Ruling finds novel issue on company’s standing as licensee and status as plaintiff
In copyright infringement proceedings, Canada’s Federal Court dismissed the defendant’s motion to summarily dismiss or to strike the plaintiffs’ amended statement of claim upon finding a novel issue regarding a company’s standing as a licensee and status as a plaintiff.
The defendant in Vero UK Limited v. Sherwood Innovations Inc., 2026 FC 876, allegedly copied the source code and object code of version 2021 of certain software (the works).
Vero UK Limited, as the works’ owner, and Vero Software, Inc. (Vero USA), as Vero UK’s distributor and licensee, served the original statement of claim on Jan. 24, 2024. The defendant denied infringement.
Two plaintiffs in the present case – Vero UK and Hexagon Manufacturing Intelligence, Inc. – served an amended statement of claim on Apr. 24, 2024. The amended claim asserted that Hexagon became the exclusive distributor and licensee of Vero UK’s works in the US and Canada following Vero USA’s and Hexagon’s merger on or about June 30, 2021.
The defendant initially consented to this amendment. Later, the defendant alleged that it gave its consent without knowing that the Jan. 1, 2017 written distribution agreement, under which Hexagon obtained its licensing rights in the works, bestowed rights in the “Territory,” defined as the US, without any mention of Canada.
On Nov. 25, 2024, Vero UK and Planit Software Limited executed a business transfer agreement, under which Planit acquired Vero UK’s works and other assets and the associated intellectual property rights under an IP assignment agreement.
Following Vero UK’s dissolution on Mar. 25, 2025, the plaintiffs moved for leave to file a further amended statement of claim to reflect the changes and to add Planit as a third named plaintiff.
The defendant moved for summary judgment to dismiss the plaintiffs’ action. Alternatively, the defendant sought to strike the copyright infringement claim.
The defendant argued that no plaintiff could bring the action as Hexagon lacked standing due to Vero UK’s dissolution, and that the assignment of interest in the works to Hexagon did not comply with s. 13(4) of the Copyright Act, 1985, because it was not written.
Last June 11, the motions judge granted the plaintiffs’ motion and allowed their further amended statement of claim, which named Vero UK, Hexagon, and Planit as plaintiffs. The judge determined that a Federal Court judge should hear the defendant’s motion.
Trial will proceed
The Federal Court dismissed both of the defendant’s motions for a lack of basis. The court found the requested relief unnecessary and inappropriate.
The court noted that the plaintiffs agreed to remove Vero UK as a plaintiff. The court ruled that a trial could best decide the novel issue regarding Hexagon’s standing as a licensee and status as a plaintiff.
In declining to strike the claim, the court held that the defendant failed to establish that it was plain and obvious that the pleading as a whole, or as it concerned Hexagon, lacked reasonable prospects of success.
First, the court pointed out that the defendant acknowledged that Vero UK had standing to bring the action at the time of the original claim’s filing. The court also saw no challenge against Planit’s current standing or capacity.
Second, the court found that the plaintiffs could assert the novel argument regarding Hexagon’s standing at trial because its status as an assignee was “open for consideration.”
Lastly, the court did not deem the action or the issue of Hexagon’s status as a plaintiff scandalous, frivolous, or vexatious, especially given the evidence that the plaintiffs had in fact been operating in Canada under a written agreement, regardless of its technical terms.
