Date: 20000925
Docket: T-992-92
BETWEEN:
ALMECON INDUSTRIES LIMITED
Plaintiff
- and -
ANCHORTEK LTD., EXPLOSIVES LIMITED,
ACE EXPLOSIVES ETI LTD. and
WESTERN EXPLOSIVES LTD.
Defendants
REASONS FOR ORDER AND ORDER
DAWSON J.
[1] These are my reasons for dismissing the plaintiff's appeal from the order of Prothonotary Lafrenière by which he gave leave to the defendant Anchortek Ltd. ("Anchortek") to amend its counterclaim and required the plaintiff to produce a settlement agreement it concluded with a third party, Austin Powder Ltd ("Austin Powder").
[2] I am not satisfied that the Prothonotary exercised his discretion on wrong principle or on a misapprehension of the facts. Rather, I have concluded that the Prothonotary exercised his discretion properly.
[3] The relevant facts are set out in the reasons of the Prothonotary. The permitted amendments were to add the following paragraphs to the counterclaim:
| 12. By way of Statement of Claim filed in Federal Court matter T-609-96, the plaintiff sued Austin Powder Ltd. (hereinafter "Austin") for infringement of Canadian Patent No. 1,220,134 on the basis of Anchortek's sale to Austin of Energy Plugs and Austin's subsequent resale of these plugs to others. As a result of an agreement between the parties, both the present action and T-609-96 were to be tried together. |
| 13. Anchortek ceased selling its Energy Plug in 1996. Since that time, and with full knowledge of the plaintiff, Anchortek has manufactured and sold bore hole plugs of a design different from the Energy Plug to Austin and others. The plaintiff at no time has alleged that these other plugs manufactured and sold by Anchortek infringe Canadian patent No. 1,220,134. |
| 14. The plaintiff has recently settled matter T-609-96 with Austin. As part of that settlement, the plaintiff has required Austin to either cease purchasing, or limit its purchases of Anchortek's non-impugned plugs referred to in paragraph 13 above. As a result, Austin's purchase from Anchortek of Anchortek's non-impugned plugs has stopped or been significantly reduced. |
| 15. The plaintiff has therefore relied upon the false and misleading allegation that Anchortek's Energy Plug infringes Canadian Patent No. 1,220,134, and the threat of a legal action with respect thereto, to secure from Austin an unlawful and improper agreement that has reduced Anchortek's sales of its non-impugned plugs to Austin. |
| 16. The plaintiff has also attempted in January of 2000 to have Western Explosives agree to a similar agreement as part of a settlement of the present action with Western. |
[4] It was submitted before me, by the plaintiff, that the only statement alleged in the amendment to be false and misleading is the statement that Anchortek's Energy Plug infringes the plaintiff Almecon's patent, Canadian Patent No. 1,220,134. This was the issue in the claim the plaintiff advanced against Austin Powder in Federal Court file T-609-96.
[5] The argument advanced by the plaintiff was that a statement made in a legal proceeding is not actionable under subsection 7(a) of the Trade-marks Act, R.S.C. 1985, c. T-13, as amended, ("Act"). Therefore, it was argued, because a statement made in a statement of claim is not actionable, then a statement made in an agreement settling an action which reiterated the matter at issue is similarly not actionable. It followed, the plaintiff argued, that the Prothonotary erred in law in permitting the amendment.
[6] I think it is clear from the wording of the amendment that the defendant's claim is premised upon the settlement agreement entered into between the plaintiff and Austin Powder. That settlement, I accept for the purpose of this motion from the unchallenged evidence of Frank Bodell, contained a term that Austin Powder was required to cease purchasing Anchortek's non-impugned plugs from Anchortek and to begin purchasing plugs from the plaintiff. As well, the settlement agreement provided that should Anchortek be successful in the present action, so that its Energy Plug is found not to infringe Almecon's patent, the provision in the settlement agreement requiring Austin Powder to cease purchasing Anchortek's non-impugned plugs from Anchortek would be of no force or effect, and Austin Powder would no longer be required to purchase plugs from the plaintiff.
[7] From those facts, Anchortek alleges that Austin Powder's agreement to cease purchasing Anchortek's non-impugned plugs was premised on the basis that Anchortek's Energy Plug infringes the plaintiff's patent. Put simply, it was alleged that the concession from Austin Powder with respect to the purchase of the non-impugned plugs flowed directly from the allegation that Anchortek's Energy Plug infringes the plaintiff's patent.
[8] Should Anchortek succeed in this action and obtain judgment that its Energy Plug does not infringe the plaintiff's patent, the premise of the settlement agreement will arguably be proven false or misleading contrary to subsection 7(a) of the Act and this would be alleged to give rise to a claim for damages by Anchortek.
[9] False or misleading statements made by a patentee to third parties, tending to discredit the competitor's business, wares or services including statements that the product of a third party infringes the patent of the patentee, are actionable under subsection 7(a) of the Act. See: S. & S. Industries Inc. v. Rowell, [1966] S.C.R. 419.
[10] The plaintiff submitted no authority for its proposition that terms of a settlement agreement cannot support a cause of action pursuant to subsection 7(a) of the Act.
[11] In the absence of such authority, and where the settlement agreement deals with matters not at issue in the original proceeding (in this case the non-impugned plugs), I cannot find that it is plain and obvious or beyond doubt that Anchortek's claim as based on the settlement agreement will fail. It follows that the Prothonotary did not err as alleged.
[12] This conclusion is also dispositive of the Prothonotary's order with respect to production of the settlement agreement. It was not seriously challenged that once the amendment is allowed, the settlement documents are the primary documentary evidence upon which Anchortek will rely at trial. Hence, the settlement agreement is relevant and should be produced as ordered by the Prothonotary.
[13] In the result, for the reasons set out herein, the plaintiff's appeal will be dismissed. The defendant Anchortek is entitled to its costs of this motion against the plaintiff, in the cause, to be assessed in accordance with Column IV of the Table to Tariff B.
ORDER
[14] The plaintiff's motion for an order allowing an appeal from the order of Prothonotary Lafrenière made on the 25th day of August, 2000, is dismissed.
[15] The defendant Anchortek is entitled to its costs of this motion, in the cause, to be paid by the plaintiff as assessed pursuant to Column IV of the Table to Tariff B.
"Eleanor R. Dawson"
J.F.C.C.
Toronto, Ontario
September 25, 2000
-
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
| COURT NO: T-992-92 |
| STYLE OF CAUSE: ALMECON INDUSTRIES LIMITED |
Plaintiff
| - and - |
| ANCHORTEK LTD., EXPLOSIVES LIMITED, |
ACE EXPLOSIVES ETI LTD. and WESTERN
EXPLOSIVES LTD.
Defendants
| DATE OF HEARING: MONDAY, SEPTEMBER 18, 2000 |
| PLACE OF HEARING: TORONTO, ONTARIO |
REASONS FOR ORDER
| AND ORDER BY: DAWSON J. |
| DATED: MONDAY, SEPTEMBER 25, 2000 |
| APPEARANCES BY: Mr. B. Stratton |
| For the Plaintiff, and |
Mr. H. Lue
For the Plaintiff
| Mr. S. Garland |
For the Defendants
| SOLICITORS OF RECORD: Dimock Stratton Clarizio |
Barristers & Solicitors
Box 102
3202-20 Queen St. W.
Toronto, Ontario
M5H 3R3
| For the Plaintiff |
Smart & Biggar
Barristers & Solicitors
Box 111
1500-438 University Ave.
Toronto, Ontario
M5G 2K8
| For the Defendants |
FEDERAL COURT OF CANADA
Date: 20000925
Docket: T-992-92
BETWEEN:
| ALMECON INDUSTRIES LIMITED |
Plaintiff
| - and - |
| ANCHORTEK LTD., EXPLOSIVES LIMITED, |
ACE EXPLOSIVES ETI LTD. and WESTERN
EXPLOSIVES LTD.
Defendants
| REASONS FOR ORDER |
| AND ORDER |