Proposed defendants set up complex corporate scheme to sell unlicensed products, plaintiffs allege
In an action alleging that three corporations infringed three asserted patents, the Federal Court upheld a case management judge’s decision allowing the plaintiffs to amend their claim by adding three corporate directors as individual defendants.
The plaintiffs in Unilin Beheer B.V. v. 6035558 Canada Inc., 2025 FC 552, moved to amend their claim to add the directors of the corporate defendants as individual defendants in their patent infringement action. The plaintiffs alleged that the proposed individual defendants:
The defendants argued that the proposed amendments were statute-barred under s. 55.01 of the Patent Act, 1985 or under s. 4 of Ontario’s Limitations Act, 2002 and would go against the interest of justice since the plaintiffs requested the changes four years after commencing the underlying action.
In June 2024, the case management judge allowed the plaintiffs to amend their claim. She noted that the corporate defendants allegedly acted together as a single business and filed a joint statement of defence asserting the plaintiffs’ patents were invalid and denying infringement.
Next, the case management judge noted that the plaintiffs alleged that the individual defendants were personally liable for patent infringement since they operated as one common enterprise as sole directors and officers of the corporate defendants.
The defendants argued that the plaintiffs’ cause of action against the individual defendants – the alleged creation of a complex corporate scheme – was distinct from their cause of action against the corporate defendants. The defendants added that these causes of action did not arise from substantially similar facts and did not trigger the same limitation period.
The case management judge rejected the defendants’ argument. She found that the plaintiffs did not know the intricacies of the relationships or the degree of the directors’ conduct of business operations.
The case management judge also determined that the following questions were triable issues: whether the cause of action was patent infringement or something else and whether the plaintiffs’ proposed amendments were untimely.
The case management judge granted the plaintiff’s motion upon applying the test in r. 75 of the Federal Courts Rules, SOR/98-106. She concluded that the plaintiffs pleaded sufficient material facts for their patent infringement claim against the individual defendants.
The defendants moved to appeal the case management judge’s decision. The Federal Court dismissed the motion of the defendants upon finding no error on the judge’s part that would justify its intervention.
First, the court ruled that the plaintiffs alleged sufficient material facts. The court explained that, if proven at trial, these facts could lead to a trial judge’s finding that the individual defendants were liable for patent infringement.
The court saw no palpable and overriding error in the case management judge’s finding that the pleadings included facts supporting that the individual defendants could have infringed the plaintiffs’ patents or used the corporate defendants as a cloak for their personal acts.
Next, the court rejected the defendant’s argument that the case management judge made a palpable and overriding error in refusing to find the claim against the individual defendants statute-barred, even if the limitation period for the cause of action of infringement was six years under the Patent Act.
The court explained that the case management judge found that the issues in this case were triable, not that the claim against the individual defendants was not statute-barred. The court left the trial judge to determine whether this claim was statute-barred.
Lastly, the court concluded that the case management judge’s reasons were not deficient or difficult to understand. The court noted that she addressed the arguments that the defendants made as well as arguments they did not make.
