Catalyst Canada Services LP v. Catalyst
Changers Inc., 2013
ABQB 73

Pursuant to the Injunction Order, Applicant Defendant Catalyst Changers
Inc. (“Changers”) delivered-up two trailer-mounted cyclone separators (the
“Applicant’s Separators”) to the Independent Supervising Solicitor (the “ISS”)
appointed under the terms of the Anton Piller Order. The Respondent’s claim regarding
the Applicant’s Separators is that they were copied from two trailer-mounted
cyclone separators belonging to the Respondent (the “Respondent’s Separators”).
The Respondent argues that the Respondent’s Separators are unique and that the
Applicant’s Separators were constructed using the Respondents’ confidential,
proprietary information.

In this application, Changers sought to vary the Injunction Order and
have the Court order the ISS to return the Applicant’s Separators to it. The
Orders are not permanent or final orders. They are temporary orders, pending a
trial of the various issues that the parties have raised.

Court ordered that the ISS maintain possession of the Applicant’s
Separators pending the trial of the matter.

Test for Interlocutory Injunctions

When dealing with a mandatory injunction, the Court must apply the more
stringent “strong prima facie case” test, rather than the “serious issue
to be tried” test appropriate in the case of prohibitory injunctions.

The Injunction Order requires Changers’ positive action to “deliver up
to the ISS without retaining any copies…all equipment” including the
Applicant’s Separators. That type of wording might require this Court to apply
the more stringent “strong prima facie case” test. However, this Court
must look beyond this to determine what the Respondent was seeking in the first
place.

In this case, the Respondent does not want the Applicant’s Separators.
It wants Changers to refrain from doing a wrongful act, viz., using the
Applicant’s Separators which are allegedly copies of the Respondent’s
Separators. This is a prohibitory injunction. It was possible to effect this
result without having the Applicant’s Separators in the hands of the ISS (the
“mandatory” portion). Thus, the Court applied the serious issue to be tried
test.

Serious Issue to Be Tried

The Court concluded that there are serious issues that require a trial
of those issues. Those issues might include whether Respondent’s Separators are
special or unique, whether Changers used the Respondent’s confidential and
proprietary information in constructing the Applicant’s Separators, and whether
the Respondent’s Separators are a “trade secret.”

The Court made the following observations about confidential and proprietary
information:

• The
  combination of otherwise non‑confidential parts and elements of a product or machine and the method
  of creating such an amalgam, could constitute confidential and proprietary
  information.

• Whether
  the Respondent’s Separators have been in the public realm for almost 4 decades
  will not determine whether they remain confidential. The court must look at the
  whole of the circumstances to determine whether, in its mind, the Respondent’s
  Separators, and their design, remained confidential.

• Professional
  or journeyman qualifications are not required for a person to develop
  confidential or proprietary information or products.

• The
  fact that the Respondent’s Separators were transported, used in the field and
  exposed to public view might not derogate from their confidential nature.

• Information
  need not be novel, in a “patent sense” to attract protection under the law of
  confidentiality.

The Respondent conceded that its employees, or those working on the
Respondent’s Separators, did not sign confidentiality agreements. However, that
does not usurp their common law duty to keep confidential information
confidential.

In the alternative that the nature of the injunction is mandatory, the
Court determined that the Respondent has established a strong prima facie
case that Changers used the Respondent’s confidential and proprietary
information to create the Applicant’s Separators.

Irreparable Harm

The Court held that the Respondents have satisfied their onus showing
that they will suffer irreparable harm if this Court were to order the return
of the Applicant’s Separators to Changers. Monetary damages will not compensate
the Respondents for this harm.

The Court observed that it must look beyond whether the harm is
compensable in money damages, although money damages is a factor that might
weigh into its decision.

At this stage, this Court was unable to determine the quantum of the
market share that the Respondents might have lost or would lose. Nor could it
determine whether the Respondent’s relationship with its customers would be
damaged. What was clear, however, was that the only 4 separators that are
currently on the market are the Applicant’s Separators and the Respondent’s
Separators. If this Court were to order the return of the Applicant’s
Separators to Changers, the parties would be directly competing with each
other, which means that if Changers “wins” a contract because of its use of the
Applicant’s Separators, that would encroach on the Respondent’s market share.
This contributed to the Court’s finding of irreparable harm.

Which Party Will Suffer Greater Harm

In the end, based on the information that the parties provided to it,
the Court found that the balance of convenience favours the Respondent.
Although the Injunction Order causes harm to Changers, the Respondent will
suffer the greater harm if this Court were to order that the Applicant’s
Separators be returned to Changers.