T-5026-78
Flexi-Coil Ltd. (Plaintiff)
v.
Smith-Roles Ltd. and Clemence Roles, carrying
on business under the firm name and style of
Blanchard Foundry Co. Ltd. and under the trade
name of Blanchard (Defendants)
Trial Division, Cattanach J.—Ottawa, April 8 and
11, 1980.
Jurisdiction — Patent infringement action — Motion for
declaration that settlement agreement in another action is
illegal and void — Defendants wish to interview an expert
witness who had previously entered into a settlement agree
ment with plaintiff in another action on behalf of his Company
— Agreement provided that potential witness's Company
would not assist any party which might become the subject of
allegations of infringement by plaintiff — Whether the Court
has jurisdiction over witness — Motion dismissed — Federal
Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 20 — The British
North America Act, 1867, 30 & 31 Vict., c. 3 (U.K.) IR.S.C.
1970, Appendix II, No. 51, s. 101.
Motion by defendants seeking a declaration that a memoran
dum of agreement between the plaintiff and Doepker Industries
Ltd. is illegal and void. Prior to commencement of this patent
infringement action, the plaintiff had commenced another
action for infringement of the same patent against Doepker
Industries Ltd. The matter was settled prior to trial by an
agreement which provided that Doepker Industries Ltd. would
not assist any party which might become the subject of allega
tions of infringement by the plaintiff. Francis Doepker, Presi
dent of Doepker Industries Ltd., and an expert in the design,
manufacture and repair of farm implements, was approached
by the defendants herein for information and assistance in the
defence of this action, but he felt that he was precluded from
giving such assistance by virtue of the settlement agreement.
Counsel for the defendants wishes to interview Mr. Doepker as
a potential witness before issuing a writ of subpoena. The
question is whether the Court has jurisdiction over Mr.
Doepker.
Held, the motion is dismissed. The contract was entered into
with respect to the settlement of an action, but that does not
confer jurisdiction over the contract in this Court unless the
contract was incidental to a proceeding before the Court in
which event the Court would be obliged to interpret it. That is
not the case here. The contract by its terms, is to be construed
according to the laws of Saskatchewan. For the Federal Court
to have jurisdiction there must be a "law of Canada" which can
be invoked in the proceedings and those proceedings must be
founded on the law. While the suit between the parties was
founded upon the Patent Act, the contract by which it was
settled is not. It is but a contract between the parties. Thus that
contract is not founded upon federal legislation or law, but
upon the general law of contract. The Federal Court has no
jurisdiction over a dispute between citizen and citizen as to the
validity of such a contract.
McNamara Construction (Western) Ltd. v. The Queen
[1977] 2 S.C.R. 654, followed.
MOTION.
COUNSEL:
Gordon Clarke for plaintiff.
J. Guy Potvin for defendants.
SOLICITORS:
McCarthy & McCarthy, Toronto, for plain
tiff.
Scott & Aylen, Ottawa, for defendants.
The following are the reasons for judgment
rendered in English by
CATTANACH J.: This is a motion brought by the
defendants seeking the following orders that I shall
enumerate:
1. A declaration that a memorandum of agreement
effective August 23, 1978 between the plaintiff in
the action and Doepker Industries Ltd., Flintridge
Holdings Ltd., and Bush Hog Equipment Ltd., is
illegal and void as being contrary to public policy
and in contempt of court.
2. As alternative to the declaration sought in para
graph 1 above, a declaration that paragraph 5 of
the memorandum of agreement is illegal and void.
3. As alternative to paragraphs 1 and 2 above, a
direction to the plaintiff that Doepker Industries
Ltd., Flintridge Holdings Ltd., and Bush Hog
Equipment Ltd., (the parties to the agreement
with Flexi-Coil Ltd., the plaintiff herein) and their
officers, agents, employees and successors be
released from their obligations.
4. As alternative to paragraphs 1, 2 and 3 above,
the issuance of a show cause order under Rule
355(4) obligating the plaintiff to answer for its
acts and covenants in the memorandum of agree
ment which are alleged to have interfered with the
administration of justice and impaired the author
ity and dignity of this Court; in short, contempt of
court.
5. As the concluding alternative to paragraphs 1,
2, 3 and 4 above, an order to stay the proceedings
herein as an abuse of process of this Court.
The plaintiff, Flexi-Coil Ltd., is a manufacturer
and distributor of farm implements in Saskatoon,
Saskatchewan and is the assignee of a patent of
invention from the inventor thereof which inven
tion relates to an hydraulically operated draw bar
for the towing of farm implements transversely
while tilling a field thereby giving a maximum
width and which can be drawn end-wise to present
a minimum width for going through gates and like
narrow confines and purposes.
The defendants are being sued by the plaintiff
for infringement of that patent. Basically the
defence to the action for infringement is a denial
thereof and that the patent is invalid and void.
This Court, by virtue of section 20 of the Feder
al Court Act, R.S.C. 1970 (2nd Supp.), c. 10, has
exclusive original jurisdiction in all cases where a
patent of invention is being impeached and concur
rent jurisdiction in infringement proceedings.
Since the validity of the patent is being
impeached this Court has exclusive original
jurisdiction.
Prior to the commencement of this action
against the defendants named in this statement of
claim, the plaintiff had commenced a like action
for the infringement of this same patent against
Doepker Industries Ltd. and Flintridge Holdings
Ltd. as defendants (Court file T-2751-75). The
action was defended by admitting the infringement
but denying the validity of the letters patent of
invention and counter-claimed for a declaration to
that effect.
Prior to the matter coming to trial a settlement
was reached. Mr. Doepker, the President of the
defendant, Doepker Industries Ltd., was not par
ticularly happy about the settlement. While he had
admitted infringement in the pleadings he con
scientiously did not think there had been infringe
ment but rather the know-how that he had utilized
in farm implements, which was an application of
"old things", had been adapted in the patent
owned by the plaintiff. However, he wanted to
settle the action and get over with it. He was quite
content to forego this particular machine because
it was insignificant to the overall specialized busi
ness of himself and his five other brothers and did
not warrant the inconvenience of defending the
law suit. It was for this reason that he signed the
contract (previously referred to as a memorandum
of agreement). This information I glean from the
cross-examination of Francis Doepker on his
affidavit in support of the motion.
This is the contract that the defendants by their
motion seek to have declared illegal and void. It is
dated October 26, 1978. A provision in the con
tract is that it is to be construed by the laws of the
Province of Saskatchewan. The defendants con
sented to judgment in the terms of Appendix "C"
which is not in the material before me. But the
controversial paragraph of the agreement is
number 5 and reads:
5. That each of Doepker, Flintridge and Bush Hog covenant
and agree not to give any assistance whatsoever in any manner
whatsoever to any party which might become the subject of
allegations of infringement of Canadian Letters Patent 964,100
by Flexi-Coil, its successors and assigns. Flexi-Coil will provide
notice in writing to each of Doepker, Flintridge and Bush Hog
of any such allegations by prepaid registered mail and to the
addresses set out in Appendix "D" hereto.
When this action was begun by Flexi-Coil
against Smith-Roles Ltd. et al., notice was given in
accordance with paragraph 5.
It is quite apparent that Francis Doepker, the
eldest of the Doepker brothers, is an expert in farm
implements, their design, manufacture and repair.
He has had 57 years practical experience in that
field. In my view he is a true expert. Naturally he
would be an extremely well qualified expert to
testify as to the state of the prior art.
It was for that very reason that Mr. Clemence
Roles approached him for information and assist
ance in the defence of this action.
Mr. Doepker indicated to Mr. Roles that he
would be willing to provide such assistance. I
would conjecture that Mr. Doepker had no reason
to feel well disposed toward Flexi-Coil and its
officers because, as he put it, he resented "being
tramped on" but he is an honourable man and one
who abides by agreements into which he enters.
Therefore the assistance which Mr. Roles request
ed was not forthcoming because Mr. Doepker felt
that he was precluded from giving it by the agree
ment he signed in the settlement of the action
against the Company of which he was President.
There is no doubt whatsoever in my mind that
Mr. Doepker is a competent and compellable wit
ness in this action regardless of paragraph 5 of the
contract or agreement. If he is to be a witness his
attendance is enforceable by a writ of subpoena. If
he refuses to attend or if he attends and refuses to
answer questions put to him, paragraph 5 of the
agreement offers him no immunity from contempt.
Mr. Potvin, counsel for the defendants, is most
anxious to interview Mr. Doepker as a potential
witness. Understandably he is reluctant to sub
poena Mr. Doepker as a witness unless he knows in
advance what evidence Mr. Doepker will give. The
only way he can know is to interview Mr. Doepker.
Mr. Doepker no doubt feels that to participate in
such an interview would be aiding and abetting a
party Flexi-Coil has sued and would be a breach of
paragraph 5 of the agreement.
Counsel for the plaintiff would consent to relieve
Mr. Doepker from any possible obligation under
paragraph 5 of the agreement provided that he is
present at the interview between Mr. Potvin and
Mr. Doepker. Understandably that condition is
unacceptable to Mr. Potvin. Hence this motion.
I cannot dictate to an expert witness that he
must give evidence. That is the decision of the
expert. Neither is an expert witness obligated to
speak with another person unless he is willing to do
so. What I am saying is that I have no jurisdiction
over a person until that person is subject to a
process of the Court.
I am in complete agreement with counsel for the
defendants when he submits that a contract which
has a tendency, however slight, to impede the
administration of justice is illegal and void and
that it is contempt to interfere with the freedom of
a witness to give evidence. The question here,
however, is whether Mr. Doepker is, as yet, a
witness.
What the motion seeks is a declaration that the
contract is illegal and void and that paragraph 5 of
that contract is illegal and void.
This contract was entered into with respect to
the settlement of an action. It is true that it was an
action within the exclusive original jurisdiction of
the Court but that, in my view, does not confer
jurisdiction over that contract in this Court unless
the contract was incidental to a proceeding before
the Court in which event the Court would be
obliged to interpret it.
That is not the case here. The contract was a
memorandum of agreement by which a law suit
was settled out of Court, entered into between
parties resident in Saskatchewan, executed by
Flexi-Coil and Doepker Industries in Saskatche-
wan (although the parties Flintridge Holdings Ltd.
and Bush Hog Equipment Ltd. executed the agree
ment on the same date at Calgary, Alberta) and
the contract by its terms, is to be construed
according to the laws of Saskatchewan, (which this
Court would do if called upon to do so).
My appreciation of the decision of the Supreme
Court of Canada in McNamara Construction
(Western) Limited v. The Queen [1977] 2 S.C.R.
654 is that for the Federal Court to have jurisdic
tion there must be a "law of Canada" within the
meaning of those words in section 101 of The
British North America Act, 1867, 30 & 31 Vict.,
c. 3 (U.K.) [R.S.C. 1970, Appendix II, No. 5]
which can be invoked to the proceedings brought
in the Court and that those proceedings must be
founded upon that law.
There is no question that the Patent Act, R.S.C.
1970, c. P-4 is legislation intra vires the federal
authority but what I am being asked in the present
motion is not to decide a proceeding "founded" on
the Patent Act but to determine the validity of a
contract between parties to a law suit by which
that law suit was settled. While the suit between
the parties was founded upon the Patent Act, the
contract by which it was settled is not. It is but a
contract between the parties to the contract as
such even though those same parties had been
parties to a law suit involving a patent of
invention.
Thus that contract is not founded upon federal
legislation or law but on the general law of
contract.
The Federal Court has no jurisdiction over a
dispute between citizen and citizen as to the validi
ty of such a contract entered into between them
and the proper forum to pass upon the invalidity of
this contract as contrary to public policy is the
courts of Saskatchewan.
While I am quite prepared to say that if Mr.
Doepker is called as a witness, paragraph 5 of the
agreement does not preclude him from testifying
and affords him no immunity for refusing to do so
if called, I am not prepared to say that for him to
discuss the subject matter of the invention in this
suit with an alleged infringer with respect to possi
ble defences thereto would not be in breach of the
memorandum of agreement. That would be to
interpret the contract which, for the reasons I have
expressed, is within the sole jurisdiction of the
Saskatchewan courts. Neither have I overlooked
the fact that Mr. Doepker is not a party to the
agreement but that it is the Company of which he
is the President that is the party. I express no
opinion 'whatsoever in this respect because, again
for the reasons expressed, it is not within my
jurisdiction to do so.
For the foregoing reasons it is also my opinion
that I have no jurisdiction to grant the orders
sought in the notice of motion.
Therefore the motion is dismissed. The costs
shall be costs to the plaintiff in any event in the
cause.
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