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Patents - Courts Jurisdiction - Federal versus Provincial. McCain Foods Limited v. J.R. Simplot Company
In McCain Foods Limited v. J.R. Simplot Company (Fed CA, 2021) the Federal Court of Appeal considers the jurisdictional distinction in the federal courts system between a patent infringment claim and one based in contract law:[62] There is also no dispute that inducing infringement is a form of patent infringement, not a distinct tort: Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research, 2020 FCA 30, 2020 CarswellNat 247 at para. 45, leave to appeal to SCC refused, 39099 (23 December 2020) (Hospira 2020); Bauer Hockey Corp. v. Easton Sports Canada Inc., 2010 FC 361, 366 F.T.R. 242 at para. 199, aff’d 2011 FCA 83, 414 N.R. 69. Accordingly, the jurisdiction of the Federal Court to adjudicate a proper claim of inducing patent infringement is not in dispute. If Simplot’s third party claim is indeed based essentially on inducing patent infringement, the appeal should be dismissed.
[63] On the other side of the debate, there appears to be no dispute that the Federal Court does not have jurisdiction to adjudicate a matter that is in essence one of breach of contract between private parties. This Court has recently clarified that the Federal Court does have jurisdiction to interpret contracts between private citizens as long as it is done under a sphere of valid federal jurisdiction vested in the Federal Court: Salt Canada Inc. v. Baker, 2020 FCA 127, 2020 CarswellNat 2843 at para. 24 (Salt). However, there must be a specific statutory grant of jurisdiction to the Federal Court. This Court went on in Salt at paragraph 40 to state, "“[w]here contracts arise within its [sic] jurisdiction, the Federal Courts are empowered to resolve these disputes [over the interpretation of agreements] just as any other court does, and they do so all the time.”" However, Salt concerned an application under section 52 of the Patent Act to vary an entry in the records of the Patent Office. Section 52 of the Patent Act therefore constituted a specific statutory grant of jurisdiction to the Federal Court.
[64] There is no dispute that the Federal Court does not have jurisdiction to adjudicate Simplot’s third party claim unless it can base its claim on a specific statutory grant of jurisdiction. Without that, Simplot’s third party claim is outside the jurisdiction of the Federal Court, and should accordingly be struck. . Salt Canada Inc. v. Baker
In Salt Canada Inc. v. Baker (Fed CA, 2020) the Federal Court of Appeal considered whether an application to amend patent records under s.52 of the Patent Act to vary the patent owner, was within Federal Court jurisdiction. The case at Federal Court decided in the negative, deeming that the issue required the court to resolve contractual disputes, which are normally the jurisdiction of the provincial superior courts. The Court of Appeal held that it has jurisdiction to decide contractual issues insofar as that was required to decide other expressly-granted federal jurisdiction issues:[5] The Federal Courts Act, R.S.C. 1985, c. F-7, section 26 provides that the Federal Court has "“original jurisdiction in respect of any matter”" in which "“jurisdiction has been conferred by an Act of Parliament on…the Federal Court”". Before the Federal Court was an application made under section 52 of the Patent Act, R.S.C. 1985, c. P-4, an Act of Parliament. Section 52 of the Patent Act provides that the "“Federal Court has jurisdiction…to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged”". The application before the Federal Court sought just that. On the plain language of section 26 of the Federal Courts Act and section 52 of the Patent Act, the Federal Court had jurisdiction over the appellant’s application.
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[22] In Kellogg, the Commissioner of Patents refused to issue a patent under what is now sections 40-41 of the Patent Act. In support of the Commissioner’s decision, the appellant sought to rely on employment contracts to disprove the respondent’s claim to ownership of a patent.
[23] While acknowledging that the then Exchequer Court had "“no jurisdiction to determine an issue […] concerning a contract between subject and subject”", the Supreme Court found that the Exchequer Court had jurisdiction because the employment contracts were only "“advanced for the purpose of establishing the appellant”" as the lawful owner of the patent: pp. 249-250. Adjudicating title to a patent was, and remains today, firmly within the Federal Court’s jurisdiction.
[24] The rule in Kellogg is simple: the Exchequer Court (and now the Federal Court) can interpret contracts between private citizens as long as it is done under a sphere of valid federal jurisdiction vested in the Federal Court. It is true that, absent a specific statutory grant of jurisdiction to the Federal Court, parties cannot assert a contractual claim in the Federal Court against another private party to obtain a damages remedy. But Kellogg tells us that where such a grant is present, parties can claim a remedy even if their entitlement turns on a matter of interpretation of an agreement or other instrument—for example, the remedy of correcting the records in the Patent Office to recognize one’s title to a patent under section 52 of the Patent Act. The case continues [Stratas JA at para 28-46] to discusses the historical tension between the two levels of court on this issue.
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