Novel Argument for Unwritten Agreements under S. 13(4) of the Copyright Act

On June 29, 2026 the Federal Court released its decision dismissing a motion for summary judgment (or, in the alternative, an order striking certain copyright allegations from the plaintiffs’ statement of claim) by the defendant, Sherwood Innovations Inc., in Vero UK Limited v. Sherwood Innovations Inc., 2026 FC 876. The motion centered on corporate developments between the plaintiffs that called into question whether the plaintiffs were capable of bringing the copyright action against Sherwood.

The original statement of claim named Vero UK Limited (“Vero UK”) as the owner of the purported copyright works (i.e., a software’s source and object code), with Vero Software, Inc. (“Vero US”) as the distributor and licensee of the works. An amended statement of claim was served several months later, naming Vero UK and Hexagon Manufacturing Intelligence, Inc. (“Hexagon”) as the plaintiffs, with the explanation that Vero US had merged with Hexagon, such that Hexagon became the exclusive distributor and licensee of the Works in Canada and the United States. Nearly half a year later, the plaintiffs sought leave to file a further amended statement of claim in order to reflect further corporate changes, namely that a company called Planit Software Limited (“Planit”) had acquired rights to the works from Vero UK through a business transfer agreement, after which Vero UK was promptly dissolved.

The plaintiffs’ motion for leave to amend was heard prior to Sherwood’s motion for summary judgment. The motions judge granted the plaintiff’s motion, with the result being that the action’s plaintiffs are now named as Vero UK (despite the company having been dissolved), Hexagon, and Planit. However, the plaintiffs’ responding written representations on Sherwood’s motion proposed another amendment to the statement of claim, this time removing Vero UK as a plaintiff.

As Sherwood’s motion materials were drafted prior to the hearing of the plaintiffs’ motion, Sherwood’s arguments centered on the allegation that the only two named plaintiffs at that time (Vero UK and Hexagon) lacked legal standing. More specifically, Sherwood argued that Vero UK lacked standing because the company was dissolved, and that Hexagon lacked standing because, contrary to subsection 13(4) of the Copyright Act, there was no written agreement between Vero UK and Hexagon providing Hexagon with rights in the Works in Canada (rather, the agreement only mentioned the United States).

First, the Federal Court determined that, with Planit now being a named plaintiff, dismissal of the action in whole could not be granted. Moreover, the Court found that a novel argument existed that, despite the absence of a written agreement, Hexagon nonetheless was a licensee of the works. The Court referred to obiter discussion from Tremblay v Orio Canada Inc., 2013 FCA 225, in which the Federal Court of Appeal considered that a possible exception to the strict requirements of s. 13(4) of the Act could occur in circumstances in which the rights owner acknowledges that they have entered into an assignment or licensing agreement and the parties have governed themselves according to the (unwritten or unsigned) agreement. As such an argument is not a pure question of law, but would require the Court to hear and assess the evidence and credibility of witnesses, the Court found that even if Planit was not presently named as a plaintiff, the action should not be summarily dismissed.

The Court further declined to strike the pleadings, finding that, due to the above novel argument, as well as the fact that no arguments were made related to Planit’s standing, it was not plain and obvious that the claims had no reasonable prospect of success.