Court File and Parties
COURT FILE NO.: CV-16-545477 DATE: 20161020 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
ONE STREET DIGITAL INC. Plaintiff – and – BERKELEY PAYMENT SOLUTIONS INC. Defendants
Counsel: Joy Casey, for the Plaintiff Kevin Fisher and Lauren A. Kason, for the Defendant
HEARD: September 27, 2016
G. DOW, J
Reasons for Decision
[1] The plaintiff, One Street Digital Inc. (“OSD”) seeks judgment against the defendant, Berkeley Payment Solutions Inc. (“BPS”) in accordance with paragraphs 1(a), (b) and (c) of its Statement of Claim, that is, a final order:
i) declaring it is the owner of intellectual property being proprietary software called Foundation Framework provided to BPS as part of a Master Information Technology and Consulting Services Agreement dated, August 8, 2011 (“Master Agreement”), as amended.
ii) restraining BPS from using this proprietary software and source code;
iii) restraining BPS from altering or changing the proprietary software and source code;
iv) costs of this motion.
[2] The defendant opposes the motion for reasons detailed below.
Background
[3] The Master Agreement facilitated BPS being able to offer pre-paid credit cards for corporate, government or financial institutions through a website. The Master Agreement made provision for services (maintenance and support) and an in-house content management system or “Client Portal” also known as “Deliverables” with ownership retained by OSD in Section 5C of the Master Agreement. In addition, Section 5A described “Berkeley Property” and defined it to include, amongst other words and phrases, computer code and software development tools.
[4] Similarly, OSD or “Consultant” as it is referred to in the Master Agreement retained ownership of, among other words and phrases, original works, computer programs (including source code).
[5] OSD was to be paid a development fee, monthly license and maintenance fees and a royalty for each card sold with the latter component having a minimum value. The Agreement was for the period August 8, 2011 until September 30, 2013. Section 8 dealt with (incompletely in my view) the termination of the Master Agreement but referenced the sale of the deliverables to BPS and return of each other’s “property”.
[6] The Agreement was amended January 10, 2012, significantly with regard to Section 5 and ownership of the Deliverables, transferring ownership to BPS “excepting Consultant property developed independently by Consultant and incorporated into deliverables as libraries, foundation classes and suchlike”. There is also a provision for payment of ongoing license fees on a monthly basis for 2013. There is subsequent discussion regarding payment of fees for 2014. The dispute between the parties subsequently arises over who owns what and what BPS owes OSD, if anything. The Statement of Claim was issued June 28, 2016.
[7] OSD claims there is no copyright to what it seeks to recover while maintaining that the “foundation software platform” created by it (or its former partner Sèbastien Barre) always having been “partitioned out” or kept separate as well as the open-source framework code in order to protect the propitiatory nature of the product. However, as submitted by BPS, OSD failed to tender evidence of the exact nature of its product.
Analysis
[8] The plaintiff seeks to enforce the contract based on basic contract law of interpreting the contract:
i) as a whole giving meaning to all of its terms;
ii) determining the intention of the parties in accordance with the words used;
iii) having regard to the factual matrix, and
iv) in a manner that it accords with sound commercial principles and good business sense (*De Beers Canada Inc. v. Ootahpan Company Limited*, 2014 ONCA 723 at paragraph 3).
[9] It was agreed that removing what OPS seeks to have returned and stopping BPS from using it would shut down the business activity that is ongoing. I note this would have the effect of limiting or ending OPS’ claim for ongoing damages in unpaid license fees which it seeks to proceed with at the trial.
[10] BPS maintains the claim is comparable to that of copyright and the OSD needs to establish authorship of its original work (*CCH Canadian Ltd. v. Law Society of Upper Canada*, 2004 SCC 13 at paragraph 16).
[11] In my view, the failure to tender evidence to precisely identify the property OSD seeks to have a declaration of ownership granted and stop its ongoing use results in the relief sought not being available.
[12] I am reinforced in this decision by the submission of BPS that the relief sought was comparable to obtaining injunctive relief and application of the three part test enunciated in *RJR-MacDonald Inc. v. Canada (Attorney General)*, [1994] 1 S.C.R. 311. While the first part of whether there is a serious issue to be tried has a low threshold, the second part of whether irreparable harm will occur without granting the relief requires analysis. In this matter, it is clear that there are issues of ongoing rights to licensing and/or maintenance fees as well as the value of the intellectual property or computer programing which can be assessed as damages. As a result, the injunctive relief (or final order being sought by OSD) ought not to be available. OSD’s attempt to side step this part of the factual matrix by seeking enforcement of the contract should not, in my view, take precedence over the true nature of the dispute between the parties. That is, fair compensation for what OSD provided to BPS which permits it to continue with a business BPS deposes any disruptions to “could cost Berkeley millions of dollar in revenues as well as expose Berkeley to claims from its clients”.
[13] While the third part of the test of which party would suffer the greater harm from the granting a refusal need not be considered, this would also favour BPS for the reasons given above.
Conclusion
[14] In my view, in the absence of clear evidence presented by OSD of what the exact non-copyrighted foundation platform program is that it seeks to be declared owner of and stop BPS from using, this motion must be dismissed and is better dealt with in combination with the issues remaining for trial.
Costs
[15] OSD submitted a partial indemnity claim for costs in the amount of $11,542.90. This compared to the Cost Outline of BPS in the amount of $26,174.40 at a partial indemnity rate for fees and HST plus disbursements of $400.52. Counsel for BPS acknowledged some additional time was the result of his changing firms and acknowledged an appropriate reduction to $20,000.00 inclusive of fees, HST and disbursements on a partial indemnity basis would be appropriate.
[16] In my view, the costs should be awarded in favour of the successful party, that is BPS, but that the amount claimed remains excessive. As a result, in accordance with r. 57.01 of the Rules of Civil Procedure and Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, I fix costs payable by OSD to BPS to be, as submitted by counsel for OSD, the sum of $12,000.00, inclusive of fees, HST and disbursements payable forthwith.