Vapor Canada Limited (Plaintiff)
v.
John A. MacDonald, Railquip Enterprises Limit
ed, and Vapor Corporation (Defendants)
No. 1
Trial Division, Walsh J.—Ottawa, August 19,
November 25, 1971.
Pleadings—Averments in statement of claim—Infringe-
ment of patent and trade mark—Disclosure of trade secret—
Insufficient details—Striking out.
Averments in a statement of claim that the defendants
infringed plaintiff's patent and trade mark, that the defend
ant M disclosed the plaintiff's trade secret, and that the
defendants engaged in improper business practices are too
imprecise and will be struck out. The details of the patent,
trade mark and trade secret, the manner of infringement of
the patent and trade mark and the persons to whom the
trade secrets were disclosed should all be disclosed.
A prayer for delivery up by the defendants of all infring
ing articles will be struck out as too imprecise.
Dow Chemical Co. v. Kayson Plastics & Chemicals
Ltd. [1967] 1 Ex.C.R. 71; Precision Metalsmiths Inc. v.
Cercast Inc. [1967] 1 Ex.C.R. 214; Union Carbide
Canada Ltd. v. Canadian Industries Ltd. [1969] 2
Ex.C.R. 422; Hassenfeld Bros. Inc. v. Parkdale Novelty
Co. [1967] 1 Ex.C.R. 277, referred to.
Redmond Qua in for plaintiff.
J. Nelson Landry for defendants.
WALSH J.—Defendants move for striking out
plaintiff's statement of claim and amended
statement of claim filed on August 11, 1971 and
November 3, 1971 respectively on the ground
that it discloses no reasonable cause of action,
it is vexatious and may prejudice, embarrass or
delay the fair trial of the action. On November
9, 1971, a further amended statement of claim
was filed by plaintiff, making some very minor
amendments to the amended statement of claim
of November 3, 1971 and by agreement of
counsel at the hearing before me on defendants'
motion, the judgment will deal with this further
amended statement of claim.
A brief summary of the background of these
proceedings as disclosed by the court record
and by counsel in argument before me is rele-
vant. The original statement of claim which
accompanied a notice of motion for an inter
locutory injunction was based on alleged patent
infringement, unfair competition, and a disclo
sure of trade secrets and confidential informa
tion by defendants, John A. MacDonald and
Railquip Enterprises Ltd., the third defendant,
Vapor Corporation, against whom no relief is
sought, having been joined as patentee of cer
tain of the patents pursuant to section 57(2) of
the Patent Act. The further amended statement
of claim added paragraphs specifically alleging
trade mark and copyright infringements on the
part of the said defendants to the patent
infringement, unfair competition, disclosure of
trade secrets and of confidential information
alleged in the original statement of claim. Since
the defendants have not yet pleaded to the
proceedings, the amended statement of claim
and further amended statement of claim by
plaintiff can be made by virtue of Rule 421
without leave, and even if leave had been
required under Rule 424, it would have been
granted by virtue of Rule 427 notwithstanding
that it might perhaps be argued that it added
new causes of action, since these clearly arose
out of the same facts or substantially the same
facts as those in respect of which relief had
already been claimed in the original statement
of claim.
In support of its application for an interlocu
tory injunction plaintiff, in due course, submit
ted three affidavits in response to which
defendants allegedly submitted nine. affidavits.
Lengthy cross-examinations have taken place
which are not yet completed of the various
witnesses in connection with these affidavits
and counsel informed the court that the tran
script of these examinations already amounts to
some 3,000 pages. As a result, the application
for interlocutory injunction has not yet been
dealt with. In view of defendants' failure to
plead to the original statement of claim, plaintiff
made an application for judgment by default
pursuant to Rule 437, which application was
dismissed by Gibson J. on October 14, 1971
with costs in favour of defendants in any event
of the cause.
In argument before me plaintiff's counsel
relied strongly on the fact that defendants'
motion was only made on November 10, 1971,
nearly three months after the date the original
statement of claim was filed and served on
defendants, stating that the original statement
of claim was less complete and detailed than the
amended statement of claim and further amend
ed statement of claim, and that if defendants
had proposed to object to the statement of
claim on the ground that it discloses no reasona
ble cause of action, is vexatious and may preju
dice, embarrass or delay the fair trial of the
action, this should have been done at that time,
and that defendants should not be permitted to
do so and further delay the progress of the
action by making this motion now. I can find no
support for this argument in the rules nor was
any jurisprudence cited to me that could sup
port it. Plaintiff, itself, by filing an amended
statement of claim as late as November 3, 1971
and further amended statement of claim on
November 9, 1971, as it was entitled to do
under the rules respecting amendments, opened
the door to defendants' motion and, in any
event, the rules set out no delay within which
defendants were obliged to make it, Rule 419
permitting the court "at any stage of the action"
to order any pleading or anything in it to be
struck out with or without leave to amend.
Moreover, the present motion, if granted, while
it may delay the progress of the action itself,
does not have the effect of delaying a hearing
on the motion for interlocutory injunction
which cannot be proceeded with until the cross-
examination of defendants' witnesses has been
completed by plaintiff's attorney.
Coming now to the merits of defendants'
motion, I find that the plaintiff's further amend
ed statement of claim is defective in many
respects in accordance with the jurisprudence
of this Court established recently in a series of
cases including Dow Chemical Co. v. Kayson
Plastics & Chemicals Ltd. [1967] 1 Ex.C.R. 71;
Precision Metalsmiths Inc. v. Cercast Inc.
[1967] 1 Ex.C.R. 214, which judgments of Jack-
ett P, as he then was, were followed by Thurlow
J. in Union Carbide Canada Ltd. v. Canadian
Industries Ltd. [1969] 2 Ex.C.R. 422, and more
recently in an as yet unreported judgment of
Pratte J. in Posting Equipment Corp. v. B & F
Metal Works Ltd. T-2286-71, August 4, 1971,
all of which were patent infringement actions.
The same principles were applied to industrial
design and trade mark infringements by Noël J,
as he then was, in Hassenfeld Bros. Inc. v.
Parkdale Novelty Co. [1967] 1 Ex.C.R. 277, and
his as yet unreported judgment in Lovable
Brassiere Co. of Canada Ltd. v. Lovable Knits
Inc. B-4229, April 1, 1971.
I quote from these judgments to illustrate the
principles of proper pleadings in industrial prop
erty cases which they have established. In the
Dow Chemical case President Jackett stated at
page 75:
... A bare assertion that the defendant has infringed the
plaintiff's rights is not an allegation of facts constituting a
cause of action and a statement of claim in which that is the
only assertion of infringement could be struck out as being
an abuse of the process of the Court. See Marsden v.
Albrecht (1910) 27 R.P.C. 785 (C.A.) per Buckley L.J. at
pages 788-9. The facts must be alleged in such a way that
the Court can be satisfied that, assuming the truth of what is
alleged, the plaintiff has an arguable cause of action (Phi-
lipps v. Philipps, (1878) 4 Q.B.D. 127). It would be no
answer to an application to strike out in such a case for the
plaintiff to say that, if he is allowed to have unrestricted
discovery of the defendant, he may then be in a position to
plead a cause of action.
This judgment is also authority for the proposi
tion that a plaintiff cannot give particulars
respecting one particular breach of which he
complains and then add allegations of a vague
nature respecting other breaches which he sus
pects but of which he is not definitely aware. At
page 73 the judgment states:
Counsel for the plaintiff takes the position, in effect, that
the plaintiff, if it has information of one type of infringe
ment of its patent, is entitled to launch proceedings for
infringements of that type and for anything else that the
defendant may have done that constitutes infringement of
the same patent, so that he will be in a position, in the
course of obtaining discovery from the defendant, to
explore the possibility of there having in fact been types of
infringement of which he did not know when he launched
his action. He concedes that, some time before trial, he
must, if the defendant then insists, amend his Statement of
Particulars by adding allegations of any other infringements
of which he has become aware in the meantime and upon
which he proposes to rely, so that he will then be restricted
at trial to his Statement of Particulars as amended.
On commenting on this contention, the judg
ment states at page 74:
It may well be, of course, that the plaintiff, at the time
that an action is instituted, has grounds for asserting that
the defendant has done certain things although he is not in a
position to say precisely when or where or how the defend
ant did such things. These details in the circumstances of a
particular case may be entirely within the knowledge of the
defendant. For example, the plaintiff may be in a position to
show that a manufacturer sold a certain class of goods that
had been manufactured by his patented process. Only the
defendant can know, however, when and where they were
so manufactured. (In such a case, it obviously would not be
necessary for the plaintiff to give such particulars, at least
before discovery had taken place. There may also be cir
cumstances in which the plaintiff's knowledge is sufficient
to warrant commencing proceedings but it is appropriate to
give him an order for inspection of the subject matter of the
action under Rule 148A before he is required to settle his
Particulars of Breaches. Compare Edler v. Victoria Press
Manufacturing Company (1910) 27 R.P.C. 114.
The judgment further states at page 78:
In my view, however, none of these problems arise when
the plaintiff, in addition to particularizing as to the facts
constituting an infringement that are known to him,
attempts to bring within the ambit of his Statement of Claim
facts that are unknown to him and which, as far as he has
any ground for belief, do not exist. Such an attempt to
include in a Statement of Claim causes of action based upon
no known facts must fail. Either the plaintiff can show that
there are facts that justify including a second cause of
action in the Statement of Claim or the references to such a
possible cause of action are not relevant to any cause of
action and should be struck from the pleading.
These principles are again set out by President
Jackett in the Precision Metalsmiths case, which
referred to the Dow Chemical case. At page 220
he states:
In an action for infringement of a patent under the Patent
Act, there must therefore be in the Statement of Claim
allegations
(a) of facts from which it follows as a matter of law that
the plaintiff has, by virtue of the Patent Act, the exclusive
right to do certain specified things, and
(b) that the defendant has done one or more of the
specified things that the plaintiff has the exclusive right to
do.
It is not a compliance with the requirement that the material
facts be alleged merely to state the conclusions that the
Court will be asked to draw, which are
(a) that the plaintiff is the owner of one or more specified
Canadian patents, and
(b) that the defendant has infringed the plaintiff's rights
under such patents.
The principles set out in these two cases were
carried a step further by Thurlow J. in the
Union Carbide case in which, despite the fact
that particulars of breaches indicated which
specific paragraphs of the patents in question
had allegedly been infringed, he held that this
was insufficient, stating, at page 425:
... in a case where interference with a property right is to
be the basis for the relief sought, a concise description of
the right asserted with a statement of the facts as to how the
right arose. What is required, moreover, is not a reference
to where information as to the plaintiff's right can be found
but a concise description of it sufficient to point unequivo
cally to what it is that the defendant has violated.
Again, at page 427, he states:
... I should add, however, that in many, if not most cases
the description of the right asserted by setting out a number
of lengthy and largely unintelligible patent claims, while
perhaps not so susceptible to the objection that no cause of
action is disclosed might well be open to the objection that
it was not a concise statement of a material fact and might
be just as objectionable and liable to be struck under
paragraphs (c) and (e) of Rule 114 as being likely to preju
dice and embarrass the fair trial of the action or as being an
abuse of the process of the Court. As I see it what is
required is a succinct description, stripped of all unneces
sary and irrelevant verbiage, of the essential feature which
the defendant is to be alleged to have taken. To compose
such a description may require time and effort but, as I see
it, a plaintiff and his counsel should know before the action
is commenced what the particular right is that they propose
to prove has been infringed and should, be able tocompose
a sufficient description of it. ,
In applying the same principles to industrial
design in the, Hassenfeld Bros. case, Noël J.,
now Associate Chief Justice, referred to the
Precision Metalsmiths case and stated at page
281:
... The allegation of infringement contained in the state
ment of claim that the defendant "by reason of its importa
tion, distribution and sale of its `Johnny Canuck Canada's
Fighting Soldier Fully Jointed Move Into 1001 Positions'
doll ... has infringed the plaintiff, Hassenfeld Bros., Inc.'s
industrial design registration No. 204, folio 26805" is not
sufficient as this allegation does not contain such a descrip
tion of the design or alleged fraudulent imitation thereof
that the defendant is alleged to have imported, distributed
and sold, as will show that they are in fact an infringement
of the plaintiffs' rights. In the absence of such a description,
there is, therefore, no allegation of the material facts neces
sary to show a cause of action for infringement.
In the Dow Chemical case President Jackett
was dealing with a motion for particulars
although, as he pointed out, the objections to
the form of the pleading might well have been
made by means of a motion to strike. In the
present case, we have the converse situation.
Defendants have made a motion to strike and
while substantially similar results might have
been obtained, certainly with respect to some of
the improperly drawn paragraphs of the further
amended statement of claim, by a motion for
particulars, the motion they have brought is
perfectly proper. There would seem to be no
practical advantage, and on the contrary, the
proceedings on the merits would be further
delayed, if only those paragraphs which are
manifestly improperly drawn were struck, leav
ing in others with respect to which a motion for
particulars would subsequently have to be
made, so it is my intention to strike out all
paragraphs which appear to me to require fur
ther clarification, reserving the plaintiff's right
to apply for leave to substitute other pleadings
for those so struck out.
Dealing now with specific paragraphs of
plaintiff's further amended statement of claim,
paragraphs 3 and 4 read as follows:
3. Defendants MacDonald and Railquip Enterprises
(herein called the defendants) have infringed said patents at
the times and places set forth in the particulars of breaches
delivered herewith, by making, constructing, using and
vending to others in Canada the inventions set forth in said
letters patent, or causing them to be.
4. The infringement consists of infringement of every
claim in the said letters patent and every element of the
combinations respectively set forth in each of the claims, by
using (1) in some products the identical combinations and
identical elements and (2) in other products, unsubstantial
variations thereof.
and the particulars of breaches referred to in
paragraph 3 reads:
1. The Defendants (other than Vapor Corporation) at
various dates in 1971 at present unknown to the Plaintiff
infringed the Patents (in respect of every claim and in
respect of every element of every claim) set forth in the
Statement of Claim and specifically on or about the 30th
April, 1971, by making, constructing, using and vending to
others to be used, the said inventions and specifically the
Defendants sold 150 Heaters to the National Steel Car
Company Limited at Hamilton (for installation in box cars
of Canadian National Railways) which infringed Patent No.
774,371 and the other Patents referred to, at Hamilton,
Montreal and at other places at present unknown to
plaintiff.
These paragraphs and the particulars in ques
tion in effect charge defendants with infringing
every claim in plaintiff's patent in the heaters
they have sold to National Steel Car Company
and are too vague, giving no succinct descrip
tion of the patents or portion of the patents
which have allegedly been infringed, nor the
manner in which defendants' heaters have
infringed them, and should be struck.
Paragraphs 7 and 7.A.1 read as follows:
7. MacDonald, as Vice President of the plaintiff, dis
closed to others, for his own benefit, and contrary to his
written agreement with the Plaintiff, certain trade secrets in
contravention of the laws to that effect and engaged in that
business practice and other business practices, contrary to
honest industrial and commercial usage in Canada, as set
forth in this pleading.
7.A.1. The plaintiff is the first, and present, owner of
copyright in several hundred manufacturing and other draw
ings, and specifications, and other things which the defend
ants fraudulently took (or caused to be taken) from the
premises of the plaintiff the precise number, and descrip
tions, and dates, of which are at present unknown to the
plaintiff but known to the defendants.
These paragraphs give no details of the trade
secrets which defendant, MacDonald, allegedly
disclosed to others, nor to whom he disclosed
them, nor what specific copyrighted manufac
turing and other drawings, specifications and
other things he allegedly took, and should be
struck.
Paragraph 8 reads as follows:
8. The defendants have infringed in Canada plaintiff's
trade mark, "Scotch Guard" as applied to railway box car
heaters, (which the plaintiff has used for at least 15 years to
distinguish such heaters made by it from any that might be
made by others and which defendant MacDonald himself,
while an employee of the plaintiff, has so used) since
February, 1971 by the use of that name in respect of box
car heaters, and by selling, distributing and advertising box
car heaters in association with that name.
but no specific details are given as to the use of
the name "Scotch Guard" by defendants nor of
the selling, distributing, and advertising of the
heaters in association with that name, which is
alleged. It should also therefore be struck.
Paragraph 10 reads as follows:
10. The Defendants pursuant to an illegal plan made
tenders slightly under those of the Plaintiff for work to be
done that necessarily involved use of the confidential infor
mation, copyrights, trade mark, trade secrets and patents
above referred to.
This paragraph gives no details as to what con
fidential information, copyrights, trade mark,
trade secrets and patents belonging to plaintiff
were necessarily involved in the work to be
done which was the subject of the said tenders.
It should therefore be struck.
Paragraph 15 reads as follows:
15. MacDonald, while in the employ of the Plaintiff, up
to the end of April, 1971, always recognized as valid the
patents being infringed by him in the construction of the
items in respect of which he has now made competing bids
with the Plaintiff and in fact declared to others, on behalf of
the Plaintiff, that such patents were valid.
but gives no details as to the patents allegedly
being infringed by MacDonald. It should be
struck.
Paragraph 17 reads as follows:
17. The Defendants or one of them has applied for a
patent on items practically identical with the inventions set
forth in the said patents subject to minor deviations and
thus recognizes the validity of the above patents.
but gives no details as to the alleged patent
application of defendants nor in what respect it
is practically identical with the inventions set
forth in plaintiff's patents, nor which of plain
tiff's patents is involved. It should also be
struck.
Paragraphs 22 and 23 read as follows:
22. MacDonald took things belonging to the Plaintiff and
parts and descriptions thereof, as well as plans to be used
by obliterating the name of the Plaintiff but retaining the
Part Numbers of the Plaintiff.
23. MacDonald and Railquip, unknown to the Plaintiff,
illegally took from the Plaintiff's plant and kept at the office
of Railquip at 11387 Gouin Boulevard West, Roxboro,
Quebec, nearly 200 plans, specifications and letters belong
ing to the Plaintiff and on 15th July, 1971 had them there.
but do not specify what things, parts and
descriptions, plans, specifications and letters
belonging to plaintiff were taken by MacDonald
and Railquip and should therefore be struck.
Paragraph 27 reads as follows:
27. In the interval between his being approached by
MacDonald and his finally rejecting MacDonald's efforts,
James gave to MacDonald certain papers that James had in
his possession, the details of all of which are not at present
known to the Plaintiff.
This is too indefinite and should be struck.
Paragraph 30 reads as follows:
30. Since the 30th April, 1971, Defendants have by
under-bidding Plaintiff, sold 150 box car heaters to National
Steel Car (a builder of box cars for the Canadian National
Railways) which infringe Patent No. 774,371 and the other
patents referred to for $90,000 and other items based on
trade secrets and other confidential information of Plaintiff
for a total of around $260,000 as compared with Plaintiff's
bid of $289,000. MacDonald had while an employee, assist
ed in preparing the Plaintiff's secret bid.
but in referring to "Patent No. 774,371 and the
other patents referred to" and also referring to
"other items based on trade secrets and other
confidential information" it gives no details as
to the nature of the patent claims which have
been infringed, nor what other items have
allegedly been so sold, nor what trade secrets or
confidential information of plaintiff was used. It
should therefore be struck.
Paragraph 32 reads as follows:
32. The patents infringed were issued to Vapor Corpora
tion and duly assigned by it to the Plaintiff and are:—
(1) 621,537 dated the 6th June, 1961 on application dated
the 22nd September, 1958, assigned by assignment regis
tered as No. 540,140.
(2) 774,371 dated 26th December, 1967, on application
dated the 3rd June, 1966, assigned by assignment registered
as No. 814,857.
(3) 784,491 dated 7th May, 1968 on application dated
24th October, 1966, assigned by assignment registered as
No. 818,858.
and, as this merely refers to the patents and
gives no succinct description of them or the
parts of them which have allegedly been
infringed, it must be struck.
Paragraphs (d), (e) and (f) of the conclusion
setting out plaintiff's claims read as follows:
(d) Delivery up to it of all products now in the possession
or under the control of the Defendants, their officers,
servants or agents, that are the combinations set forth in
the claims of the said patents or that are elements of such
combinations.
(e) Delivery up to it of all products now in the possession
or under the control of the Defendants, their officers,
servants or agents in the making of which the knowledge
or information, or drawings, or parts (and other confiden
tial information or things) obtained by MacDonald while
in the employ of plaintiff was used.
(f) Delivery up to it of plans, drawings, specifications,
parts, or letters referred to above now in the possession
or under the control of the Defendants, their officers,
servants, or agents.
These are too imprecise in their references to
information, drawings, parts, plans, specifica
tions, letters and confidential information and
should be struck.
In making this ruling I am not unmindful of
the difficulty for plaintiff in requiring it to be
specific at the time of the commencement of its
action as to precisely which of its patents,
drawings, plans, specifications and so forth
were used by defendants in their manufacture
and sale of the heater complained of. This dif
ficulty was touched on by President Jackett in
one of the passages I have cited from the Dow
Chemical case (supra). However, extensive dis
covery has now taken place, although not yet
fully completed, and a model of the heater
alleged by defendants to be that which they are
manufacturing has been produced as an exhibit,
so that plaintiff's agents and employees have
now had an opportunity of examining it in
detail. Plaintiff should be well aware at this
stage of the proceedings and capable of stating
with some precision which of its patents, draw
ings, plans and specifications defendant Mac-
Donald allegedly took with him or copied when
he left its employ, and which of these defendant
Railquip Enterprises Ltd. has used in the con
struction of this heater. The fact that defend
ants themselves have all this information in
their possession does not relieve plaintiff of the
burden of alleging with precision which of the
patents, plans, specifications, drawings, trade
secrets and other items complained of defend
ants have used or are using. Defendant Mac-
Donald had a right after leaving plaintiff's
employ to enter into competition with it, and a
distinction will have to be made at the trial
between his use of his general knowledge in this
field, which is his personal property as are any
original plans, drawings, specifications and so
forth which he made subsequent to his employ
ment by plaintiff, and any use which he or
Railquip may have made of plans, drawings and
specifications in which plaintiff has the copy
right, or objects or processes for which plaintiff
has the patent. At this stage of the proceedings
plaintiff should have sufficient information to
enable it to plead precise allegations of fact
giving rise to the right claimed instead of
making vague and generalized allegations which
it hopes will cover infringements which it may
have overlooked or of which it is not at this
time aware.
I therefore order as follows:
1. That paragraphs 3, 4, 7, 7.A.1., 8, 10, 15,
17, 22, 23, 27, 30 and 32 of the further amend
ed statement of claim be struck out, as well as
the further amended particulars of breaches,
and paragraphs (d), (e) and (f) of the conclu
sions of plaintiff's amended statement of claim.
2. That the plaintiff, however, be granted
leave to apply for leave to substitute other
pleadings for the further amended statement of
claim and particulars of breaches that are so
struck out.
3. That if no such application be made within
four weeks from the date of this order or such
other delay as the Court may on application
allow, the defendants may apply to have this
action dismissed.
4. That the costs of this application to strike
out be in favour of defendants in any event of
the cause.
Rule 114(1)(c) and (e) referred to in this judgment read
as follows:
114. (1) The Court may at any stage of the proceedings
order to be struck out or amended any pleading or anything
in any pleading on the ground that
(c) it may prejudice, embarrass or delay the fair trial of
the action,
(e) it is otherwise an abuse of the process of the Court;
Rule 419 of the present Rules contains substantially similar
provisions.
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.