March 30, 2022
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In Farmobile, LLC v. Farmers Edge Inc., 2022 FC 22, the Federal Court considered motions made by both parties to amend their pleadings and a motion by Farmers Edge Inc.’s (“Farmers Edge”) to bifurcate or adjourn the trial. While the Court allowed both parties to make some minor amendments to their pleadings, the majority of the amendments as well as the motion to bifurcate or adjourn were not allowed.
Background
Farmobile, LLC (“Farmobile”) is the registered owner of Canadian Patent Number 2,888,742 (the “742 Patent”) which includes certain device and system claims. Farmobile alleges that Farmers Edge’s farming data exchange system and related data collection device, the CanPlug, infringe on the 742 Patent’s claims.
Both parties have been involved in this action since 2017, with the Court setting numerous trial dates only to subsequently adjourn them. This delay can largely be attributed to changes to the parties’ positions as a result of software updates to Farmers Edge’s products. The current motions to amend pleadings arise from a set of software changes Farmers Edge implemented in April and July 2021. Both parties sought to amend their pleadings in response to the July 2021 software updates while Farmers Edge also moved to bifurcate or adjourn the trial in response to Farmobile’s proposed amended pleadings.
Farmobile’s Amended Pleadings
The Court noted that, generally, an amendment to pleadings for the purpose of determining the real questions in a controversy between parties should be allowed at any stage in an action so long as “the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice” (para 19). In assessing whether an amendment would serve the interests of justice, the Court stated that regard can be had to the factors outlined in Enercorp Sand Solutions Inc v Specialized Desanders Inc, 2018 FCA 215 at paras 20 – 21.
The Court categorized Farmobile’s amendments into two categories: (1) allegations that Farmers Edge’s CanPlug infringes the 742 Patent’s device claims after the July 2021 update; and (2) allegations that the 742 Patent’s device and system claims are infringed after the April and July 2021 updates “because the hardware and software components operate in a manner that is functionally equivalent to the previous system” (para 23). The Court allowed the amendments in the first category but rejected the amendments in the latter one.
Commenting on the first category of amendments, the Court found these amendments acceptable because they confirm and clarify that Farmobile’s allegations of infringement by Farmers Edge continue after the July 2021 update. The Court also found that the amendments: (1) would not cause injustice to Farmers Edge; (2) are sufficiently particularized; (3) are timely; (4) are unlikely to delay trial; and (5) are able to facilitate the Court’s consideration of the dispute.
The Court disallowed the Farmobile amendments relating to the latter category of amendments due to the amendments being redundant to the allowed amendments and lacking adequate material particulars.
Farmers Edge’s Amended Pleadings
Next, addressing the Farmers Edge amended pleadings, the Court allowed certain amendments to Farmer Edge’s pleadings which respond to the allowed amendments to Farmobile’s pleadings. In addition to these amendments, Farmers Edge also sought to introduce new allegations through its amendments, such as allegations that the 742 Patent was invalid based on inutility and overbreadth. These new allegations were contested by Farmobile.
The Court did not allow any of the contested amendments to be made. The Court’s decision to reject these amendments was based on a variety of factors, including: (1) the amendments lacking any factual foundation; (2) a concern that the amendments would delay the trial; (3) the lack of timeliness in making the amendments; and (4) the amendments not being relevant or being a distraction to the main issue at trial. The Court found that, generally, the Farmers Edge’ amendments have:
“a distinctive flavour of a party trying to introduce into an action a series of new allegations that would result in further documentary and oral discovery of the other party and inventors...[t]his discovery, as well as the necessary new expert reports, is likely to lead to further disputes, further motions, further expense, and further delay. Despite Farmers Edge’s protests to the contrary, these allegations are not justified simply because Farmobile has responded to Farmers Edge’s software amendments by asserting the device claims of the 742 Patent” (para 92).
Farmers Edge’s Motion to Bifurcate or Adjourn
As a result of Farmobile’s proposed amended pleadings, Farmers Edge requested that the trial, set for August 2022, be bifurcated or adjourned. Farmers Edge claimed such a bifurcation or amendment was necessary and desirable as: (1) it did not have adequate time to fairly defend itself otherwise; (2) the bifurcation would not prejudice Farmobile; and (3) a bifurcated proceeding would be more efficient and less expensive.
The Court began its analysis by setting out its power to bifurcate proceedings, as set out in Rule 107 of the Federal Courts Rules. Noting that bifurcation represents a departure from the norm, the Court stated that the burden is on the moving party, Farmers Edge, to demonstrate that bifurcation is warranted in the circumstances.
The Court rejected all three arguments Farmers Edge made in support of its motion.
First, the Court noted that many of the amendments to the pleadings requested by the parties had been denied, thus removing the need for any additional delay. As a result, the August 2022 trial date was achievable and it was “incumbent on the parties to make every effort to be ready for trial on the scheduled date, including through the reasonable conduct of pre-trial steps” (para 121).
Second, the Court noted that Farmobile would be prejudiced through “the inherent delay in further postponing Farmobile’s remedial requests” (para 125). Further, Farmobile would be specifically prejudiced since its customers make technology choices based on growing seasons.
Lastly, the Court noted that bifurcation would be impracticable and inefficient as the issues divided between the bifurcated hearings would be interwoven with experts and lay witnesses having to re-attend a second trial.
Authors: Zhiyao Chen and Mark Leonard