The Québec Court of Appeal's decision in Gotar
Technologies Inc. v. Arseneault emphasizes that a non-compete
clause and assignment of intellectual property to an employer
cannot be interpreted so broadly that a person is prevented from
earning a living in a similar field once the relationship with the
employer is over. Moreover, a business opportunity that is rejected
or not developed by an employer may be fair game for development by
In March 2008, the Québec Court of Appeal upheld a
decision by the Superior Court rejecting a request by Gotar
Technologies Inc. (Gotar) for a permanent injunction preventing two
of Gotar's former directors from using a process for
transforming aluminum. Gotar alleged that the process had been
assigned to it by one of the former directors, and also that the
use of the process by the directors violated their contractual and
civil 'non-compete' and loyalty obligations.
The defendant, Émile Arseneault, had been one of the
initial shareholders and directors of Gotar when it was
incorporated in 1997. Previously, Mr. Arseneault had worked
for Les Traitements Villeneuve Inc., a company specializing in the
recovery, treatment and reuse of contaminated and non-contaminated
metals. Gotar provides de-oxydization, delipidation and industrial
cleaning services for industrial equipment using bio-degradable and
non-toxic products and application methods.
While still working for Gotar, in 2001, Mr. Arseneault brought
up the idea of recovering aluminum shavings and submitting them to
a chemical decontamination process to render them reusable.
The idea was discussed with a patent agent, but was never developed
Mr. Arseneault's relationship with Gotar began to
deteriorate in 2003, and he left the company permanently in
2004. In April 2004, Mr. Arseneault and another former
director of Gotar, André Simard, created the company
Alumitherm International Inc. (Alumitherm). Alumitherm is in the
business of supplying reusable, spherical, calibrated aluminum
particles created by applying a transformation process to aluminum
Gotar applied to the Québec Superior Court for a
permanent injunction against Alumitherm, claiming that it was the
owner of the transformation process used by Alumitherm, and that
Mr. Arseneault and Mr. Simard had competed unfairly and deprived
Gotar of a business opportunity.
In his contract with Gotar, Mr. Arseneault had assigned his
rights in various de-oxydization, de-greasing, and decontamination
products that he had invented. Both former directors had
agreed that Gotar would own any intellectual property that they
invented, created or developed while employed by Gotar.
However, the Superior Court found that these contractual
provisions did not give Gotar any rights to the process used by
Alumitherm, primarily because it found persuasive the
defendants' expert report explaining that the mechanical
transformation process used by Alumitherm bore no similarity to the
chemical decontamination processes and products owned and performed
On appeal, the Québec Court of Appeal agreed that the two
processes were fundamentally different, and not competitive with
one another. The Court of Appeal also observed that although the
contracts signed by the former directors were drafted very broadly,
they could not be interpreted to mean that any technologies
conceived of by Mr. Arseneault during his employment were
automatically transferred to Gotar, where those technologies were
so different from those actually used by Gotar.
With respect to the allegations of unfair competition and
failure in the obligation of loyalty, the Court of Appeal affirmed
the Superior Court's finding that Gotar was not deprived of any
business opportunity. The idea of recovering and rendering reusable
aluminum shavings had been raised by Mr. Arseneault in 2001, but
for various reasons, Gotar decided not to develop this
concept. In this circumstance, according to the courts,
nothing prevented Mr. Arseneault from revisiting the idea in 2004,
developing it, and putting it into action.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).