A Calgary drilling company was recently ordered by an Alberta court to stop manufacturing a well tractor it had developed.

The order came as a result of a suit by a Denmark-based competitor, who alleged the Alberta company stole its tractor design.

Welltec APS, based in Denmark and the parent of Alberta-based subsidiary Welltec Canada, developed the Well Tractor, a device used to develop and service oil wells.

In 1998, Welltec signed a contract with Computalog Ltd., a subsidiary of Alberta-based Precision Drilling Corporation, to allow Computalog to conduct tests of two Well Tractors in Canada. That contract specified that Computalog was not allowed to disclose any part of Well Tractor designs to a third party.

In 1999, Computalog acquired the European-based Preussag Wireline und Messervice, which had agreements with Welltec to rent the Well Tractors as long as it would not copy the design or compete with the tractor.

Welltec took Precision and its subsidiary Precision Drilling Technology Services Group Inc. (the successor of Computalog) to Court of Queen’s Bench in Calgary, alleging the Precision Trac developed by Computalog Europe was “improperly copied from the Welltec design.”

Precision argued that there was no genuine issue to be tried. It claimed that the agreements between Welltec and Preussag did not automatically become agreements between Welltec and Computalog as a result of the asset purchase. In addition, the agreement drawn directly between Welltec and Computalog was never breached, it claimed.

In a recent decision, Justice C.A. Kent agreed with Precision about the agreements. She also found the two models of tractors were “substantially identical,” and the resulting confusion could lead to potential damages to Welltec and its 10 years of established goodwill.

Judge Kent refused to award Welltec damages, but granted an injunction to stop Precision from “directing the manufacture, importation or use and marketing of copied well tractors.”

Bonus Boondoggle

An Alberta couple who used a company bonus to make improvements to their Edmonton property must accept that the company now has a claim on their land, say the courts.

Paul Douglas Hoag was employed by Newport Pacific Financial Group SA of Edmonton when he was paid a $500,000 bonus. Hoag, along with Susan Lorraine Edwards, used that money to make improvements to their property.

Newport alleges that Hoag breached his duties to Newport, including not invoicing clients, not paying suppliers, travelling to and meeting with a Newport client for the purpose of discrediting Newport’s competence, and more. As a result, Newport was granted a claim against Hoag’s and Edwards’ property in October 2002. Hoag and Edwards went to court seeking an order declaring the claim invalid.

Justice Brian Burrows found that it was possible to connect the breach of fiduciary duty directly with the property, and that one could argue that Newport has a valid interest. As a result, he ruled, the company’s claim against the property stands.

(Cases taken from recent Alberta court judgment records. Nicole Strandlund can be reached at nicole@businessedge.ca)