A recent decision of the Federal Court considered an
assertion of patent infringement that had been made to the
The plaintiff was the licensee of a patent and an industrial
design. Both the patent and the design related to an expandable
garden hose made up of an inner flexible, stretchable hose encased
in an outer fabric hose. The hose was quite compact when no water
pressure was applied but under pressure the inner hose stretched
only to be constrained by the length of the outer fabric. The
expandable hose product was marketed in Canada under the name
The defendant also sells hoses in Canada including an expandable
hose marketed under the trademark POCKETHOSE.
In the latter half of 2012, a large retailer agreed to purchase
the plaintiff's XHOSE product and a number of orders were
placed for it. However, in April of 2013 the defendant's
representatives approached the retailer concerning the purchase of
POCKETHOSE product. The defendant offered the retailer an indemnity
in respect to any lawsuit the plaintiff might bring.
When the plaintiff learned of this development it caused its
representatives to approach the retailer. During a course of
meetings and other related exchanges, these individuals left the
retailer with the impression that it would be sued by the plaintiff
for patent infringement.
The plaintiff brought an action in the Federal Court asserting
that the defendant's hose infringed its patent and industrial
design. The retailer was not a defendant. The defendant defended
the action on the basis, among other things, that the patent and
design were invalid. In addition, the defendant alleged that the
plaintiff's assertions of the validity of the patent and design
were directed at customers and perspective customers of the
defendant and violated subsection 7(a) of the Trade-marks
As the action progressed both the patent and the design were
found to be invalid, leaving only the issue of the alleged breach
of subsection 7(a) to be dealt with and only with respect to the
Subsection 7(a) provides that no person shall make a false or
misleading statement intending to discredit the business, goods or
services of a competitor. For the purposes of the subsection
statements only need to be misleading without being shown to be
false. In addition, the plaintiff does not have to establish malice
or knowledge of the falsity of the statement to succeed.
All the plaintiff needs to establish is:
a false or misleading statement;
that tends to discredit the business
or business, goods or services of a competitor; and
The judge reviewed the relevant cases and concluded that not
every assertion of rights relating to a patent or an industrial
design that was subsequently held to be invalid would constitute a
false and misleading statement. The court must inquire as to the
nature and the circumstances of the assertion and any subsequent
conduct by the party making the assertions.
The judge concluded that the plaintiff's representatives
deliberately and skillfully left the retailer with the impression
that the plaintiff would sue it for patent infringement. However,
as the patent and design were invalid, this statement was false and
misleading and intended to discredit the goods of the defendant
contrary to section 7(a) of the Trade-marks Act.
As noted above, damages are an essential element in a claim
under subsection 7(a). In this case, the retailer never placed any
further orders for the POCKETHOSE after having listened to the
assertions made by the plaintiff's representatives. However it
seems that the retailer was happy with the XHOSE product and
intended to continue to sell it. The POCKETHOSE purchase was only a
one time promotional purchase and the retailer did not wish to sell
both products because of potential inventory problems.
While the discussions with the plaintiff's representatives
were stressful, they ultimately played no part in the decisions
made by the retailer. As a result, the judge concluded that there
was no causal link between the false and misleading statements made
by the plaintiff and the damages alleged to have been suffered by
From the plaintiff's point of view it can be effective to
claim that a defendant's customers are infringing. However,
there are risks of proceeding in this manner when the patent in
issue is subsequently found to be invalid.
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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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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