This is a review of a recent decision of the Ontario Superior
Court of Justice, which has implications for Canadian patent owners
The case is Verdellen v. Monaghan Mushrooms Ltd.
The facts are that the Applicant ("Verdellen") sought
a declaration that he was the owner of certain patent rights
outside North America for an invention he founded while employed by
Rolland Farms ("Rolland"). Verdellen claimed such rights
pursuant to a December 2008 written assignment agreement, which
purported to assign the rights from Rolland to Verdellen (the
The invention in question was the subject of a Patent
Coorperation Treaty ("PCT") Application with a Canadian
National Phase Application.
In late 2009, Monaghan Mushrooms Ltd. ("Monaghan")
purchased Rolland's business, including the entirety of
Rolland's intellectual property rights.
Monaghan took the position that Verdellen could not establish
the validity of the Assignment. Alternatively, Monaghan argued that
notwithstanding the Assignment, it acquired the patent rights as a
bona fide purchaser for value without notice of
Monaghan also argued that the Assignment was void under Section
51 of the Patent Act, which provides that an assignment is
void against any subsequent assignee unless such assignment is
registered with the Canadian Intellectual Property Office
("CIPO") in accordance with Sections 49 and 50 of the
Importantly, Verdellen did not register the Assignment with
CIPO. Following its purchase of Rolland, Monaghan registered an
assignment of the patent rights from Rolland to Monaghan.
The Judge found too many factual issues to make a finding on the
validity or enforceability of the Assignment. That said, the Judge
decided that even if the Assignment was valid, Verdellen would have
acquired only an equitable interest in the patent rights owing to
the fact that the Assignment contemplated the future assignment of
the patent rights and did not effect an assignment of the
The Judge found that even if the Assignment was valid, Monaghan
undertook an extensive due diligence process, which on all accounts
showed Rolland to be the owner of the patent rights in
The Judge ultimately concluded that even assuming the Assignment
to be valid and enforceable, Monaghan was a bona fide
purchaser for value without notice of the Assignment or any rights
held by Verdellen and therefore took title to the patent rights
free and clear of any equitable interest held by Verdellen.
The Judge went on to consider Monaghan's alternative
argument under Section 51 of the Patent Act and found that
because the issue was in respect of foreign non- Canadian rights
under the PCT Application, the Canadian Patent Act did not
Notwithstanding the above, the Judge commented that had the
issue concerned Canadian patent rights in a PCT Application, the
Patent Act would have applied. In such a situation,
Section 50(2) would have dictated that Verdellen's failure to
register the Assignment would deprive him of priority against
Monaghan as a subsequent assignee with a registered assignment. In
this situation, Verdellen's assignment would be rendered
The Verdellen decision provides a practical perspective
on the possible implications of failing to register assignments of
patent rights in Canada.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Canadian Intellectual Property Office has issued a report entitled IP Canada Report 2016, discussing trends in IP use domestically, and by Canadians abroad, based on analysis of CIPO's internal data and those collected by the World Intellectual Property Organization.
This chapter of Doing Business in Canada provides an overview of Canada's intellectual property regime in five key areas: copyright, industrial designs, patents, trademarks and the enforcement of IP rights.
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