Federal Court Decisions

Date: 19990910

Docket: T-2398-98

BETWEEN:

     EXCALIBRE OIL TOOLS LTD., TEBO

     MANUFACTURING LTD. and

     EDWARD L. MOORE,

     Plaintiffs,

     - and -

     THOMAS A. GARAY and

     INTEMECH ENGINEERING LTD.,

     Defendants.

     REASONS FOR ORDER

MR. JOHN A. HARGRAVE,

PROTHONOTARY

[1]      The Statement of Claim in this action was initially for impeachment of a patent held by the Defendants and which the Plaintiffs wished declared void. As an alternative the Plaintiffs sought to be able to elect either to have the patent declared void, or to have the patent transferred to a corporate entity which is not a party. Section 60 of the Patent Act governs impeachment. By section 60(3) of the Act a plaintiff must give security for costs, as may be ordered by the Federal Court: the only discretion the Court is left with is the amount of security.

[2]      In the present instance the Plaintiffs, contrary to section 60(3) of the Patent Act, which requires that security be given before the Plaintiffs proceed with their action, amended the Statement of Claim some four months after the action had been commenced: by the amendment the Plaintiffs merely seek an order that the Defendants" patent be transferred to a non-party called Variperm (Canada) Ltd. For all intents and purposes the Plaintiffs seek to accomplish an impeachment, but outside of section 60 of the Patent Act. The Defendants now take the position, in the face of the Defendants" motion for security for costs under section 60, that no security is required.

[3]      Section 60 is quite clear: where a plaintiff seeks to have a patent or a claim in a patent declared invalid or void, or brings an action in the Federal Court for a declaration as to infringement, security for costs is a requirement. That was the provision under which the original action was brought.

[4]      In contrast the Amended Statement of Claim relies upon section 52 of the Patent Act which gives to the Federal Court the jurisdiction to order that an entry in the records at the Patent Office, relating to title, be varied or expunged. There is no provision in or linked to section 52 which requires security for costs when only expungement or a variation of title are involved. Counsel for the Plaintiffs refers to paragraph 11 of the Amended Statement of Claim, in which section 52 of the Patent Act is specifically pleaded.

[5]      Counsel for the Plaintiff referred, during argument, to Comstock Canada v. Electec Ltd. (1992), 38 C.P.R. (3d) 29, a decision of Mr. Justice Muldoon"s, in which an action under section 52 of the Patent Act resulted in an Order that the register be varied, or in the alternative, at the election of Electec made within 30 days, that the patent be declared invalid. In effect, Electec accomplished what the Plaintiffs hope to accomplish, a variance or alternatively a transfer of the patent within section 52 of the patent act.

[6]      The Defendants say that once the initial Statement of Claim was in place the Plaintiffs ought to have put up security for costs. Moreover, by utilizing section 51 of the Patent Act and section 20 of the Federal Court Act, which gives the Trial Division exclusive original jurisdiction in instances where an impeachment or annulment are at issue, the Plaintiffs have, in effect, changed horses in mid-stream and thus avoided the obligations that are usual in this sort of a proceeding, to have to give security for costs under section 60 of the Patent Act.

[7]      I have some sympathy for the Defendants. However, there is clearly no jurisdiction under section 52 of the Patent Act and section 20 of the Federal Court Act to award the Defendants security for costs. Nor is there, on the material filed, any facts which would give rise to security for costs under Rule 416 of the Federal Court Rules.

[8]      The result of all of this is that the Defendants" motion is denied.

[9]      As to costs, it concerns me that the Plaintiffs filed a Statement of Claim, clearly seeking impeachment under section 60(1) of the Patent Act and then, instead of coming to the Court, "before proceeding therein" as required by section 60(3) of the Act to give security for costs, did nothing for four months. In the fourth month the Plaintiffs proceeded to amend the Statement of Claim in order to avoid the clear obligation to give security for costs. In all of the circumstances, the costs of this motion are payable forthwith by the Plaintiffs to the Defendants at the top range of Column IV.

                             (Sgd.) "John A. Hargrave"

                                 Prothonotary

September 10, 1999

Vancouver, British Columbia

     FEDERAL COURT TRIAL DIVISION

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

HEARING DATED:          August 26, 1999

COURT NO.:              T-2398-98

STYLE OF CAUSE:          EXCALIBRE OIL TOOLS LTD. et al.

                     v.

THOMAS A. GARAY et al.

PLACE OF HEARING:          Vancouver, BC

REASONS FOR ORDER OF

JOHN A. HARGRAVE, PROTHONOTARY

dated September 10, 1999

APPEARANCES:

Mr. Neil Kathol          for Plaintiff

Mr. Ian MacDonald          for Defendant

SOLICITORS OF RECORD:

     Wilson, Laycraft

Calgary, AB              for Plaintiff

     Field Atkinson Perraton

Calgary, AB               for Defendant