The appellants appealed the dismissal of their motion for an interlocutory injunction.
The injunction sought to prohibit the respondent from challenging the validity of the appellants' U.S. patent, relying on a 'no-challenge' clause in a prior settlement agreement.
The motion judge had dismissed the motion, finding no strong prima facie case because the clause was deemed contrary to public policy based on U.S. case law.
The Divisional Court allowed the appeal, holding that the motion judge erred in her interpretation of the agreement and in applying U.S. law over Canadian law, which upholds such clauses in litigation settlements.
The Court found a strong prima facie case, irreparable harm, and that the balance of convenience favoured the appellants, granting the injunction.
