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Where Should You Launch Your Intellectual Property Case?

When deciding, with your client, to bring an intellectual property lawsuit in Canada, one question that will need to be answered is what court should be used? In many instances, both the Federal Court and the provincial courts have concurrent jurisdiction but depending on the specific causes of action, your choice may be limited to one of the courts and other facts may influence your choice.

Jurisdiction

The provincial ‘superior’ courts have inherent jurisdiction over all causes of action that have not been explicitly provided elsewhere. The Federal Court, in contrast is purely a statutory creation (see the Federal Courts Act) and only has jurisdiction over specific areas as provided in statute.

Actions for infringement of patents, trademarks or copyright can be brought in either the provincial courts or the Federal Court (s.20).

Actions relating to records within the Canadian Intellectual Property Office, such as disputes over ownership or inventorship of a patent or trade-mark must be brought in the Federal Court – s.20(1)(a).

Similarly, appeals or judicial reviews from the Canadian Intellectual Property Office such as from the Patent Appeal Board or the Trade-marks Opposition Board must be brought in the Federal Court.

On the other hand, disputes that involve contract disputes or breaches, including licensing agreements may be outside the jurisdiction of the Federal Court and can only be brought in the provincial court.

In considering whether causes of action are within the Federal Court’s jurisdiction, the Supreme Court has established the following test. This test can be applied to specific causes of action in a Statement of Claim even if other causes of action are within the Federal Court’s jurisdiction (see Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 SCR 626 at para 8):

a) There must be a statutory grant of jurisdiction by the federal Parliament;
b) There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction; and
c) The law on which the case is based must be “a law of Canada” as the phrase is used in section 101 of the Constitution Act, 1867.

For example, in Garford Pty Ltd. v. Dywidag Systems International, Canada, Ltd, 2010 FC 997, a request to add claims for unjust enrichment were denied in the Federal Court as being outside the Courts jurisdiction. In Multi Formulations Ltd. v. Allmax Nutrition Inc., 2009 FC 896, a counterclaim for inducing breach of contract and tortious interference with economic relations was struck, “because the subject matter falls well outside of the jurisdiction of this Court…” even though the main action was within the Court’s jurisdiction.

Geography

Another factor to consider is the scope of the dispute, enforceability and the practicalities of the litigation. As with all types of litigation, the location of the defendant, the scope of any injunction or damages award should also be considered when considering the court in which to start the suit.

The Federal Court has jurisdiction, including enforcing judgments across Canada. It also has registry offices, court rooms across the country. A damages award or an injunction is enforceable against any asset or operation of the defendant no matter the province or territory.

The provincial courts are limited to the provincial borders. Although recognition agreements allow an order in one province to be entered in a second province, these can add additional steps and cost to the enforcement of an order.

Stays

A defendant can bring a motion, or the court itself on its own motion, can review the jurisdiction of the Court to decide the issues raised in a pleading. The Court can require that the proceeding be stayed or dismissed for lack of jurisdiction.

Stays also arise if proceedings relating to the same issues are brought in a plurality of proceedings, such as both the Federal Court and a superior court. For example, in Domaines Pinnacle Inc. v. Beam Inc., 2013 FC 831, the Court recently considered parallel trade-mark proceedings brought by the plaintiff in the Quebec Superior Court and the Federal Court in which both courts had jurisdictions. In that instance the Quebec action was stayed pending resolution in the Federal Court.

Other factors

Procedural differences and practices can also be a factor in selecting a court if a choice is available. For example, case management is common for intellectual property cases in the Federal Court but less so in some provincial superior courts. Because of the number of intellectual property proceedings brought in the Federal Court, many of the Prothonotaries and Judges have more familiarity with intellectual property law than in the provincial superior courts. In 2013, approximately 470 intellectual property proceedings were brought in the Federal Court, around 22% of all proceedings in the Federal Court.

While intellectual property cases are predominantly brought in the Federal Court, selecting a court for a particular case depends on the specific allegations, facts and parties and there may be good reasons to bring the action in a superior court.

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