of work done pursuant to both these arrangements, new technology was invented relating to a “co-extrusion die system” [the Invention]. The Plaintiff alleges that it owns or co-owns the Invention because Castillo was its employee and because DSS acknowledged that all inventions arising out of the IRAP Project would be owned by Alpha Marathon Technologies Inc. The Plaintiff also alleges that its former president, Bentivoglio, “invented and/or discovered” the Invention “together with” the Defendants.
[17] In its Statement of Claim, the Plaintiff states that it intended to apply for a United States Patent respecting the Invention. The Plaintiff alleges that it directed Castillo to act as its representative to instruct a US Patent Agent. However, Castillo instructed the patent agent to list his name alone as the inventor.
[18] The US Patent was ultimately granted (US Patent No. 6,902,385 B2), listing Castillo as the sole inventor. The US Patent is described as a “continuation-in-part” of an earlier patent in which Castillo held a one-third interest along with two other inventors, neither of whom are involved in the present dispute.
[19] The Plaintiff alleges that Castillo ignored or refused its demands to execute an assignment of all the rights under the US Patent to Alpha Marathon Technologies Inc.
[20] In its Statement of Claim, the Plaintiff alleges that it is the owner of all right, title and interest in and to all technologies, discoveries and inventions claimed in the US Patent Application. The Plaintiff seeks the following relief, as well as damages:
A declaration that Bentivoglio is a co-inventor of technologies, discoveries, and inventions claimed in the US Patent Application;
A declaration that the Plaintiff is the owner (or, in the alternative, “co-owner”) of all right, title and interest in and to the technologies, discoveries and inventions claimed in the US Patent Application, and all priority rights derived therefrom;
An interim, interlocutory, permanent and mandatory injunction against the Defendants requiring them to “execute all documents and to do all things necessary to convey” their interest in the US Patent Application to the Plaintiff (or, in the alternative, to declare Bentivoglio as inventor on said US Patent Application);
An interim, interlocutory, permanent and mandatory injunction against the Defendants from infringing the US Patent Application;
An interim, interlocutory, permanent and mandatory injunction against the Defendants requiring them to “execute any and all further papers which may be necessary or desirable to vest or perfect the title in and to any and all technologies, discoveries and inventions claimed in the US Patent Application”.
[21] The Defendants recount the events and relationship with the Plaintiff very differently. The Defendants deny that the Plaintiff had any role in the discovery of the Invention, and assert that Bentivoglio’s role was restricted to sales and marketing. The Defendants dispute that Castillo was an employee and point to the explicit terms of the Collaboration Agreement which state that Castillo is not an employee, but an independent contractor. The Defendants add that the agreement was that DSS would retain exclusive rights to any intellectual property developed during the course of the relationship.
[22] The Defendants also allege that the Plaintiff clandestinely copied information about the invention from Castillo’s computer after inviting Castillo to a meeting, then ejected him from the premises without his computer.
[23] According to the Defendants, the Plaintiff applied for a Canadian patent respecting the same Invention in 2003, but abandoned the application soon after the Defendants filed an objection. The Defendants note that there is no Canadian patent or patent application with respect to the Invention.
III. The Motion
[24] The Defendants’ primary argument is that the Plaintiff’s action should be dismissed because this Court has no jurisdiction to determine the claims given that the claims involve a dispute about the ownership of a US patent, and turn on matters of contract law.
[25] The Defendants also submit that the claim should be dismissed pursuant to Rule 118 because Alpha Marathon Technologies Inc. has passed through bankruptcy and been bought and sold, without any notice of transmission or assignment of the interest of this litigation, as required by Rule 117.
[26] In the event that the Statement of Claim is not struck, the Defendants ask for Security for Costs pursuant to Rule 416 based on their allegation that Alpha Marathon Technologies Inc. is a holding company, which does not conduct any business, and is likely impecunious.
IV. The Issues
[27] The motion raises the following issues:
Whether and how the Plaintiff’s preliminary objections should be addressed.
Whether the Federal Court has the jurisdiction to determine the Plaintiff’s claims.
Whether the action should be dismissed based on the Plaintiff’s failure to notify the Defendants and the Court of a transmission of interest.
Whether, if the action proceeds, the Plaintiff should be ordered to give security for costs.
V. The Preliminary Issues
[28] The Plaintiff first challenges whether section 221 can be relied on to strike the Plaintiff’s Statement of Claim. A motion to strike under Rule 221 will succeed where it is “plain and obvious” that the claim discloses no reasonable cause of action (Hunt v Carey Canada Inc., [1990] 2 SCR 959, [1990] 1 WDCP (2d) 523). The “plain and obvious” test also applies to the striking of claims for lack of jurisdiction (Hodgson et al. v Ermineskin Indian Band et al. (2000), 180 FTR 285 at 289, 95 ACWS (3d) 788 (TD), aff’d (2000) 267 NR 143, 102 ACWS (3d) 2 (CA), leave to appeal to SCC refused (2001) 276 NR 193, 2001 CarswellNat 1860).
[29] The plain and obvious test was endorsed more recently in City of Windsor, where the Court stated, at para 24:
The sole issue is whether the Federal Court has jurisdiction under the ITO test to hear the Company’s application. If it is plain and obvious that the Federal Court lacks jurisdiction to hear this application, the motion to strike must succeed.
[30] The Plaintiff next submits that the Defendants’ motion exceeds the Case Management Judge’s direction. The Plaintiff explains that the Defendants initially brought their motion pursuant to Rule 221 to be determined by the Case Management Judge without a complete Motion Record. The Case Management Judge then set a date for the Court to determine the Motion and directed the Defendants to serve and file a revised Motion Record with written representations by July 24, 2017. The Plaintiff submits that the present motion should be restricted only to the Rule 221 issue and should not address the Defendants’ request for relief based on the Plaintiff’s alleged failure to give notice of transmission of interest or to address the issue of security for costs. I do not agree.
[31] There is no requirement for a party to seek leave of the Case Management Judge to bring a motion in the present circumstances. The Plaintiff has not cited any authority for its proposition that the motion should be restricted to that which the Case Management Judge directed. Nor has the Plaintiff suggested that it has suffered any prejudice in responding to the other grounds set out in the motion. The Plaintiff had more than ample notice of this motion which was filed in July 2017, and ample time to respond in advance of the hearing, which took place in October, 2017.
[32] The Plaintiff also challenges the affidavit of Castillo as irrelevant and inflammatory, and submits that it should be disregarded because Rule 221(2) provides that no evidence shall be heard on a Rule 221 motion.
[33] As the Defendants note, affidavit evidence is permissible where the motion to strike the pleadings is based on the Court’s lack of jurisdiction. In Mil Davie v Hibernia Management & Development Co. (1998), 226 NR 369 at para 8 (CanLII), 1998 CarswellNat 814 (CA), the Federal Court of Appeal clarified that Rule 419, which is now Rule 221, could be relied on to strike pleadings for want of jurisdiction. The Court of Appeal also clarified that the prohibition on adducing evidence on such motions does not apply where the issue is the jurisdiction of the Court. At para 8, the Federal Court of Appeal stated:
Generally speaking, where an objection is taken to its jurisdiction, the Court must be satisfied that there are jurisdictional facts or allegations of such facts supporting an attribution of jurisdiction. The existence of the necessary jurisdictional facts will normally be found in the pleadings and in the affidavits filed in support of or in response to the motion. In this respect, the prohibition contained in Rule 419(2) against the admissibility of evidence does not apply when it is the jurisdiction of the Court which is contested as opposed to a mere objection to the pleadings on the basis that they do not reveal a reasonable cause of action. We mention this to dissipate any doubt as to the admissibility of affidavit evidence in the present instance.
VI. Does the Federal Court have Jurisdiction to Adjudicate the Plaintiff’s Claim?
[34] The parties were requested to provide additional written submissions post-hearing to elaborate on the issue of the Court’s jurisdiction, more specifically: the application of the ITO test and its recent consideration in City of Windsor; whether the Federal Court has the statutory jurisdiction to determine the claims at issue pursuant to Section 20(2); and, whether there is any jurisprudence in support of the Plaintiff’s position that this Court has the jurisdiction to determine claims about the ownership of an invention made in Canada but not patented in Canada. The post-hearing submissions are summarized below along with the other written and oral submissions.
A. The Defendants’ Submissions
[35] The Defendants refute the Plaintiff’s submission that it has attorned to the jurisdiction of this Court. The Defendants submit that, although the parties have been engaged in this litigation for several years and have engaged in two or three mediation sessions, the Defendants have not and cannot attorn to the jurisdiction of the Court because the jurisdiction simply does not exist. (Canadian National Railway v Canada (Canadian Transportation Commission) (1987), [1988] 2 FC 437; 1987 CarswellNat 226) (TD).
[36] The Defendants further submit that the jurisdiction of the Court can never be presumed. The onus to establish jurisdiction is on the party bringing the claim, in this case, the Plaintiff (Norrail Transport Inc. v Canadian Pacific Ltd. (1998), 154 FTR 161 at paras 22-23, 79 ACWS (3d) 288 (TD) [Norrail]).
[37] The Defendants argue that the Plaintiff has not established that the Federal Court has jurisdiction. The three essential requirements for the Federal Court to have jurisdiction were established by the Supreme Court of Canada in ITO: there must be a statutory grant of jurisdiction by the federal Parliament; there must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction; and, the law on which the case is based must be a “law of Canada” as the phrase is used in section 101 of the Constitution Act¸1867, 30 & 31 Victoria, c3 (UK) [Constitution Act], meaning laws enacted by the Parliament of Canada (see also Norrail at paras 24-25).
[38] The Defendants submit that the first requirement ‒ a statutory grant of jurisdiction ‒ is not satisfied. Subsection 20(2), which provides concurrent jurisdiction for the Federal Court, is not applicable because the words “any patent of invention” in that section mean a patent of invention obtained in Canada, not simply an invention or a patent of invention obtained in another country.
[39] The Defendants point to the Plaintiff’s Statement of Claim which seeks declaratory and injunctive relief related to the ownership of a US patent. The Defendants submit that the question of who has rights to the technology or invention claimed in a US patent has nothing to do with the Patent Act, RSC 1985, c P4 [Patent Act] and cannot be determined in accordance with any other law within the meaning of “laws of Canada”.
[40] The Defendants also argue that even if a Canadian patent or patent application existed, there would be no jurisdiction for this Court to determine the claim because the dispute focuses on contractual issues, including the alleged employment relationship between the parties, and possibly tort (i.e., conversion). The Defendant notes that the Plaintiff points only to the Collaboration Agreement in support of its claim to an ownership interest in the US patent, which confirms that the basis of the dispute is contract. The Defendants submit that the proper forum for the dispute is the Superior Court of a province.
[41] The Defendants submit that Kellogg Company v Kellogg (1941), [1941] SCR 242, [1941] 2 DLR 545 (SCC) [Kellogg], relied on by the Plaintiff, is not authority for this Court to find jurisdiction in this case, noting that in Kellogg, a Canadian patent application was at issue, i.e., there was a statutory grant of authority.
The Defendants refute the Plaintiff’s characterization of the dispute as about “inventorship”, noting that there is no evidence on this issue, just a bare claim. Moreover, inventorship would have to be determined based on American patent law. The Defendants note that the Plaintiff has not pursued any action in the United States.
B. The Plaintiff’s Submissions
[42] The Plaintiff first submits that the Defendants should have brought a preliminary motion pursuant to Rule 208 and, having not done so, have clearly attorned to the jurisdiction of this Court, which disposes of the jurisdictional argument. The Plaintiff notes that the Defendants filed a Statement of Defence and Counterclaim in 2005, and in the intervening years participated in two Court ordered mediations and a subsequent “impromptu” mediation, yet never challenged the jurisdiction of the Court, until now.
[43] Second, the Plaintiff submits that it has met the three part ITO test to establish that the Federal Court has jurisdiction.
[44] The Plaintiff notes that in City of Windsor, the Supreme Court of Canada reiterated the ITO test and stated that the starting point is to identify the nature or character of the claim (at para 25). The Plaintiff characterizes its claims as seeking equitable remedies (declaratory and injunctive relief) about the inventorship and ownership of Canadian “inventions claimed in US Patent Application NO 10/060, 0081”. The Plaintiff also states that the essential character of its claim is a dispute over the inventorship and ownership of a Canadian invention made by Canadians in Canada against a Canadian resident, i.e., it is not about a US patent. The Plaintiff submits that the Federal Court has jurisdiction to decide the question of ownership and inventorship. The Plaintiff also submits that its claims for relief are based on common law with respect to patents, or are based on patent law, both of which are matters of federal competence.
[45] The Plaintiff submits that the contractual aspect in the dispute does not preclude the Court’s jurisdiction where the subject matter of the action concerns a patent, trade-mark or copyright (Kellogg at 249-250).
[46] The Plaintiff relies on subsection 20(2) of the Federal Courts Act, which provides concurrent jurisdiction to the Federal Court where a remedy is sought “at law or in equity respecting any patent of invention”. The Plaintiff submits that it seeks equitable remedies regarding “any patent of invention” and points to Kellogg at 249-250, in support of its position.
[47] With respect to the second part of the ITO test, the Plaintiff submits that the federal common law regarding patents and inventorship, which is well established (Apotex v Wellcome, 2002 SCC 77 at para 96-99, [2002] 4 SCR 153 [Wellcome]; Weatherford v Corlac Inc, 2011 FCA 228 at para 99, 422 NR 49 [Weatherford]), applies. The Plaintiff adds that the ownership of inventions made by employees is part of the body of federal patent law which “surrounds” the interpretation and application of the Patent Act (C Searle & Co v Novopharm 2007 FCA 173 at para 36-40, 281 DLR (4th) 207).
[48] With respect to the third part of the ITO test, the Plaintiff submits that the “law of Canada” relied on is both the federal common law regarding inventorship and patents, and the Patent Act.
[49] In response to the Court’s request to the Plaintiff to provide jurisprudence to support its position that the Federal Court has jurisdiction to determine a dispute about the ownership of a foreign patent – or simply of an invention ‒ the Plaintiff continues to rely on Kellogg, noting that Kellogg has been cited with approval in other cases, including recently by the Federal Court of Appeal in Allergan v Apotex Inc, 2015 FC 367 at para 32- 33, 252 ACWS (3d) 433, rev’d on other grounds but aff’d on jurisdiction, 2016 FCA 155 at para 11-13, 399 DLR (4th) 549 [Allergan].
[50] The Plaintiff submits that Cellcor Corp v Canada v Kotacka (1976), [1977] 1 FC 227, 1976 CarswellNat 87 (CA) [Cellcor] (where the Court expressed disagreement with a passage in Kellogg) can be distinguished because in Cellcor, a patent application was pending, but in the present case, there is no patent application.
C. The Federal Court Does Not Have Jurisdiction
(1) The ITO test
[51] In City of Windsor the Supreme Court of Canada cautioned that the Federal Court only has the jurisdiction conferred on it by statute and that “the language of the [Federal Court Act] is completely determinative of the scope of the Court’s jurisdiction” (at para 33).
[52] As noted above, the Supreme Court of Canada reiterated the three essential requirements for the Federal Court to have jurisdiction as set out in ITO, all of which must be established, noting at para 34:
This Court held in ITO that a statutory grant of jurisdiction is necessary, but not alone sufficient, for the Federal Court to have jurisdiction in a given case. Because Parliament established the Federal Court pursuant to its competence, under s. 101 of the Constitution Act, 1867, to establish “additional Courts for the better Administration of the Laws of Canada”, the role of the Federal Court is constitutionally limited to administering “the Laws of Canada”, which in this context means federal law (Thomas Fuller, at p. 707; Quebec North Shore, at pp. 1065-66; Consolidated Distilleries, at pp. 521-22). The three-part ITO test for jurisdiction is designed to ensure the Federal Court does not overstep this limited role (ITO, at p. 766, per McIntyre J.):
1. There must be a statutory grant of jurisdiction by the federal Parliament.
2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
3. The law on which the case is based must be “a law of Canada” as the phrase is used in s. 101 of the Constitution Act, 1867.
[53] Before assessing whether the three part test is met, the essential nature of the Plaintiff’s claim must be considered. As the Supreme Court of Canada noted in City of Windsor at para 25, “the conferral of jurisdiction depends on the nature of the claim or remedy sought”, adding that “Jurisdiction is not assessed in a piecemeal or issue-by-issue fashion”.
[54] The Plaintiff has characterized its claims in several ways and made related submissions that are difficult to reconcile. The Plaintiff states that it seeks equitable remedies (declaratory and injunctive relief) about the inventorship and ownership of Canadian inventions claimed in a US Patent. The Plaintiff also states that the essential character of its claim is a dispute over the inventorship and ownership of a Canadian invention made by Canadians in Canada against a Canadian resident, i.e., it is not about an US patent or a patent at all. However, in relying on Kellogg, the Plaintiff argues that the presence of a contractual aspect in the dispute does not preclude the Court’s jurisdiction “where the subject matter of the action concerns a patent, trade‑mark or copyright”, which is inconsistent with the Plaintiff’s characterization of its claim as about an invention and not a patent.
[55] The Plaintiff also submits that the well-established federal common law dealing with patents and inventorship provides the basis for its claim and also “nourishes” it, at the second part of the ITO test. The Plaintiff adds that the ownership of inventions made by employees is part of the body of federal patent law which “surrounds” the interpretation and application of the Patent Act. However, the action is not based on the provisions of the Patent Act.
[56] The Plaintiff’s Statement of Claim cannot be ignored in identifying the nature of the claim. As noted above, the Plaintiff seeks, among other relief: a declaration that it is the owner (or, in the alternative, “co-owner”) of all right, title and interest in and to the technologies, discoveries and inventions claimed in the US Patent Application; and, an interim, interlocutory, permanent and mandatory injunction against the Defendants from infringing the US Patent Application. To the extent that the Plaintiff suggests some distinction between a patent “application” and a patent, the Plaintiff acknowledged that the US Patent was issued.
[57] In my view, the essential nature of the Plaintiff’s claim is declaratory and injunctive relief (equitable remedies) with respect to the ownership of an invention, which is also the subject matter of a US Patent. Given this characterization of the claim, the first question is whether there is a statutory grant of authority pursuant to subsection 20(2).
(2) The Scope of Subsection 20 (2) of the Federal Courts Act
[58] Section 20 of the Federal Courts Act provides:
20 (1) The Federal Court has exclusive original jurisdiction, between subject and subject as well as otherwise,
20 (1) La Cour fédérale a compétence exclusive, en première instance, dans les cas suivants opposant notamment des administrés :
(a) in all cases of conflicting applications for any patent of invention or for any certificate of supplementary protection under the Patent Act, or for the registration of any copyright, trade-mark, industrial design or topography within the meaning of the Integrated Circuit Topography Act; and
a) conflit des demandes de brevet d’invention ou de certificat de protection supplémentaire sous le régime de la Loi sur les brevets, ou d’enregistrement d’un droit d’auteur, d’une marque de commerce, d’un dessin industriel ou d’une topographie au sens de la Loi sur les topographies de circuits intégrés;
(b) in all cases in which it is sought to impeach or annul any patent of invention or any certificate of supplementary protection issued under the Patent Act, or to have any entry in any register of copyrights, trade-marks, industrial designs or topographies referred to in paragraph (a) made, expunged, varied or rectified.
b) tentative d’invalidation ou d’annulation d’un brevet d’invention ou d’un certificat de protection supplémentaire délivré sous le régime de la Loi sur les brevets, ou tentative d’inscription, de radiation ou de modification dans un registre de droits d’auteur, de marques de commerce, de dessins industriels ou de topographies visées à l’alinéa a).
[59] As explained in greater detail below, I am of the view that subsection 20(2) does not provide a statutory grant of jurisdiction with respect to this dispute. In order to fall within subsection 20(2), the Plaintiff must be seeking a remedy that arises from “federal law”. With respect to patents, the only relevant “federal law” is the Patent Act, which does not create remedies respecting the ownership of unpatented inventions or foreign patents.
[60] In asserting that subsection 20(2) provides a statutory grant of jurisdiction over this dispute, the Plaintiff relies almost exclusively on Kellogg. Kellogg involved two competing patent applications for the same product allegedly made by an employer and its former employee (whose estate was pursuing the claim). The Commissioner of Patents determined that the respondent’s late husband was the first inventor. The appellant, employer, then launched proceedings in the Exchequer Court to determine the rights of the parties. One of the alternative claims made by the appellant was that even if the employee (the respondent’s husband) was the true inventor, the appellant was the owner of the invention by virtue of its contract of employment with the employee. The Exchequer Court struck out the alternative claim on the ground that that it was a contractual issue over which the Court had no jurisdiction. The Supreme Court disagreed and restored the claim. The Supreme Court noted, at 249, that presuming the allegations in the alternative claim are true, this would provide one reason to declare the appellant entitled to the issue of a patent, including the claims in conflict, and would lead to the remedies sought which are within section 44 of the Patent Act, 1935 (Dom c32). The Supreme Court then stated at page 249-250),
“It is undoubtedly true…that the Exchequer Court has no jurisdiction to determine an issue concerning a contract between subject and subject…but here the subject-matter of the appellant’s allegation only incidentally refers to the contract of employment…The allegation primarily concerns the invention alleged to have been made by [the employee] and of which the appellant claims to be the owner as a result of the contract and of the other facts set forth; in the allegation. The contract and the claims based thereon are advanced for the purpose of establishing that the appellant is entitled both to the rights deriving from the invention and to the issue of a patent in its own name. That is precisely the remedy which the Exchequer Court of Canada has the power to grant under paragraph (iv) of subsec. 8 of sec. 44 of the Patent Act.
[Emphasis added]
[61] The Plaintiff first relies on Kellogg for the proposition that, although some contractual issues are involved in the determination of its claim, the jurisdiction of the Federal Court is not precluded. This proposition is not in dispute. Kellogg is still cited for the proposition that the Federal Court may resolve “incidental” contractual issues where the overall claim is, in “pith and substance”, within the Court’s jurisdiction (ITO at 781; Allergan at paras 11-13; Ballantrae Holdings Inc. v Pheonix Sun (The), 2016 FC 570 at para 142, 267 ACWS (3d) 259). In Kellogg, the Court found that the remedy sought was based on section 44 of the Patent Act and that the contractual issue was incidental; the overall claim was within the Court’s jurisdiction.
[62] In Allergen, at paras 11-13, the Federal Court of Appeal reiterated that contractual issues can be addressed by the Federal Court where it is “part and parcel of a matter over which the Court has statutory jurisdiction”. Justice Stratas explained at para 13:
[13] On the issue of jurisdiction, I agree with the Federal Court and substantially adopt its analysis. I would add the following. Contract law, when viewed in a vacuum, is normally under provincial jurisdiction. However, the Federal Court has jurisdiction when the contract law issue before the Court is part and parcel of a matter over which the Federal Court has statutory jurisdiction, there is federal law essential to the determination of the matter, and that federal law is valid under the constitutional division of powers: ITO-Int’l Terminal Operators v. Miida Electronics, [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641; Canadian Transit Company v. Windsor (Corporation of the City), 2015 FCA 88, 384 D.L.R. (4th) 547.
[63] In Salt Canada Inc v Baker, 2016 FC 830, 269 ACWS (3d) 153 [Salt Canada] the applicant sought a declaration under section 52 of the Patent Act that it was the owner of a registered Canadian patent. The Court acknowledged that it had authority to determine questions of patent ownership in some circumstances, but found that the Court “lacks jurisdiction where determination of ownership of the patent depends upon the application and interpretation of contract law principles” (para 20). The Court noted that the common thread in the relevant jurisprudence is that the Court is without jurisdiction when “determining patent ownership first requires the interpretation of contractual documents” (para 23).
[64] As the jurisprudence makes clear, there must first be a statutory grant of jurisdiction. The incidental contractual issues will not necessarily preclude jurisdiction if the contractual dispute is “part and parcel” of the overall claim, which is otherwise within the Court’s jurisdiction. On the other hand, where the claim is “purely and simply” a contractual dispute, or where an issue over which the Court might have jurisdiction is “secondary to and dependent upon” the resolution of a contractual issue, the Court has no jurisdiction (see Salt Canada).
[65] These principles are well established, however, they are of no assistance to the Plaintiff. The question in the present case is not simply whether the contractual issues are “part and parcel” of the overall claims or merely incidental, but whether the overall claims are, in “pith and substance”, within the Court’s jurisdiction (Kellogg), i.e., whether there is a statutory grant of jurisdiction.
[66] In attempting to address this question, the Plaintiff also relies on Kellogg for the proposition that subsection 20(2) provides jurisdiction where a remedy is sought in law or equity concerning “any patent of invention”. In Kellogg, the Supreme Court of Canada’s comments suggest a broad interpretation of paragraph 22(c) of the Exchequer Court Act, RSC 1927, c 34 [Exchequer Court Act] which is the forerunner/predecessor to the current subsection 20(2) of the Federal Courts Act. The Supreme Court of Canada noted at page 250:
It will be noticed that subsec. (c) deals with the "remedy" which is sought. And it enacts that the Exchequer Court shall have jurisdiction between subject and subject in all cases where a "remedy is sought" "respecting any patent of invention" "under the authority of any Act of the Parliament of Canada or at Common Law or in Equity." The remedy sought by the appellant, as a result of paragraph 8 of its statement of claim, is evidently a remedy in Equity respecting a patent of invention. The appellant claims that remedy as a consequence of the facts alleged in its paragraph 8. It claims the remedy as owner deriving its title from the same alleged inventor of whom the respondent claims to be the assignee, through other assignors. In such a case, the invention or the right to the patent for the invention is primarily the subject matter of the appellant's claim, and the remedy sought for is clearly "respecting any patent of invention." And this is covered by subsec. (c) of sec. 22 of the Exchequer Court Act, as it stands at present.
[67] This paragraph, read in isolation, suggests that the Federal Court has jurisdiction over any action which seeks any remedy respecting a patent based on common law or equity. However, the words of the paragraph must be considered in the context of the decision as a whole and the facts in Kellogg. I do not interpret this as support for the view that subsection 20 (2) provides this Court with concurrent jurisdiction in all circumstances where any equitable remedy is sought with respect to any patent of invention. In Kellogg, the subject of the claim was a pending Canadian patent application and a decision of the Commissioner of Patents, which the appellants challenged. As noted above, the Court found that the remedy sought was based on section 44 of the Patent Act.
[68] Moreover, this passage must be interpreted in light of subsequent jurisprudence, both with respect to the Federal Courts Act generally and subsection 20(2) in particular.
[69] The subsequent jurisprudence reflects a more constra