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Ordinary Actions Of Corporate Officers Not Sufficient To Pierce Corporate Veil In Oilfield Patent Infringement Action

On February 13, 2017 the Federal Court of Appeal dismissed an appeal by NOV Downhole Eurasia Limited and Dreco Energy Services ULC who sought to amend their statement of claim in a patent infringement action by adding individuals as parties and adding a claim for joint and several liability. Two of the individuals sought to be added as parties were directors and officers of existing defendants. The third individual was involved in the development of an allegedly infringing product.

Prothonotary Milczynski had previously dismissed the motion and Justice Bell subsequently dismissed a Rule 51 appeal (see our previous blog post here). The Court of Appeal held that the Federal Court had correctly identified and applied the legal principles regarding the amendment of pleadings and did not err in its understanding of the law regarding personal liability of directors and officers or regarding the personal liability of third parties. In dismissing the appeal, the Court of Appeal reiterated the sentiments of the Federal Court that NOV and Dreco failed to plead material facts supporting the proposed claim:

[9] Further, in my view the proposed pleading is deficient because it does not contain material facts with sufficient specificity to establish “the deliberate, willful and knowing pursuit of a course of conduct,” as described in Mentmore. Most of the pleaded facts describe ordinary activities of directors and officers, such as causing the corporations to develop a competing product and to pay out profits to the officers and directors. The facts set out in the proposed pleading do not establish the type of conduct that is necessary for personal liability.

A copy of the Court of Appeal’s Reasons for Judgment can be found here.