Federal Court Finds Lack of Jurisdiction on Matters of Patent Ownership under Contract in Infringement Action

On December 14, 2018, the Federal Court (FC) issued a decision in Farmobile, LLC v. Farmers Edge Inc. (2018 FC 1269), considering appeals from orders of a prothonotary regarding the FC’s jurisdiction to deal with issues relating to patent ownership where contractual issues are involved.  In this case, in responding to a claim of patent infringement, the defendant asserted that it, and not the plaintiff, was the rightful owner of the patent in dispute, having been assigned all rights to the invention claimed in the patent pursuant to an agreement. The defendant counterclaimed, asserting that in accordance with the agreement, it was the patent’s rightful owner.

The Court held that, in determining whether the FC has jurisdiction in a given case, the question is whether the contractual issues raised in a plea relate to the essential nature of the claim, or are ancillary to it.

The Court dismissed the plaintiff’s appeal of the prothonotary’s decision not to strike portions of the statement of defence dealing with ownership.  The Court reasoned that the plaintiff’s action was for patent infringement, and the essential nature of the defence raised by the defendant was that it did not infringe the plaintiff’s patent, in part because it was the rightful owner.  The plea of non-infringement was held to be unquestionably within the FC’s jurisdiction.

The Court also dismissed the defendant’s appeal of the prothonotary’s decision to strike portions of the defendant’s counterclaim.  The Court held that a counterclaim must be considered separately from a statement of defence, as a stand-alone action.  In this case, the essential nature of the counterclaim was a contractual claim for a declaration that the defendant is the patent’s rightful owner.  Therefore, the court lacked jurisdiction to adjudicate the impugned portions of the counterclaim.

Summary By: Vanessa Komarnicki