Date: 20001018
Docket: T-407-98
BETWEEN:
REVOLVING MEDIA CANADA INC.,
Plaintiff,
- and -
JÜRGEN RICHARD MÜNKNER, and
IAP (INTERNATIONAL AIRPORT PROMOTION) n.v.,
Defendants.
REASONS FOR ORDER AND ORDER
ROULEAU, J
[1] The defendant Jürgen R. Münkner brought an application before the Court on Monday, October 16, 2000 seeking the following relief:
| (1) requiring the plaintiff to post increased security for the costs of the defendant Jürgen R. Münkner in an amount to be quantified by the Court; |
| (2) requiring the plaintiff to take no further steps in this action until such security is given by the plaintiff; |
| (3) costs to the defendant Jürgen R. Münkner in this motion. |
[2] This is an action for impeachment of the defendant's patent and is subject to the provision of section 60 of the Patent Act. The plaintiff posted security for costs in the amount of $5,000.00 on commencing the action. The action is not settled and is scheduled to proceed to Trial beginning November 28, 2000 and is expected to last a period of ten days. The defendant Jürgen R. Münkner has submitted a Draft Bill of Costs including disbursements totalling an excessive $72,000.00.
[3] The defendant submits that pursuant to section 60(3) of the Patent Act as well as Rule 416 of the Federal Court Rules the Court has a duty to accede to this request. Section 60(3) of the Patent Act reads as follows:
| Security for Costs -- With the exception of the Attorney General of Canada or the attorney general of a province, the plaintiff in any action under this section shall, before proceeding therein, give security for the costs of the patentee in such sum as the Federal Court may direct, but a defendant in any action for the infringement of a patent is entitled to obtain a declaration under this section without being required to furnish any security. |
Rule 416 of the Federal Court Rules provides as follows:
| 416.(1) Where security available -- Where, on the motion of a defendant, it appears to the Court that |
| (h) an Act of Parliament entitles the defendant to security for costs. |
| 416.(6) Increase in security -- The Court may, on the motion of a defendant, order a plaintiff who has paid an amount into court under subsection (5) to pay in an additional amount as security for the defendant's costs. |
Rule 417 of the Federal Court Rules provides as follows:
| Grounds for refusing security -- The Court may refuse to order that security for costs be given under any of paragraphs 416(1)(a) to (g) if a plaintiff demonstrates impecuniosity and the Court is of the opinion that the case has merit. |
[4] Counsel for the plaintiff in representations filed with the Court indicates at paragraph 12 states as follows:
| "The defendants are aware of the plaintiff's financial situation and any amount set by this Honourable Court the security of costs would be oppressive to the plaintiff and likely cause the plaintiff to discontinue this case." |
[5] As has been pointed out by counsel for the defendant Jürgen R. Münkner this is an impeachment action and pursuant to section 60(3) of the Patent Act he is at liberty to seek security for costs as the Court may direct.
[6] A pre-trial conference attended by the parties before Prothonotary Hargrave on December 15, 1999 at which time solicitors for the defendant advised the plaintiff's solicitors that the defendant would be applying for additional security for costs. Nevertheless, examinations for discovery were proceeded with and concluded along with undertakings in March 2000. It was not until September 2000 that the affidavits of the experts were filed on behalf of both parties.
[7] The rational for ordering security for costs was explained by Strayer, J. in Electec Ltd. et al v. Comstock Canada et al. (1989), 24 C.P.R. (3d) at page 137 the rational provides some guarantee that the defendant will obtain his costs if he should succeed. At page 141-2 he wrote:
| The obvious conclusion to be drawn is that indeed the defendant patentee is to be protected for his costs to the extent that this is normally done when "security for costs" are awarded by a court. What the proper quantum of security should be is left to the discretion of the court just as it is once the court determines that the preconditions of Rules 446 have been met. |
[8] As evidenced by the Draft Bill of Costs it is apparent that the defendant will incur substantial assessable costs far in excess of the $5,000.00 which has already been paid in by the plaintiff.
[9] It was also apparent to this plaintiff through out these proceedings and particularly after the motions entertained by Prothonotary Hargrave in December of 1999 that the defendant intended to seek additional and further costs, nevertheless, he chose to proceed with the action and conclude discovery. Following discovery there was considerable delay before this application was made before this Court such delay incurred additional expenses to both parties in securing expert evidence.
[10] The evidence reveals that the plaintiff has barely sustainable as a business, the plaintiff has no employees and the office of the company is located in the home of the president's parents.
[11] There has been tendered no evidence to establish that this plaintiff has sufficient assets in Canada available to pay costs of the defendant if they are so ordered and I am satisfied that the Court is bound under section 60(3) of the Patent Act to order increase security even though the plaintiff may be impecunious and may have to discontinue these proceedings.
[12] The plaintiff on the other hand has filed his Draft Bill of Costs which exceeds $60,000.00. There is no obligation on the part of the defendant to pay additional security for costs in this proceeding since he is the holder of the patent against whom the action for impeachment is being brought. As Justice Strayer said in the Electec Ltd case supra the Court is under an obligation to order increase costs to avoid frivolous and vexatious actions that could be brought against any patent holder.
[13] In light of the delay in bringing this application either before discoveries or following the completion of the discoveries but before the expenses incurred of retain expert witnesses I am satisfied to make the following order:
ORDER
THIS COURT ORDERS that the plaintiff shall post additional increased security for costs in the amount of $25,000.00 for the defendant Jürgen R. Münkner.
THIS COURT FURTHER ORDERS that the increased costs are to be paid into Court by October 20, 2000; failure to comply with this directive the plaintiff's action shall be struck.
THIS COURT FURTHER ORDERS that costs of this motion are to be costs in the cause.
THIS COURT FURTHER ORDERS that should the action be struck, the defendant Jürgen R. Münkner may make an application to any Judge of this Court for payment out of the $10,000.00 he has posted for security for costs.
(Sgd.) "P. Rouleau"
Judge
October 18, 2000
Vancouver, British Columbia
I HEREBY CERTIFY that the above document is a true copy of the original filed of record in the Registry of the Federal Court of Canada the __________ day of __________________________ A.D. 20________
Dated this _____ day of _________________ 20_____
_____________________________
Sandra McPherson, Registry Officer
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
| DOCKET: T-407-98 |
| STYLE OF CAUSE: Revolving Media Canada Inc. |
v.
Jürgen Richard Münkner et al
| PLACE OF HEARING: Vancouver, British Columbia |
| DATE OF HEARING: October 16, 2000 |
REASONS FOR ORDER AND ORDER OF ROULEAU, J.
| DATED: October 18, 2000 |
APPEARANCES:
| Mr. Mark Grabas For the Plaintiff |
| Mr. Craig Ash For the Defendant |
SOLICITORS OF RECORD:
Vermette & Co
Barristers and Solicitors
| Vancouver, BC For the Plaintiff |
Oyen Wiggs Green & Mutala
Barristers and Solicitors
| Vancouver, BC For the Defendant |