Supreme Court of Canada
General Foods, Ltd. v. Struthers Scientific and International Corp., [1974] S.C.R. 98
Date: 1971-11-29
General Foods, Limited (Plaintiff) Appellant;
and
Struthers Scientific and International Corporation (Defendant) Respondent.
1971: October 7; 1971: November 29.
Present: Martland, Judson, Ritchie, Hall, Spence, Pigeon and Laskin JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Actions—Stay—Patents—Impeachment proceedings in Exchequer Court—Infringement proceedings in Superior Court of Quebec—No stay of proceedings in Exchequer Court.
The appellant instituted an action in the Exchequer Court for a declaration that three patents granted to the respondent were invalid and void. The respondent then took five patent infringement actions in the Superior Court in the Province of Quebec, three of which were each based on one of the patents referred to in the action in the Exchequer Court and two on one of two other patents respectively. The appellant then instituted a second action in the Exchequer Court for a declaration that the two additional patents were invalid or not infringed. The respondent moved for an order to stay each of the two actions in the Exchequer Court pending final disposition of the actions before the Superior Court. The Exchequer Court dismissed the application in the first action and granted it in the second for the sole reason that the proceedings in the Exchequer Court were commenced subsequent to the institution of the actions in the Superior Court. The appellant obtained leave to appeal to this Court from the judgment granting the stay in the second Exchequer Court action.
Held: The appeal should be allowed.
The choice of forum for the first action taken in the Exchequer Court must be considered proper and suitable not only in itself but also on account of the judgment dismissing the respondent’s motion to stay. The appellant should not be deprived of the right to prosecute before the same Court an action for impeachment of two patents held by the same paten-
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tee as the other three patents and pertaining to the same product. The view that priority in the institution of the proceedings should be decisive in this case, irrespective of any other consideration, was not justified.
APPEAL from a judgment of Jackett P. of the Exchequer Court of Canada[1], granting a stay of action. Appeal allowed.
G.F. Henderson, Q.C., and G.A. Macklin, for the plaintiff, appellant.
J.D. Kokonis, Alan R. Campbell and R.S. Uditsky, for the defendant, respondent.
The judgment of the Court was delivered by
PIGEON J.—On February 10, 1970, the appellant “General Foods” filed in the Exchequer Court, now the Federal Court, a statement of claim against the respondent “Struthers”. After describing the process by which the plaintiff manufactures freeze-dried coffee in La Salle, P.Q., it referred to three different Canadian patents granted to Struthers on January 6, 20 and 27, 1970, respectively. It said that plaintiff had reasonable cause to believe that Struthers might sue it for infringement of such patents in respect of its production of freeze-dried coffee. The prayer was for a declaration that the three patents are invalid and void.
On February 17, 1970, Struthers commenced five patent infringement actions against General Foods in the Superior Court of the Province of Quebec. Each of three of such actions was based on one of the patents referred to in the action in the Exchequer Court, each of the other two was based on one of two other patents dated April 29 and December 16, 1969, respectively.
On March 13, 1970, General Foods filed a statement of claim in the Exchequer Court with respect to the two last mentioned patents. The conclusions pray not only for a declaration of invalidity but also for a declaration that a certain piece of apparatus and a process used by
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General Foods do not constitute an infringement or, in the alternative, a declaration that it has by virtue of s. 58 of the Patent Act the right to use the apparatus and process and to make the product claimed in the patents without liability to Struthers for so doing.
On November 17, 1970, Batshaw J. denied exceptions to dismiss the five actions in the Superior Court made by General Foods on the ground of lis pendens.
Immediately, on November 20, 1970, Struthers gave notice of applications for orders staying each of the two actions in the Exchequer Court pending final disposition of the actions before the Superior Court.
On December 23, 1970, Jackett P., as he then was, rendered judgments dismissing the application in the first action, granting it in the second with leave to either party “to apply to terminate the stay if, as a result of developments in the Superior Court actions or otherwise, a new basis can be submitted”. A single set of reasons dealing with both applications together was issued.
Leave to appeal from the judgment in the second action was granted to General Foods. No application for leave to appeal the judgment in the first action was made by Struthers. The case falls accordingly to be decided on the basis that a stay was correctly refused in the first action.
At the hearing of this appeal, additional material was submitted by the parties, namely reasons for judgments in the Court of Appeal affirming, subsequent to the judgment of the Exchequer Court, the judgments of the Superior Court denying the exceptions of lis pendens, and a judgment of the Superior Court dated August 11, 1971, ordering a stay in the five Superior Court actions pending a decision of this Court
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on this appeal. This last judgment also stays, pending the same decision, motions for a stay in the five actions pending final disposition of actions before the Exchequer Court of Canada and also pending final disposition of actions before the District Court of the State of Delaware.
From the facts disclosed by the additional material added to those mentioned in Jackett P.’s reasons, it appears that the actions in the Superior Court are quite similar. The only material differences seem to be those due to the nature of the particular patent relied on, the allegations and conclusions differing as is appropriate to a patent for a process or a patent for an apparatus. In each case, reference is made at the outset to an agreement of August 12, 1964, between Struthers and General Foods’ U.S. parent company. This agreement includes a provision in the following terms:
12. (b) General Foods shall not disclose to anyone outside of its own organization, without the prior written consent of Struthers, any information, advertising or promotion relating to the said equipment or the freeze concentration process.
Another agreement of September 30, 1965, is also referred to including a somewhat similar but more elaborate clause respecting disclosures. The actions allege that General Foods is bound by its parent’s agreements and that it is infringing the patents sued upon either by using the infringement apparatus or making use of the patented process.
In his reasons for judgment Jackett P. said, after quoting s. 21 par. (b) and (c) of the Exchequer Court Act and ss. 56, 61 and subs. 1 and 2 of s. 62 of the Patent Act:
The position is, therefore, that this Court and the appropriate provincial courts have concurrent jurisdiction in infringement actions and can give effect to all proper defences including that of invalidity of the
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patent (compare Skelding v. Daly, 1941 S.C.R. 184) but this Court has exclusive jurisdiction to
(a) entertain an action instituted for the purpose of having a patent declared invalid or void (compare section 62(1) of the Patent Act and Hemsworth v. Charlton, 1927, 32 O.W.N. 302),
(b) entertain an action for a declaration that a process or article does not or would not constitute an infringement (section 62(2)).
He then noted that most reported cases concerning a multiplicity of actions before different courts, deal with cases in which the other court is a foreign court and said:
these cases have no application to the present problem except to show that the court has an inherent jurisdiction to take appropriate action where problems arise as a result of overlapping jurisdiction.
Then, after quoting from Magaziner v. Samuel[2], he stated:
If the problem arises in respect of two actions in the same court, it becomes one to be settled by a proper exercise of judicial discretion on all the circumstances of the particular proceedings. This is not really possible where the problem arises in one superior court in Canada as a result of proceedings in that court and another court having concurrent jurisdiction under the same statute. (Emphasis added).
Finally, he went on to hold:
I am of the view that the only approach that the Court that is asked to stay an action can take is to stay the action if it was started after the action in the other court unless very clear reasons are shown why the second action should proceed even though the action first commenced is proceeding.
Thus, it is clear that the staying order in the second action was granted for the sole reason that the proceedings in the Exchequer Court were commenced subsequent to the institution of the actions in the Superior Court. I have underlined the sentence clearly stating that the
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legislation was viewed as excluding a decision on the basis of judicial discretion in the circumstances. Such being the case, it appears desirable to quote the relevant provisions which are in the Exchequer Court Act, s. 21 par. (b) and (c) and in the Patent Act, ss. 56, 57, 60, 61, and 62.
21. The Court has jurisdiction as well between subject and subject as otherwise,
* * *
(b) in all cases in which it is sought to impeach or annul any patent of invention, or to have any entry in any register of copyrights, trade marks or industrial designs made, expunged, varied or rectified; and
(c) in all other cases in which a remedy is sought under the authority of any Act of the Parliament of Canada or at common law or in equity, respecting any patent of invention, copyright, trade mark, or industrial design.
56. (1) An action for the infringement of a patent may be brought in that court of record that, in the province wherein the infringement is said to have occurred, has jurisdiction, pecuniarily, to the amount of the damages claimed and that, with relation to the other courts of the province holds its sittings nearest to the place of residence or of business of the defendant; such court shall decide the case and determine as to costs, and assumption of jurisdiction by the court is of itself sufficient proof of jurisdiction
(2) Nothing in this section impairs the jurisdiction of the Exchequer Court under section 21 of the Exchequer Court Act or otherwise.
57. (1) Any person who infringes a patent is liable to the patentee and to all persons claiming under him for all damages sustained by the patentee or by any such person, by reason of such infringement.
(2) Unless otherwise expressly provided, the patentee shall be or be made a party to any action for the recovery of such damages.
60. When in any action or proceeding respecting a patent that contains two or more claims, one or more of such claims is or are held to be valid, but another or others is or are held to be invalid or void, effect
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shall be given to the patent as if it contained only the valid claim or claims.
61. The defendant, in any action for infringement of a patent may plead as matter of defence any fact or default which by this Act or by law renders the patent void, and the court shall take cognizance of such pleading and of the relevant facts and decide accordingly.
62. (1) A patent or any claim in a patent may be declared invalid or void by the Exchequer Court at the instance of the Attorney General of Canada or at the instance of any interested person.
(2) Where any person has reasonable cause to believe that any process used or proposed to be used or any article made, used or sold or proposed to be made, used or sold by him might be alleged by any patentee to constitute an infringement of an exclusive property or privilege granted thereby, he may bring an action in the Exchequer Court against the patentee for a declaration that such process or article does not or would not constitute an infringement of such exclusive property or privilege.
(3) With the exception of the Attorney General of Canada or the attorney general of a province of Canada, the plaintiff in any action under this section shall, before proceeding therein, give security for the costs of the patentee in such sum as the Court may direct, but a defendant in any action for the infringement of a patent is entitled to obtain a declaration under this section without being required to furnish any security.
Counsel for General Foods strenuously argued that the impeachment of a patent contemplated in s. 62 was a remedy differing in nature and consequences from the defence of invalidity available against an infringement action before the provincial courts under s. 61. Reference was made to legislative history in support of that argument. Briefly, such history is as follows.
In the Patent Act, c. 61 of the Revised Statutes of Canada 1886, the provisions under the heading “IMPEACHMENT AND OTHER LEGAL PROCEEDINGS IN RESPECT OF PATENTS” began with s. 28, almost identical with s. 55 of the present Act, stating that a
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patent shall be void in some cases. Then came a section corresponding with the present s. 57.1 respecting liability for infringement. This was immediately followed by what is now s. 56.1 providing for the institution of infringement actions before provincial courts. After this came the provisions for injunction and for partial relief as in the present ss. 59 and 60. Then came what is now s. 61 enabling the defendant in an infringement action to plead whatever may render the patent void. This was immediately followed by a provision for the impeachment of patents by action in the provincial courts, after which came what is now ss. 64 and 65.
It will thus be seen that those last two sections originally referred to judgments in the provincial courts. It is hard to see why they would have been meant to refer only to a judgment in an action for impeachment and not also to a judgment in an action for infringement on which the court had been asked by the defendant to hold the patent void under the immediately preceding section.
Jurisdiction in patent cases was conferred upon the Exchequer Court in 1895 by 54-55 Vict. c.26, s.4. This was an amendment to the Exchequer Court Act substantially in the same terms as in s. 21 above quoted. Of course, this meant concurrent jurisdiction. However, in 1932, s. 3 of c.21, 22-23 Geo. V replaced the provision for actions in impeachment before the provincial courts by an enactment substantially identical with what is now s. 62. In the Patent Act 1935, a rearrangement was made and there was added what is now ss. 56.2 and 57.2.
Counsel for General Foods strongly relied on what Orde J.A. said in Hemsworth v. Charlton[3]:
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While it is competent for this Court to find, upon the defences raised by the defendant, that the plaintiff was not entitled to a patent for his alleged invention, and that consequently his action for an infringement must fail, that is as far as the judgment can go. It is binding only inter partes. A declaration of invalidity would operate as a judgment in rem, which in these proceedings the Court is powerless to pronounce.
Reference was also made to what Davis J. said in Skelding v. Daly[4]:
The provincial court did not assume to give any judgment setting aside the patent; it merely denied the plaintiff the relief sought on the ground that the plaintiff’s patent was invalid. That was the same course which was taken by the Ontario Court of Appeal in Durable Electric Appliance Co. Ltd. v. Renfrew Electric Products Ltd. (1926, 59 O.L.R. 527) which judgment was affirmed on appeal to this Court (1928 S.C.R. 8).
On the other hand, counsel for Struthers quoted from the reasons of Taschereau J. (as he then was) in the same case, at p. 192:
Moreover, s. 63 which reads as follows:—
Every judgment voiding in whole or in part or refusing to void in whole or in part any patent shall be subject to appeal to any court having appellate jurisdiction in other cases decided by the court by which such judgment was rendered.
indicates clearly that the provincial courts of appeal have jurisdiction to hear appeals from provincial courts voiding or refusing to void any patent.
It was argued with some logic that if in what is now s. 65 “judgment voiding any patent” includes a judgment of a provincial court in an infringement action, the same words should have the same meaning in the immediately preceding section. To this may be added that the reason for the provision requiring a patentee to be made a party to an infringement action (s. 57.2) would seem to be that his patent is liable to be declared void. In s. 61 the words “decide accordingly” might well include making a decla-
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ration of invalidity, seeing that those words relate to “any fact or default which … renders the patent void”.
In view of all this, I am not convinced that in Laboratoire Pentagone Ltée v. Parke Davis Co.[5], I was in error when saying that the judgment of the Superior Court had declared the patent void although, for the record, it should be noted that the wording of the conclusions of that judgment was:
As the plaintiff’s case rests on the validity of the Canadian Patent No. 479,333, and as this Court considers this patent to be invalid, plaintiff’s action for injunction is dismissed with costs.
Be that as it may, the question whether that judgment was within s. 64 was not before the Court in that case. All that was held was that it should be restored because it was well founded in so far as it upheld the defence of invalidity of the patent. Whether this judgment actually voided the patent or merely held it void as between the parties did not have to be decided.
It does not appear to me that this question has to be decided in the present case either, despite the importance given to it in argument. Assuming that in the actions before the Superior Court, General Foods is entitled to obtain, if successful, a judgment voiding the two patents in question, it does not follow that its action before the Exchequer Court should be stayed for the sole reason that it was instituted subsequently.
With respect, I cannot agree with Jackett P. that the exercise of judicial discretion “is not really possible where the problem arises in one superior court in Canada as a result of proceedings in that court and another court having concurrent jurisdiction under the same statute”.
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I can find no authority in support of this assertion, and fail to see why it should be so. General Foods was admittedly an “interested person” and, as such, prima facie, entitled in law to institute proceedings in the Exchequer Court under s. 62 of the Patent Act. An explicit provision would be required to deprive it from this right. I cannot read the Act as so providing.
I fail to see why, under s. 62.3, the right of having a patent declared void without giving security for costs would be available to a defendant if sued for infringement in the Federal Court, not if sued in a provincial court. Of course “a declaration under this section” means a declaration by the Exchequer Court, now the Federal Court. But “a defendant in any action for the infringement of a patent” includes a defendant in such an action before any court, unless some limitation is implied. I am unable to perceive any reason for so doing, the rule of construction being not to introduce a distinction that is not spelled out, except for a good reason.
However, it does not appear necessary to reach a firm conclusion on this point. General Foods did give security on the second action as well as on the first. Also, we do not have to consider what the situation would be in a simple case of proceedings instituted by an action for infringement in a provincial court. Here, the first action was taken by General Foods in the Exchequer Court. It is a choice of forum that must be considered proper and suitable not only in itself but also on account of the judgment dismissing Struthers’ motion to stay. In view of that decision, the question in the present case is whether General Foods should be deprived of the right to prosecute before the same court an action for impeachment of two patents held by the same patentee as the other three and pertaining to the same product. What has been said of the nature of the five actions before the
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Superior Court makes it clear that there is some connexity. The same two contracts are mentioned in connection with all five patents.
On being asked at the hearing in this Court to state the reason for instituting five separate actions in the Superior Court, counsel for Struthers gave no other reason but that it was contended that these were separate inventions and that art. 66 of the Code of Civil Procedure respecting the joinder of causes of action was permissive, not mandatory. While this may be true, patent owners and their attorneys should bear in mind that litigants are expected to avoid unnecessary costs and the unreasonable multiplication of proceedings is an abuse of the worst kind that should be discouraged and, if necessary, punished by the use of judicial discretion in matters subject thereto.
The judgments dismissing General Foods’ exceptions of lis pendens before the courts of Quebec do not appear relevant to the decision in this case. They rest on a technical point that is entirely independent of the discretionary power to stay the actions respecting the two patents with which we are concerned. It is also clear that, on any view of the matter, there was no other action pending in any court concerning these two patents when these actions were instituted. In the three other actions, the situation was different but concerns the patents involved in the first action in the Exchequer Court as to which there is no appeal.
There remains the question of the two contracts that are relied on in each of the actions in the provincial court in addition to the patents. It may be that in some cases, the possibility of joining in the same action a contractual claim that cannot be tried in the Federal Court with a claim for patent infringement might justify a decision that it is preferable to stay the proceedings in the Federal Court. Here, no such ques-
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tion arises. Struthers did not attempt on the application to make a case for the exercise of discretion on that basis. Furthermore, such a basis could not now be considered in view of the decision that the first action in the Exchequer Court must be allowed to proceed.
As to Struthers’ contention that this Court should not interfere with the exercise of discretion in the Court below, the answer is that the judgment appealed from was not based on discretion. On the contrary, as we have seen the view was that while, as a general rule this is the basis on which a decision to stay an action should be made, priority in the institution of the proceedings should be decisive in this case, irrespective of any other considerations. For the reasons above stated, this departure from the ordinary principle does not appear to be justified.
On the whole, I am of opinion that the appeal should be allowed, that the judgment of the Exchequer Court should be reversed and that respondent’s motion to stay appellant’s action should be dismissed with costs in both courts.
Appeal allowed with costs.
Solicitors for the plaintiff, appellant: Gowling & Henderson, Ottawa.
Solicitors for the defendant, respondent: Smart & Biggar, Ottawa.