Culzean Inventions Ltd. v. Midwestern Broom Co., Midwestern Marketing Canada Ltd., Semenchuk, Janzen, Glazier and Astle, (1984) 31 Sask.R. 180 (QB)

• Judge: Grotsky, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: January 13, 1984
• Jurisdiction: Saskatchewan
• Citations: (1984), 31 Sask.R. 180 (QB);1984 CanLII 2276 (SK QB);[1984] 3 WWR 11;82 CPR (2d) 175;31 Sask R 180

Culzean Inventions v. Midwest. Broom (1984), 31 Sask.R. 180 (QB)

MLB headnote and full text

Culzean Inventions Ltd. v. Midwestern Broom Company Ltd., Midwestern Marketing Canada Ltd., Semenchuk, Janzen, Glazier and Astle

(No. 274)

Indexed As: Culzean Inventions Ltd. v. Midwestern Broom Co., Midwestern Marketing Canada Ltd., Semenchuk, Janzen, Glazier and Astle

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Grotsky, J.

January 13, 1984.

Summary:

Curl Master held a patent on curling brooms issued in 1958. In 1967 Curl Master granted Midwestern Broom a licence to make and sell the brooms. Midwestern Broom agreed, inter alia, to pay royalties to Curl Master until 1980. Curl Master assigned its rights under the agreement to Culzean (the plaintiff). The patent expired in 1975. Thereafter one of the officers and several employees of Midwestern Broom caused Midwestern Broom to cease making royalty payments and they set up another company, Midwestern Marketing, to make and sell the brooms contrary to the licencing agreement. Culzean claimed against Midwestern Broom, Midwestern Marketing, and the officer and the employees of Midwestern Broom (the defendants), for, inter alia, an accounting of brooms sold and for royalties thereon. The defendants resisted the claim on the ground, inter alia, that the licencing agreement was terminated when the patent expired.

The Saskatchewan Court of Queen's Bench allowed Culzean's (the plaintiff's) claim.

Contracts - Topic 6504

Illegal contracts - Enforcement of illegal contracts - The Saskatchewan Court of Queen's Bench referred to the general rule of law that where a contract is either expressly or by implication forbidden by the common or statute law, no court will enforce it - See paragraph 50.

Contracts - Topic 6728

Illegal contracts - Contrary to public policy - Restraint of trade - Defined - Agreement to pay royalties after expiry of patent - A patent holder licenced Midwestern to manufacture and sell curling brooms and Midwestern agreed to pay royalties until 1980 - The patent expired in 1975 - The patent holder's assignee claimed for royalties not paid by Midwestern after 1975 - The Saskatchewan Court of Queen's Bench allowed the claim - The court rejected Midwestern's argument that an agreement for payment of royalties after the expiry of a patent was an agreement in restraint of trade or an attempt to create a monopoly contrary to the Combine Investigation Act - See paragraphs 46 to 54.

Evidence - Topic 2430

Presumptions - Foreign law - An agreement contained a clause stating that the agreement should be interpreted in accordance with the laws of the Province of Quebec - When a dispute arose, the parties appeared to consent to have the dispute determined under the laws of the Province of Saskatchewan and neither party led evidence of the law of Quebec - The Saskatchewan Court of Queen's Bench stated that in absence of such evidence, the court could proceed on the basis that in Quebec, the general law, as distinguished from special statutory provisions, is the same as that of Saskatchewan - See paragraph 22.

Patents of Invention - Topic 5005

Licencing agreements - Expiry of patent - Effect of - On payment of royalties - A patent holder licenced Midwestern to manufacture and sell curling brooms and Midwestern agreed to pay royalties until 1980 - The patent expired in 1975 - Midwestern resisted a claim for royalties after 1975, arguing that no royalties were payable after the patent's expiry - The Saskatchewan Court of Queen's Bench allowed the claim - The court stated that since the obligation to pay royalties arose by virtue of a licencing agreement and not by the patent, the obligation extended beyond the subsistence of the patent - See paragraphs 46 to 54.

Practice - Topic 4496

Discovery - Use of examination in court - Use of discovery evidence of one defendant against another defendant - The Saskatchewan Court of Queen's Bench stated that as a general rule, the admissions of one party on an examination for discovery are not receivable as evidence against another party to the same action - The court stated, however, that the rule may be displaced in a conspiracy case - The court held, therefore, in a case where several defendants conspired to breach an agreement to pay royalties to a patent holder's assignee, that each defendant was bound by the admissions of the other - See paragraphs 64 to 68.

Torts - Topic 5083

Interference with economic relations - Conspiracy - What constitutes - The Saskatchewan Court of Queen's Bench held that a scheme to bring about a breach of an agreement, whereby one party had agreed to pay royalties to another party in order to be able to manufacture and sell a certain patented product, amounted to an actionable civil conspiracy - See paragraphs 69 to 76.

Words and Phrases

Selling Price - The Saskatchewan Court of Queen's Bench discussed the meaning of the phrase "selling price" as it related to the calculation of royalties payable pursuant to an agreement between a patent holder and a party licenced by the patent holder permitting the party to manufacture and sell the patented product - See paragraphs 55 to 62.

Cases Noticed:

Hellens (falsely Densmore) v. Densmore, [1957] S.C.R. 768, refd to. [para. 22].

Gray v. Kerslake, [1958] S.C.R. 3, refd to. [para. 22].

Curl-Master Mfg. Co. v. Atlas Brush Ltd., [1966] Ex. C.R.; [1967] S.C.R. 514, refd to. [para. 32].

Kirilenko and Kirilenko v. Lavoie and Sinclair (1981), 10 Sask.R. 324, refd to. [para. 44].

Tool Metal Manufacturing Co. Ltd. v. Tungsten Electric Co. Ltd., [1955] 2 All E.R. 657 (H.L.), refd to. [para. 49].

Trubenizing Process Corporation v. John Forsythe Limited, [1943] S.C.R. 422, refd to. [paras. 49, 52].

General Films Limited v. McElroy and McElroy (No. 2), [1939] 3 W.W.R. 491 (Sask. C.A.), refd to. [para. 49].

North-Western Salt Co. Ltd. v. Electrolytic Alkalai Co. Ltd., [1914-15] All E.R. Rep. 752, refd to. [para. 49].

Prince Albert Properties and Land Sales Limited v. Kushneryk (1955), 16 W.W.R.(N.S.) 567 (Sask. C.A.), refd to. [para. 49].

Pigeon Hole Parking (Eastern Canada) Inc. v. Automatic Parking Inc. (1971), 6 C.P.R. 71, refd to. [para. 52].

Coyle v. Sproule (1941), 2 C.P.R. 125, refd to. [para. 52].

Great West Uranium Mines Ltd. v. Rock Hill Uranium Ltd. et al., [1955] 4 D.L.R. 307 (Sask. C.A.), refd to. [para. 64].

Consolidated Coal Co. Ltd. v. Big Chief Woodyard Ltd. et al., [1934] 3 D.L.R. 668, refd to. [para. 66].

Nowsco Well Service Ltd. v. Canadian Propane Gas & Oil Ltd. et al. (1981), 7 Sask.R. 291; 122 D.L.R.(3d) 228 (Sask. C.A.), refd to. [para. 70].

Bank of Toronto v. Matheson, [1927] 4 D.L.R. 328 (Sask. C.A.), refd to. [para. 70].

Hayhurst v. Innisfail Motors Ltd. et al., [1935] 2 D.L.R. 272, refd to. [para. 70].

Saskatchewan Farm and Land Company v. Smith et al., [1923] 1 W.W.R. 1179 (Sask. K.B.), refd to. [para. 72].

Sorrell v. Smith, [1925] A.C. 700, refd to. [para. 73].

Allan v. Flood, [1898] A.C. 1, refd to. [para. 73].

Quinn v. Leathem, [1901] A.C. 495, refd to. [para. 73].

Crofter Handwoven Harris Tweed Co. v. Veitch, [1942] A.C. 495, refd to. [para. 73].

Klein v. Jenoves, [1932] 3 D.L.R. 571, refd to. [para. 73].

Roman Corporation v. Hudson Bay Oil & Gas Co. Ltd. (1973), 36 D.L.R.(3d) 413, refd to. [para. 73].

Logan v. R., [1938] 3 D.L.R. 145, refd to. [para. 73].

R. v. Baron and Wertman (1977), 14 O.R.(2d) 173, refd to. [para. 73].

South Wales Miners' Federation v. Glamorgan Coal Co., [1905] A.C. 239 (H.L.), refd to. [para. 74].

Krug Furniture Co. v. Berlin Union A.W. (1903), 5 O.L.R. 463, refd to. [para. 74].

Statutes Noticed:

Combines Investigation Act, R.S.C. 1970, c. C-23 [para. 47].

Excise Tax Act, R.S.C. 1970, c. E-13, sect. 26, sect. 30 [para. 56].

Patent Act, R.S.C. 1952, c. 203, sect. 50 [para. 9].

Patent Act, R.S.C. 1970, c. P-4, sect. 67, sect. 68 [para. 49].

Authors and Works Noticed:

Chitty on Contracts (21st Ed.), p. 101, paras. 909, 917, 919 [para. 47].

Canadian Encyclopedic Digest (Western)(3rd Ed.), title 34, para. 345 [para. 47].

Fox, Canadian Patent Law and Practice (4th Ed.), pp. 293, 325 [para. 49].

Burns, Patent, Trademark and Copyright Law in Canada (1977), pp. 54 to 64 [para. 49].

Law Society of Upper Canada, Department of Continuing Education, Patent Law Licencing of Patents and Know-How (1975), p. 9 [para. 49].

Halsbury's Laws of England (1st Ed.), vol. 7, p. 510, para. 1032 [para. 60].

Halsbury's Laws of England (3rd Ed.), vol. 29, p. 172, para. 325 [para. 49].

Corpus Juris, vol. 12, p. 544 [para. 72].

Corpus Juris, vol. 22, pp. 397, 398 [para. 65].

Corpus Juris Secundum, vol. 69, p. 774, para. 250; p. 780, para. 252 [para. 49].

Counsel:

H.R. Kloppenburg, for the plaintiff;

Wm. B. Purdy, for the defendants.

This case was heard before Grotsky, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on January 13, 1984: