2013 ONSC 582
Delta Hotels v. Backus-Naur et al.
Motion Before: MASTER ABRAMS
In attendance:
J. Zagar, for plaintiff 647-259-7969 (f.)
D.A. Seed, for defendants 416-622-4762 (f.)
By the court:
The plaintiff wishes to amend its statement of claim. It says that the proposed amendments are intended to: clarify the relief sought and provide further particulars of the material facts supporting its claims; plead and rely upon the Copyright Act; and, plead, in the alternative, equitable ownership of copyright.
The dictates of R. 26.01 are mandatory, save if there is non-compensable prejudice to be suffered. The plaintiff says that no non-compensable prejudice will be suffered by the defendants if I grant it leave to amend its claim. Why does it say so?
It says, pointing to the present incarnation of the pleadings, that it is clear that the defendants were or ought to have been aware of the facts underlying the claims based in copyright. The statement of claim, in its current form, is clearly founded in both an intellectual property (copyright) claim and breach of contract claim. Specifically, and inter alia, the plaintiff has pled and relied on various sections of a 2009 consulting services agreement between the parties that makes specific reference to ownership of “...copyright and other proprietary rights” by the plaintiff and assignment of “...ownership of copyright in...inventions...” by the corporate defendant. The defendants have pled that there was an agreement between the parties that the corporate defendant “...would retain all of the copyrights” and there was specific reliance, by the defendants, on the provisions of the Copyright Act (see, for instance, paras. 1(a)(i), 7, 8, 9, 26, and 27 of the statement of claim and paragraphs 5, 14, 17, 19, 31, 34, 46-50, and 52 of the statement of defence and counterclaim).
It points out that the examination for discovery of the plaintiff’s representative has not yet been conducted so that questions may be posed, by defendants’ counsel, in respect of the proposed amendments; and, it advises that it requires no additional discovery of the defendants.
Further documentary discovery, it says, is not required, as the facts underlying the claims in copyright are the same or substantially the same as the facts underlying the plaintiff’s breach of contract claim.
The claims in copyright are an alternative theory of liability based on the same factual matrix in the original claim, the plaintiff says.
The mediation herein has neither been held nor scheduled; and, the proceedings have yet to be set down for trial.
For their part, the defendants posit that Master Dash earlier addressed the manner in which these proceedings would be litigated and ordered discovery completed by the end of August/12. Mr. Seed points out that there was no reference by Dash, M. nor has there been any reference in the discovery plan proposed by the plaintiff and ordered followed by Master Dash to the pleadings being amended. In my view that fact, in and of itself, is not a bar to leave to amend being granted. Counsel re-evaluate their cases all the time, even on the eve of trial.1 That being so, the issue I must address is not when did the plaintiff decide to amend but, rather, whether the timing of its decision is prejudicial to the defendants. On the facts before me and for the reasons advanced by the plaintiff (as highlighted in paragraphs numbered 1-5 above), with which reasons I agree, I say that it is not.
The defendants also say that equitable ownership of copyright is an untenable plea and, as such, should be disallowed. Equitable ownership of copyright is a recognized principle in the United Kingdom. Ms. Zagar submits (and the excerpt cited by her from Professor Vaver’s Intellectual Property Law: Copyright, Patents, Trademarks, 2d ed., at 140 appears to support her submission) that there is no direct discussion in Canadian jurisprudence in favour or against equitable ownership of copyright.
Relying on Succar v. Wawanesa Mutual Insurance Co., 2006 CarswellOnt (S.C.J.), at paras. 2, 8-9, Ms. Zagar says that “[c]laims should not be dismissed simply because they are novel. Even if it could be said that the proposed pleading raises an ‘arguable, difficult or important point of law’, such a finding would not justify striking out the claims”. That is true. She also says that, having regard to the state of the law in Canada, it is not absolutely clear that a claim founded on equitable ownership of copyright is incapable of success (even if success is uncertain). On the materials before me, I am inclined to agree with this submission, too. While I accept, as Mr. Seed has argued, that there is now no precedent in Canadian law for the alternative plea proposed, I cannot say that it necessarily follows that on the specific facts of any given case, or this case, there could never be. To say that foreign copyright cases may not be easily transferable to Canada as the Supreme Court did in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339, para. 22 is not to say that they are at no time and under any circumstances transferable.
For all of these reasons, the plaintiff’s motion is allowed. If counsel wish to address the issue of costs (i.e. supplement or simply state their reliance on the costs outlines filed by them) or the issue of timetabling, I may be spoken to.
January 24, 2013 ___________________________