Date: 20041103
Docket: T-1291-04
Citation: 2004 FC 1550
Toronto, Ontario, November 3rd, 2004
Present: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
GARFORD PTY. LTD.
Plaintiff
and
PAUL VILLGREN and VEIKKO JARVI
Defendants
REASONS FOR ORDER AND ORDER
[1] This is a motion by the Defendants, Paul Villgren ("Villgren") and Veikko Jarvi ("Jarvi"), for an Order striking out the Statement of Claim for patent infringement issued against them on July 9, 2004. The Plaintiff, Garford Pty. Ltd. ("Garford"), alleges in its pleading that Villgren and Jarvi are personally liable for the acts of infringement of two companies, Sling Choker Manufacturing Limited ("Sling Choker") and Ground Control (Sudbury) Limited ("Ground Control"). Garford also alleges that the Defendants Villgren and Jarvi induced third parties to infringe its patent.
[2] Villgren is the sole director and an officer of Ground Control and Sling Choker, and Jarvi is an officer and employee of Ground Control. They submit that Garford has failed to allege sufficient material facts to support the allegations that are personally liable for the actions of the two companies. As such, they say, it is "plain and obvious" that the claims against them cannot succeed. The Defendants also maintain that the present action is an abuse of process, since it was commenced solely to strengthen Garford's settlement position in a related proceeding that was brought against Ground Control and Sling Choker (Federal Court No. T-76-01), and which is scheduled for trial in September 2005 (the "Related Action").
[3] In light of my conclusion that the action is vexatious and constitutes an abuse of this Court's process, I need not decide whether the allegations against the Defendants are adequately plead. In my view, leave to amend should have been sought to include the allegations in the Related Action.
Facts
[4] This Court has jurisdiction under Rule 221 of the Federal Court Rules, 1998 (the Rules) to strike a Statement of Claim. In determining whether a pleading should be struck for failure to disclose a reasonable cause of action under Rule 221(1)(a), the facts on the face of the pleadings must be assumed to be true, and evidence is not admissible. However, evidence may be entertained by the Court where a party claims that an action is frivolous or vexatious (Rule 221(1)(f)), or an abuse of process (Rule 221(1)(f)). Therefore, in addition to the allegations contained in the Statement of Claim, consideration was given to the facts set out in the affidavits filed by both parties on this motion.
[5] Garford is the owner of Canadian Patent Number 2,002,806 (the " '806 Patent "), that relates generally to a rock anchor used in mining operations, as well as methods and devices for producing same. On January 17, 2001, Garford commenced the Related Action against Ground Control and Sling Choker seeking various relief, including a Declaration that claims 1-3, 5, 6, 8-11, 13, 15-17 of the '806 Patent are valid, a declaration that two companies have induced or contributed to third parties infringing the patent, and an injunction to restrain the corporate defendants, their directors, officers, and employees from further infringing Garford's patent.
[6] Under the case management of Mr. Justice Hugessen, examinations for discovery of the parties in the Related Action have been completed, including the examination of Villgren as a representative of Ground Control and Sling Choker in December 2002. Mr. Justice Hugessen conducted pre-trial conferences at various times in 2003, followed by a settlement conference in January 2004. On January 9, 2004, he ordered that the Related Action be set down for trial in the Spring or Fall of 2005.
[7] On July 9, 2004, Garford brought the present action in respect of the same patent and seeking essentially the same relief as in the Related Action against Villgren and Jarvi. Identical allegations are made against the Defendants in the two proceeding, except for additional wording found in paragraphs 3, 4, 5, 12, 13, 14 and 23 of the Statement of Claim in the present action. The "new" allegations are set out in the underlined portions of the paragraphs below:
3. Ground Control (Sudbury) Limited ("Ground Control") is a company organized and existing under the laws of Ontario with a principal office and place of business at 1150 Kelly Lake Road, Sudbury, Ontario Canada P3E 5P4. Ground Control carries on business as a manufacturer, distributor, exporter and importer of, among other things, rock anchors. Ground Control is a defendant in concurrent litigation involving the Plaintiff and the patent-in-suit as matter T-76-01.
4. Sling Choker Manufacturing Limited ("Sling Choker") is incorporated and existing under the laws of Ontario with a principal place of business at 2212 Algonquin Road North, Sudbury, Ontario, Canada, P3E 4Z6. Sling Choker carries on business as a manufacturer, distributor, exporter and importer of, among other things, rock anchors. Sling Choker is a defendant in concurrent litigation involving the Plaintiff and the patent-in-suit as matter T-76-01.
5. Villgren is the owner of Sling Choker and the sole director of Sling Choker and an officer of Sling Choker. Villgren is the sole director of Ground Control as well as its only officer. Jarvi is General Manager and Sales Manager of Ground Control.
***
12. Villgren and Jarvi were at all material times personally aware of the Plaintiff's patents and the requirement for them to obtain permission or consent from the Plaintiff in respect of the use of the technology.
13. Villgren and Jarvi acquired their knowledge of the '806 Patent through meetings and correspondence with the Plaintiff or the Plaintiff's agents.
14. Villgren and Jarvi personally directed a third party to construct the infringing apparatus.
23. Villgren and Jarvi have engaged in a deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute an infringement of the Plaintiff's rights or that reflected an indifference to the risk of it
24. The aforesaid acts of the Defendants will likely continue unless restrained by this Court. By reason of the aforesaid acts of the Defendants, the Defendants have and/or will make a profit and the Plaintiff has and/or will suffer damage.
25. The Plaintiff is unaware of the full extent of the Defendants infringement as aforesaid and claims in respect of all infringing activities of the Defendants.
[8] In his affidavit filed in opposition to the motion, Mr. Daniel Brown, a commercial manager of the exclusive licensee in Canada of Garford's patent, provides an explanation for bringing a lawsuit against Villgren and Jarvi at this time. Mr. Brown states that there is a possibility that any injunction or other restraining order obtained against Ground Control in the Related Action would be ineffective, since Villgren and Jarvi would simply resume infringement by another company personally controlled by them. Villgren is said to have represented to Mr. Brown during telephone conversations that if the matter does not settle soon, he will wind down Ground Control. Villgren has also indicated to Mr. Brown that he controls a number of companies, and has implied that he would simply shift infringing activities to another business he personally controls.
Analysis
[9] Counsel for Garford does not dispute that the Related Action and this proceeding involve overlapping issues of fact and law. The Statement of Claim makes reference to the Defendants' activities, and their liability for patent infringement in respect of acts committed by Sling Choker and Ground Control. In particular, Garford alleges that Villgren and Jarvi were personally aware of its patents, acquired knowledge of the '806 Patent directly through meetings and correspondence with the Plaintiff or the Plaintiff's agents, and personally directed a third party to construct an infringing apparatus. The Statement of Claim goes on to repeat numerous allegations made in the
Related Action, including that Ground Control and Sling Choker initiated the manufacture, use, and sale of the subject matter of the '806 Patent subsequent to the time at which Garford commenced or authorized sales of its "Garford Cable"disclosed in the '806 Patent. The Statement of Claim alleges that Ground Control and Sling Choker continued to do so even after being put on notice regarding the '806 Patent on December 20, 1994.
[10] It appears that the extent of personal involvement of Villgren and Jarvi in directing the actions of Ground Control and Sling Chiker was known to the Plaintiff well before the Related Action was instituted, and as far back as 1992. Their degree of control over the companies was also canvassed during examinations for discovery in the Related Action. Yet, surprisingly, Garford never took any steps to amend its pleading. Nor did it move to add Villgren and Jarvi as defendants, as it was entitled to do under Rule 104. This Rule governs joinder of parties, and provides that the Court may order that a person who ought to have been joined as party, or whose presence before the Court is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined be added as party. Instead, Garford simply brought a separate action.
[11] This Court has recently considered the propriety of bringing separate proceedings against different parties that involve similar facts and issues. In Vogo Inc. v. Acme Window Hardware Ltd. ("Vogo v. Acme"), 2004 FC 851, O'Keefe, J. dismissed an appeal from an order of Prothonotary Tabib, who had refused to strike a statement of claim. The Plaintiff, Vogo Inc. ("Vogo"), had alleged that Tam Nguyen ("Nguyen"), the president and director of Acme Window Hardware Ltd. ("Acme"), a defendant in an earlier proceeding brought by Vogo, was personally liable for Acme's infringement. Prothonotary Tabib rejected Nguyen's argument that it was improper for Vogo to bring a separate action and then seek consolidation, rather than move to add him as a defendant in the earlier action. O'Keefe, J. concluded that Prothonotary Tabib was not clearly wrong in the exercise of her discretion, noting that consolidation would avoid a multiplicity of proceedings, and would promote an expeditious and inexpensive determination.
[12] The disposition of the motions in Vogo v. Acme should not be viewed as an endorsement by this Court of the practise of bringing multiple proceedings. Prothonotary Tabib was dealing with a particular fact situation, where two proceedings had not yet proceeded beyond the discovery stage. She was able to fashion a remedy, through consolidation of the two proceedings, that minimized any delay in the conduct of the two actions. As a result, there was no prejudice to the defendants in either action.
[13] Such would not be the case in the present proceeding. A pre-trial conference has already been conducted in the Related Action, and trial dates now been fixed. Any consolidation order, at this late stage, could jeopardize the trial dates in the Related Action, since the present action is only at the pleading stage, and further discovery may be required. Moreover, the duration of the trial may have to be revisited to take into account the additional issues raised in the Statement of Claim.
[14] Garford submits that since Villgren has implied recently that he may wind down Ground Control and shift the infringing activities to another business he personally controls, it is entirely justified in now bringing action against Villgren and Jarvi. That may very well be. One cannot ignore, however, that the allegations against Villgren and Jarvi arose from, and are inextricably linked, to the Related Action, which has been closely case-managed by Mr. Justice Hugessen. In my view, the Related Action was and remains the proper forum to debate the propriety, including the timeliness, of the allegations. It would be presumptuous of me to meddle in an action that is case managed by someone else, particularly when I am not familiar with its intricacies and dynamics.
[15] I consider it both vexatious and oppressive for Garford to have brought two separate actions involving the same patent and the same issues, and seeking injunctive relief against essentially the parties. It would simply be too costly, inefficient and inconvenient for this Court to entertain two proceedings that are redundant and duplicative.
[16] In the circumstances, I would dismiss the action on the grounds that it vexatious and constitutes an abuse of the Court's process, without prejudice to the Plaintiff's right to seek leave to add Villgren and Jarvi as parties to the related proceeding that is now pending in this Court (Court File No. T-76-01).
ORDER
THIS COURT ORDERS that:
1. The Statement of Claim in this proceeding is hereby struck out without leave to amend pursuant to Rule 221(1)(f) of the Federal Court Rules, 1998.
2. The Plaintiff shall pay the Defendants' costs of this motion forthwith in the sum of $1,730.78.
3. This Order is made "without prejudice" to the Plaintiff's right to seek leave of the Court to add Mssrs. Villgren and Jarvi as parties to a related proceeding that is now pending in this Court (Court File No. T-76-01), and "without prejudice" to the Plaintiff's right to seek leave of the Court to amend its pleadings in that action.
"Roger R. Lafrenière"
Prothonotary
FEDERAL COURT
Names of Counsel and Solicitors of Record
DOCKET: T-1291-04
STYLE OF CAUSE: GARFORD PTY. LTD.
Plaintiff
and
PAUL VILLGREN and VEIKKO JARVI
Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: OCTOBER 18, 2004
REASONS FOR ORDER
AND ORDER BY: LAFRENIÈRE, P.
DATED: NOVEMBER 3, 2004
APPEARANCES BY:
P. Bradley Limpert FOR THE PLAINTIFF
Jason C. Markwell FOR THE DEFENDANTS
SOLICITORS OF RECORD:
GOWLING LAFLEUR HENDERSON LLP
Barristers and Solicitors
Toronto, Ontario FOR THE PLAINTIFF
OGILVY RENAULT
Barristers and SolicitorsToronto, Ontario FOR THE DEFENDANTS
FEDERAL COURT
Date: 20041103
Docket: T-1291-04
BETWEEN:
GARFORD PTY. LTD.
Plaintiff
and
PAUL VILLGREN and VEIKKO JARVI
Defendants
REASONS FOR ORDER AND ORDER