DATAINTRO SOFTWARE LIMITED
DATAINTRO SOFTWARE LIMITED
File No. PR-2010-077
Decision made
Wednesday, December 1, 2010
Decision and reasons issued
Tuesday, December 14, 2010
IN THE MATTER OF a complaint filed pursuant to subsection 30.11(1) of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47
BY
DATAINTRO SOFTWARE LIMITED
AGAINST
THE CANADA REVENUE AGENCY
Pursuant to subsection 30.13(1) of the Canadian International Trade Tribunal Act, the Canadian International Trade Tribunal has decided not to conduct an inquiry into the complaint.
Jason W. Downey
Jason W. Downey
Presiding Member
Dominique Laporte
Dominique Laporte
Secretary
1. Subsection 30.11(1) of the Canadian International Trade Tribunal Act 1 provides that, subject to the Canadian International Trade Tribunal Procurement Inquiry Regulations,2 a potential supplier may file a complaint with the Canadian International Trade Tribunal (the Tribunal) concerning any aspect of the procurement process that relates to a designated contract and request the Tribunal to conduct an inquiry into the complaint. Subsection 30.13(1) of the CITT Act provides that, subject to the Regulations, after the Tribunal determines that a complaint complies with subsection 30.11(2) of the CITT Act, it shall decide whether to conduct an inquiry into the complaint.
2. The complaint relates to a procurement (Solicitation No. 1000280473) by the Canada Revenue Agency (CRA) for the provision of barcode software. The procurement requirement for a software solution includes the following: all software and licensing required to meet the requirements of the “Macro PDF417” barcode generation product, including a 12-month warranty with maintenance and support services; maintenance and support services for years two through five; and one soft copy of all documentation. In addition to the above firm requirements, the bidders had to provide the following options: the option to purchase additional licences and forms; the option to purchase maintenance and support services for the additional licences purchased; the option to purchase training services; the option to obtain certain professional services; and the option to purchase an entity licence.
3. Dataintro Software Limited (Dataintro) alleged that the CRA incorrectly awarded a contract to a non-compliant bidder. Specifically, it alleged that the CRA should have deemed the winning bidder non-compliant with the terms of the solicitation regarding the infringement of third parties’ intellectual property rights. In this regard, Dataintro referred to a standard acquisition clause incorporated into the solicitation documents according to which “[t]he Contractor represents and warrants that, to the best of its knowledge, neither it nor Canada will infringe any third party’s intellectual property rights in performing or using the Work . . . .”
4. Dataintro submitted that the software solution proposed by the winning bidder is based on technology that is virtually identical to Dataintro’s patented technology. Dataintro further submitted that it holds patents for the technology in question in certain European countries and that, consequently, the use of the solution proposed by the winning bidder is in breach of its European patents.
5. According to Dataintro, since the above-noted clause does not limit the scope of the protection against infringement to intellectual property rights held in Canada, the CRA should not have awarded the contract to a bidder that infringes its European intellectual property rights.
6. On January 10, 2010, the CRA issued the solicitation documents. On January 26, 2010, bids closed. On February 24, 2010, the CRA informed Dataintro that it was not the successful bidder and also informed it of the name of the winning bidder.
7. On February 26, 2010, Dataintro, through its Canadian reseller, Purpose Data Limited, made an objection, by telephone, to the CRA regarding the issue of the alleged infringement, by the winning bidder, of its intellectual property rights. According to Dataintro, the CRA informed it that, in order to resolve the issue, the first step was to submit a letter setting out the nature of the complaint to the CRA.
8. On March 4, 2010, Dataintro sent a letter to the CRA in which it stated that it was of the view that the winning bidder may be non-compliant with the terms and conditions of the solicitation and that Dataintro could provide substantial evidence to support its claim that the solution proposed by the winning bidder was in breach of a European patent held by Dataintro.
9. Referring to the certifications attached to the solicitation documents, pursuant to which the CRA reserved the right to verify all information provided by bidders and indicated that untrue statements may result in proposals being declared non-responsive, Dataintro submitted that the fundamental question at issue was whether the CRA would uphold the award of a contract to a vendor that could be demonstrated to be in breach of its intellectual property rights.
10. On March 8, 2010, the CRA advised Dataintro that, at the time of the award of the contract, it had no reason to question the winning bidder’s compliance with the terms of the solicitation, that Dataintro’s intellectual property rights did not extend to Canada where the software will be used and that the CRA was unable to re-evaluate the software.
11. On March 18, 2010, Dataintro sent a letter to the CRA outlining the CRA’s potential liability for patent infringement and requesting a solution to the matter. In particular Dataintro suggested that the CRA take measures to prevent a non-resident located in a country in which patent protection has been obtained by Dataintro from using the solution that was the object of the contract.
12. On April 1, 2010, in response to Dataintro’s letter of March 18, 2010, the CRA reiterated that there was no evidence that the winning bidder’s representations regarding intellectual property rights were erroneous and advised that it had no basis to conclude that the award of the contract was improper.
13. On April 15, 2010, Dataintro sent another letter to the CRA and reiterated its request for a settlement to the problem, arguing that this matter went far beyond the narrow issue of the winning bidder’s compliance with the terms of the solicitation. It stated that the matter concerned serious potential legal proceedings concerning the infringement of Dataintro’s intellectual property rights that would involve the CRA.3
14. On April 29, 2010, the CRA again advised Dataintro that it had already addressed the issue of the winning bidder’s compliance. With respect to the issue of the potential infringement of Dataintro’s European patent, the CRA requested additional evidence.
15. On May 5, 2010, via e-mail, Dataintro sent additional information to the CRA concerning Dataintro’s European patent. On June 22, 2010, Dataintro sent another e-mail to the CRA, noting that Dataintro had not received a response from the CRA since the provision of the additional information and that Dataintro may have to launch legal proceedings against users of the software solution at issue in Europe.
16. On June 24, 2010, the CRA, through its legal counsel, informed Dataintro that the CRA was reviewing the matter with the vendor. Counsel also indicated that a reply to Dataintro’s May 5, 2010, correspondence would be provided upon receipt of instructions from the CRA.
17. On August 26, 2010, the CRA advised Dataintro that it did not wish to commit further resources to the issue of potential intellectual property infringement and that it was prepared to restrict access to the software solution by non-residents located in countries where patent protection had been obtained by Dataintro, as was suggested by Dataintro.
18. On September 20, 2010, Dataintro noted the CRA’s undertaking, but requested that the CRA advise it of its specific position on the issue of whether the solution proposed by the winning bidder was infringing Dataintro’s European patent or would infringe its future U.S. patent. In its September 20, 2010, letter, Dataintro also noted that it is “. . . quite surprised that . . . [the CRA] has decided to cease committing resources to reach a determination on this core issue.”
19. On November 15, 2010, Dataintro received a letter dated November 12, 2010, from the CRA confirming that the CRA would implement a blocking mechanism to restrict access to the software solution upon receipt of a duly executed settlement between the CRA and Dataintro. With respect to Dataintro’s question regarding the CRA’s determination on the issue of infringement of intellectual property rights by the solution proposed by the winning bidder, the CRA stated that whether the CRA had made a determination or obtained an opinion in this regard was a matter of solicitor-client privilege.
20. On November 24, 2010, Dataintro filed its complaint with the Tribunal.
21. Subsection 6(1) of the Regulations provides that a complaint shall be filed with the Tribunal “. . . not later than 10 working days after the day on which the basis of the complaint became known or reasonably should have become known to the potential supplier.”
22. Subsection 6(2) of the Regulations states that “[a] potential supplier who has made an objection . . . to the relevant government institution, and is denied relief by that government institution, may file a complaint with the Tribunal within 10 working days after the day on which the potential supplier has actual or constructive knowledge of the denial of relief, if the objection was made within 10 working days after the day on which its basis became known or reasonably should have become known to the potential supplier.”
23. In other words, a complainant has 10 working days from the date on which it first becomes aware, or reasonably should have become aware, of its ground of complaint to either object to the government institution or file a complaint with the Tribunal. If a complainant objects to the government institution within the designated time, the complainant may file a complaint with the Tribunal within 10 working days after it has actual or constructive knowledge of the denial of relief by the government institution.
24. The Tribunal is of the view that Dataintro knew the basis of its complaint on February 24, 2010, when it was informed by the CRA of the name of the successful bidder. According to the complaint, an objection to the CRA was made, by telephone, on behalf of Dataintro on February 26, 2010, a telephone conversation which was followed by a formal objection, in writing, on March 4, 2010. Dataintro’s objection, which concerned its allegation that the contract had been awarded to a bidder that may not comply with the terms and conditions of the solicitation documents, was therefore made within 10 working days after the day on which Dataintro first became aware of the basis of its complaint, as required by subsection 6(2) of the Regulations.
25. However, pursuant to this provision, in order to be timely, a complaint must also be filed with the Tribunal within 10 working days after the day on which a complainant had actual or constructive knowledge of the denial of relief by the relevant government institution. In this case, a review of the correspondence provided by Dataintro reveals that, as early as March 8, 2010, the CRA indicated that its position was that the winning bidder’s proposal was compliant with the terms and conditions of the solicitation documents and that it would not revisit this issue. However, Dataintro and the CRA continued to correspond through various e-mails and letters exchanged after March 8, 2010. This suggests that the CRA may have continued to give consideration to Dataintro’s objection after March 8, 2010.
26. That being said, much of the correspondence that was subsequently exchanged between Dataintro and the CRA pertains to issues that are different from those of the winning bidder’s compliance with the terms of the solicitation documents. In fact, the main topic discussed in this correspondence is the CRA’s potential liability for patent infringement through its use of the solution proposed by the winning bidder and the implementation of mechanisms to protect Dataintro’s alleged intellectual property rights in that context.
27. On August 26, 2010, the CRA informed Dataintro of its final decision, namely, that it was not prepared to commit further resources to a determination of whether the contracted solution infringed any of the intellectual property rights claimed by Dataintro. At that time, the CRA indicated that it was prepared to restrict access to the software, as suggested by Dataintro, in order to settle the matter. In this regard, the Tribunal notes that even Dataintro acknowledged that this was the CRA’s final position when it stated as follows:
The final position from the CRA was that it did not wish to commit any further resources to determining whether the [winning bidder’s] solution infringed any patents held by Dataintro and believed that the solution to the argument was to simply implement a technology block barring access to CRA forms from countries where Dataintro held valid patents. CRA upheld that [the winning bidder’s proposal] was fully compliant with the original tender on the basis that no evidence existed during the tender process to suggest otherwise.4
28. The Tribunal is of the view that the correspondence of March 8, 2010, and the subsequent timely exchanges are evidence that the CRA examined the situation until August 26, 2010. At that time, however, the language used in the CRA’s letter, to the effect that it did not wish to commit further resources to this matter, indicates that the CRA would no longer consider the case and that the receipt of the denial of relief was definitive at that point.
29. This is further echoed in the complaint itself by Dataintro when it states that “[t]he final position from the CRA was that it did not wish to commit any further resources to determining whether the [winning bidder’s] solution infringed any patents held by Dataintro . . .” [emphasis added], confirming that Dataintro effectively considered that it received its denial of relief at that point in time.
30. The Tribunal therefore considers that Dataintro had a clear statement that the CRA was not going to do anything further and, thus, had actual knowledge of the CRA’s denial of relief (i.e. that the CRA would not find the winning bidder’s proposal non-compliant) on August 26, 2010.
31. If Dataintro was in disagreement with the CRA’s response to its objection and wanted, as it appears, to raise this matter with the Tribunal, it had to do so within 10 working days from the receipt of the CRA’s letter. Ten working days after August 26, 2010, is September 10, 2010. However, the complaint was not filed until November 24, 2010.
32. While there are several more items of correspondence between the parties after August 26, 2010, up to and including November 15, 2010, the Tribunal notes that the mere fact that Dataintro continued to communicate with the CRA on this matter, after having received a definitive denial of relief to its objection, did not alleviate it of the onus to comply with the time limit prescribed by the Regulations.5 When the response to an objection is an unambiguous denial of relief and does not suggest the possibility of the matter being reconsidered, the time limit for filing a complaint is calculated from the date of that response.
33. The Tribunal therefore finds that the complaint has not been filed within the time limit prescribed by subsection 6(2) of the Regulations.
DECISION
34. Pursuant to subsection 30.13(1) of the CITT Act, the Tribunal has decided not to conduct an inquiry into the complaint.
1 . R.S.C. 1985 (4th Supp.), c. 47 [CITT Act].
2 . S.O.R./93-602 [Regulations].
3 . According to Dataintro, such proceedings could ensue from patent infringement in Europe or, eventually, in the United States, where Dataintro’s patent application for the software technology at issue was pending.
4 . Complaint at 9.
5 . Re Complaint Filed by IT/net Ottawa Inc.( 6 July 2009), PR-2009-023 (CITT).