T-5768-81
Flexi-Coil Ltd. (Plaintiff)
v.
Rite Way Manufacturing Co. Ltd. and Leslie
Hulicsko (Defendants)
INDEXED AS: FLEXI-COIL LTD. V. RITE WAY MANUFACTURING
LTD. (T.D.)
Trial Division, Rouleau J.—Toronto, November
27, 1989; Ottawa, February 1, 1990.
Federal Court jurisdiction — Trial Division — Appeal from
order striking portions of counterclaim to patent infringement
action relying on Statute of Monopolies — Appeal dismissed
— Statute of Monopolies not within jurisdiction of Federal
Court as not valid and applicable federal law — Purpose and
effect of Statute of Monopolies discussed — Not applicable to
valid patents — To extent in force in Canada, within provin
cial domain.
Constitutional law — Distribution of powers — Whether
Federal Court having jurisdiction to entertain counterclaim
invoking Statute of Monopolies — Remedies in England under
Statute in area of property and civil rights and available in
common law courts — At Confederation, area given to provin
cial legislatures — Patents of inventions an exception —
Remedies in Statute of Monopolies not included in Canadian
Patent Act — What not in Act not under Federal Court
jurisdiction.
Patents — Infringement — Appeal from order striking parts
of counterclaim relying on Statute of Monopolies — Appeal
dismissed — Statute of Monopolies not applying to valid
patents.
This was an appeal from an order in a patent infringement
action maintaining an earlier order striking portions of the
counterclaim pleading the Statute of Monopolies. Those por
tions were struck for "duplicity", as the relief sought under the
Statute of Monopolies would be similar to other allegations in
the same pleading. The paragraph was struck without leave to
amend because the Statute of Monopolies would not apply if a
patent was involved, and the Court would not have jurisdiction
if a patent was not involved. The Assistant Senior Prothonotary
was ordered to reconsider his order based on Burnaby Machine
& Mill Equipment Ltd. v. Berglund Industrial Supply Co. Ltd.
There, an application to strike a plea for relief under the
Statute of Monopolies was dismissed on the ground that a
pleading should be struck only in plain and obvious cases. It
was held that the status of the Statute of Monopolies should
not be determined on a preliminary motion. Giles A.S.P.
refused to vary the order, relying on the ground of duplicity. He
maintained that the Statute of Monopolies was not part of the
law of Canada and therefore not within the jurisdiction of the
Federal Court. Since he had already determined this issue, the
Burnaby case was distinguishable. The issue was whether the
Statute of Monopolies is valid and applicable federal law.
Held, the appeal should be dismissed.
The Federal Court is a statutory court limited in jurisdiction
to the "better administration of the laws of Canada" either
under the Federal Court Act or any other Act of Parliament. It
has jurisdiction in patent matters under Federal Court Act,
sections 20 (remedy sought under authority of any Act of
Parliament or at law or in equity respecting a patent) and 26
(jurisdiction specifically conferred on Federal Court by Act of
Parliament). Remedies under the Statute of Monopolies as
they existed in England were in the area of property and civil
rights and determinable in that country's particular common
law courts. At Confederation much of this area of jurisdiction
was conferred upon the provincial legislatures, one exception
being exclusive jurisdiction to deal with "patents of inventions"
which was given to the Parliament of Canada under subsection
91(22) of the Constitution Act, 1867. In enacting the Patent
Act, Parliament chose not to include remedies of treble dam
ages and double costs. What is not contained within the Patent
Act cannot be under the jurisdiction of the Federal Court of
Canada. The Statute of Monopolies, to the extent that it is in
force in Canada, is part of property and civil rights and within
the provincial domain.
The Statute of Monopolies was enacted to control abuses of
the royal prerogative by granting monopolies which interfered
with the fair course of trade. It declared all monopolies void
and required confirmation of propriety of patents. It provided
for triple damages and double costs for any party "hindered,
grieved, disturbed, or disquieted" by any patent. The reasoning
in Peck v. Hindes makes it clear that the Statute of Monopo
lies did not apply to patents properly issued. Even if the Statute
of Monopolies were a part of the law of Canada, the defendant
could not plead the remedies under it since there is a valid and
subsisting patent.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
[R.S.C. 1970, Appendix H, No. 5], s. 91(22).
Federal Court Act, R.S.C., 1985, c. F-7, s. 20.
Federal Court Rules, C.R.C., c. 663, R. 419.
Patent Act, R.S.C., 1985, c. P-4.
Statute of Monopolies, 21 Jac. 1, c. 3.
The Patent Act of 1869, 32 & 33 Vict., c. 11 (U.K.).
CASES JUDICIALLY CONSIDERED
APPLIED:
Peck & Co. v. Hindes, Ld. (1898), 15 R.P.C. 113 (Q.B.).
CONSIDERED:
Aca Joe International v. 147255 Canada Inc. et al
(1986), 10 C.P.R. (3d) 301; 4 F.T.R. 311 (F.C.T.D.);
Safematic Inc. v. Sensodec Oy (1988), 20 C.1.P.R. 143;
21 C.P.R. (3d) 12; 20 F.T.R. 132 (F.C.T.D.); Burnaby
Machine & Mill Equipment Ltd. v. Berglund Industrial
Supply Co. Ltd. et al. (1982), 64 C.P.R. (2d) 206
(F.C.T.D.).
AUTHORS CITED
Fox, Harold G. The Canadian Patent Law and Practice
relating to Letters Patent for Inventions, 4th ed.
Toronto: Carswell Co. Ltd., 1969.
COUNSEL:
Gordon S. Clarke for plaintiff.
Timothy J. Sinnott for defendants.
SOLICITORS:
Gordon S. Clarke, Toronto, for plaintiff.
Barrigar & Oyen, Toronto, for defendants.
The following are the reasons for order ren
dered in English by
ROULEAU J.: This is an appeal by the defendant
from the order of Assistant Senior Prothonotary
Giles, dated 27 October, 1989 [[1990] 1 F.C. 108
(T.D.)], wherein he maintained his previous order
striking from the counterclaim a plea based on the
Statute of Monopolies, 21 Jac. 1, c. 3. Before
going further, a brief chronology of what has
occurred so far is necessary.
The statement of claim, filed in 1981, alleges
that the defendants had infringed the plaintiffs
patent, Registration No. 1,099,566, which is for a
"Multiple Section Draw Bar" intended for agricul
tural use. Various amended pleadings and particu
lars ensued. The statement of defence was eventu
ally amended to include a counterclaim, seeking in
paragraph 16 an order restraining the plaintiff
from making false and misleading statements;
claiming damages for loss of goodwill, etc.; as well,
in paragraph 17, the remedy under the Statute of
Monopolies of treble damages and double costs in
the event of proving it was "hindered, grieved,
disturbed or disquieted ... by the occasion or
pretext of any monopoly, or of any .. . Letters
Patent ...". Particulars of these allegations,
amongst other things, were ordered by Giles
A.S.P. January 16, 1989. A further amended
statement of defence and counterclaim as well as
amended particulars thereof were filed as a result
of this order.
The plaintiff subsequently brought a motion for
an order striking out certain allegations in the
counterclaim, on the grounds that the particulars
provided as a result of the January 16, 1989 order,
did not sufficiently specify the alleged false
representations; more particularly the "hindrance,
grievance, disturbance or disquieting" with respect
to these false statements, or the loss of goodwill,
etc.; further, that the defendants failed to substan
tiate a reasonable cause of action within the juris
diction of the Federal Court, based upon the Stat
ute of Monopolies.
As a result of this motion, Mr. Giles A.S.P.,
rendered an order dated September 8, 1989, strik
ing paragraph 17 of the further amended defence
and counterclaim, paragraph (d) of the prayer for
relief therein and paragraph 3 of the amended
statement of particulars, all of which dealt with
the Statute of Monopolies. He did this on the
grounds of "duplicity". The relief sought under the
Statute of Monopolies would be similar, if not
identical, to the allegation of false statements in
paragraph 16 of the same pleading. He further
ruled that it should be struck without leave to
amend. His reasoning on this aspect is as follows:
... if a purported patent is involved, as was pointed out by Mr.
Justice Matthew in Peck & Co. v. Hindes, Ld. (1898), 15
R.P.C. 113 (Q.B.), where a patent is involved the Statute of
Monopolies would not apply. If a patent is not involved, as Mr.
Justice Collier pointed out in Aca Joe International v. 147255
Canada Inc. et al. (1986), 10 C.P.R. (3d) 301 (F.C.T.D.), this
Court would not have jurisdiction to hear the case.
If I am wrong in finding Peck v. Hindes and Aca Joe are
applicable, I find that the Statute of Monopolies is not appli
cable because the acts complained of, as seen from the particu
lars filed, took place in the Prairie provinces.
The defendant appealed this decision to Mr.
Justice Muldoon, arguing that the learned Pro-
thonotary had erred in his appreciation of the
principle of law that a court should not strike out a
pleading under Rule 419 [Federal Court Rules,
C.R.C., c. 663] unless it is "plain and obvious".
Counsel argued that whether the Statute of
Monopolies was within the competence of the
Federal Court was still in doubt on the basis of
Burnaby Machine & Mill Equipment Ltd. v. Ber-
glund Industrial Supply Co. Ltd. et al. (1982), 64
C.P.R. (2d) 206 (F.C.T.D.) and that it ought to be
left to the trial judge to determine the issue. In
Burnaby v. Berglund, an action for copyright
infringement, the plaintiff sought to strike out
certain paragraphs of the counterclaim, which
included a plea for relief pursuant to the Statute
of Monopolies. It was argued that the Federal
Court had no jurisdiction to entertain such a plea.
Mr. Justice Dubé dismissed the application, noting
that the Court will not strike out a pleading under
Rule 419(1) unless it is plain and obvious. Further,
he felt that the status of the Statute of Monopolies
ought not to be determined on a preliminary
motion such as a motion to strike, but should be
left up to the trial judge for determination.
Mr. Justice Muldoon, after hearing the appeal,
ordered that the Prothonotary reconsider his
impugned order to strike, and vary or confirm such
order in light of Mr. Justice Dubé's reasons in
Burnaby v. Berglund, supra.
After submissions, Mr. Giles reconsidered his
decision, and on October 27, 1989 he refused to
amend or vary his earlier decision, distinguishing
Burnaby. It was his view that in light of Mr.
Justice Muldoon's order it was not necessary in his
reconsidered decision to determine whether the
Statute of Monopolies is part of the law of
Canada. He was satisfied that the pleading could
not be Sustained on the basis of "duplicity". He
maintained his position that the impugned para
graphs should be struck without leave to amend,
relying on Aca Joe [Aca Joe International v.
147255 Canada Inc. et al. (1986), 10 C.P.R. (3d)
301; 4 F.T.R. 311 (F.C.T.D.)] and Peck [Peck &
Co. v. Hindes, Ld. (1898), 15 R.P.C. 113 (Q.B.)],
supra, that the Statute of Monopolies was not
within the jurisdiction of the Federal Court. In his
view, his attention should only be directed to the
decision in Burnaby and that it was not on all
fours with his situation; since he had already made
a determination that the Statute of Monopolies
was not part of the law of Canada, and therefore it
should not be necessary to leave it to a trial judge
to make the determination. This is what he per
ceived Mr. Justice Muldoon had directed him to
do.
The present application is a further appeal from
the order of Mr. Giles, A.S.P. dated October 27,
1989, on the following grounds:
(1) The Learned Prothonotary erred in not reversing or vary
ing his Order dated 8 September, 1989, after reviewing the case
of Burnaby v. Berglund 64 C.P.R. (2d) 206.
(2) The Learned Prothonotary erred in failing to grant the
defendants leave to amend the paragraph of their pleading
invoking the Statute of Monopolies, in view of the principle of
law set out in Burnaby v. Berglund that a pleading should not
be struck out under Rule 419 unless it is plain and obvious that
there is no cause of action.
(3) The Learned Prothonotary erred in distinguishing the case
of Burnaby v. Berglund.
(4) The Learned Prothonotary erred in his appreciation of the
case of Aca Joe International v. 147255 Canada Inc. 10 C.P.R.
(3d) 301.
(5) The Learned Prothonotary erred in his interpretation of the
Order of Mr. Justice Muldoon dated 16 October, 1989.
Was Mr. Giles' order to strike invalid in light of
the principle enunciated in Burnaby v. Berglund?
Mr. Justice Dubé was not satisfied that it was
"plain obvious" that there was no cause of action,
and therefore he left the determination to the trial
judge. If, however, it can be established that the
Statute of Monopolies is not valid and applicable
federal law, should not a pleading based thereon
be struck as disclosing no cause of action within
the jurisdiction of the Federal Court?
The Federal Court has jurisdiction in patent
matters pursuant to section 20 of the Federal
Court Act [R.S.C., 1985, c. F-7], where any
remedy is sought under the authority of an Act of
Parliament; and under section 26 of the Federal
Court Act, where jurisdiction has been specifically
conferred on this Court.
Two cases decided since Burnaby v. Berglund,
without elaborating, held that the Statute of
Monopolies does not confer jurisdiction upon this
Court to provide remedies under it, nor could this
Court entertain remedies provided thereunder.
In Aca Joe, supra, Mr. Justice Collier, dismiss
ing an application for an interlocutory injunction,
had the following to say regarding the Statute of
Monopolies [at pages 308-309 C.P.R.]:
I am not convinced that it is existing, and applicable, federal
law, statute or otherwise. But assuming it is, I can find nothing
in it conferring jurisdiction, to hear actions based on it, on this
Court. The reference in the original statute is to the courts
existing in England at the time the statute was passed. They
were common law courts: King's Bench, Common Pleas, and
Exchequer. Those courts had no equitable jurisdiction to grant
injunctions. The remedy in the English statute was damages.
I previously considered the Statute of Monopo
lies in Safematic Inc. v. Sensodec Oy (1988), 20
C.I.P.R. 143; 21 C.P.R. (3d) 12; 20 F.T.R. 132
(F.C.T.D.), in an application to strike out the
statement of claim as disclosing no reasonable
cause of action within the jurisdiction of the Fed
eral Court.
The relevant portion of those reasons is as fol
lows [at pages 154-155 C.I.P.R.]:
The plaintiffs' allegations founded in the Statute of
Monopolies, supra, must also fall. On reviewing the facts of
this case I am satisfied that in order to find that the Federal
Court has jurisdiction to entertain this action, the plaintiffs
must show at the very least that the relief they seek is within
either:
(a) Section 20 of the Federal Court Act, where a remedy is
sought under the authority of any Act of the Parliament of
Canada or at law or in equity, respecting any patent of
invention, copyright, trade mark or industrial design, or
(b) Section 26 of the Federal Court Act where jurisdiction
has been specifically conferred on the Federal Court by any
Act of Parliament.
The Statute of Monopolies does not designate, for obvious
historical reasons, that its remedies can be heard in the Federal
Court. The subject matter of the monopoly, or pretext of
monopoly referred to in this case is not under a letters patent
within the meaning of s. 20. The right to an invention not
covered by letters patent is within the provincial sphere of
competence, therefore, the Federal Court does not have juris
diction to hear any claim for relief framed within this legisla
tion under this fact situation.
In Safematic, unlike the present case, there was
no issued patent, and therefore I was not called
upon to determine conclusively whether the Stat
ute of Monopolies and remedies thereunder are
part of the law of Canada.
In both Aca Joe and Safematic, it was not
necessary to determine whether the Statute of
Monopolies was valid, subsisting and applicable
federal law. This matter, however, is now squarely
before the Court.
Before dealing with the issue, it would be useful
to examine the purpose and effect of the old
Statute of Monopolies. It was examined with
great particularity in the case of Peck v. Hindes,
supra. In 1610, King James I issued a Royal
Declaration that he would henceforth abstain from
granting monopolies, or any grants or commissions
which would interfere with the fair course of trade.
In the preamble to the Statute of Monopolies,
enacted in 1623, the Monarch was reminded of his
previous declaration and by passing the new Act
he was adamant about undoing the wrong. Section
1 of the statute declared that henceforth all
monopolies, grants, Letters Patent, etc., tending to
create or protect monopolies and interfere with the
fair course of trade, are contrary to the laws of the
land, are void and of no effect. Section 2 required
all monopolies, etc. to be tried and determined
according to the common law. As a result, the Act
required Patentees alleging a right of monopoly to
come before a Court of Law and have confirmed
the propriety of their Letters Patent or monopolies.
Section 4, invoked by the defendants in this pro
ceeding, provided the remedy of triple damages
and double costs for any party who was "hindered,
grieved, disturbed, or disquieted, by occasion or
pretext of any monopoly or Letters Patent ...."
Section 6 exempted from the operation of the
Statute all patents for new invention which were
subsequently granted. The plaintiffs in Peck, supra
had argued that the section 6 proviso did not apply
to a patent which was flawed. The Court dismissed
this argument, emphasizing that the Act "applies
in its terms to invalid and improper exercises of
the Royal Prerogative, and not to Letters Patent
which were perfectly legitimate and protected by
law."
As stated by the Prothonotary, the reasoning in
Peck v. Hindes makes it clear that the Statute of
Monopolies did not apply to "patents for new
inventions" properly issued; even assuming that it
was a part of the law of Canada, no remedies
under the Statute of Monopolies can be pleaded
by the defendant since we have a valid and subsist
ing patent. Although the defendant submitted that
Peck was distinguishable and possibly not binding
on this Court since it was decided after Confedera
tion, it nevertheless appears to be a clear explana
tion of what the Statute of Monopolies intended.
In determining any question of jurisdiction, it is
necessary to keep in mind that the Federal Court
of Canada is a statutory court, limited in jurisdic
tion to "the better administration of the laws of
Canada" either under the Federal Court Act or
any other Act of the Parliament of Canada. It is
my view that remedies under the Statute of
Monopolies as they existed in England were in the
area of property and civil rights and determinable
in that country's particular common law courts. At
the time of Confederation, much of this particular
area of jurisdiction was conferred upon the provin
cial legislatures of this country; by way of excep
tion, exclusive jurisdiction to deal with "patents of
Invention" was given to the Parliament of Canada
pursuant to subsection 91(22) of the Constitution
Act, 1867 [30 & 31 Vict., c. 3 (U.K.) [R.S.C.
1970, Appendix II, No. 5]]. Parliament then exer
cised this power by passing the first Patent Act in
1869 [The Patent Act of 1869] (32 & 33 Vict.,
c. 11 (U.K.)), now the Patent Act, R.S.C., 1985,
c. P-4.
The Statute of Monopolies was not in substance
a patent statute per se, but rather an Act dealing
with the then prevailing monopolies. It was enact
ed to control abuses of the royal prerogative. The
courts which exercised this jurisdiction were the
common law courts existing at the time. They were
not courts of equity. Prior to Confederation, the
courts of the provinces exercised jurisdiction simi
lar to the common law courts of England. At the
time of Union, the provinces were given exclusivity
in the realm of property and civil rights, with
certain exceptions including subsection 91(22) of
the Constitution Act, 1867, clearly legislation
regarding patents was given to the Parliament of
Canada. Parliament, in exercising its constitution
al power over patents, enacted the Patent Act; it
chose not to include remedies of treble damages
and double costs. What is not contained within the
Patent Act cannot be under the jurisdiction of the
Federal Court of Canada.
Fox, in The Canadian Patent Law and Practice
relating to Letters Patent for Inventions (4th ed.;
Carswell, 1969, pages 12-13), had the following to
say:
It may be questioned whether the Statute of Monopolies still
remains in force in Canada and whether the Ontario statute is
infra vires the Legislature of that Province, in view of the fact
that the Dominion has acted under the exclusive authority
conferred upon it by s. 91(22) of the British North America
Act, 1867, to pass legislation with respect to patents of inven
tion. To answer those questions one must examine the purpose
for which the Statute of Monopolies was originally passed in
1624. It was not by any means enacted as a patent statute
having as its primary purpose the establishment of a system
whereby letters patent might be obtained for meritorious inven
tions. It was enacted as the result of a long and turbulent
agitation against the abuse of monopolies of all kinds as well as
other grievances that were set out in the preamble to the Act
and which now appears as s. 1 of the Ontario statute. Those
grievances included many things other than letters patent,
embracing the dispensing with penal laws, compounding of
forfeitures, and monopolies and licences of a wide variety and
character. A perusal of the declaration contained in King
James' Book of Bounty of 1610, which Coke has noted as one
of the important factors that contributed to the enactment of
the Statute of Monopolies, will show that the primary and
essential purpose of the statute was to declare the common law
concerning, and to put an end to, the abuse of the grant of
illegal monopolies and other powers and licences having noth
ing to do with inventions and new manufactures. S. 6 merely
exempted patents for new manufactures from the prohibition in
the declaration of s. 1. On these facts the Statute of Monopo
lies, as re-enacted by the Ontario Legislature, cannot be con
strued in its entirety as legislation concerning "Patents of
Invention and Discovery" but must be held to be legislation
concerning "Civil Rights within the Province" and so within
the competence of a provincial legislature. Anything within the
saving section that is contrary to the terms of the Dominion
Patent Act, as, for example, the time limit for valid monopoly
grants with respects to new manufactures, must give way to the
legislation on "Patents of Invention and Discovery" which is
within the exclusive competence of the Federal Parliament.
Subject to that qualification, the remainder of the Statute of
Monopolies is concerned either with civil rights within the
province or "The Administration of Justice within the Prov
ince" and so it is within the competence of a provincial
legislature as provided by s. 92(14) of the British North
America Act. [Footnotes omitted.]
I am in respectful agreement with this position.
The Statute of Monopolies, to the extent that it is
in force in Canada, is part of property and civil
rights and within the provincial domain. The
defendant is attempting to convince me that the
remedy of triple damages and double costs should
be available. As I have said before, the Statute of
1623 is clear, the remedy does not apply to patents
properly issued. May I suggest that the defendant
in his argument is suggesting that an "incidental
remedy" is analogous or synonymous with "inci-
dental jurisdiction"; in my view this cannot be so
without a specific incorporation in the Canadian
Patent Act. Indeed, it appears that the operation
of section 129 of the Constitution Act, 1867,
comes into play in these circumstances to exclude
the validity of the Statute of Monopolies from the
domain of Parliament's legislative competence,
because the Patent Act excludes those remedies.
I am satisfied that the Prothonotary was correct
in striking the impugned paragraph of the counter
claim and particulars regarding the Statute of
Monopolies without leave to amend on the basis
that this Court has no jurisdiction.
As to whether or not it was the law of the
prairies at their times of Confederation and wheth
er or not it is enforceable in the provincial domain,
without specific legislation being enacted, is a
question for another day.
Whether Mr. Giles had the authority to recon
sider his order, I am not prepared to discuss, since
this decision renders the question moot.
This appeal is dismissed with costs.
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.