T-5812-79
Apotex Inc. (Plaintiff)
v.
Hoffman-La Roche Limited (Defendant)
Trial Division, Cattanach J.—Ottawa, April 8 and
17, 1980.
Patents — Practice — Impeachment proceedings — Secu
rity for costs — Order granted for leave to file security for
costs — Failure of plaintiff to deposit security for costs until
motion brought by defendant — Motion by defendant to strike
out statement of claim and dismiss action because of the
plaintiffs failure to comply with order, or alternatively to
increase the security for costs — Whether failure to deposit
security renders proceedings void — Whether amount of secu
rity should be increased — Motion allowed and amount of
security is increased — Patent Act, R.S.C. 1970, c. P-4, s.
62(3) — Federal Court Rules 2(1), 302(b), 314, 315, 402,
446(1)(a),(b), 700(3) — Exchequer Court Rule 13.
MOTION.
COUNSEL:
J. G. Fogo for plaintiff.
R. Scott Jolliffe for defendant.
SOLICITORS:
Malcolm Johnston, Toronto, for plaintiff.
Cowling & Henderson, Ottawa, for defend
ant.
The following are the reasons for judgment
rendered in English by
CATTANACH J.: By statement of claim dated
November 30, 1979 and filed December 3, 1979
the plaintiff seeks a declaration that a patent of
invention of which the defendant is the owner is
invalid. In short an action for impeachment which,
by virtue of section 20 of the Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, falls within the
exclusive original jurisdiction of the Trial Division
of this Court.
Subsection 62(3) of the Patent Act, R.S.C.
1970, c. P-4 reads:
62....
(3) With the exception of the Attorney General of Canada
or the attorney general of a province of Canada, the plaintiff in
any action under this section shall, before proceeding therein,
give security for the costs of the patentee in such sum as the
Court may direct, but a defendant in any action for the
infringement of a patent is entitled to obtain a declaration
under this section without being required to furnish any
security.
Simultaneously with the filing of the statement
of claim in the registry office in Toronto, Ontario
counsel for the plaintiff filed notice of motion
dated Monday, December 3, 1979 for leave to file
security for costs in this action in the amount of
$1,000 without prejudice to the defendant's right
to apply for increased security. This application
was made pursuant to Rule 324, that is in writing
without appearance of counsel. The motion was
transferred to Ottawa, Ontario, received on Thurs-
day, December 6, 1979, was brought to my atten
tion on that day and the order was granted by me
on that day in the terms requested.
Under Rule 13 of the Exchequer Court Rules it
was provided that in an action to impeach a patent
the plaintiff shall at the time of the filing of his
statement of claim give security in the sum of
$1,000.
Thus under Rule 13 both the amount of the
security and the time for its deposit was provided.
Rule 13 in the language it appeared in the
Exchequer Court Rules is not included with Fed
eral Court Rules.
Accordingly subsection 62(3) of the Patent Act
must be considered.
Under subsection 62(3) the plaintiff in an
impeachment action shall, before proceeding
therein, give security for the costs of the patentee
in such sum as the Court may direct. I do not
think that language is susceptible of the interpreta
tion that the Court may direct that no costs shall
be deposited.
Thus it would follow that the security should be
deposited at the time the statement of claim is
filed. However, unlike Rule 13 of the Exchequer
Court Rules, the Federal Court Rules do not fix
the amount of the security for costs in an impeach
ment. Therefore the plaintiff must apply to have
the amount of the security fixed.
This the plaintiff did and did so at the same
time the statement of claim was filed.
In Rule 2, paragraph (1) of the Federal Court
Rules "action" is defined as a proceeding in the
Trial Division other than an appeal, an application
or an originating motion.
Under Rule 400 an action shall be commenced
by filing an originating document, that is a state
ment of claim or a declaration.
Attributing the same meaning to the word
"action" in subsection 62(3) of the Patent Act as
in the Federal Court Rules it follows that there
can be no "action" until a statement of claim is
filed and that a plaintiff is precluded by subsection
62(3) from taking any further step without first
depositing security for costs.
This is confirmed by Rule 700(3), which must
be read in conjunction with the mandatory provi
sions of subsection 62(3) of the Patent Act, read
ing in part:
Rule 700... .
(3) In an action to impeach a patent of invention, the Court
may at any time, in its discretion order that the plaintiff ...
give security for costs before taking any further step.
In the present instance such an order was given
on application by the plaintiff under subsection
62(3) of the Patent Act on Thursday, December 6,
1979.
For the foregoing reasons the proceedings to
that date have been in compliance with the statu
tory provision and the Rules of Court.
However, upon reviewing the material on file, I
observe that the plaintiff on December 7, 1979,
effected service of the statement of claim and
particulars of objection on the defendant.
I also observe that the plaintiff did not deposit
security for the costs of the defendant in the form
and manner prescribed by Rules 314 and 315 in
the amount of $1,000 as ordered on December 6,
1979 until March 28, 1980.
I have been informed that the failure to do so
was the result of administrative oversight in the
office of the solicitor for the plaintiff and I suspect
that the deposit so overlooked was forthwith made
upon service of the motion now under consider
ation.
The motion under review is dated March 26,
1980, returnable on April 1, 1980, and seeks an
order striking out the statement of claim and
dismissing the action because of the failure of the
plaintiff to comply with subsection 62(3) of the
Patent Act or alternatively to increase the security
for costs by an additional $5,000.
A review of the file does not indicate that
service of the defendant's motion was effected on
the plaintiff. There is no affidavit of service filed
nor is there any acknowledgment of service. I
suspect there was service because the motion was
returnable, originally on April 1, 1980 but was by
consent of the parties adjourned to April 8, 1980.
For the reasons I have expressed previously I am
of the view that as at December 6, 1979 the
plaintiff has complied with subsection 62(3) and
the Rules.
Subsequent to December 6, 1979 the plaintiff is
in breach of the order of that date following upon
the service of the statement of claim and the
particulars of objection.
Thus there has been a non-compliance with an
order granted under the Rules even though no
time, other than forthwith, was specified. "Forth-
with" means as soon as reasonably practicable.
By reason of Rule 302(b) such non-compliance
shall not render any proceedings void unless the
Court so directs and the circumstances peculiar to
this matter do not, in my view, warrant such a
direction since no prejudice has been wrought
upon the defendant.
Alternatively the defendant requests an increase
in the amount of the security for costs by $5,000
that is from $1,000 to $6,000.
The practice of compelling the deposit for costs
is of ancient origin predicated upon a plaintiff
being resident out of the jurisdiction and without
property liable to be taken in execution within the
jurisdiction to secure the defendant for such costs
incurred and for which the plaintiff was liable.
This practice is perpetuated in Rule 446(1)(a),(b).
These considerations were not present in the
enactment of subsection 62(3) of the Patent Act
and accordingly the legislative intention must have
been to deter irresponsible actions for impeach
ment of patents of invention.
In the present instance the plaintiff is resident in
Canada, having been incorporated pursuant to the
laws of the Province of Ontario, and it is estab
lished that it has substantial assets in Canada.
On the other hand the defendant tendered
affidavit evidence to the effect that the probable
costs would far exceed $5,000. That I accept.
However neither the plaintiff's residence in
Canada, the extent of the assets or the costs of the
action are the criteria upon which to base security
under subsection 62(3).
In the order dated December 6, 1979 the proba
bility of an application to increase costs was not
overlooked by the plaintiff. Under Rule 13 of the
Exchequer Court Rules the minimum deposit was
$1,000. The plaintiff offered a bond of $4,000
which was refused. The reasons for the refusal are
not evident but the plaintiff's willingness to
increase the security to (but not by) $5,000 is.
Therefore, taking all circumstances into account
including the plaintiffs dereliction in complying
with the order dated December 6, 1979 it is
ordered that the amount to be deposited by the
plaintiff for security for the defendant's costs is
increased from $1,000 to $5,000 by the deposit of
a further $4,000.
The defendant shall be entitled to the costs of its
motion in any event in the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.