Summary judgment and summary trial: factors affecting availability of summary disposition in IP disputes under the new Federal Courts Rules
November 17, 2011

The majority of IP litigation in Canada occurs in the Federal Court of Canada. Faced with the escalating cost of litigation, the Federal Court, like many other court systems, has recognized the need to focus on "proportionality" in legal proceedings, and on providing for more expedient and less costly avenues to resolve disputes. The Federal Courts Rules now provide summary judgment tools, which, if used effectively, can allow for a determination of issues short of trial (often on the basis of affidavit evidence).

Prior to the amendments to the Federal Courts Rules in December 2009, it was very difficult for a party to obtain any type of summary judgment, with the Federal Court interpreting the summary judgment rules in a manner that very much restricted the availability of such summary determination. Generally, under the former Rules, the Court would only grant a summary judgment if there was no genuine issue for trial, or if the Court was able, on the whole of the evidence, to decide the questions of fact and law. The Court would eschew a summary judgment order in favour of a full trial where discoveries or admissions were considered necessary to a party's case, where credibility was at issue, or where the case was considered too complicated to resolve under summary proceedings. On several occasions, the Federal Court of Appeal stated that cases that contained conflicts in evidence or issues of credibility were too complex to render a summary judgement (see, for example, MacNeil Estate v. Canada (Indian and Northern Affairs Department), 2004 FCA 50 ("MacNeil")).

Such an interpretation of the previous Rules effectively narrowed the availability of summary judgments, resulting in very few summary judgment applications being brought and even fewer being granted by the Court. This was a source of mutual concern for the parties to litigation and for the Court itself, as parties lacked flexible options towards the efficient disposition of their case without a full trial, and the Court maintained lengthy trial queues and a heavy caseload as a result. The Regulatory Impact Analysis Statement issued by the Canadian Federal Government with the December 2009 Rules amendments concluded that there was a need to amend the summary rules to allow the Federal Court the capacity to grant summary relief in a broader and more flexible manner than the approach adopted in decisions like MacNeil.

As a result, the 2009 amendments to the Federal Courts Rules included key modifications introducing a summary trial procedure, which was intended to provide the Court and litigants with a better and more effective summary procedure. The new summary trial procedure of the Federal Court was modeled after the provincial British Columbia Supreme Court summary trial "Rule 18A" (now Rule 9-7 of the British Columbia Supreme Court Civil Rules), which had been successfully implemented and used in British Columbia to allow for determination of matters by way of affidavit evidence, where issues, such as complexity and credibility, may have previously been a bar to summary relief.

The summary trial procedure adopted by the Federal Court was intended to allow the Federal Court to dispose summarily of actions in a greater range of circumstances and also to give the parties greater control over the pace and extent of their litigation process. Unlike the former Rules, now, if the Court declines to allow a summary judgment because it finds that there is a genuine issue for trial, it can still proceed to determine the issue on summary trial if it is satisfied that there is sufficient evidence for adjudication. The evidence that may be relied on in a summary trial includes affidavits, examination for discovery, admissions, and written statements of an expert meeting certain conditions. The Court also has the discretion to require a witness to appear viva voce for cross-examination, should it be required for an assessment of credibility. Judgment on summary trial can be refused only if the issues raised are not suitable for summary trial, if the summary trial would not assist the efficient resolution of the matter, or if it would be unjust to decide the issues by summary trial, regardless of the amounts involved, the complexities of the issues and the existence of conflicting evidence.

With respect to intellectual property disputes, Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2010 FC 966 ("Wenzel"), a patent infringement action, was one of the first cases where summary judgment and summary trial were considered under the new Rules. The Court in that case, in considering whether or not to allow a motion for summary judgment to be heard, rejected the possibility of hearing a motion for either summary judgement or summary trial. Regarding the application for a summary judgment, the Court stated that there was not enough evidence available through the abbreviated summary judgment process to construe the patent under dispute, with the moving party having failed to provide any assistance on that issue through an expert witness. Additionally, there would be contradictory evidence and credibility issues, which act as a bar to summary judgment. The Court then went on to consider the possibility of summary trial under the new Rules (notwithstanding that it had not been asked to by the parties), and similarly decided that a motion for summary trial would not be appropriate under the circumstances, commenting that patent infringement actions are "inherently complex, and technical," and that the technical nature of the patent at issue required review by expert witnesses to assist the Court in construing the patent, in addition to clarifying contradictory evidence.

However, the Court in Wenzel explicitly left open the possibility that a summary trial could be found to be an efficient and effective procedure in a patent infringement proceeding, and seems to have heavily factored the amount of time and cost required to prepare the summary trial, the proximity of the actual trial date (being only a year away) and lack of independent expert evidence "available at the moment," in determining that the procedure was not appropriate under the circumstances of that particular case.

Earlier this year, in the trademark and copyright infringement decision of Louis Vuitton Malletier S.A. and Burberry Limited et al. v. Singga Enterprises et al., 2011 FC 776 ("Louis Vuitton"), the Federal Court was presented with a motion for summary trial, and granted the same, notwithstanding the amounts involved and relatively complex fact pattern supported by numerous fact witness affidavits. Using the new Rules, the Court granted a total of $2.48 million in damages against purveyors of counterfeit goods, including punitive and exemplary damages, the highest award of damages and costs to date in a counterfeiting action in Canada. In awarding the substantial judgment against the defendants, the Court accepted that British Columbia jurisprudence on summary trial is instructive and may be persuasive. The Court adopted the leading British Columbia jurisprudence (Inspiration Management Ltd. v. McDermind St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 202, [1989] B.C.J. No. 1003 (C.A.)), which provides that if the judge can find the facts as he or she would at trial, the judge should give judgment based upon the affidavit evidence, unless to do so would be unjust, regardless of complexity or conflicting evidence.

Even more recently, in the matter of Teva Canada Limited v. Wyeth LLC, 2011 FC 1169 ("Teva"), the Court granted summary trial judgment on the issue of whether or not the plaintiff was entitled to pursue a claim under section 8 of the Patented Medicines (Notice of Compliance) Regulations. The issues before the Court related to the affect of corporate amalgamations and licensing. In emphasizing that the Rules must be interpreted so as to secure the just, most expeditious and least expensive determination of every proceeding on the merits, the Court allowed a summary trial because it found that:

  1. the issues were well defined and significant in allowing the action as a whole to proceed more quickly;
  2. the facts necessary to resolve the issues were clearly set out in the evidence;
  3. the evidence was not controversial and there were no issues as to credibility; and
  4. the questions of law, though novel, could be dealt with as easily on summary trial as they would otherwise have been after a full trial.

Of note in this case was that while the plaintiff had brought the motion for summary trial, and the defendants had resisted the motion in part on the basis that summary trial was not appropriate, judgment was in fact granted in against the plaintiff and for the defendants. This decision has been appealed by the plaintiff, though not with respect to the appropriateness of using the summary trial rules in issuance of the judgment.

The difference in the outcome in Wenzel as compared to the outcome in Louis Vuitton and Teva appears to be based on (i) the requirement for expert testimony to construe the intellectual property at issue and, (ii) the stage the proceeding had reached. In the Wenzel patent dispute, the fact that live expert witness testimony was required to construe the patent appears to have weighed against a grant of a summary judgment or summary trial, as did the fact that the action was already scheduled for trial and the summary trial would require the expenditure of time and money that would be better spent preparing for the scheduled trial. Conversely, in Louis Vuitton and Teva, expert evidence was not required and the Courts were able to determine the issues on the evidence before them. In Louis Vuitton, the proceeding was also at a very early stage (pre-oral discoveries).

Therefore, both the need for expert evidence and timing may be limiting factors, irrespective of a matter's complexity, that may guide the Court's choice to permit or decline summary procedures under the new Rules. In respect of patent cases, given that expert opinion is so often utilised to assist the Court in construing the patent and assessing the prior art, the Court may frequently find that the conflicts presented in expert evidence will necessitate live testimony to resolve issues of credibility. Conversely, in copyright and trademark cases, there may be a lesser requirement for expert evidence, and summary procedures may be a more viable option, meaning that the new Rules may well lend themselves better to copyright and trademark cases as opposed to patent infringement actions. However, in either case, parties should keep in mind the ability for the Court to order live cross-examinations at summary trial, which could be useful in situations where the Court can determine most issues on affidavit evidence and only needs to hear from a limited number of live witnesses, thereby significantly shortening the time required for a summary trial as compared to a full trial.

The successful use of the Federal Court summary trial rules in obtaining judgment in the Louis Vuitton and Teva decisions, gives greater certainty to IP rights owners of the availability of summary procedures in the Federal Court for resolving IP disputes and of the circumstances in which the Federal Court will resolve similar, nation-wide disputes on a summary basis for at least trademark and copyright infringement matters, and some types of substantial issues in patent cases as well. This is particularly true given the adoption, by the Federal Court, of British Columbia jurisprudence on summary trial and the flexibility that both Courts have now applied to the summary trial procedure. The ability to use such procedure for issues of patent infringement and validity remains to be seen, but in the right circumstances will hopefully also give access to summary resolution of such issues.

These recent successful uses of the summary trial rules also complement the recent decision of the Federal Court of Appeal in BBM Canada v. Research In Motion Limited (2011 FCA 151), which confirmed the ability of trademark owners to use the Federal Court "application" process (Part 5 of the Federal Courts Rules) for a summary determination, by way of affidavit evidence, of matters of trademark infringement, passing-off and depreciation of goodwill. While not available in the case of patent infringement matters (which must be brought by way of an action under the Patent Act), it is another summary option available to trademark and copyright owners, and emphasizes the current move of the Federal Court to support summary adjudication short of trial.

Karen F. MacDonald and Elizabeth E. Farries, Vancouver

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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