Executive Summary: Key Legal and Evidentiary Issues

• Plaintiffs alleged that directors of defendant corporations personally orchestrated a scheme to infringe patents.

• Federal Court assessed whether individual directors could be added as defendants based on new evidence from discovery.

• The Amended Statement of Claim was challenged on the basis of being statute-barred under both federal and provincial limitation laws.

• The Associate Judge ruled that the claim disclosed a reasonable cause of action and that limitation issues should be decided at trial.

• Defendants argued procedural unfairness and insufficient reasoning, but the reviewing judge found no legal or factual error.

• Appeal was dismissed, and plaintiffs were awarded costs for the motion.

Facts of the Case

Unilin Beheer B.V. and Flooring Industries Limited, SARL filed a patent infringement action against three Canadian corporate defendants—6035558 Canada Inc. (Mississauga Flooring Solutions Inc.), 2364651 Ontario Inc. (Epico Forest Products Inc.), and 2184372 Ontario Inc. (Hardwood Giant). The claim also targeted three individual defendants—Manmoham Grewal, Rajvir Grewal, and Ravnit Kauldhar—who were directors and officers of the corporate defendants.

The plaintiffs accused the corporate defendants of selling unlicensed flooring products in violation of their patent rights. Following discoveries and examination of corporate representatives, the plaintiffs moved to amend their original claim to include the individual directors as co-defendants. They alleged that the directors personally orchestrated and benefited from a scheme to sell infringing products, even before some of the companies were incorporated, and used corporate entities to shield themselves from liability.

Procedural History and Motion to Amend

The motion to amend the Statement of Claim was granted by Associate Judge Martha Milczynski. The defendants opposed the amendment on grounds that the claims against the individual directors were statute-barred under the Patent Act and Ontario’s Limitations Act, and that the motion came too late—four years after the action began. They also argued that allowing the amendment was not in the interests of justice.

The Associate Judge ruled that the claim disclosed a reasonable cause of action and that whether it was statute-barred was a triable issue. She found that sufficient material facts had been pleaded to support a potential finding of personal liability for patent infringement. She granted leave to amend the claim, reasoning that the Plaintiffs could not have fully known the role of the individuals until after discovery.

Appeal and Federal Court’s Decision

The defendants appealed the Associate Judge’s ruling. The Federal Court, presided over by Justice Jocelyne Gagné, reviewed whether there had been an error in law or a palpable and overriding error of fact. The appeal court reaffirmed that discretionary decisions of case management judges are entitled to significant deference.

Justice Gagné upheld the decision, emphasizing that the amendment was properly grounded in newly revealed facts and was not plainly futile. The question of whether the individual defendants acted beyond their roles as corporate directors, and thus could be held personally liable, was considered a legitimate triable issue. The Court also dismissed concerns over inadequate reasoning, noting that the Associate Judge’s decision was clear and responsive to the relevant issues.

Outcome

The Federal Court dismissed the defendants’ appeal and awarded $1,000 in costs to the plaintiffs. The individual directors remain parties to the action, and their potential liability will be addressed at trial. The case will proceed with the amended claims in place, allowing the plaintiffs to pursue allegations of personal misconduct and corporate veil-piercing related to patent infringement.