When a lawyer receives an allegation claiming inventorship of the subject matter of his or her client’s Canadian patent, that lawyer assumes a claim will be filed in the Federal Court. When a lawyer receives an allegation claiming inventorship of the subject matter of his or her client’s US patent, that lawyer assumes a claim will be made in the US Patent Office, and thus retains US patent counsel. Neither of these assumptions held true in the case of ARAM Systems Ltd. (ARAM) v. NovAtel Inc. (NovAtel) [2008], ABQB 441, a decision of Alberta’s superior court, the Court of Queen’s Bench. Accordingly, they may not be true in future patent litigation.

In ARAM v. NovAtel, ARAM claimed that its employee was the inventor or co-inventor of the subject matter contained in NovAtel’s US patent and pending Canadian and European patent applications. ARAM further claimed that NovAtel was in breach of a non-disclosure agreement and duties of confidence. The Alberta Court seized jurisdiction over the parties, and, after hearing four months of testimony from lay-witnesses, technology experts and foreign law experts, denied all of ARAM’s claims. The case is intriguing from a number of perspectives.

For those involved in the oil and gas industry, the subject invention is revolutionary. The inventor is NovAtel’s Chief Technology Officer and “GPS guru,” Patrick Fenton, one of the most recognized people in the global position system (GPS) area. The plaintiff was essentially alleging Mr. Fenton had “acquired” the invention from an ARAM employee. These allegations were dismissed in their entirety.

The patent and pending applications disclose a unique method for the acquisition of seismic data in harsh environments using precise GPS in the exploration for hydrocarbons. The process provides for precise positioning (within centimetres) of seismic geophones using GPS receivers in canopied or harsh environments (which may block a clear view of the sky, a requirement for GPS accuracy). This specialized application of GPS provides positioning accuracy as required in the industry and is different from more ordinary uses of this technology (such as the GPS receivers used in cars, which are accurate within metres rather than centimetres). The invention will likely revolutionize the industry as it will virtually eliminate the need for seismic survey, the most expensive aspect of exploration.

What was also unique in this instance is that the court proceeded on the basis that the proper law with respect to ARAM’s derivation claim (the allegation the invention had been derived from ARAM) was US patent law. This required extensive evidence on the US law of derivation from a number of experts, which in NovAtel’s case included a former Chief Judge of the US Patent Court.

As with all inventorship disputes and derivation claims, the case turned on the credibility of the witnesses. In this instance, Justice A.D. MacLeod made several findings of non-credibility against ARAM’s alleged inventoremployee and some of the corroborating witnesses. These findings were a clear vindication for NovAtel and Patrick Fenton.

From a jurisprudence perspective, the decision is novel in that it was the first time a Canadian superior court has decided issues of inventorship and derivation of the subject matter contained in a US patent and foreign patent applications, based primarily on US law.

“Just how did this action end up in the Alberta Queen’s Bench?”, most observers ask. The short answer is that both parties were resident in Alberta; the alleged misfeasance occurred in Alberta; and, most importantly, the parties had entered into a non-disclosure agreement that contained a standard choice of jurisdiction clause, the choice being Alberta. These standard choices of Canadian jurisdiction clauses are not uncommon in the industry, or unreasonable.

Derivation proceedings in the United States (whether in the court system or in the US Patent Office) can be an expensive and time-consuming process. The standard of proof can also be very high and the evidentiary requirements quite onerous. For Canadian parties, the provincial superior courts might be seen as a possible option. However, it should be noted that in this instance US law on derivation, including the standard of proof, was strictly applied to ARAM.

McCarthy Tétrault Notes:

We would expect that most parties filing under the US patent system (a common first step for Canadian inventors) would want to have derivation claims decided by the proper tribunal with the appropriate expertise. As the US patent system is a first-to-invent jurisdiction (as opposed to most countries, which have a first-to-file process), derivation claims are not uncommon and the US court system (or the US Patent Office) have a wealth of jurisprudence on this issue.

It is not our intention to discuss the merits of each jurisdiction in this article. We do, however, encourage those who typically file patent applications in multiple jurisdictions to consider its preferred litigation venue for foreign patent disputes and tailor their non-disclosure agreements accordingly.

McCarthy Tétrault lawyers Timothy St. J. Ellam and Kara L. Smyth acted for NovAtel Inc. in the above proceedings.