Ocean Rodeo Sports v. Oyen, 2017 BCSC 876

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Ocean Rodeo Sports v. Oyen, 2017 BCSC 876 Date: 20170419 Docket: 11-3283 Registry: Victoria Between: Ocean Rodeo Sports Plaintiff And: Gerald O.S. Oyen, Oyen Wiggs Green and Mutala LLP and Gerald O.S. Oyen Law Corporation Defendants Before: The Honourable Mr. Justice Bracken Oral Reasons for Judgment (In Chambers) Counsel for Plaintiff: K. Brooks Counsel for Defendants: J. G Dives, Q.C. and L. V. Mauro Place and Date of Trial/Hearing: Victoria, B.C. April 19, 2017 Place and Date of Judgment: Victoria, B.C.

April 19, 2017 [ 1 ] THE COURT: The plaintiff applies to strike three appointments to examine for discovery in this action. The action is a claim for negligence against a firm of solicitors. The negligence that is alleged arises from a missed filing date with respect to obtaining a United States patent.

The plaintiff says that it instructed the defendant law firm to make a follow-up application for the purposes of obtaining a patent to a quick-release device, which was designed to allow a kiteboard rider to quickly detach from the kiteboard if wind or other conditions resulted in a loss of control of the board. [ 2 ] The plaintiff says that the device had two separate and distinct aspects.

One was a manual release which was done by manually releasing the harness from the board; the other was a control bar release which allowed the release of the rider from the board simply by pushing the control bar away. [ 3 ] The invention was created by four individuals who contributed at different levels. The individuals were Ross Harrington, Frank White, Jeffrey Wood, and Richard Myerscough. Each, as I say, had a different level of involvement in contributing to the invention itself.

The inventors filed, as individuals, a provisional application for patent with the United States patent office on December 4, 2001. I gather that was done without the assistance of the defendants, at least, and perhaps without the assistance of counsel. [ 4 ] Mr. Harrington, Mr. White, and Mr. Wood then assigned their rights to the plaintiff in November of 2002. They have had no further interest in the invention, although Mr. Harrington still works for the plaintiff. None of the three individuals are parties to the litigation. [ 5 ] In July 2002 Mr.

Myerscough instructed the defendant law firm to file the necessary follow-up application to the provisional application that had been made in December of 2001. The instruction was to provide the information to the U.S. patent office with the object of perfecting the provisional filing and to obtain patent rights for the invention.

It is alleged that the defendant firm missed the deadline to file the follow-up application and that resulted in the loss of priority of the plaintiff's application for United States patent. [ 6 ] I am told that if the follow-up application had been filed in time, and if the application for patent was ultimately successful, the plaintiff would have enjoyed U.S. patent protection for their invention from December 4, 2001, which was the date of the provisional filing. [ 7 ] The application for the patent was ultimately successful, but the plaintiff says that it lost its priority, because another inventor filed its patent in the intervening period, which resulted in a significant loss of potential royalty rights to the plaintiff. [ 8 ] The plaintiff says the appointments for examination for discovery should be struck because they relate to individuals who are neither parties to the action, nor are they adverse in interest to the defendants.

The defendants say that the three are assignors of an

interest and as such they fall into the provisions of Rule 7-2 (7) as assignors. That rule states: If an action is brought by an assignee, the assignor may be examined for discovery. [ 9 ] The defendants say that the plaintiff in this case is an assignee and the three individuals are assignors. [ 10 ] The defendants argue by analogy that the rules of the Federal Court of Canada have almost identical wording and have been interpreted to provide a right to examine assignors of a patent or an invention for discovery.

Rule 237 (4) of the Federal Court Rules has essentially the same wording as our rule, except for the additional word “also” in that the assignor may “also be examined for discovery”. I am advised there is no decided British Columbia case in interpreting Rule 7-2(7) of the B.C. Rules. [ 11 ] There is case law related to Rule 237 (4) of the Federal Court Rules. The courts have dealt with patent law issues in the case of Faulding (Canada) Inc. v. Pharmacia S.P.A., [1999] F.C.J. No. 448 .

In that case the court noted the difference between an examination for discovery of a party to the action and of an assignor or inventor. The latter would not be able to have evidence obtained at the examination used in court without leave of the trial judge. A similar case in Pro - Vertic

(1987) Inc. v. International Diffusion Consommateur S.A. (1989), 26 C.P.R. (3d) 528 , another Federal Court of Canada decision, dealt with a similar issue at para. 27. [ 12 ] The plaintiff says that Mr. Myerscough was examined for discovery by the defendants on August 4, 2016, as a representative of the plaintiff. I gather that discovery has not yet reached its conclusion. Mr. Harrington remains an employee of the plaintiff and the others have no further connection. The plaintiff says that the rule should not be interpreted so broadly as to allow any examination of any non-party who has simply made an assignment.

The plaintiff says that the rule should be interpreted narrowly as the assignor of a cause or a right of action. To allow a broader application would extend the scope of the examination by allowing a right of examination for discovery of any assignor without any effectual or practical limit.

The plaintiff argues that all three of the proposed persons to be examined have simply done nothing other than assign a property right to the plaintiff. [ 13 ] The plaintiff argues further that none of the individuals are adverse in interest, which it says is the overarching principle behind the rules related to examinations for discovery in the Supreme Court Civil Rules.

Both Rule 7-2 (1) and (2) have wording which suggests that the persons to be discovered should be adverse in interest. [ 14 ] The plaintiff also says that the court must consider the context where a representative is allowed under the rules to give evidence.

That person normally stands in the shoes of a party to the litigation, such as a litigation guardian or a corporate representative and not just anyone who is simply assigned a right at some prior point in time. [ 15 ] Finally, the plaintiff argues that the rules of court provide a clear alternative to the examination for discovery rule by Rule 7-5, which provides for the pretrial examination of witnesses.

Thus, the defendants could examine the three individuals in accordance with that rule after meeting the threshold requirements provided that those persons are seen to have some material evidence to a question that arises in the action. [ 16 ] At issue is the difference between how evidence obtained in an examination for discovery and evidence obtained pursuant to right to examine under Rule 7-5 can be used. The evidence obtained at an examination for discovery can be read in and used in the action subject, of course, to the discretion of the trial judge.

The evidence obtained pursuant to Rule 7-5 is generally restricted to a right to impeach the witness at a further hearing such as a trial. [ 17 ] Obviously the purpose of the examination for discovery rule is to obtain admissions or to obtain information upon which to base an impeachment of a witness at trial, and also so that the defendant or the plaintiff where appropriate knows the case that they have to meet. There is no such right to simply read in the evidence as Mr. Dives submits in his application.

That rule is always subject to judicial discretion. [ 18 ] The defendants say at issue is the nature and description of what it was that is to be patented. That is, what was the invention? The defendants take the position that it was a combination of two functions contained in one patent application, both the manual and the control bar functions. They argue that the competing device is a manual device only and does not involve the control bar.

The defendants argue that it is entitled to examine the three individuals on the nature of the invention, and also it says that the defendant firm of solicitors forwarded a draft follow-up application to all four of the inventors, with the request that the draft be carefully examined by each of them and the solicitors invited comments, corrections, or any clarifications. The defendants submit it should have the opportunity to examine on those issues as well. [ 19 ] Thus, the issue before the court is whether Rule 7-2 (7) should be given a more broad

interpretation as sought by the defendants or a more narrow

interpretation as the plaintiff submits. [ 20 ] Clearly the three persons the defendants seek to discover, or examine for discovery, are assignors of some right to the invention. The plaintiff was clearly the assignee. While arguably the assignment contained only an assignment of a property right, it also very likely constitutes a relinquishment of any right to the protection of the invention by means of a patent. [ 21 ] The plaintiff points out that the three individuals have no connection to the solicitors, gave no instructions and thus, have no right of action.

However, the defendants say at issue is the very nature of the invention. If the defendant firm was instructed to pursue a patent of a device that is different from the competing patent, and the plaintiff, in fact, obtained what it had instructed the solicitors to obtain, then their action may fail on the basis that there is no loss.

What input the three individuals named had respecting the contents of the application is also of some relevance. [ 22 ] The law, and the jurisprudence surrounding the rules, seeks to make more efficient the use of time and money involved in litigation through court rules such as Rule 1-3 (2), the proportionality rule, as well as other rules. The law also seeks to encourage cooperation of the parties in getting at the root of the action, to provide more efficient and cost efficient trials, and to promote early settlement.

[ 23 ] Thus, I accept there must be some limit to the right to examination of an assignor and not simply an open invitation to conduct an unlimited examination. That limit requires at least these two threshold factors.

First, the party proposing to conduct the examination must establish that the person to be examined has assigned a right or an interest in property that is relevant to the action or a right of an action itself to be entitled to an examination. [ 24 ] Secondly, the assignor must show some material evidence relating to an issue in the action that might be obtained from the person it seeks or they seek to examine.

It is not an open-ended right to examine any assignor about anything, but a limited right to be used when the threshold requirements of relevancy and materiality are met. [ 25 ] In this case, in my view, the defendants have shown relevance as to the nature of the invention and relevance of any contribution that the three persons it seeks to examine have made directly or indirectly to the instructions that were given to the defendants’ solicitors. [ 26 ] Thus, I find that there is a right for the defendants to examine the three individuals, but limited to the questions as to the nature of the invention itself and any contribution directly or indirectly that the three individuals may have made to the instructions that were given to the solicitor. [ 27 ] In the result, the application to strike the appointments is dismissed.

Costs I think should be left in the cause. [ 28 ] MR. DIVES: I would ask one special order for costs, My Lord.

We've been already billed two cancellation fees, because we had these appointments set for in excess of two weeks, and only received notice on Friday or Thursday before the long weekend of this application, and that put us in the position where we've had to cancel and we have these cancellation fees, and I'd ask the plaintiff be responsible for paying those cancellation fees. [ 29 ] THE COURT: I think it is an issue that as was pointed out had not been litigated before and I think as well the costs should be left in the cause. If you are successful, you will get them, and I grant leave.

Obviously you can repeat your claim for your special costs at the end of the day. [ 30 ] MR. DIVES: It wasn't a claim for special costs. [ 31 ] THE COURT: All right. [ 32 ] MR. DIVES: It was just a claim for those specific disbursements. [ 33 ] THE COURT: All right, thank you. “J. K. Bracken, J.” The Honourable Mr. Justice Bracken