Intangible Justice? Intellectual Property Disputes and Canadian Small Claims Courts.

• Author: Rosborough, Anthony

Introduction

1. Jurisdiction

   1. Subject-Matter Jurisdiction

      (i) Patents

      (ii) Copyright

      (iii) Trademarks

   2. Jurisdiction by Enabling Act

2. Institutional Readiness and Capacity

   1. Methodology

      (i) Organizational Justice

      (ii) Interviewing Method

   2. Results

      (i) Allocation and Scheduling of Claims

      (ii) Institutional Support for Decision-Makers

      (iii) Internal Governance of Institutions

3. Analysis & Implications

   1. Intellectual Property Small Claims & Canadian SMEs

   2. Comparative Intellectual Property Small Claims Approaches

   3. Bolstering Small Claims Intellectual Property Dispute Resolution Capacity in Canada

   Conclusion

   Introduction

   If it is axiomatic that every right needs a remedy, the saying holds doubly true when the right at stake is a copyright. Something as ephemeral as intellectual property requires legal tools to enforce exclusivity. Yet litigation is costly, so the classic cost-benefit conundrum means many acts of infringement go unaddressed as "negative value suits". (1)

   Small claims courts have long been Canada's answer to this problem. The so-called "peoples' courts" promise faster, simpler, and cheaper dispute resolution, playing leading roles in virtually all proposals to enhance access to justice. This paper assesses whether small claims bodies have the capacity to suitably resolve disputes in the intellectual property arena--namely, disputes centred around copyright, trademark, and patents. While unquestionably excellent for many straightforward civil matters, these bodies are limited with respect to more complex and unorthodox claims. (2) It is a matter of both jurisdiction and readiness.

   Part I definitively sets out the jurisdiction of small claims bodies over intellectual property matters. Meant as a guide for litigators and adjudicators, it answers what can be done from a doctrinal perspective. Courts in the past have struggled in this regard. Some pronounce judgments while simultaneously expressing skepticism about their ability to do so; (3) others miss entry-level IP doctrines entirely, resulting in trials that provide neither justice nor affordability. (4) Analyzing both federal statutes and provincial enabling acts, we find small claims forums have wide jurisdiction in the IP space, running from infringement actions to more conventional contractual disputes.

   Part II examines whether small claims forums facing IP claims have the capability to quickly and inexpensively address them. Quite apart from whether parties can take IP to a small claims body, this informs them as to whether they should. Viewed through the lens of organizational justice, this assessment zooms in on three bodies that each represent a different setup: the Ontario Small Claims Court, being a division of the Superior Court of Justice; the Nova Scotia Small Claims Court, a stand-alone court headed by local adjudicators; and the British Columbia Civil Resolution Tribunal (CRT), an online administrative body. A comparative analysis reveals differences that bear on whether IP claims are likely to be heard by decision-makers familiar with the subject area, positioned to undertake research where necessary, and subject to internal governance regarding the quality of their work. These differences also reveal significant inconsistencies between jurisdictions that may ultimately impede greater access to justice for intellectual property claimants.

   A discussion of the findings follows in Part III. It places our results in the broader context of IP small claims reforms internationally, including the creation of specialized small claims intellectual property courts to improve access to justice for small and medium-sized enterprises. It highlights the value in Canada's largely decentralized framework of small claims adjudication and proposes investment and resource allocation to these bodies to assist in achieving the access-to-justice goals within Canada's national "Intellectual Property Strategy". (5)

1. Jurisdiction

   Two constraints bear upon small claims forums: federal legislation, namely the applicable IP and Federal Court acts, and the body's own enabling statutes.

   1. Subject-Matter Jurisdiction

      (i) Patents

      The Patent Act permits infringement actions in any court of record, with defendants able to raise in these courts any defence including an attack on the patent's validity. (6) Though some write as if "court of record" means a superior court, (7) neither the Patent Act nor any binding authority requires it to be so.

      There are a few things a small claims court cannot do. Most notably, only the Federal Court has jurisdiction to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged. (8) The Federal Court also has exclusive jurisdiction over cases of conflicting applications for any certificate of supplementary protection, those in which it is sought to impeach or annul a patent or CSP, (9) and Patented Medicines (Notice of Compliance) proceedings. (10)

      The result of these sections is, firstly, that small claims courts can adjudicate infringement claims and can hold a patent to be unenforceable. However, they cannot invalidate a patent in rem or affect the patent register. he patent will be unenforceable as between the parties only, remaining prima facie valid as against everybody else. (11) Most significantly, all small claims forums, including BC's CRT, can act when matters have no or merely incidental effects on registration, such as contract, employment, breach of confidence, and title disputes. These bodies can also resolve matters concerning unregistered rights, which arise most often when an invention is patented abroad but not in Canada. (12) While this can necessitate a multiplicity of proceedings, the proper course is to resolve the private law dispute provincially then apply to vary the register. (13) To simplify litigation, patentees at times undertake to consent to a Federal Court expungement order should the provincial body declare their patent invalid. (14)

      (ii) Copyright

      Copyright law allows licensing, infringement, breach of trust cases and more as small claims. A permissive forum designation clause in the Copyright Act states:

      41.24 The Federal Court has concurrent jurisdiction with provincial courts to hear and determine all proceedings, other than the prosecution of offences under sections 42 and 43, for the enforcement of a provision of this Act or of the civil remedies provided by this Act. (15)

      "Provincial court" does not necessarily mean "superior court". (16) A consensus across multiple provinces confirms as much. (17) (This is true even in Alberta, notwithstanding one comment to the contrary). (18) Nor are administrative bodies excluded. The reference to "provincial courts" is meant to confer jurisdiction, not restrict it; its wording "sufficiently general" so as to respect the institutional design choices of provinces. (19) Canada's first such body, BC's CRT, routinely--and properly--resolves copyright claims. (20)

      A suggestion has elsewhere been made that "[a]n apparent disadvantage to bringing an action for copyright infringement in a small claims court is that . . . it may not be possible to award the statutory damages that are found in the Copyright Act." (21) We see no basis for this concern. Small claims bodies can and do award statutory damages per the plaintiff's election right. (22)

      There are only a few things that small claims forums cannot do. Cases of conflicting applications for the registration of any copyright or those in which it is sought to have any entry in the copyright register made, expunged, varied, or rectified are beyond their purview. (23) As with other forms of IP, however, parties may contest the validity of a copyright and obtain an in personam finding of invalidity from a provincial forum. (24) The second category of forbidden proceedings is that concerning proceedings to stop infringing goods at the border. (25) As a result, small claims bodies are free to act in a wide variety of infringement, licensing, title, and contract disputes concerning copyright.

      (iii) Trademarks

      Infringement, passing off, depreciation of goodwill actions, and more can all proceed as small claims. A small claims court housed within the superior court--in Ontario, Prince Edward Island, Manitoba, or Nunavut (26)--is given remedial powers under the Trademarks Act itself:

      52 In sections 53 to 53.3, court means the Federal Court or the superior court of a province;

      Power of court to grant relief

      53.2 (1) If a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits, for punitive damages and for the destruction or other disposition of any offending goods, packaging, labels and advertising material and of any equipment used to produce the goods, packaging, labels or advertising material. (27)

      Some reason that this section precludes small claims bodies that stand alone (28) or exist within the provincial court (29) from acting. (30) We disagree. Subsection 53.2(1) is a remedial provision rather than a forum designation clause. Non-superior small claims bodies may properly take cases insofar as their enabling statutes allow. What they cannot do is rely on subsection 53.2(1) to provide remedies--these must flow from provincial legislation.

      As always, some matters are within the Federal Court's exclusive jurisdiction. This extends to all cases of conflicting applications for the registration of a trademark, or in which it is sought to have any entry in the trademarks register made, expunged, varied, or rectified. (31) Thus, while only the Federal Court can make changes to the register, (32) defendants may still seek inter partes findings of invalidity as in other areas of IP. (33) Relatedly, there are several...