The Court of Appeal of Alberta dismissed the Plaintiffs' appeal of Hillier J.'s decision confirming the Master's Order, which summarily dismissed the Plaintiffs' claims. The essence of the Plaintiffs' claim was that the Defendants unlawfully used the Plaintiffs' technology for the manufacture of flexible composite pipe. The consolidated action also contained a claim that one of the individual Defendants had breached a confidential relationship with Composite Technologies and disclosed confidential information relating to the technology for the manufacture of flexible composite pipe to one of the corporate Defendants.
Importantly, prior to commencing the action, the Plaintiff Composite Technologies and the Plaintiff Proflex Pipe Corporation entered into a technology transfer agreement in respect of the flexible composite pipe technology. In addition, the Registrar of Corporations dissolved the Plaintiff Proflex Pipe in 2006.
In the underlying decision, the Defendants had applied for and were granted summary judgment, and the Plaintiffs' claims were dismissed. The Master granted the relief requested for two reasons: 1) the Plaintiff Proflex Pipe was not a legal entity and had no right to commence an action; and 2) the other Plaintiffs had no interest in the intellectual property that they sought to protect. This decision was confirmed on appeal by Hillier J. In addition to the Master's conclusions, Hillier J. found that, as of July 1, 2006 (the day before the Registrar of Corporations dissolved Proflex Pipe), the Plaintiff Composite Technologies did not have any remaining interest in the technology. Furthermore, Hiller J. rejected the Plaintiffs' argument that he should have allowed them to amend their claim to ask for rectification of the technology transfer agreement as "[t]he failure to file an application [for rectification] or to set out wording to rectify the contract before the Master or on appeal supports the inference that it is a late strategy seeking to avoid summary dismissal".
After reviewing the merits of the Appellants' argument, the Court of Appeal found none of them to be compelling. For example, the Court of Appeal noted that the Plaintiffs never applied for a rectification application, and even if they had, they would have not been in a much better position given the law on rectification. The Court of Appeal also found, among other things, that the technology transfer agreement was not invalid because of the Plaintiff Composite Technologies' failure to give shareholders notice of the proposed transaction.