The court rejected the application of the two-year limitation period under provincial law
The Court of Appeal of Alberta has ruled that claims for patent infringement are subject to the six-year limitation period under the federal Patent Act rather than the two years set by the province's Limitations Act.
The decision overturns the summary dismissal of JL Energy Transportation Inc.'s lawsuit against Alliance Pipeline Limited Partnership and allows the case to proceed to trial.
JL Energy owns patented technology related to using natural gas mixtures to improve the efficiency of high-pressure gas pipelines and facilities. It licensed the technology to Alliance Pipeline, which transports liquid-rich natural gas from British Columbia to Illinois. However, JL Energy alleged that Alliance Pipeline used the technology beyond the licensed scope in lateral pipelines feeding into the main pipeline.
The company filed a lawsuit on May 11, 2016, alleging patent infringement and breaches of the license agreements. The case management judge summarily dismissed the action, ruling that the claim was time-barred under Alberta's two-year limitation period. JL Energy appealed, arguing that its patent infringement claims fell under the federal Patent Act, which provides a six-year limitation period.
The key issue before the Court of Appeal was whether Alberta's Limitations Act or the federal Patent Act governed the timeline for filing patent infringement claims. The court found that the case management judge erred in applying the provincial limitation period.
The ruling stated that the Patent Act creates a statutory cause of action for patent infringement, and parliament has the constitutional authority to set a specific limitation period. Since section 55.01 of the Patent Act states that "no remedy may be awarded for an act of infringement committed more than six years before the commencement of the action," the court concluded that the federal limitation period applies. The court emphasized that applying different limitation periods depending on whether the case is heard in a Federal or provincial court would be legally inconsistent.
The court also rejected the prior decision in Canadian Energy Services Inc. v. Secure Energy Services Inc., which had applied Alberta's two-year limitation period to patent infringement claims. The court clarified that the Limitations Act does not override federal law where parliament has enacted a specific limitation period.
JL Energy also argued that the alleged patent infringement and breaches of the license agreements constituted "rolling" breaches, meaning each instance of unauthorized use restarted the limitation period. The court found that the case management judge improperly dismissed this issue summarily. The panel ruled that whether the alleged infringement and contract breaches engaged a rolling limitation period required a full trial to assess the facts.
The Court of Appeal allowed JL Energy's appeal, set aside the case management judge's dismissal, and reinstated the lawsuit. The matter will now proceed to trial, where the parties will have the opportunity to present full arguments on the alleged patent infringement, breaches of license agreements, and the potential application of a rolling limitation period.
