A company sued a former employee for misappropriating its intellectual property
The Ontario Superior Court of Justice permanently stayed an intellectual property misappropriation lawsuit, finding that the plaintiff's delayed disclosure of settlement agreements with former co-defendants constituted an abuse of process, as it altered the adversarial nature of the case.
The lawsuit originated from a company alleging that a former employee and their consulting firm misappropriated its intellectual property.
The defendants sought to have the case stayed, arguing that the plaintiff had reached agreements with three former employees that required them to cooperate in advancing the claims. The plaintiff later discontinued its claims against these individuals but did not immediately inform the defendants of the settlements.
The court found that the plaintiff took eight days to disclose one agreement and twelve days to disclose the others, contrary to legal precedents requiring immediate disclosure of agreements that change the dynamics of a case.
Citing Ontario Court of Appeal rulings, the Superior Court emphasized that non-disclosure of such agreements deprives remaining parties of the ability to assess their legal strategy accurately. While the court did not find bad faith, it ruled that the plaintiff's delay disadvantaged the defendants, justifying a permanent stay of proceedings.
The defendants requested further disclosure of documents that the plaintiff had seized from the consulting firm under an Anton Piller Order. They argued that the Independent Supervising Solicitor (ISS) had failed to provide the documents in a usable format, as the files lacked metadata, which prevented them from determining when and where the documents were created. The court noted that the missing metadata was crucial to establishing the origin of the disputed materials because the case centred on allegations of intellectual property misappropriation. The court reviewed the defendants' concerns and determined that the ISS had not ensured meaningful access to the documents. However, the document disclosure issue no longer affected the case outcome because the court had already stayed the proceedings due to abuse of process.
