Executive Summary: Key Legal and Evidentiary Issues

• Navtech claimed unpaid royalties under a licence agreement tied to its ship design work for the M/V Asterix conversion project.

• The defendants challenged jurisdiction and liability by asserting there was no maritime lien and no contractual relationship with FFS.

• The Court dismissed claims against FFS and the ship, finding no maritime lien or valid legal theory linking FFS to Navtech’s contract.

• Navtech was awarded summary judgment for over $2.25 million in unpaid royalties, but enforcement was stayed pending a set-off claim.

• The Court dismissed Navtech’s copyright infringement claim, finding the allegations related to moral rights, not protected under copyright law in this context.

• Costs were awarded to the prevailing parties in each motion, except no costs were ordered for the Crown’s unsuccessful intervention motion.

Facts and outcome of the case

Navtech Inc., a naval architecture firm based in Québec City, was contracted by Chantier Davie Canada Inc. (Davie) to provide design documentation for converting a commercial vessel, later named M/V Asterix, into an Auxiliary Oiler Replenishment ship for potential use by the Royal Canadian Navy. The relationship began in 2014 with a Non-Disclosure Agreement and was formalized through a Memorandum of Agreement and later a Licence Agreement. This agreement entitled Navtech to royalties equal to 1.42% of the vessel’s total cost, capped at $280 million.

Davie initially paid part of the royalties but later terminated Navtech’s involvement and ceased payments. Navtech filed a lawsuit claiming unpaid royalties, seeking summary judgment for the outstanding balance, asserting ownership of the design intellectual property, and alleging copyright infringement for the removal of its attribution from design documents. It also pursued an in rem claim against the vessel and included Federal Fleet Services Inc. (FFS) as a defendant, alleging it was Davie’s alter ego.

The defendants responded with several motions. FFS sought summary judgment to dismiss both the in personam and in rem claims against it and the ship. The Crown also moved to intervene to dismiss the in rem claim, asserting the ship was now under government service. Davie and FFS separately moved for summary judgment to dismiss the copyright claim.

The Court dismissed the Crown’s motion to intervene after ruling in favor of FFS. It found that Navtech had no maritime lien and therefore could not pursue an in rem action against the ship. The judge held that FFS had no contractual relationship with Navtech, was not the alter ego of Davie, and could not be liable under any of the proposed legal theories. As a result, all claims against FFS and the ship were dismissed.

Navtech’s summary judgment motion for unpaid royalties succeeded. The Court agreed that the royalty obligation under the Licence Agreement was clear and enforceable. However, since Davie alleged it incurred costs due to defects in Navtech’s work and asserted a right of set-off, the Court stayed the enforcement of the $2,258,437.83 judgment until those counterclaims were resolved at trial.

Navtech’s copyright claim was dismissed. The Court held that the act of removing Navtech’s name from design documents did not constitute a copyright infringement but could only potentially be a moral rights violation. As a corporation, Navtech could not assert moral rights under the Copyright Act, and it had not properly pleaded or substantiated a copyright violation.

On the issue of costs, the Court awarded them to the successful parties in each motion—Navtech for the royalties motion, FFS for the admiralty motion, and the defendants for the copyright motion—with the exact amounts to be assessed later. The Crown was denied costs for its unsuccessful intervention.