Earlier this summer, in Salt Canada Inc. v. Baker, 2020 FCA 127, Canada’s Federal Court of Appeal clarified the scope of the Federal Court’s power to decide contractual disputes. Prior to this case, whenever a case involved a contractual dispute, there were questions whether the Federal Court, with its powers granted by a federal statute and none of those powers mentioning contracts, had jurisdiction over the matter, and indeed parties would instead go to other courts, such as Ontario’s Superior Court of Justice, to litigate the matter. In Salt, however, the Federal Court of Appeal has made it clear that the Federal Court has the power to decide contractual disputes whenever the dispute arises within jurisdiction otherwise granted to the Federal Court. 

In the case, SALT brought an application to the Federal Court to vary under section 52 of the Patent Act the records of the Patent Office to list it as the owner of a patent. The case involved a series of assignment agreements starting with an assignment from the inventor to company A, then to company B, then back to the inventor, and then to Mr. Baker (the respondent in the case) who subsequently stopped paying for the assignment, and then finally an assignment from the inventor to SALT. When the inventor tried to get Mr. Baker to assign the patent back to him, Mr. Baker refused, and as a result, SALT asked the Federal Court to order under section 52 of the Patent Act that the Patent Office list SALT as the owner of the patent. Readers may recall that section 52 of the Patent Act states that the “Federal Court has jurisdiction … to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged.”

The Federal Court in the appealed decision found that it did not have jurisdiction over the case. It relied on earlier cases which determined that the Federal Court lacks jurisdiction where the determination of the ownership of a patent depends on the application of contract law principles, i.e. whether the case relates primarily to contracts rather than to patents. Here, the Federal Court found that the case related primarily to contracts, and the issuance of an order under section 52 was secondary to and dependent upon a prior interpretation of the various assignments, which was a matter of contract law reserved for the superior courts. SALT appealed.

The Federal Court of Appeal allowed the appeal, and in no uncertain terms. It held that section 52 of the Patent Act gives the Federal Court express jurisdiction to make the order sought by SALT, and the fact that agreements and other commercial instruments need to be construed as part of the exercise of jurisdiction does not eliminate the jurisdiction. The Court found that the Federal Court often engages in interpretation of contracts, and pointed to earlier authority which held that the Federal Court could interpret contracts as long as that was done under a sphere of valid federal jurisdiction vested in the Federal Court. 

The Federal Court of Appeal also firmly rejected the authority relied on by the Federal Court in the case which determined jurisdiction on the basis of whether the case was primarily about patents or contracts. The Federal Court of Appeal held that the bounds of the Federal Court’s jurisdiction do not rest on the nebulous exercise of assessing whether something is primarily a case in contract or whether contractual interpretation will dictate the end result; the Court said:  

To do this is to take a Goldilocks approach to jurisdiction, taste-testing each case for the appropriate amount of federal flavour and asserting jurisdiction only in cases where the federal content is, in the personal opinion of a judge, “just right”. Jurisdiction should not depend on the palate of individual judges.

The Federal Court of Appeal also pointed to access to justice and minimization of litigation expense, noting that the approach adopted by the Federal Court in the case would force parties to litigate in both the Superior and the Federal Court, which should be avoided.   

The Federal Court of Appeal went on to decide the substance of the case, and after reviewing the applicable agreements, found that the appellant SALT was indeed entitled to the ownership of the patent, and directed the Commissioner of Patents to vary the entry in the records of the patent office to list SALT is the owner.