Date:
20130304
Docket:
T-1043-12
Citation:
2013 FC 217
Ottawa, Ontario,
March 4, 2013
PRESENT: Madam
Prothonotary Aronovitch
BETWEEN:
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SAFE GAMING SYSTEM INC.
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Plaintiff
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and
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ATLANTIC LOTTERY CORPORATION,
NOVA SCOTIA GAMING CORPORATION AND
TECH LINK INTERNATIONAL ENTERTAINMENT LIMITED
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Defendants
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REASONS FOR
ORDER AND ORDER
Overview
[1]
The
underlying proceeding is a patent infringement action brought by Safe Gaming
Systems Inc. (Safe Gaming) pursuant to the Patent Act, RSC 1985, c P-4 (Patent
Act) in respect of electronic gambling activities carried out by the Nova
Scotia Gaming Corporation (NS Gaming), the Atlantic Lottery Corporation
(Atlantic Lottery) and Tech Link International Entertainment Limited (Tech
Link).
[2]
Before
filing their defences to this action, NS Gaming and Atlantic Lottery,
(together, the Defendants), have moved to strike the action as against them on
the grounds that the Federal Court lacks personal jurisdiction over them as
Crown defendants. The Defendants maintain that while the Federal Court has
subject matter jurisdiction over patent infringement actions, it does not have
personal jurisdictions in actions against them as agents of the Crown in right
of the Province of Nova Scotia.
[3]
For
the reasons that follow, I am satisfied that, read together, section 20 of the Federal
Courts Act, RSC 1985, c F-7 (FCA) and sections 2.1 and 54(2) of the Patent
Act, confer personal as well as subject matter jurisdiction upon the Federal
Court to entertain the present patent infringement action against NS Gaming and
Atlantic Lottery.
The Facts
[4]
In
the context of a motion to strike, the facts as alleged must be taken as
proven. Extraneous evidence may not be adduced in support of a motion to strike
brought under Rule 221(1)(a) of the Federal Courts Rules, SOR/98-106,
save where the ground for striking is that the Court lacks jurisdiction in
respect of a claim. The following are the salient relevant facts alleged by the
plaintiff in its statement of claim.
[5]
Safe
Gaming is the owner of Canadian Patent No. 2,331,238, entitled “Safe Gaming
System” (238 Patent), which claims a technological solution to proactively
prevent problem gambling and to monitor and regulate responsible gaming
activities of an individual.
[6]
NS
Gaming is a Nova Scotia Crown corporation established in 1995 by the provincial
Gaming Control Act, 1994-95, c 4 (Gaming Control Act) for the
purpose of carrying out the management function of regulated gaming in Nova
Scotia, which includes overseeing the management of the business of gaming in
the province.
[7]
Atlantic
Lottery is incorporated under the Canada Business Corporations Act, RSC
1985,
c C-44, and runs the day-to-day operations of many of the various gaming
business lines in Atlantic Canada. In Nova Scotia, Atlantic Lottery is
contracted by NS Gaming to operate its video and ticket lottery businesses and
to act as agent for NS Gaming in carrying out these objectives. The agency
agreement between NS Gaming and Atlantic Lottery along with the Order of the
Governor in Council approving the agreement are adduced as evidence in support
of this motion.
[8]
NS
Gaming is a 25 percent shareholder in Atlantic Lottery. Other Atlantic Lottery
shareholders include the Queen in Right of the Province of Newfoundland and Labrador, the Lotteries Commission of New Brunswick and the Prince Edward
Island Lotteries Commission. Atlantic Lottery conducts, manages and operates
lottery schemes in four provinces: Nova Scotia, New Brunswick, Newfoundland and Prince Edward Island.
[9]
Together,
the Defendants provide socially responsible gaming products and services to
Nova Scotians that incorporate the plaintiff’s patented responsible gambling
features.
[10]
The
plaintiff’s seeks a declaration of infringement of the 238 Patent, a permanent
injunction, and damages against all three defendants in connection with their
unlicensed use of its patented technology. Safe Gaming also seeks a
declaration that NS Gaming has failed to comply with Section 19.1 of the Patent
Act by failing to make efforts to obtain a license to the plaintiff’s
patent on reasonable commercial terms.
The Grounds for
the Motion
[11]
The
Defendants rightly point out that the question of whether the Federal Court has
jurisdiction over particular subject matter is distinct from whether it has
jurisdiction over a particular party: Greely v Tami Joan (The), (1996)
113 FTR 66 (TD) and Trainor Surveys (1974) Limited v New Brunswick, [1990]
2 FC 168 (TD). They rely most notably on Dableh v Ontario Hydro [1990]
FCJ No 913 (Dableh), wherein the Court held that an action in
tort/patent infringement against a provincial Crown agent corporation must be
brought in provincial court unless a statute expressly provides for Federal
Court jurisdiction “ratione personae” over the Crown.
[12]
The
Defendants’ second argument for striking is that the Nova Scotia Proceedings
Against the Crown Act, RS 1989, c 360 (NSPAC Act),
requires proceedings against the Crown to be brought
in
the Supreme Court of Nova Scotia. Thus, as agents of the Crown, any proceedings
against them say the Defendants, can only be taken in the Supreme Court of Nova
Scotia.
[13]
To
flesh out the Defendants’ argument, the Gaming Control Act provides that
NS Gaming is an agent of Her Majesty in right of the Province of Nova Scotia. The statute further provides that the NSPAC Act applies to actions and proceedings
against NS Gaming, and that any reference to the “Crown” in the NSPAC Act
is to be construed as a reference to NS Gaming.
[14]
The
Defendants maintain that a reference to the “Crown” in a statute extends to
Crown agents. Therefore, by virtue of the agency
agreement, and as an agent of the Nova Scotia Crown, the Defendants say that
the NSPAC Act also applies to Atlantic Lottery and compels any
suit against Atlantic Lottery to be brought in the Supreme Court of the
province.
The Jurisdiction
of this Court
[15]
The
Federal Court is a statutory court that requires a statutory grant of power to
exercise jurisdiction. The elements required to support a finding of jurisdiction
in the Federal Court are set out in ITO-International Terminal Operators
Ltd v Miida Electronics Inc, [1986] 1 S.C.R. 752 at 766
(ITO) as follows: 1) there is a
statutory grant of jurisdiction by the federal Parliament; 2) there is an
existing body of federal law which is essential to the disposition of the case
and which nourishes the statutory grant of jurisdiction; 3) 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.
[16]
The
FCA and the Patent Act, together, give subject matter
jurisdiction to the Court for remedies claimed in respect of patents. Under
section 20(1) of the FCA, this Court has exclusive original jurisdiction
in all cases of patent impeachment and annulment. The Court also has
concurrent jurisdiction under section 20(2) of the FCA in all other
cases, for example patented infringement actions, “in which a remedy is
sought under the authority of any Act of Parliament respecting any patent.”
[17]
The
moving parties rest their case primarily upon Dableh, wherein Justice
Dubé struck out a patent infringement action against New Brunswick Power and
Hydro Quebec, in part, on the basis that provincial legislation stipulated that
actions against them could only be brought in their respective provincial
courts. In that case, the Court was called upon to consider the immunity from
liability in tort which the Crown enjoys except as abrogated by statute. The
Court noted that the Patent Act did not expressly provide that it was
binding on the Crown, and in the absence of express language in the Patent
Act to bind the Crown, Justice Dubé concluded that the concurrent subject
matter jurisdiction, between subject and subject, over patent infringement
under section 20 of the FCA,
was
not sufficient to bind the provincial Crowns and their agents at issue in that
case.
[18]
Justice
Dubé wrote the following regarding the absence of any provisions in the Patent
Act that could bind the Crown:
La Loi sur les brevets,
S.C.R. 1985, c. P-14, ne fait aucune mention de possibilité de recours devant
la cour fédérale du Canada dans le cas de contrefaçon d’un brevet par la Couronne
du chef d’une province. On ne retrouve pas non plus dans ce texte de loi
une implication nécessaire liant la Couronne provinciale…
(at
page 551)
[19]
The
law has changed since Justice Dubé’s decision. Section 2.1 of the Patent Act
was amended in 1993 and now states, “The Act is binding on Her Majesty in
right of Canada or a province.”
[20]
Further,
while section 54 of the Patent Act gives concurrent jurisdiction to the
provincial courts in matters of patent infringement, section 54(2) of the Patent
Act provides that “Nothing…impairs the jurisdiction of the
Federal Court under section 20 of the Federal Courts Act…”
[21]
Other
than in areas such as patent expungement where it has exclusive jurisdiction, section
20(2) of the FCA, gives this Court concurrent jurisdiction in all other
cases in which a remedy is sought under the authority of any Act of Parliament
respecting any patent. The Patent Act is such an Act of Parliament which
now extends patent remedies as against Her Majesty in right of Canada or a province. The remedies that are available under the Patent Act against
the provincial Crown are therefore enforceable in this Court.
[22]
The
above provisions of the FCA and the Patent Act, read together,
thus provide an explicit statutory grant of jurisdiction by Parliament, to the
Federal Court, over patent remedies that may be sought against the Crown,
sufficient, in my view, to satisfy the elements of the ITO test
necessary to find jurisdiction in this Court.
[23]
As
for the provincial legislation, and the NSPAC Act in particular, the
statute only permits actions in tort against the provincial Crown that are
brought pursuant to its provisions. Section 91 of the Constitution Act,
1867, gives the Federal Parliament exclusive jurisdiction over patents. The
provincial legislation does not have the effect of ousting the jurisdiction
given by Parliament to the Federal Court in respect of patent actions, or of
preventing Parliament from creating a statutory cause of action and attributing
jurisdiction in respect of the cause of action to the Federal Court
concurrently with the province.
[24]
Indeed,
within constitutional limits, Parliament may derogate from the jurisdiction of
the provincial courts by conferring jurisdiction upon federal courts
constituted by statute pursuant to section 101 of the Constitution Act,
1867, “for the better administration of the laws of Canada.” Express statutory
language must be used where jurisdiction is intended to be assigned to the
Federal Court. That is the case in this instance.
[25]
I
would add that the Defendants’ reading of the FCA and Patent Act
to preclude the jurisdiction of this Court in respect of remedies for patent
infringement as against the Crown would result in a multiplicity of proceedings
that Parliament would not have intended. The Federal Court has exclusive
jurisdiction as relates to the expungement of patents. Thus, should the
Defendants wish to defend against the action by attacking the validity of the
plaintiff’s patent, they would only be able to do so in this Court. As the
plaintiff rightly points out, such a scheme would not ensure the best attainment
of the objects of section 20 of the FCA, and of the Patent Act,
in accordance with the interpretive principle set out in section 12 of the Interpretation
Act, RSC 1985, c
I-21.
Conclusion
[26]
Coupled
with the statutory grant of Federal Court jurisdiction in all cases involving
remedies under the Patent Act, section 2.1, in my view, removes any
doubt that the Federal Court has concurrent jurisdiction in cases seeking a
remedy under the Patent Act against a provincial Crown. If I am wrong,
the motion would fail in any event, as the Defendants have failed to meet their
heavy burden in this motion of satisfying the Court that it is “plain and
obvious”, or free from doubt, that the Federal Court lacks jurisdiction to
entertain this action as against the Defendants: Hunt v Carey Canada Inc,
[1990] 2 S.C.R. 959, Hodgson v Ermineskin Indian Band No. 942, 2000 CanLII
15066 (FC), (2000) 180 FTR at para 10, aff’d (2000), 267 NR 143 (FCA) at para
4.
[27]
While
my above findings are dispositive of the matter I would add that if the NSPAC
Act were to apply to exclude a suit against the provincial Crown in this
Court, it is not clear, or free of doubt, that Atlantic Lottery may be said to
be the Crown for the purposes of that statute and thus immune from suit in this
Court.
ORDER
THIS
COURT ORDERS that:
1.
The
motion of the Defendants Nova Scotia Gaming Corporation, and Atlantic Lottery
Corporation is denied.
2.
The
time for the service and filing of the Defendants’ statements of defence is
extended to March 28, 2013.
3.
The
costs of the motion are payable to the plaintiff, in any event of the cause.
“R. Aronovitch”
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