Judgments

[1993] 1 F.C. 341

A-949-92

A-1222-92

Signalisation de Montréal Inc. (Appellant)

v.

Les Services de Béton Universels Ltée, 2704927 Canada Inc., 2859-7888 Québec Inc., Richard Capuano, Energy Absorption Systems Inc. and Barrier Systems Inc. (Respondents)

Indexed as: Signalisation de Montréal Inc. v. Services de Béton Universels Ltée (C.A.)

Court of Appeal, Hugessen, Décary and Létourneau JJ.A.—Montréal, November 18; Ottawa, December 21, 1992.

Patents — Infringement — Capacity to sue — Appeal from order striking out statement of claim on ground plaintiff lacking capacity to seek injunctive relief — Appellant representative of exclusive licensee in Quebec for patented invention — Patent Act, s. 55 giving person “claiming under” patentee right to sue for damages caused by infringement — Exclusive licensee entitled to sell invention — Appellant’s rights derived from sale — Purchaser of patented article from patentee acquiring licence — Licensee, even non-exclusive licensee, person “claiming under” patentee and entitled to sue for infringement — Rights accruing to purchaser of patented article not based on estoppel — “Floodgates” argument specious — Person “claiming under” patentee person deriving rights to use patented invention directly from patentee whether right to use acquired by assignment, licence, sale, lease.

These appeals were from orders striking out the statement of claim on the ground that the appellant had no capacity to seek injunctive relief for alleged infringement and dismissing the plaintiff’s application for an interlocutory injunction. The action was for infringement of a patent for a “transferable roadway lane divider”, movable medians used to separate and contain traffic flows around roadway construction sites. The allegation of infringement related to the method of transferring the lane dividers from one side of the roadway to the other, to quickly change the number of lanes going either way to accommodate traffic flow. The method is embodied into a machine, the “T.T.V.”, which picks up the concrete lane dividers on one side at the front and transfers them across diagonally to deposit them on the other side at the rear. Energy Absorption Systems Inc. owns the patent. Barrier Systems Inc. is the exclusive licensee in Canada and the U.S.A. pursuant to an agreement which prohibited assignment of rights and transfer of the licence. Barrier appointed the appellant as its exclusive representative in Quebec. The Trial Judge held that the appellant was merely an exclusive representative.

Patent Act, subsection 55(1) gives all persons claiming under the patentee the right to sue for damages caused by infringement of the patent. Under subsection 55(2), the patentee must be made a party to any action for the recovery of such damages. The issue was whether the appellant was “claiming under” the patentee.

Held (Décary J.A. dissenting in part), the appeal should be allowed in part.

Per Hugessen J.A.: The appellant has the status to assert a claim for damages under Patent Act, section 55. The statement of claim should not have been struck out. That Barrier could neither assign its rights under its licence nor transfer the licence was irrelevant. Barrier was entitled to sell the invention, and that sale was the source of the appellant’s right. It is settled law that the purchaser of a patented article from a patentee acquires the right to use the article and the right to sell it, together with the same “right of use”, to another person. This right is a “licence”. It is equally settled law that under section 55 a licensee, even a non-exclusive licensee, is a person “claiming under” the patentee and is entitled to sue for infringement. It is not a form of estoppel which prevents the patentee from asserting the patent against the purchaser of the patented article. Estoppel would be personal to the purchaser and would avail only against the patentee or persons claiming under him. The incorporeal right in the patent is an incident of the corporeal right of ownership in the thing sold and cannot be separated therefrom. The concept of implied licence also better explains the right of the purchaser of a patented article to resell the article and convey to his purchaser an equal right to use and sell it and so on ad infinitum. Estoppel is also inappropriate because, as a defence only, it assumes infringement. A purchaser has a right to use the article bought, which prevents him from being an infringer. He is a person “claiming under” the patentee. The “floodgates” argument was specious. A non-exclusive licensee will rarely suffer any damages, but if he does there is no reason to deny him recovery. It cannot be said that the damages of an implied non-exclusive licensee should be included in those of the patentee. A person “claiming under” the patentee is a person who derives his rights to use the patented invention from the patentee. When a claimant, such as the appellant, asserts a right in the monopoly on the right to use an invention, and the source of that right may be traced directly back to the patentee, that person is “claiming under” the patentee. It does not matter whether the right to use was acquired by assignment, licence, sale or lease.

Per Décary J.A. (dissenting in part): The appellant had no capacity to bring the action. It was simply a representative of Barrier. Barrier could not transfer a licence in the patent because it was prohibited from doing so by its licence agreement.

The purchaser of a patented product is not entitled to bring patent infringement proceedings as a necessary consequence of its rights as an implied licensee. A mere contract of purchase of a patented product will not make the purchaser a person claiming under the patentee within section 55. The purchaser of a patented product from the inventor, an assignee or a licensee acquires, unless there is notice to the contrary, the right to use that product with the implied warranty that he will not be accused of infringement if such use is made of it. This implied warranty derives from the contract of sale by which the inventor, the assignee or the licensee and the purchaser are bound, and it attaches to the product sold. It cannot be transformed into an implied licence under the patent, which would attach to the patent itself. That would be to confuse the patented product and the patent and would give the word “licence” a meaning which it does not have. The mere implied warranty on use of the product in accordance with the patented method does not in itself confer any interest in the patent. The purchaser of a patented product cannot have greater rights in respect of the patent than the representative from whom the product was purchased. “All persons claiming under the patentee” in section 55 is narrower than “any interested person” or “any person” in subsections 60(1) and (2). It presumes a personal link, whether direct or indirect, between the claimant and the patentee. Even if the purchaser could assert a claim under the patent, he could not assert a claim from the patentee in the absence of a firm contract to that effect. A mere contract for sale should not be construed as a licence, conferring on the purchaser the right to come to the defence of the patent and to “claim under the patentee” for that purpose. To allow any owner and user of a patented product simply by virtue of owning and using the product, and in the absence of any mandate from the inventor, to use the Patent Act to question the validity of the patent before the courts, would open the floodgates of litigation. That section 55 refers only to the “patentee” indicates that Parliament intended that the chain of title, in determining who is claiming under the patentee, should go back only to the assignee and the licensee, apart from the patentee’s legal representatives. The Patent Act establishes and protects a monopoly situation. In the absence of a clearer intention from Parliament, it should not be extended to every user or owner of the patented product. Acceptance of the appellant’s arguments would be to interpret section 55 as if “claiming under the patentee” did not appear, and as if it was sufficient for damages to have been incurred as a result of the infringement for the injured party to have a remedy.

Per Létourneau J.A. (concurring with Hugessen J.A.): The granting of legal capacity to sue for damages sustained as a result of patent infringement would not amount to deleting “claiming under the patentee” from subsection 55(1). A licensee relying on this subsection is not claiming for infringement. He is claiming for damages as a result of infringement. The words “persons claiming under the patentee” in subsection 55(1) are not more limited than the word “person” in subsections 60(1) and (2). Those subsections are also qualified. Subsection 55(1) was enacted to discourage patent infringement and to provide a redress to those who have a right which may be traced back to the patentee and who suffer a wrong as a result of the infringement. It is unrealistic in commercial matters to require buyers and users of patented articles to negotiate, before they acquire or use them, an agreement whereby the patentee or another licensee would undertake to compensate them in case of patent infringement or would undertake to bring legal proceedings to end the infringement. It is because a claim in damages by an implied licensee would put in issue the validity of the patent that subsection 55(2) requires that the patentee be made a party to any action for damages.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Federal Court Rules, C.R.C., c. 663, R. 419.

Patent Act, R.S.C., 1985, c. P-4, ss. 2, 42 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16), 55 (as am. idem, s. 21).

CASES JUDICIALLY CONSIDERED

APPLIED:

Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304; Betts v. Wilmott (1871), L.R. 6 Ch. 239; Armstrong Cork Canada v. Domco Industries Ltd., [1982] 1 S.C.R. 907; (1982), 136 D.L.R. (3d) 596; 66 C.P.R. (3d) 46; 42 N.R. 254.

CONSIDERED:

Commissioner of Patents v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning, [1964] S.C.R. 49; (1964), 41 C.P.R. 9; 25 Fox Pat. C. 99; Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607; (1986), 33 D.L.R. (4th) 321; [1987] 1 W.W.R. 603; 23 Admin. L.R. 197; 17 C.P.C. (2d) 289; 71 N.R. 338; Fiberglas Canada, Ld. and Another v. Spun Rock Wools, Ld. and Another, [1947] A.C. 313 (P.C.); American Cyanamid Co. v. Novopharm Ltd., [1972] F.C. 739; (1972), 7 C.P.R. (2d) 61 (C.A.); Heap v. Hartley (1889), 42 Ch. D. 461 (C.A.); Chadwick v. Bridges (S. N.)& Co. Ltd., [1960] R.P.C. 85 (Ch. D.).

REFERRED TO:

Hirsh Co. v. Minshall et al. (1988), 89 N.R. 136 (F.C.A.).

AUTHORS CITED

Fisher, Harold and Russel S. Smart. Canadian Patent Law and Practice, Toronto: Canada Law Book Co., 1914.

Fox, Harold G. Canadian Law and Practice relating to Letters Patent for Inventions, 4th ed., Toronto: Carswell Co. Ltd., 1969.

APPEAL from orders striking out the statement of claim on the ground that the plaintiff lacked capacity to sue and dismissing an application for interlocutory injunction (Signalisation de Montréal Inc. v. Services de Béton Universels Ltée, T-1614-92, Rouleau J., judgment dated 28/7/92, not yet reported). Appeal allowed in part.

COUNSEL:

J. Nelson Landry and Judith M. Robinson for appellant and for respondent Barrier Systems Inc.

André C. Lavigne and Roger Hughes, Q.C. for respondents Les Services de Béton Universels Ltée, 2704927 Canada Inc., 2859-7888 Québec Inc. and Richard Capuano.

David J. McGruder for respondent Energy Absorption Systems Inc.

SOLICITORS:

Ogilvy Renault, Montréal, for appellant and for respondent Barrier Systems Inc.

Pouliot, Mercure, Montréal, for respondents Les Services de Béton Universels Ltée, 2704927 Canada Inc., 2859-7888 Québec Inc. and Richard Capuano.

Barrigar & Oyen, Ottawa, for respondent Energy Absorption Systems Inc.

Editor’s Note

Two issues were raised by this appeal. The first was as to whether the appellant had the capacity to sue for patent infringement and the second was whether, assuming capacity, an interlocutory injunction should be granted. This case is reported as abridged, the second issue being dealt with by an Editor’s Note.

The following are the reasons for judgment rendered in English by

Hugessen J.A.: This appeal is against two orders given by Rouleau J. in the Trial Division, July 28, 1992. By the first [T-1614-92, not yet reported], he allowed an application by the defendant (here respondent), Les Services de Béton Universels Ltée,[1] and struck out the statement of claim pursuant to Rule 419 [Federal Court Rules, C.R.C., c. 663] on the ground that the appellant “has no capacity to bring this action”.[2] By the second order under appeal, for which no reasons were given but quite evidently as a consequence of the first order, Rouleau J. dismissed the application made by plaintiff (here appellant) for an interlocutory injunction.

The appeal accordingly raises two discrete issues, the first being as to the appellant’s capacity to bring an action for patent infringement and the second, assuming such capacity, being whether the case is an appropriate one for the issuance of an interlocutory injunction.

Capacity to sue

The action as framed is for patent infringement. Its statutory base (and there can be no other) is therefore in section 55 of the Patent Act:[3]

55. (1) Any person who infringes a patent is

(a) liable to the patentee and to all persons claiming under the patentee for all damages sustained by the patentee or by any such person, after the grant of the patent, by reason of the infringement; and

(b) liable to pay reasonable compensation to the patentee and to all persons claiming under the patentee for any damages sustained by the patentee or by any such person by reason of any act on his part, after the application for the patent became open to the inspection of the public under section 10 and before the grant of the patent, that would have constituted an infringement of the patent if the patent had been granted on the day the application became open to the inspection of the public under that section.

(2) Unless otherwise expressly provided, the patentee shall be or be made a party to any action for the recovery of damages referred to in subsection (1).

Since the appellant is not itself the patentee the question is whether it is a person “claiming under” the patentee.

The patent in issue is Canadian Patent number 1208469 for a “Transferable Roadway Lane Divider”. The specification sets out that it is for “a system of transferable roadway lane dividers and a method of transferring said dividers”.[4] The first nine claims relate to the “lane dividers” themselves which may, in layman’s language, be described as the movable medians used to separate and contain traffic flows around roadway construction sites. There is no allegation of infringement with regard to any of these claims and they are not in issue here.

The last three claims, being numbers 10, 11 and 12, are for a “method” of transferring the lane dividers from one side of the roadway to the other. Its utility is that it is supposed to permit a “quick change”[5] of the direction of vehicle flow in high density traffic areas. In particular it permits the number of lanes going either way to be quickly switched so as to accommodate anticipated heavy traffic at rush hours in one direction or in the other as may be appropriate.

The statement of claim asserts an infringement of claim 10 only, but it is helpful for an understanding of the patented method to reproduce all three “method claims” 10, 11 and 12:

10. A method for transferring a roadway lane divider from a first position to a laterally displaced second position on a roadway or the like, said lane divider comprising a plurality of interconnected divider sections positioned in freestanding relationship on said roadway and disposed in closely spaced tandem relationship relative to each other, comprising the steps of positioning a mobile road vehicle having a transfer mechanism adjacent to a first end of said lane divider and into engagement with divider sections thereof, moving said transfer mechanism from the first end of said lane divider towards a second end thereof and simultaneously lifting said divider sections as a unit in suspended and spaced relationship above said roadway from said first position adjacent to a first side of said transfer mechanism, moving said suspended divider sections as a unit serpentine-like generally transversely across said transfer mechanism from said first position towards said second position adjacent to a second side of said transfer mechanism opposite to the first side thereof, and depositing said suspended divider sections as a unit at said second position in free-standing relationship on said roadway.

11. The method of claim 10 wherein each of said lifting and moving steps comprises engaging and supporting upper ends of said divider sections in suspended relationship under said transfer mechanism.

12. The method of claim 11 wherein each said divider section has a pair of laterally spaced and longitudinally extending undercut bearing surfaces defined on an upper end thereof and wherein said engaging and supporting steps comprise moving a plurality of rollers beneath and into engagement with said bearing surfaces and gradually lifting said divider sections as a unit in suspended relationship above said roadway. (Appeal Book, Vol. I, at page 028.)

The claims, it will be noted, are for a “method” and not for a machine but we were shown photographs and a video tape of machines said to embody the method. Again, in layman’s terms, it appears to consist of a large wheeled rectangular frame which occupies approximately the whole of a single traffic lane on a high-speed highway and which, as it is moved along such highway, picks up the concrete lane dividers on one side at the front and transfers them across diagonally to deposit them on the other side at the rear.

The appellant is not the owner of the patent which is presently held in the name of the respondent, Energy Absorption Systems Inc. (”Energy Absorption”). The owner of the patent has granted a licence covering the U.S.A. and Canada to the respondent Barrier Systems Inc. (”Barrier”). The following terms of that licence are relevant:

2.01   The Licensor in consideration of the royalties hereby reserved hereby grants the Licensee an exclusive and nontransferable (except such transfers as are provided for in Section 10.01 hereof) right and license to make, have made for it, use, lease, repair and sell:

(i)   the inventions covered by the Licensor Patents in the Territory;

(ii)  The Technology in the Territory; and

(iii) any subsequent inventions, innovations or improvements made by Licensor in the fields covered by the Licensor Patents and The Technology during the term hereof. (Appeal Book, Vol. II, at page 225.)

…

10.01 The rights granted to the Licensee pursuant to this Agreement are personal, and Licensee shall not assign the benefit of this Agreement or any rights granted or to be granted hereunder without the written consent of the Licensor which consent shall not be unreasonably withheld, except that such rights may be assigned without such consent to a new company which may be formed for the exclusive or principle purpose of manufacturing and selling the products of this Agreement provided any such company agrees to be bound by the provisions of this Agreement and the Licensor is furnished with proof of such compliance. (Appeal Book, Vol. II, at page 234.)

The appellant has entered into an agreement with Barrier by which it is appointed as “representative”. The following provisions of that agreement are relevant for present purposes:

I. DEFINITIONS

A.   The Products shall mean the following traffic control devices:

(1) Moveable concrete barriers;

(2) Transfer vehicle; and

(3) Ancillary equipment necessary to allow the barrier system to function properly.

B.   The Territory shall mean the Province of Québec, Canada.

II. RIGHTS GRANTED

Barrier hereby appoints Representative exclusive representative of the Products in the Territory. Representative hereby accepts the exclusive representation of the Products in the Territory and agrees to promote the Products to customers located in the Territory only for use within the Territory. Barrier shall not ship Products to any other buyer in the Territory without prior written notification to the Representative. On the first sale, Barrier shall pay to Representative a commission equal to 7% of the net sale. In all other cases, Representative will receive a minimum commission of 5% of the net invoice amount of up to $500,000, 4% of the next $500,000, 3% of the next $500,000, and 2% of amounts over $1,500,000. Net invoice shall be defined as invoice price less freight and taxes. All amounts will be calculated in US dollars. If Barrier manufactures any new or modified devices different from the traffic control devices presently manufactured, Barrier shall give written notice to Representative of such new or modified devices and Representative shall have, for a period of sixty (60) days from the date of such notice, the option of adding such new or modified devices to the list specified in Article I.A. The Representative shall not have the right to manufacture or produce the Products unless specifically approved by Barrier in writing. (Appeal Book, Vol. I, at pages 090-091.)

…

VI. INDEPENDENT CONTRACTORS

It is understood that each party hereto is an independent contractor engaged in the operation of its own business, is not the agent of the other party for any purpose whatsoever, and neither party has any authority to enter into any contracts or assume any obligation for the other party, or to make any warranties or representations on behalf of the other party. Nothing herein contained shall be construed to establish a relationship of employer and employee, co-partners or joint venturers between Barrier and Representative. (Appeal Book, Vol. I, at page 093.)

The agreement makes no specific reference to the patent but it is not contested that the “movable concrete barriers” which are its object are in fact “lane dividers” covered by one or more of claims 1 to 9 and the “transfer vehicle” is the embodiment of the “method” covered by one or more of claims 10, 11 and 12. It is also clear that the appellant has acquired such “lane dividers” and “transfer vehicle” (called a “T.T.V.”) from Barrier and has been making use of them and the patented methods in carrying on its business.

(I have used the word “acquired” because much was sought to be made by respondent of the fact that appellant had financed its acquisition by means of a leasing arrangement with financial institutions and was therefore not the owner of the “lane dividers” and “T.T.V.”, did not have title thereto, and did not even derive its rights, whatever they might be, directly from Barrier. In my view, nothing whatsoever turns on this fact. If it were necessary to do so, I should have no hesitation in looking through the technicalities imposed by modern financing methods to the underlying commercial realities, but it is not. In my view, the question whether the appellant is a person “claiming under” the patentee does not depend upon the number of removes between it and the patentee but upon the nature of the rights held and their ultimate provenance.)

As previously indicated, Rouleau J. was of the view that the appellant did not have the capacity to seek relief for any alleged infringement of the patent. The core of his reasoning is contained in the following passage where, after reviewing the documents which I have just quoted, he said [at pages 4-5]:

It is evident from the above that the patent owner granted to the defendant Barrier an exclusive licence to the patent in North America and that the rights granted to Barrier under this licence were non-transferable. It is also evident that Barrier, in its agreement with the plaintiff, did not purport to transfer any of these rights to the plaintiff, that the plaintiff is not an agent of Barrier, merely a representative entitled to use and promote Barrier’s patents.

Most of the jurisprudence asserted by the plaintiff relies on the general principle that a purchaser of a patented article may use it without infringing the patent because the law implies that, by virtue of the purchase, a purchaser is granted “a licence” by the patentee to sell, lease or deal with the patented article as he pleases. I do not disagree, while there is no doubt that the plaintiff has a “right” or “licence” to use the equipment as he sees fit, this corollary does not confer on it any “rights” under the patent.

I must conclude that the plaintiff is no more than an exclusive representative of Barrier, the manufacturer of the equipment, in the territory of Ontario and Quebec and it has, in fact, no capacity to seek injunctive relief. (Appeal Book, Vol. VIII, at pages 1759-1760.)

In my view, and with respect, this is an error. The fact that Barrier could not assign its rights under its licence (section 10.01 supra) nor transfer the licence (section 2.01) is nothing to the point. Barrier was clearly entitled by the latter section to sell the invention and in fact did so, and that is the source of appellant’s right.

It is trite law that on an application to strike, pursuant to Rule 419(1)(a), the allegations of the statement of claim must be taken as proven and the statement should be struck out “only in plain and obvious cases” and where “the case is beyond doubt”.[6]  Here the relevant allegations of the statement of claim are as follows:

16. By virtue of the aforementioned agreements and its purchases of TTV equipment covered by patent 469 from the defendant BARRIER SYSTEMS, the plaintiff SIGNALISATION enjoys exclusive use of the patented system, the exclusive right to promote the sale of, sell or enable third parties to benefit from a right to exploit the patented system and method, and rights to license use of the patented method in the provinces of Quebec and Ontario.

17. Pursuant to the aforementioned agreements and the provisions of the Patent Act, R.S.C. 1985, c. P-4, the only other persons entitled to use the devices and exploit under licence the method covered by patent 469 are other purchasers of the system patented through the plaintiff SIGNALISATION, the purchase of such devices and barriers giving the purchaser a licence to exploit rights to the method patented in patent 469 within the territories of the provinces of Quebec and Ontario or any part thereof.

…

33. The plaintiff SIGNALISATION and the defendants BARRIER SYSTEMS and ENERGY ABSORPTION consider that the method of moving flexible rigid barriers used either by the defendant SERVICES DE BETON, the defendant ITI or the defendant 927 CANADA in repairing the Pont Gédéon Ouimet project is an infringement of the patented method described in claim 10 of patent 469.

…

39. As a consequence of their unlawful activities the defendants SERVICES DE BETON, ITI, 927 CANADA and RICHARD CAPUANO made profits, while the plaintiff SIGNALISATION sustained damage by reason of the use by the aforesaid defendants of a method for moving rigid flexible barriers which infringed claim 10 of patent 469 in connection with the Pont Gédéon Ouimet project. (Appeal Book, Vol. I, at pages 004-009.)

These allegations may be reduced for present purposes to three very simple propositions:

1) The appellant by acquiring the “lane dividers” and the “T.T.V.” has acquired an implied licence to use the patented method in Ontario and Quebec;

2) The respondents have breached claim 10 of the patent;

3) The appellant has thereby suffered damage.

It is settled law that the purchaser of a patented article from a patentee acquires, at the same time, the right to use the article and the right to sell it, together with the same “right of use”, to another person. As long ago as 1871, this right was described as a “licence”:

When a man has purchased an article he expects to have the control of it, and there must be some clear and explicit agreement to the contrary to justify the vendor in saying that he has not given the purchaser his license to sell the article, or to use it wherever he pleases as against himself. He cannot use it against a previous assignee of the patent, but he can use it against the person who himself is proprietor of the patent, and has the power of conferring a complete right on him by the sale of the article.[7]

It is equally settled law that under section 55 of the Patent Act a licensee, even a non-exclusive licensee, is a person “claiming under” the patentee and is entitled to sue for infringement. The leading Canadian case is Armstrong Cork Canada v. Domco Industries Ltd.[8] where Martland J. speaking for the Supreme Court said:

Armstrong sought to distinguish an exclusive licence from a non-exclusive licence on the basis that the former was a grant of a part of the monopoly and that such a licensee was practically an assignee of the patent for the term of the licence with all the beneficial rights of the patentee. It is difficult to reconcile this reasoning with what was said in Heap v. Hartley (supra) (applied by this Court in the Electric Chain Co. case) in the passage which I have already quoted. I repeat from that passage the following portion which is apt in relation to Armstrong’s submission:

Now he puts his case in a two-fold manner. He says: “In the first place, as exclusive licensee, I am in the position of an assign of the letters patent for that district and for that term, and as an assign of letters patent, I have a right to restrain any person who is infringing within the district.” That argument appears to be based on an entire error with regard to the nature of a license. An exclusive license is only a license in one sense; that is to say, the true nature of an exclusive license is this. It is a leave to do a thing, and a contract not to give leave to anybody else to do the same thing. But it confers like any other license, no interest or property in the thing.

In my opinion, the reasons which led this Court and the Privy Council to the conclusion reached in the Fiberglas case are as applicable to a non-exclusive licensee as to an exclusive licensee. If an exclusive licensee is a person claiming under the patentee within s. 57(1), [now sub-section 55(1)], and the Fiberglas case so holds, there is no valid basis, under the wording of the subsection, to exclude its application to a non-exclusive licensee, and there is no valid basis for interpreting the Fiberglas case as holding otherwise.

It was also contended on behalf of Armstrong that a non-exclusive licensee has no rights which can be infringed and therefore has no claim against the infringer of a patent. This was the view of Jackett C.J. in the American Cyanamid case. He was of the opinion that the non-exclusive licensee had only a right to use the patent, which right was not affected by its infringement.

This was the legal position, even in respect of an exclusive licensee, prior to the enactment of s. 55 of the 1935 Act. Section 55 was enacted to meet this difficulty and, in my opinion, it has overcome the problem. Section 55(1), by its terms, imposes a liability upon the infringer of a patent to the patentee and also to all persons claiming under him for all damages sustained by the patentee or any such person by reason of such infringement. It is the infringement of the patent which gives rise to a liability. If that infringement causes damage to the patentee or to any person claiming under him, the infringer must compensate for the damage sustained by reason of the infringement of the patent. A licensee relying on this subsection is not claiming against the infringer for infringement of his rights under the licence, he is claiming for the damage he has sustained in consequence of the infringement of the patent. [Emphasis added.]

The respondent contends, however, and the Motions Judge seems to have accepted, that it is loose use of language to describe the purchaser’s right to use a patented article as a “licence”. Quite apart from the fact that I would be reluctant to find that Lord Hatherley, L.C. had been speaking loosely when he spoke of a “licence” in Betts v. Wilmott, supra, it is difficult to see on what other legal basis one could place the rights accruing to the purchaser of a patented article. The respondent suggests that it is a form of estoppel which simply goes to prevent the patentee from asserting the patent against the person to whom he has sold the thing. But this surely cannot be the case. Estoppel would be personal to the purchaser and would avail only against the patentee or persons claiming under him. Thus, if the respondent’s analysis were correct it would mean that the incorporeal right in the patent could somehow become separated from the corporeal right of ownership in the thing sold, for if the first is personal and limited in scope, there can be no doubt that the second avails against the world. But if the first is simply an incident of the second, which it clearly is, it seems more consonant with principle that they should not be separated. The characterization of the relationship as one of licence, albeit implied, seems far more appropriate.

The concept of an implied licence from the patentee to a purchaser of a patented article also serves better to explain the latter’s undoubted right (saving any contractual provision to the contrary) to himself resell the article and convey to his purchaser an equal right to use and sell it, and so on ad infinitum. The chain is surely better viewed as one of a series of implied sub-licences than of notional estoppels.

Also, it seems that estoppel is an inappropriate characterization in the circumstances because it assumes infringement. It is trite to say that estoppel is a shield and not a sword, that it serves only as a defence and not as a cause of action. But as a defence to what? The answer can only be an action for infringement. But, if I purchase a patented monkey wrench from a hardware store which has acquired it from a wholesaler which has obtained it from a distributor who got it from a manufacturer who holds a licence from the patentee, an infringement action by the latter against me will fail, not because I have infringed but am protected from the claim asserted against me, but rather because I have a right to use the thing which I have bought, a right that can be asserted not only against the patentee but against the world at large and which prevents me from being an infringer. Just like any other licensee, I am a person “claiming under” the patentee and that claim avails as much against the latter as against anyone else.

Finally, the respondent threatened us with the “floodgates” argument: if the purchaser of a patented article is to be held to be an implied non-exclusive licensee and thereby to have the right to claim for damages for infringement pursuant to section 55, there will be no end to infringement actions by all the ultimate purchasers of all the patented monkey wrenches, ballpoint pens, flashlights, clocks and whatnots that human ingenuity has invented and placed on the market.

Like most “floodgates” arguments, this one is specious. In the first place, it will be rare that a non-exclusive licensee of this sort will in fact suffer any damages, or if he did that they would be anything other than de minimis. In the second place, however, and assuming that such an implied non-exclusive licensee is seriously damaged by an infringement of the patent, I can think of no principled reason which would deny him his recovery. Certainly, one cannot say that his damages should be included in those of the patentee, for clearly that is not the case. To hold, on the other hand, that this is a case of damnum absque injuria is offensive in the extreme. Such cases usually arise where the damage is caused by the exercise of some competing right; an infringer, by definition, has no right to infringe and should, therefore, be held accountable to those whom he harms.

In my view, a person “claiming under” the patentee is a person who derives his rights to use the patented invention, at whatever degree, from the patentee. The right to use an invention is one the monopoly to which is conferred by a patent.[9] When a breach of that right is asserted by a person who can trace his title in a direct line back to the patentee that person is “claiming under” the patentee. It matters not by what technical means the acquisition of the right to use may have taken place. It may be a straightforward assignment or a licence. It may, as I have indicated, be a sale of an article embodying the invention. It may also be a lease thereof. What matters is that the claimant asserts a right in the monopoly and that the source of that right may be traced back to the patentee. That is the case with the appellant here.

In my view, the appellant has the status to assert a claim for damages under section 55 of the Patent Act and has done so inter alia in the paragraphs in the statement of claim reproduced and summarized above. That statement of claim should not have been struck out.

His Lordship agreed with Rouleau J. that the interlocutory injunction application should be denied. By the date that this appeal was argued, the construction project in respect of which the interlocutory injunction was sought had been completed. Accordingly, injunctive relief could relate only to possible future use of the allegedly infringing machine. Hugessen J.A. said that the principles governing the granting of interlocutory injunctions were well known and had been restated by Stone J.A. in Turbo Resources Ltd. v. Petro Canada Inc. There was here a serious question to be tried. As for irreparable harm, appellant’s case was argued on the basis of the financial stability of the two sides. Appellant was said to be at risk of bankruptcy if it lost the subcontract for the construction project. It was further asserted that respondent was in a shaky financial position so that it might be unable to satisfy a judgment awarded against it. But it did not appear that appellant’s financial difficulties resulted from respondent’s activities and the Court was not persuaded that respondent would be unable to satisfy a judgment. Nor could it be concluded that the balance of convenience clearly favoured either party. In making a rough assessment of the relative strengths of the parties’ cases—the final factor mentioned in Turbo Resources—His Lordship concluded that the defences raised were serious enough to cast a long shadow on the rights which were at the heart of appellant’s claim. The evidence was such as to leave the Court in doubt as to the fact of infringement. It would therefore be inappropriate to issue an interlocutory injunction.

Conclusion

I would allow the appeal in part. I would set aside the order of Rouleau J. which struck out the statement of claim and I would dismiss the application made pursuant to Rule 419 with costs. I would affirm the order dismissing the application for an interlocutory injunction. Success on the appeal being divided, I would make no order as to costs in appeal.

* * *

The following is the English version of the reasons for judgment rendered by

Décary J.A. (dissenting in part): Unlike my colleague Hugessen J.A., I do not believe that the remedy available to Signalisation de Montréal Inc., if remedy it has, may take the form of an action for patent validation and infringement under subsection 55(1) of the Patent Act, R.S.C., 1985, c. P-4 (the Act). I therefore find, for the reasons set out herein, that the appellant has no capacity to bring the action and that the motion by Les Services de Béton Universels Ltée based on Rule 419 was properly allowed by the Motions Judge.

To assist in understanding the following reasons, the owner of the patent, Quick-Steel Engineering Pty Limited, will be referred to as “Quick-Steel”; the assignee of the patent, Energy Absorption Systems Inc., as “Energy”; the holder of a licence issued by Quick-Steel, Barrier Systems Inc., as “Barrier”; the exclusive representative of Barrier under a contract signed by it, Signalisation de Montréal Inc., as “the appellant”; and the alleged infringer of the patent, Les Services de Béton Universels Ltée, as “the respondent”. I shall further refer to the [translation] “equipment forming part of a patented method of rapidly installing and transferring movable barriers”[10] “for the sale” of which the appellant “secured exclusive representation rights” and which it claims to have subsequently acquired under a lease-to-purchase contract.[11]

In paragraphs 16 and 17 of its statement of claim, the appellant relied both on the exclusive representation contract which it had entered into in 1989 with Barrier and on the contract for the purchase of the patented product under a lease-to-purchase arrangement which it had entered into with Barrier, in support of its argument that it was “a person claiming under the patentee” within the meaning of subsection 55(1) of the Act.

After examining the relevant documents, the Motions Judge concluded that the representation contract had not given the appellant any right in respect of the patent, properly speaking. This conclusion was not challenged before us, in my view correctly, because the documents in question clearly indicate that the appellant is simply a concessionaire or representative of Barrier. Nor is there any allusion to the patent in the representation contract; the situation could not be otherwise, since in the licence which it granted to Barrier, Quick-Steel stipulated in section 2.01 that:

2.01   The Licensor in consideration of the royalties hereby reserved hereby grants the Licensee an exclusive and nontransferable … right and licence ….

in section 10.01 that:

10.01 The rights granted to the Licensee pursuant to this Agreement are personal, and Licensee shall not assign the benefit of this Agreement or any rights granted or to be granted hereunder without the written consent of the Licensor ….

and in section 10.02 that:

10.02 Licensor may assign the Licensor Patents during the term of this Agreement, provided that any assignee of the Licensor Patents shall agree to be bound by the terms hereof and to assume all obligations of Licensor hereunder.

The appellant could not have received anything more from Barrier than Barrier was entitled to transmit to it.

With respect to the contract for the purchase of the patented product, the Motions Judge found that while the purchase of a patented product gives the purchaser the “right” or “licence” to use the product in accordance with the method set out in the patent, such purchase does not, however, give it any “rights” under the patent properly speaking.

Before this Court, the appellant argued essentially that the owner and user of a patented product has an “implied licence” to use the product without being accused by the owner of the patent of infringement, and that, [translation] “as a necessary consequence of the rights of the Appellant … as an implied licensee having the right to enjoy the exclusive and uninhibited use of the Equipment … and of the patented method”, the appellant “should be able to bring proceedings to put a stop to the activities of third parties which infringe the patent method and thereby cause damages to the appellant”.[12]

With respect, it is this “necessary consequence” which completely escapes me. Counsel for the appellant, who could cite no authority bearing directly on this point, made much of the decision of the Supreme Court of Canada in Armstrong Cork Canada v. Domco Industries Ltd., [1982] 1 S.C.R. 907. I do not see how that decision can be of any use to him.

That decision held, at the most, that “a licensee under a patent” (le titulaire d’une “licence en vertu d’un brevet”) is a person claiming under the patentee within the meaning of subsection 57(1) (now 55(1) of the Act), regardless of whether the licence is exclusive, which it was established prior to that case, or non-exclusive. It did not hold, and it does not allow us to hold, that the purchaser of a patented product becomes by implication “a licensee under a patent”.

In Armstrong, the owner of the patent, Congoleum, had granted to Domco “a restricted non-exclusive right and licence to make, use and sell the products covered by the patent in Canada” [at page 909]. It was assumed that the “licence” was a “licence under a patent”. “The real issue” was “whether Domco, as the holder of a licence to make, use and sell in Canada the products covered by the patent, can claim damages from Armstrong [the infringer] arising out of its infringement of that patent [at page 910]”. The Court decided that it could. It based this on, inter alia, the following comments of Lord Simonds in Fiberglas Canada, Ld. and Another v. Spun Rock Wools, Ld. and Another, [1947] A.C. 313 (P.C.), at pages 320-321 [at page 914]:

But it appears to [their Lordships] that the statutory amendment of 1935 following on the decision of Electric Chain Co. of Canada, Ld. v. Art Metal Works Inc. ([1933] S.C.R. (Can.) 581) points irresistibly to the conclusion that licensees are persons claiming under the patentee within the meaning of the section. The patentee by definition means the person for the time being entitled to the benefit of a patent. Section 55, sub-s. 1, contemplates an action not only by the person for the time being entitled to the benefit of a patent but also by any person claiming under that person. On the plain language of the section a licensee answers that description. The appellants as licensees were therefore entitled to sue for damages under s. 55.

and, at page 919, it approved the following comments of Sweet D.J. in American Cyanamid Co. v. Novopharm Ltd., [1972] F.C. 739 (C.A.), at page 767, which it quoted at page 915:

It would seem logical for Parliament to decide to correct the situation wherein the licensee, under such circumstances, had no protection from and no recourse against the infringer and, in enacting section 57(1) [now s. 55(1)] in its present form, to create, by statute, a right in the licensee against the infringer and to provide a means of enforcing that right. Certainly the change was not necessary for the protection of the patentee or the assignee of the patent. They were already protected.

Since the patentee and the assignee were already protected, the 1935 amendment to the legislation extended protection to the exclusive licensee and, with Armstrong, to the non-exclusive licensee. The appellant would like to extend the chain of title so as to include any purchaser or user of the patented product among persons “claiming under the patentee”.

I have no difficulty in accepting the first part of the appellant’s proposition, that is: the “implied licence” of the owner and user of a patented product to use the product without thereby infringing the patent.[13] It is clear that anyone who purchases a patented product from the inventor, an assignee or a licensee thereby acquires, unless there is notice to the contrary, the right to use that product with the implied warranty that he or she will not be accused of infringement if such use is made of it. This implied warranty (I prefer this expression to “implied licence”) derives from the contract of sale by which the inventor, the assignee or the licensee and the purchaser are bound, and it attaches to the product sold. However, and this is where I am unable to concur in the appellant’s position, I do not see how the implied warranty on use, which attaches to the patented product sold, can be transformed into an implied licence under the patent, which would attach to the patent itself. In my opinion, the appellant is confusing the patented product and the patent, and is giving the word “licence”, if in fact there is a licence, a meaning which it does not have. As Lord Fry of the English Court of Appeal pointed out in Heap v. Hartley (1889), 42 Ch. D. 461 [at page 470] (quoted in Armstrong at pages 912 and 913):

An exclusive license is only a license in one sense; that is to say, the true nature of an exclusive license is this. It is a leave to do a thing, and a contract not to give leave to anybody else to do the same thing. But it confers like any other license, no interest or property in the thing. A license may be, and often is, coupled with a grant, and that grant conveys an interest in property, but the license pure and simple, and by itself, never conveys an interest in property. It only enables a person to do lawfully what he could not otherwise do, except unlawfully.[14]

In this case, the mere implied warranty on use of the product in accordance with the patented method does not in itself confer any interest in the patent. The licences in issue in Armstrong were not merely implied warranties; they were “licences under the patent” which were issued by the patentee and which conferred an interest in both the product and the patent.

It would be curious, to say the least, if the purchaser of a patented product were to have greater rights in respect of the patent than the mere concessionaire from which the product was purchased has itself. Thus, in this case, if the appellant’s position were to be accepted, the appellant could not claim against the patentee under its exclusive contract to distribute the product, but could do so under its contract to purchase the product. This is an extension of the chain of title which does not reflect reality and for which there is no support in the provisions of the Act.

The provisions of subsection 55(1) itself, “all persons claiming under the patentee”, “toute personne se réclamant [du breveté]”, do not lend themselves to the extremely large construction suggested by the appellant. These words are certainly narrower than the words “any interested person”, “intéressé”, which are found in subsection 60(1), or “any person”, “une personne”, found in subsection 60(2), which refer, respectively, to an application to declare a patent invalid and a declaration as to an alleged patent infringement. Similarly, the person must be able to claim under the “patentee”, and not under the “patent”; in my opinion, this presumes the existence of a personal link, whether direct or indirect, between that person and the “patentee”. Even if the person who purchases a patented product could assert a claim under the patent, I do not believe that in the absence of a firm contract to that effect he or she could assert a claim from the patentee itself.

I am further not persuaded that a mere contract for the sale of a patented product which contains no discernible indication of the intention of the patentee, the assignee or the licensee to confer on the purchaser anything more than the implied warranty on use of the product could be construed as a “licence” conferring on the purchaser the right to come to the defence of the patent and to “claim under the patentee” for that purpose. A licence may indeed be granted by oral contract (unless it is exclusive; in that case, subsection 50(2) of the Act requires registration). However, on this point, Fox[15] pointed out at page 286, that:

A licence, to be effectual, should be in writing…. An effective licence may arise by parol agreement if acted upon.

In any event, it is all the more necessary that evidence be available of an oral or written contract different from the contract of sale conferring on the purchaser more than the implied warranty on use of the product, solely for the sale price and without any royalties. In this case, there was no such oral or written contract which would supplement the contract of sale.

I find it difficult to accept that any owner and user of a patented product could, simply by virtue of owning and using the product and in the absence of any mandate from the inventor, assignee or licensee, trigger application of the particularly stringent provisions of the Patent Act, bring the validity of the patent into issue before the courts and open the floodgates of litigation. Under section 59 of the Act, the defendant in any action for infringement of a patent may plead as a matter of defence any fact or default which renders the patent void. Moreover, in this case, the appellant expressly sought in its statement of claim to have claim 10 of the patent in issue declared valid. While under the provisions of subsection 55(2) the patentee must be made a party to any action for the recovery of damages, this does not mean that Parliament intended that any mere owner and user of a patented product could take the initiative and itself come to the defence of the patent. Section 55 refers only to the “patentee”, which leads me to believe that in Parliament’s mind the chain of title should hardly, in seeking to determine who is claiming under the patentee, go beyond the assignee and the licensee, apart from the patentee’s legal representatives. This requirement for a personal connection, whether direct or indirect, between the patentee and the person asserting a claim also appears to me to derive from the definition of “legal representatives” [“représentants légaux”] in section 2 of the Act, in which the expression “claiming through or under applicants for patents and patentees of inventions” is rendered as “réclamant par l’intermédiaire ou à la faveur de demandeurs et de titulaires de brevets”. By adding licensees to assignees, the courts have quite probably exhausted the chain. The Patent Act is legislation which establishes and protects a monopoly situation. In the absence of a clearer invitation from Parliament, I would hesitate to extend this protection to every user or owner of the patented product.

It is my decision simply that the appellant has no remedy against a so-called infringer under section 55 of the Patent Act. It is not necessary for me to decide whether the appellant has some other remedy or remedies, and if so what it or they may be, against the patentee, the assignee, the seller of the patented product or the infringer. The Patent Act is not legislation to provide insurance against any damage resulting from the infringement of a patent.

It is not impossible that the appellant might, at the appropriate time, have compelled Energy or Barrier to apply to the courts to have the infringement stopped; Energy itself applied to the Federal Court on September 3, 1992 to have the alleged infringement by the respondent stopped (T-2197-92). On this point I note the admission, found in paragraph 35 of the statement of claim and repeated in paragraph 48 of the affidavit of the appellant’s general manager, that:

[translation] 35. Under the agreements between the defendant BARRIER SYSTEMS and the plaintiff SIGNALISATION, and the agreements between the defendant BARRIER SYSTEMS and QUICK STEEL ENGINEERING PTY LIMITED, the predecessors of the defendant ENERGY ABSORPTION, the plaintiff SIGNALISATION has no remedy in damages or otherwise which it may exercise against the defendants BARRIER SYSTEMS or ENERGY ABSORPTION in order to be compensated for the unlawful activities of the defendants SERVICES DE BÉTON, ITI, 927 CANADA and RICHARD CAPUANO, and those defendants have no obligation to bring proceedings before the Court to obtain financial compensation or damages on behalf of the plaintiff SIGNALISATION against the latter defendants.

48. I am informed by my solicitors that under the plaintiff SIGNALISATION’s agreements with the defendant BARRIER SYSTEMS, SIGNALISATION has no remedy in damages against BARRIER with respect to a third party who might use a competing system which infringes the licence rights it enjoys. The only remedy in damages and action which the plaintiff SIGNALISATION has is an action in infringement for violation of its licence rights over the patented procedure resulting from its acquisition of two series 200 vehicles from the defendant BARRIER SYSTEMS.

We need only read sections 11.01 and 11.02 of the licence contract between Quick-Steel and Barrier:

XI  Patent Infringement

11.01 The Licensee shall forthwith give notice in writing to the Licensor of any infringement or threatened infringement in the Territory of any of the Licensor Patents which shall at any time during the life of this Agreement come to its knowledge.

11.02 If the Licensee establishes to the satisfaction of the Licensor that any person, firm, or company is making, selling, or using a system in infringement of any of the Licensor Patents and the Licensor agrees that steps ought to be taken to bring such infringement to an end, including legal proceedings where necessary, the Licensee may notify the Licensor that it wishes the Licensor to join with the Licensee in taking steps to end such infringement including legal proceedings in the Party’s joint names. Upon agreement between the parties as to the proportions in which they shall share the costs thereof, such steps shall be taken. Failing such agreement, each party shall be free to act independently. In the event of joint proceedings being taken and damages awarded, such damages shall be shared by the parties in the same proportion as they agree to share the costs.

to see what contractual avenues are available in respect of patent infringement by a third party, and which allow a party to claim under the patentee. I wonder whether the appellant is not, at bottom, inviting the Court to interpret section 55 of the Act as if it contained implied provisions of the nature found in sections 11.01 and 11.02 of the licence contract.

Nor is it impossible that the appellant may have some ground for bringing action itself against the respondent on the basis of some form of liability in tort.

Whether or not there is, or was, any possibility of a contractual remedy against Energy or Barrier or of a remedy in tort against the respondent, it is not for this Court to extend the statutory remedy provided by Parliament. As Judson J. pointed out in Commissioner of Patents v. Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Bruning, [1964] S.C.R. 49, at page 57:

There is no inherent common law right to a patent. An inventor gets his patent according to the terms of the Patent Act, no more and no less.

The same is true of a person who claims under the patentee. That person is the person whom the Patent Act recognizes as such, and no one else. To accept the appellant’s arguments would, in my opinion, be to interpret subsection 55(1) of the Act as if the words “claiming under the patentee” did not appear, and as if it were sufficient for damages to have been incurred as a result of the infringement of a patent in order for the injured party to have a remedy under that subsection.

I therefore conclude that a mere contract of purchase of a patented product does not make the purchaser a person claiming under the patentee within the meaning of subsection 55(1) of the Act.

I am aware that this is a motion under Rule 419, that I must take the allegations of the statement of claim as proven and that the motion must be dismissed if I have the least doubt as to the merits of the appellant’s arguments, having regard to its capacity to bring action. The appellant asserts that Quick-Steel is the inventor, that Energy is the assignee of the patent, that Barrier is an exclusive licensee, that under agreements entered into with Barrier the appellant [translation] “has the exclusive right to promote sale and use”, and that it has purchased two pieces of equipment from Barrier. However, paragraphs 16 and 17, which my colleague has quoted, are assertions of law, which are assertions and no more, and I cannot take them as proven. The test is to determine whether the facts, not the law, if we take them as proven, disclose a reasonable cause of action (Hirsh Co. v. Minshall et al. (1988), 89 N.R. 136 (F.C.A.). Rule 419(a) would hardly make sense if the Court had to take the causes of action asserted by the plaintiff to be well founded. I have sought in vain the assertion that the appellant holds a licence under a patent, and even had there been such an assertion, it would have been contradicted by the documents which form part of the statement of claim. Paragraph 18 of the statement of claim, in my opinion, concludes the discussion. The appellant states in that paragraph that [translation] “it exploits its exclusive rights of representation and use”. Its rights of representation were not argued before us. As to its rights of use, I believe that I have adequately established that even if we take them as proven they disclose no reasonable cause of action.

Moreover, even if Rule 419(1) is not the ideal vehicle for arguing lack of capacity of a plaintiff to bring action, it has been accepted, since Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607, at page 617, that it may be that “the question of standing can be properly determined on a motion to strike”:

It depends on the nature of the issues raised and whether the court has sufficient material before it, in the way of allegations of fact, considerations of law, and argument, for a proper understanding at a preliminary stage of the nature of the interest asserted.

In the case at bar, I have before me everything that I need to decide the issue.

There is therefore no reason not to put an end to the action immediately. I would affirm the order of the Motions Judge and strike the action brought by the appellant on the ground that it discloses no reasonable cause of action.

Having said that, in the event that I am in error on this first point, I am of the opinion, for the reasons given by my colleague, that in any event an interlocutory injunction should not be granted in this case. I would dismiss the appeal in toto with costs.

* * *

The following are the reasons for judgment rendered in English by

Létourneau J.A.: I agree with my colleague, Hugessen J.A. and with his reasoning that I find compelling. I do not share the views of my colleague, Décary J.A. that the granting of the legal capacity to sue to the appellant for the damages sustained as a result of the patent infringement would amount to deleting the words “claiming under the patentee” in subsection 55(1) of the Patent Act. As the Supreme Court said in Armstrong Cork Canada v. Domco Industries Ltd., an excerpt already quoted by my brother Hugessen J.A., “[a] licensee relying on this subsection is not claiming against the infringer for infringement of his rights under the licence, he is claiming for the damage he has sustained in consequence of the infringement of the patent.”[16]

Nor do I believe as my colleague Décary J.A. suggests that the words “persons claiming under the patentee” in subsection 55(1) are more limited than the word “person" in subsections 60(1) and (2) of the Act. In subsection 60(1), it has to be an interested person and therefore it is not unqualified. In subsection 60(2), it has to be a person who uses or proposes to use a process or a person who makes, uses or sells an article that might constitute an infringement of a patent. Likewise in subsection 55(1), it has to be a person who claims under the patentee, that is to say a person who as a user, an assignee, a licensee or a lessee had a title or a right which may be traced back to the patentee.

As pointed out by my colleague Hugessen J.A., it will be rare instances where a simple user of a patented article will suffer damages in consequence of a patent infringement. But when this happens I simply cannot believe and accept that the victim would have to assume its loss and that the infringer would go scott-free, free to create more victims. Subsection 55(1) was enacted to discourage patent infringement and to provide a redress to those who have a right which may be traced back to the patentee and who suffer a wrong as a result of the infringement. I do not think it is realistic in commercial matters, especially in this day and age, to expect and require from buyers and users of patented articles to negotiate, before they acquire or use them, an agreement whereby someone else, be it the patentee or another licensee, would undertake to compensate them in case of patent infringement or worse would undertake to bring legal proceedings to put an end to the infringement. In this latter case, the victim would still not be compensated for his damages as, save exceptions, no one can claim for the damages sustained by a third party.

It is true that a claim in damages by an implied licensee such as the buyer of a patented article would put in issue the validity of the patent and the extent of the infringement, if any. However, this is the reason why subsection 55(2) requires that the patentee be made a party to any action for the recovery of damages. Thus, the patentee can meaningfully participate in the debate and protect his patent.

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