Inducement to Induce Infringement

Elbit Systems Electro-optics Elop Ltd v Selex ES Ltd aff’d 2016 FC 1129 Martineau J aff’g 2016 FC 1000 Tabib J

2,527,754 / Fiber Laser Based Jamming System / MUSIC / MIYSIS

I don’t usually blog about motions to strike, since the bar for striking is so stringent that a refusal to strike is not very informative, but this one is worth a brief note as it raises a novel issue of potentially wide applicability: is inducement to induce infringement a permissible cause of action?

A subcontractor provided indemnity against patent infringement to a prime contractor who, in turn, provided an indemnity to the ultimate customer [24], [30]. The allegation is that but for the agreement to indemnify, the prime contractor would not have selected the subcontractor to provide the allegedly infringing product. If the prime contractor is inducing infringement, can the subcontractor be liable for inducing the prime contractor to induce infringement? The patentee is also suing the subcontractor, who is a direct competitor, for direct infringement. Both the prime contractor and the customer are alleged to directly infringe, but neither is named as a defendant, presumably because the patentee does not want to bring an action against a potential customer.

Tabib J refused to strike the relevant passages of the statement of claim on the basis that the defendant had not satisfy the court that a cause of action in “indirect inducement” did not have the slightest chance of success, and Martineau J affirmed [30].