JL Energy v. Alliance Pipeline: No Rolling Limitation Period for Patent Infringement

On February 8, 2024, Justice Horner of the Alberta Court delivered his decision in the case of JL Energy Transportation Inc v. Alliance Pipeline Limited Partnership, 2024 ABKB 72. In this ruling, Justice Horner granted a summary dismissal in favor of the defendant, enforcing a two-year limitation period for claims related to the breach of contract and patent infringement within Alberta. This article provides an overview of the ruling.

Background:

JL Energy Transportation Inc (JL Energy) developed a groundbreaking and cost-effective technology, revolutionizing the way natural gas and natural gas liquids could be transported through the same pipeline system.

JL Energy granted Alliance Pipeline Limited Partnership (Alliance) a limited use license to employ this technology. Utilizing this license, Alliance planned and constructed a pipeline stretching from British Columbia and Alberta to Chicago between 1996 and 2000. This project aimed to export Western Canadian enriched natural gas to a processing facility in the US operated by Alliance and Aux Sable.

In 2016, JL Energy filed a lawsuit against Alliance accused Alliance of using its proprietary and patented technology to transport and process rich natural gas through additional pipelines located in British Columbia, Alberta, and North Dakota. The core of JL Energy's lawsuit was the claim that Alliance and Aux Sable had done so without obtaining the necessary license or authorization, leading to allegations of breach of the limited use license and patent infringement.

Alliance sought a summary judgment to dismiss the case, arguing that the claims were barred by a two-year limitation period for bringing such lawsuits in Alberta.

Critically, JL Energy waived privilege over detailed communications with their former legal counsel regarding breach of the license agreement. These communications disclosed that JL Energy knew the injury it suffered due to the breach of licensing agreement as of November 27, 2013.

Limitations Periods and Patent Infringement:

Justice K.M. Horner restated and relies upon a series of principles established by the caselaw, including:

1. The inquiry under s. 3 of the Limitation Act is on the injury and not the cause of action: Geophysical Services Incorporated v. Encana Corporation, 2018 ABCA 384.
2. There is no rolling limitation period for patent infringement claims in Alberta: Secure Energy Services Inc v. Canadian Energy Services Inc, 2022 ABCA 200.
3. Discoverability does not require perfect knowledge or certainty that the claim will succeed: Grant Thorton LLP v. New Brunswick, 2021 SCC 31

In the end, the court concluded that JL Energy was reasonably aware of the injury suffered in 2013; it could attribute the injury to the breach of licensing agreement by Alliance; and that the breach was sufficiently serious to warrant a proceeding for remedial order. Nevertheless, it did not file its lawsuit until 2016. As a result, the claim was statute barred by section 3 of the Limitation Act.

Conclusion:

The decision case stands as a significant illustration as to the legal relationship between contractual disputes, limitation periods and claims for patent infringement. It emphasizes the need for  prompt action when disputes arise.