Norwich Order Not to Be Used to Circumvent Discovery

Worthware Systems International Inc v Raysoft Inc 2022 FC 1492 Pentney J

2,515,486 / Internet Based Cellular Telephone Service Accounting Method and System

In this decision Pentney J refused to grant a Norwich Order in the patent context. No new law was involved, but the decision is helpful nonetheless as we don’t see many decisions on Norwich orders in the patent context.

The 486 patent relates to a method of inputting customer information at the point of sale of cellphones [7]. Worthware and Raysoft both provide point of sale software to dealers, and Worthware brought an infringement action against Raysoft alleging that Raysoft’s product infringed. In this motion, Worthware sought a Norwich order against Raysoft’s controlling mind—the sole director, President and Secretary, and only shareholder—Mr Lalancette, ordering him to provide information regarding Raysoft’s clients. Worthware argued that it was entitled to know the identity of the clients, who would be direct infringers, both to be able to calculate its damages, and in order to bring proceedings against the dealers in the event that Raysoft would be unable to satisfy a damages award. Raysoft, on the other hand, argued that the parties operate in a small and highly competitive market, and that Worthware was seeking the names and addresses of Raysoft’s dealers in order to try to sell them its software [20].

Pentney J refused to grant the order, primarily on the basis that Worthware had not established that Mr Lalancette is the only practical source of the information it seeks [21]. He emphasized that a Norwich Order is “extraordinary equitable relief” which is “an intrusive and extraordinary remedy that must be exercised with caution,” [22], citing GEA v Ventra 2009 ONCA 619 [85]. The requirement that the party seeking the order must show that it is necessary because the party named is the only practical source of the information is therefore an “ironclad” element of the test. In this case, the defendant Raysoft itself also holds the necessary information, as was acknowledged by Worthware [24]–[25].

Moreover, Worthware had asked for the very information it now seeks during the examination for discovery of Mr. Lalancette, who testified as the Defendant Company’s sole representative. Raysoft objected, and the CMJ refused to order production of Raysoft’s client list, because “the discovery process does not serve to obtain names of potential witnesses for the sole purpose of starting an action against them… The jurisprudence has clearly and consistently discouraged such fishing expeditions…” [26]. This confirmed that Mr. Lalancette is not, in fact, the only practical source of the information [29].

More broadly, Pentney J pointed out that “a Norwich Order is not intended to be used to circumvent the normal discovery process in litigation” [34]. If Worthware was unsatisfied with the refusal of the order for disclosure of the client list, it should have appealed that decision, rather than trying an end run by way of a Norwich Order.

Another factor is that Worthware brought its motion for a Norwich Order almost four years after bringing its action against Raysoft, even though it knew all the key facts about how the alleged infringement operated; this called into question Worthware’s motivation in deciding to seek extraordinary equitable relief [31]. Pentney J dismissed Worthware’s argument about its doubts as to whether Raysoft would be able to satisfy any damages award as being unsupported by the evidence, and undermined by Worthware’s failure to take any other steps to protect its position, such as asking for security for costs [32].