Federal Court Of Appeal Upholds Lower Court Decision Finding No Patent Owner In Infringement Action

On August 15, 2024, the Federal Court of Appeal (the FCA) released its decision in Mud Engineering Inc. v Secure Energy Services Inc., 2024 FCA 131, dismissing Mud Engineering Inc. and An-Ming (Victor) Wu’s (collectively, the Appellants’) appeal from a Federal Court of Canada’s decision denying their motion for a declaration of patent ownership along with their related patent infringement action.

The Appellants initially brought an action in the Federal Court of Canada against Secure Energy Services Inc. and Secure Energy (Drilling Services) Inc. (collectively, the Respondents), alleging that they had infringed the Appellants’ patents. The Respondents issued a statement of defence and counterclaim, in particular alleging that the Respondents, rather than the Appellants, were the proper owners of the disputed patents. The Appellants sought a motion for summary judgement to dispose of the issue of patent ownership. 

The Federal Court (the Court), in disposing with the motion, dismissed the entire infringement action. The Court found that neither the Appellants nor the Respondents had led sufficient evidence to obtain a declaration of patent ownership, and the Appellants therefore lacked standing to pursue an infringement action.

On appeal, the Appellants argued that, in addition to other errors, the lower court’s decision led to the absurd result that neither the Appellants nor the Respondents owned the relevant patents. The majority of the FCA dismissed the appeal, finding that the lower court had not committed legal error or palpable and overriding error, and that the result was not absurd. The majority found that the lower court was entitled to decline to issue a declaration of patent ownership, and was correct in dismissing the infringement action if neither party could establish ownership. The FCA noted that the decision of the lower court does not leave the parties without a remedy for infringement, as it binds the Appellants and Respondents only against each other, and not against third parties. 

Summary By: Claire Bettio