Federal Court includes thermostat manufacturer as defendant in patent infringement lawsuit

The suit initially targeted only end users of the alleged infringing product

Federal Court includes thermostat manufacturer as defendant in patent infringement lawsuit

The Federal Court has allowed the manufacturer of alleged infringing products to be added as a defendant in a patent infringement lawsuit against the end users.

The dispute in Seismotech IP Holdings Inc. v. John Does, 2023 FC 1335 involved a patent-holder who sued the end users of allegedly infringing products but not the manufacturer. The manufacturer then moved to be added as a party.

The plaintiff in the action, Seismotech, owns four patents. It alleged that several brands and models of intelligent thermostats infringed their patents. Ecobee is one of the manufacturers of the allegedly infringing device.

Seismotech commenced proceedings in court against a category of unidentified persons, described as “John Does,” who purchased intelligent thermostats made by Canadian manufacturers, including Ecobee. Seismotech claimed damages from each defendant.

Ecobee brought a motion before the Federal Court, asking to be a party to the “John Doe action” or, in the alternative, for leave to intervene. The court allowed Ecobee’s motion to be added as a party, finding that its legal interests were affected by Seismotech’s action.

The court, in its decision, acknowledged the principle of party autonomy in civil litigation. According to this principle, parties are free to choose how they will assert or defend a claim, including the plaintiff’s choice of the defendant against whom to bring an action. The court also noted that the plaintiff’s decision to sue certain potential defendants, but not others, should usually be respected.

Accordingly, the court said that to be added as a party, the presence of a proposed defendant must be necessary to determine the action. The court emphasized that there are circumstances in which the court must override the plaintiff’s choice, especially when the party to be added has legal interests that are affected by the outcome of the proceeding.

The court was ultimately satisfied that Seismotech’s action affected Ecobee’s legal interests. The court noted that Ecobee is the manufacturer of certain products Seismotech alleged infringed its patents. While the lawsuit targeted the end users of these products, it is evident to the court that the lawfulness of Ecobee’s products was directly at stake.

The court pointed out that if Seismotech succeeds in the lawsuit, it would mean that Ecobee’s products infringed Seismotech’s patents and that Ecobee had no right to manufacture them. As such, the court said that Ecobee was not a mere witness in the matter because the case outcome would have a practical effect on its right, even though Seismotech did not seek any relief against it.

Furthermore, the court said that if the end users were found to infringe, it would be because they used Ecobee’s infringing product. As a result, end users would likely sue Ecobee in warranty, possibly through a class action. Accordingly, the court believed that the outcome of Seismotech’s action would necessarily affect Ecobee’s rights in an action brought by end users. The court said Ecobee could be directly prejudiced if end users were found liable without putting forward certain defences.

The court concluded that Seismotech’s action would affect Ecobee’s legal interests. Accordingly, the court granted leave to add Ecobee as a defendant in the lawsuit.

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