Federal Court Applies Salt Canada Decision

In the Federal Court’s recent decision in Mud Engineering Inc. v. Secure Energy Services (2020 FC 1049), the Federal Court had the opportunity to consider the extent of its jurisdiction when issues relating to the ownership of patents are at play.

The Court had the opportunity to apply the reasoning of the Federal Court of Appeal in Salt Canada Inc v. John W Baker (2020 FCA 127) (“Salt Canada”) to the facts before it and ultimately confirmed that it has jurisdiction to interpret agreements in the context of patent disputes.

Background

Mud Engineering alleged that Secure Energy sold products that infringed its patents related to drilling fluid compositions used in extracting bitumen from wells in western Canada.

Secure Energy claimed non-infringement and invalidity, claiming instead that it was the rightful owner of the patents in dispute. Its ownership claim flowed from employment agreements and various other documents.

Action at the Alberta Court of Queen’s Bench

Due to uncertainty surrounding the question of jurisdiction, Mud Engineering commenced an action at the Alberta Court of Queen’s Bench (“ACQB”). To avoid duplication, Mud Engineering brought an application at the ACQB to stay the issues concerning infringement, validity and title to the disputed patents, in favour of a determination at the Federal Court. Secure Energy opposed the stay, suggesting that the Federal Court lacked jurisdiction where the ownership of patents depends upon the interpretation of contracts between the parties. Secure Energy argued interpretation of a contract requires the interpretation and application of provincial law, for which the Federal Court has no jurisdiction.

The ACQB dismissed the application by oral decision. In dismissing the application, the ACQB suggested it may be prudent for the parties to request that the Federal Court rule on jurisdiction as a preliminary matter. Following this suggestion, Mud Engineering brought a motion for determination of a point of law under Rule 220 of the Federal Courts Rules.

Salt Canada at the FCA

The Federal Court considered the recent ruling of the Federal Court of Appeal in Salt Canada. In that case, the Federal Court of Appeal was clear that section 52 of the Patent Act grants judicial power to the Federal Court to determine issues of title to a patent, which may involve the interpretation of agreements, and other commercial instruments.

Applying Salt Canada

The Federal Court found Salt Canada to be relevant given that it involved interpreting contracts for the purpose of registration of a patent and Mud Engineering involved interpreting contracts for the purpose of determining ownership in an infringement action.

The Federal Court was unequivocal in its pronouncement that it had jurisdiction to adjudicate the claims before it relating to the title of the disputed patents.

Authors: Jaclyn Tilak and Emma Baumann, 2020/2021 Articling Student-at-law