Aram Systems Ltd. v. NovAtel Inc. et al., 2008 ABQB 441

• Judge: A.D. Macleod, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 23, 2008
• Citations: 2008 ABQB 441;(2008), 449 A.R. 288 (QB)

Aram Systems Ltd. v. NovAtel Inc. (2008), 449 A.R. 288 (QB)

MLB headnote and full text

Temp. Cite: [2008] A.R. TBEd. SE.097

Aram Systems Ltd. (plaintiff) v. NovAtel Inc. and Patrick C. Fenton (defendants)

NovAtel Inc. (plaintiff by counterclaim) v. Aram Systems Ltd., Norman David Heidebrecht and Donald G. Chamberlain (defendants by counterclaim)

(0601 08106; 2008 ABQB 441)

Indexed As: Aram Systems Ltd. v. NovAtel Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

A.D. Macleod, J.

July 23, 2008.

Summary:

In July 2003, the defendant Fenton, an executive of the defendant, NovAtel Inc., filed a United States Provisional Patent Application for a seismic acquisition system utilizing a Global Positioning System for both timing and positioning. A regular patent application with respect to the invention was filed in July 2004. Fenton assigned all of his rights to NovAtel and in October 2006, a U.S. patent with respect to the invention was issued in the name of NovAtel. The plaintiff, Aram Systems Ltd., maintained that the invention was really Heidebrecht's and that all of the rights to it belonged to Aram as the assignee of Heidebrecht's rights. Aram alleged that during meetings held between representatives of Aram and NovAtel in June 2003, confidential information was imparted to NovAtel, which Fenton and NovAtel wrongfully appropriated for their own purposes. Aram also alleged that the defendants breached a Non-Disclosure Agreement which was entered into during the course of a meeting in June 2003. Aram claimed unauthorized use of confidential information. It also claimed that the defendants wrongfully derived their patent from Heidebrecht and it sought declaratory and other relief related to NovAtel's U.S. patent and to pending patent applications in other countries. NovAtel counterclaimed for declaratory relief and for other relief related to certain pending patent applications by Aram.

The Alberta Court of Queen's Bench dismissed Aram's claims. The court held that Heidebrecht was neither an inventor nor a co-inventor of the subject matter of any of the NovAtel patents and NovAtel's U.S. patent was not derived from Heidebrecht. The defendants also did not breach their duty of confidence to Aram. With respect to the counterclaim, the court stated that having found in favour of the defendants, it was not aware of any relief that the defendants required. The court stated that "To the extent that my judgment might be found useful in other jurisdictions, I believe it speaks for itself and does not require any consequential declaration or order".

Equity - Topic 1003

Equitable relief - General - When refused - [See Equity - Topic 3902 ].

Equity - Topic 3902

Fiduciary or confidential relationships - Breach of confidence - What constitutes - In October 2006, a U.S. patent for a seismic acquisition system utilizing a Global Positioning System for both timing and positioning was issued in the name of NovAtel Inc. - The plaintiff, Aram Systems Ltd., maintained that the invention was really Heidebrecht's and that all of the rights to it belonged to Aram as the assignee of Heidebrecht's rights - Aram alleged that during meetings held between representatives of Aram and NovAtel in June 2003, confidential information was imparted to NovAtel, which NovAtel and its executive (Fenton) wrongfully appropriated for their own purposes - Aram claimed against NovAtel and Fenton, alleging breach of a Non-Disclosure Agreement which was entered into in June 2003 and unauthorized use of confidential information - The Alberta Court of Queen's Bench dismissed the claim - The defendants did not breach their duty of confidence to Aram - Any information provided by Aram to the defendants during the June 2003 meetings was communicated in circumstances which imported an obligation of confidence - However, the court was unable to conclude that the information was confidential or, if it was, that the defendants used it in an unauthorized manner - The court further stated that if it had found a breach of confidence, it would not exercise its equitable discretion in this case as it had concerns about the not entirely forthcoming manner in which Aram behaved - See paragraphs 104 to 151 and 157.

Patents of Invention - Topic 4403

Patent derivation - Elements - In an action alleging patent derivation, expert evidence was led as to what constituted conception and communication in the context of a patent derivation claim in the United States - The Alberta Court of Queen's Bench stated that "The legal experts generally agreed that a person alleging that the subject matter of a patent claim was derived from him by the inventor named on the patent must prove: 1. Prior conception of the invention; and 2. Communication of that conception to the patentee. ... It is generally agreed that conception is defined as: Formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice. Conception is complete when the idea is so clearly defined in the inventor's mind that only ordinary skill would be necessary to reduce the invention to practice, without extensive research or experimentation" - With respect to the standard of proof, the party alleging derivation had to prove its case with "clear and convincing evidence" - See paragraphs 64 to 65 and 70.

Patents of Invention - Topic 4404

Patent derivation - Standard of proof - [See Patents of Invention - Topic 4403 ].

Patents of Invention - Topic 4405

Patent derivation - What constitutes - In July 2003, the defendant, Fenton, an executive of the defendant, NovAtel Inc., filed a United States Provisional Patent Application for a seismic acquisition system utilizing a Global Positioning System for both timing and positioning - A regular patent application with respect to the invention was filed in July 2004 - Fenton assigned all of his rights to NovAtel and in October 2006, a U.S. patent with respect to the invention was issued in the name of NovAtel - The plaintiff, Aram Systems Ltd., maintained that the invention was really Heidebrecht's and that all of the rights to it belonged to Aram as the assignee of Heidebrecht's rights - Aram alleged that during meetings held between representatives of Aram (including Heidebrecht) and NovAtel in June 2003, confidential information was imparted to NovAtel, which Fenton and NovAtel wrongfully appropriated for their own purposes - Aram claimed that the defendants wrongfully derived their patent from Heidebrecht and it sought declaratory and other relief related to NovAtel's U.S. patent and to pending patent applications in other countries - The Alberta Court of Queen's Bench dismissed Aram's derivation claim - Heidebrecht was neither an inventor nor a co-inventor of the subject matter of any of the NovAtel patents - NovAtel's U.S. patent was not derived from Heidebrecht - Aram was unable to tender clear and convincing evidence that Heidebrecht conceived of a complete and operative invention which he then communicated to Fenton - Heidebrecht did not conceive of a complete and operative invention, but rather only an idea of a result which he hoped to achieve - It was Fenton who had the expertise to develop and test the complete and operative invention - The only information communicated by Heidebrecht to Fenton was easily ascertainable and in no way inventive - See paragraphs 60 to 103 and 157.

Patents of Invention - Topic 4406

Patent derivation - Limitation period - In October 2006, a U.S. patent for a seismic acquisition system utilizing a Global Positioning System for both timing and positioning was issued in the name of NovAtel Inc. - The plaintiff, Aram Systems Ltd., maintained that the invention was really Heidebrecht's and that all of the rights to it belonged to Aram as the assignee of Heidebrecht's rights - Aram claimed that the defendants (NovAtel and one of its executives) wrongfully derived the NovAtel patent from Heidebrecht and it sought declaratory and other relief - The Alberta Court of Queen's Bench dismissed Aram's derivation claim, holding that Heidebrecht was neither an inventor nor a co-inventor of the subject matter of NovAtel's patent - The court further held that the claim for derivation, had it been successful, would not be barred by the Limitations Act - Aram had no way of knowing that an injury had occurred until it had the opportunity to review the patent claim filed by NovAtel and to determine what inventive elements it contained - Therefore, the discoverability period set out in s. 3(1)(a) of the Limitations Act did not start to run until the February 10, 2005, publication of NovAtel's patent - Aram's claim was brought within two years of that date and therefore was not barred by the Limitations Act - See paragraphs 140 to 150 and 157.

Cases Noticed:

Garrett Corp. v. United States (1970), 422 F.2d 874 (Ct. Cl.), refd to. [para. 67].

Huck Manufacturing Co. v. Textron Inc. (1975), 187 U.S.P.Q. 388, refd to. [para. 68].

Hess v. Advanced Cardiovascular Systems (1997), 103 F.3d 976 (Fed. Cir.), refd to. [para. 70].

Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153; 296 N.R. 130; 2002 SCC 77, refd to. [para. 74].

KSR International Co. v. Teleflex (2001), 127 S. CT. 1727 (U.S. Sup. Ct.), refd to. [para. 74].

Eli Lilly and Company v. Aradigm Corporation (2004), 376 F.3d 1352 (Fed. Cir.), refd to. [para. 75].

Phillips v. AWH Corporation (2005), 415 F.3d 1303 (Fed. Cir.), refd to. [para. 75].

Trovan, Ltd. et al. v. Sokymat et al. (2002), 299 F.3d 1292 (Fed. Cir.), refd to. [para. 75].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 104].

Pharand Ski Corp. v. Alberta (1991), 116 A.R. 326; 80 Alta. L.R.(2d) 216 (Q.B.), refd to. [para. 104].

Murphy Oil Co. et al. v. Predator Corp. et al. (2006), 408 A.R. 98; 2006 ABQB 680, refd to. [para. 104].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161, refd to. [para. 105].

Coco v. A.N. Clark (Engineers) Ltd., [1969] R.P.C. 41 (Ch. D.), refd to. [para. 109].

Stenada Marketing Ltd. v. Nazareno (1990), 33 C.P.R.(3d) 367 (B.C.S.C.), refd to. [para. 110].

Visagie et al. v. TVX Gold Inc. (1998), 78 O.T.C. 1; 42 B.L.R.(2d) 53 (Gen. Div.), affd. (2000), 132 O.A.C. 231; 6 B.L.R.(3d) 1 (C.A.), refd to. [para. 111].

Ansell Rubber Co. v. Allied, [1867] V.R. 37, refd to. [para. 113].

Deta Nominees Pty. Ltd. v. Viscount Plastics Products Pty. Ltd., [1979] V.R. 167, refd to. [para. 113].

Aram Systems Ltd. v. NovAtel Inc. et al. (2006), 411 A.R. 17; 2006 ABQB 948, revd. (2007), 404 A.R. 288; 394 W.A.C. 288; 84 Alta. L.R.(4th) 37; 2007 ABCA 100, refd to. [para. 141].

Sousa v. Mayo et al. (2005), 389 A.R. 63; 56 Alta. L.R.(4th) 395; 2005 ABQB 845, refd to. [para. 146].

Sun Gro Horticulture Canada Ltd. v. Abe's Door Service Ltd. et al. (2006), 397 A.R. 282; 384 W.A.C. 282; 2006 ABCA 243, refd to. [para. 147].

Counsel:

D. Doak Horne, Shaun B. Cody and Caryn S. Narvey (Gowling LaFleur Henderson LLP), for the plaintiff;

Timothy S. Ellam and Kara L. Smyth (McCarthy Tetrault), for the defendants.

This action and counterclaim were heard on October 1 to 25 and December 18 and 19, 2007, before A.D. Macleod, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on July 23, 2008.