Recent Decisions October 2004
I. FEDERAL COURT DECISIONS
(a) Patents
1. Carbo Ceramics v. China Ceramics Proppant, July 28, 2004 FCTD (Shore J.) Interlocutory Injunction/Springboarding
Motion where the plaintiff sought an interlocutory injunction to prevent the defendant from marketing and selling ceramic proppant pending the outcome of the trial for the plaintiff's claim of patent infringement.
Held: Injunction granted. The test for an interim injunction to be granted from R.J.R. -MacDonald Inc. v. Canada (Attorney General) was applied. Both parties agreed that the plaintiff had established a serious issue to be tried, as the plaintiff had established a prima facie case for infringement. With respect to the second prong of the test and whether the plaintiff would suffer irreparable harm, the plaintiff presented two submissions: the defendant would be unable to pay damages if the plaintiff was successful, and the defendant was “springboarding” into the marketplace. In response to the allegation that the defendant would be unable to pay, should damages be awarded against it, the defendant had submitted a letter of undertaking from the Chinese manufacturer of the ceramic proppant and had itself submitted a letter of undertaking and a balance sheet indicating that it had $132,000 of assets and capital in Canada. The Court held that the undertaking given by the Chinese manufacturer was of little value, as the Chinese manufacturer did not have assets in Canada, and without assets in Canada they could not be compelled to fulfill their commitment. The Court agreed with the plaintiff that the balance sheet, prepared by the Director of the defendant, without supporting evidence, was insufficient evidence to demonstrate that it would be able to pay an award for damages. The plaintiff had therefore demonstrated irreparable harm. With respect to springboarding, Shore J. said this was used to describe a situation where a party holding the patent loses a part of the market share due to breach of a patent in anticipation of expiry of the patent, and the patent infringer is allowed to take unfair advantage of the situation, as it “ramps up” before the expiration of the patent. The Court deemed that the defendant was springboarding and as a result it was obtaining an advantage for which an award of damages would be insufficient. Under the third prong of the test, the Court held that the balance of convenience favoured neither side. In such cases, the Court stated that the status quo should be preferred (Turbo Resources Group Ltd. v. Petro Canada Inc., [1989] 2 F.C. 451). Shore J. stated that the status quo does not refer to the time immediately before the motion is brought, but rather means that the infringer should not be allowed to continue in the marketplace (Lubrizol Corp. v. Imperial Oil Ltd., [1989] F.C.J. No. 27 (T.D)). Therefore, the balance of convenience favoured the plaintiff, and the interlocutory injunction was granted.
2. China Ceramic Proppant v. Carbo Ceramics, September 2, 2004 FCA (Létourneau, Nöel, Sexton JJ.A) Expiry of Interlocutory Injunction/Timing of Status Quo /Springboarding
Appeal from order that granted an interlocutory injunction against China Ceramic Proppant pending the outcome of the trial for patent infringement.
Held: Appeal allowed to the limited extent of amending the judge's orders so that the interlocutory injunction expires on the date the patent expires. On all other aspects, the appeal was dismissed. Counsel for the appellant had submitted that the judge had made a preliminary determination regarding infringement of the patent, which unduly influenced his decision regarding the balance of convenience. Court held that they were satisfied that the judge had not prejudged the merits of these issues, even though he had used loose and unfortunate language. The appellant submitted that the judge had erred in his determination of the status quo because the status quo they argued should be the situation prevailing at the time the application for the injunction was made. The Court stated that the judge had come to the right conclusion regarding status quo and the balance of convenience, but that the reasons given required some clarification. The Court stated that it had been recognized in Turbo Resources Ltd. v. Petro Canada Inc. (1989) 24. C.P.R. that there may be factors, such as the strength of one party's case over the other, which would essentially tip in a party's favour a balance of convenience which otherwise appears to be neutral. One such factor, the Court held, was the judge's finding that the appellant was “springboarding” into the marketplace in anticipation of the expiry of the Plaintiff's patent. The Court stated that there was sufficient evidence before the judge to support the allegation of “springboarding” that had been made. Also, the Court held, to accept the appellant's contention that the status quo should be fixed at the time at which the injunction was sought would be to allow the appellant to continue the alleged infringing activities, but also to carry on its alleged “springboarding” with the blessings of the Court. When the judge's finding that the appellant would be unable to financially honour an award of damages is combined with the strength of the respondent's case as found by the judge, the balance of convenience is tipped in favour of the respondent.
(b) Trade Marks
1. Veuve Cliquot Ponsardin v. Boutiques Cliquot, April 22, 2004 FCA (Noël, Desjardins, Nadon JJ.A.) Appeal/Likelihood of Confusion/General Class of Wares
Appeal from decision that respondent was not infringing appellant's trade-marks.
Held: Appeal dismissed. The Trial Judge did not misapply the rule established by Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534. The “link” required by Pink Panther “is not any link whatever, but one based on which a conclusion can be drawn that there was a risk of confusion.” The Trial Judge did not lose sight of s. 6(2); she considered that there was no risk of confusion, regardless of whether or not the wares (champagne versus clothing) were of the same general class.
2. Pierre Fabre Médicament v. Smithkline Beecham, June 7, 2004 FCTD (O'Reilly J.) Opposition Appeal/Confusion by an Anglophone Consumer/Linguistic Experts
The appellant applied to register IXEL. The respondent opposed based on its mark PAXIL. The Registrar held in favour of the respondent but was overturned on appeal to the Trial Division. A subsequent appeal to the Court of Appeal resulted in the conclusion that both the Registrar and the Trial Division had erred as to the applicable test for determining the risk of confusion. In particular, they “erred in transforming the third prong of the only applicable test (is there a risk of confusion in the average Francophone consumer, the average Anglophone consumer or, in some special circumstances, the average bilingual consumer?) into an independent test.” The present case is not one where the perception of an average bilingual consumer is relevant. As the parties agreed that there was no likelihood of confusion between the marks for the average Francophone consumer, the Court of Appeal returned the case to the Trial Division for determination of whether there is a risk of confusion between the marks for an Anglophone consumer.
Held: Opposition dismissed. The Registrar imposed too high a burden of proof by applying the standard of “doubt” as to confusion. The proper test is as follows: “is it more likely than not that, as a first impression in the mind of the average Anglophone consumer with a vague memory, that there is a tangible risk of confusion between the marks IXEL and PAXIL?” Linguistic expert opinions should be treated with caution since their function is to dissect words and the marks should not be dissected. The Court concluded that the first syllable of the trade-marks is so different that phonetically the degree of similarity between the marks is low. This factor, combined with the fact that the nature of the prescription medication business reduces the risk of confusion, supported the conclusion that there was not a likelihood of confusion.
3. Spenco Medical v. Emu Polishes, July 6, 2004 FCTD (Kelen J.) Summary Judgment/Trade-mark Infringement
Motion by defendant for summary judgment to dismiss the plaintiff's action for trade-mark infringement on the ground that there is no likelihood of confusion between the plaintiff's registered trade-mark POLYSORB and the defendant's trade-mark POLYSOFT for shoe insoles.
Held: Motion dismissed. The plaintiff has raised genuine issues for trial and the credibility of the plaintiff's witnesses on the issue of whether confusion is likely must be weighed by a trial judge.
4. Tradition Fine Foods v. Oshawa Group et al., July 20, 2004 FCTD (O'Reilly J.) Trade-mark Infringement/Evidence of Confusion/Survey Evidence
Action for a declaration that the defendants have infringed the plaintiff's registration for TRADITION through their use of LES MARCHES TRADITION for stores selling food, including bakery goods. The plaintiff's mark is registered for various bakery products.
Held: Action dismissed. Even if the Court were to accept that the defendants sometimes use TRADITION for their stores, it would still not find infringement because the defendants sell a vast array of food products and do not sell bakery products with the word TRADITION on them. There are major differences between the parties' enterprises. The plaintiff's evidence of misdirected phone calls and enquiries as whether there was a connection between the two businesses does not amount to evidence of actual confusion. The plaintiff's survey evidence did not persuade the Court because aspects of the survey suggested that the people surveyed may have been guessing. The Court rejected the plaintiff's suggestion that an adverse inference should be drawn from the defendants' failure to produce their own survey or an expert to contradict the plaintiff's survey.
5. Positive Attitude Safety System et al. v. Albian Sands Energy and Stibbard, July 23, 2004 FCTD (Noël J.) Summary Judgment /Passing Off/Copyright Infringement
Motion by defendants for summary judgment dismissing the plaintiffs' claims of passing off with respect to the plaintiffs' PASS trade-marks and infringement of the copyright in various written materials produced by the plaintiffs. The plaintiffs have created a safety system which they license to various industries. The defendants, who are in the mining and oil industry, used the plaintiff's safety system for about two months and then produced a similar system which was distributed to both employees and outside contractors.
Held: Noël J made certain findings of fact and set out the issues that remain to be decided by the trial judge. There is a genuine issue concerning passing off but Noël J was not provided with all the factual evidence needed to properly respond to that issue. Despite the differences in the parties' primary trade, the fact that the defendants used the plaintiffs' product and then produced and distributed a similar product might support a finding that they are in the same trade. In addition, the determination as to whether the defendants made a substantial copy of the plaintiffs' system should be left to the trial judge as some witnesses will be called who did not present evidence before the motions judge. On both issues, Noël J felt that all the substantive legal materials had not been presented to him by the parties.
6. Metro-Goldwyn-Meyer v. Stargate Connections, August 30, 2004 FCTD (Simpson J.) Opposition Appeal/ Confusion /Material Dates/Interpretation of Statement of Services
Appeal from decision that rejected appellant's opposition to an application to register STARGATE for Internet services, such as web site development, web site publishing and Internet design, marketing and connection. The opposition was based on the likelihood of confusion with the opponent's previous use of STARGATE for the production, distribution and screening of a movie called STARGATE and a wide variety of wares and services. The Registrar concluded that the parties' businesses were so different that confusion was not likely.
Held: Appeal dismissed. The Court rejected the appellant's submissions that the material date with respect to entitlement is the date of decision. Regarding distinctiveness, the appellant submitted that the material date was the date of decision, while the respondent submitted that it is the date of application - the Court held that the correct material date regarding distinctiveness is the date of filing of the opposition. The Court was not persuaded that the Registrar was clearly wrong in concluding that the applicant's statement of services did not include rendering entertainment services over the Internet. The Registrar did not err in considering the applicant's evidence of actual use in interpreting the nature of its services.
7. Technosoft Business Systems v. Gestion Technocap, September 10, 2004 FCTD (Simpson J.) Opposition Appeal
Appeal from an opposition decision that refused an application to register TECHNOCORP for computer-related wares and services based on non-distinctiveness. The Registrar's decision was based on an assumption that there was a connection between the parties' services. The applicant filed no evidence before the Registrar but both parties filed evidence on appeal.
Held: Appeal allowed. The new evidence would have affected the Registrar's findings of fact on three of the s. 6(5) factors. The parties' businesses are very different.
8. Canadian Rehabilitation Council for the Disabled v. Rehabilitation Foundation for the Disabled, October 1, 2004 FCTD (O'Reilly J.) Judicial Review re Publication of Official Mark/Admissible Evidence/Licensing Official Marks
Application for judicial review of Registrar's issuance of notices under s. 9(1)(n)(iii) of the adoption and use of the official marks MARCH OF DIMES and ONTARIO MARCH OF DIMES by the respondent. The applicant, the National Council, is also known as THE MARCH OF DIMES while the respondent, the Ontario Foundation, is also known as the ONTARIO MARCH OF DIMES. The applicant says that any use of the marks made by the respondent was under license from it.
Held: Application granted. Use of an official mark under licence from another public authority does not constitute “adoption and use” for the purposes of s. 9(1)(n)(iii). Although judicial review is usually decided based on the evidence before the decision-maker, an exception can be made in a case like this where the applicant's evidence shows that the respondent had no independent entitlement to the marks. Given the perfunctory nature of the Registrar's decision under s. 9(1)(n)(iii), it is appropriate to give a party contesting the public notice an opportunity to present new evidence relating to the adoption and use of an official mark on judicial review. Although the applicant never used ONTARIO MARCH OF DIMES and the issue of confusion is not relevant under s. 9, the Court concluded that it must treat both of the applicant's marks equally since all of the various forms of MARCH OF DIMES used by the respondent derived from its licensing arrangement with the applicant. The Court declined to deal with the respondent's argument that licensed use of an official mark does not enure to the benefit of the licensor but noted that if it were to accept that argument, a public authority could not license its official marks to another public authority without risking enabling the licensee to obtain its own public notices.
(c) Practice
1. Benisti Import-Export v. Modes TXT Carbon, April 7, 2004 FCTD (Morneau P.) Motion to Examine Witness not Chosen as Representative/Federal Court Rule 237(3)
Motion by the plaintiff under r. 237(3) to examine a witness other than the one selected by the defendant corporation to be its representative.
Held: Motion granted. The witness selected to represent the defendant corporation was not an employee throughout the relevant period, and gave 37 undertakings when examined, causing the Prothonotary to agree that answers would not come promptly and effectively from him. On the other hand, the witness proposed by the plaintiff was uniquely positioned to answer questions regarding the defendant, meeting the requirements of Liebmann v. Canada (Minister of National Defence (1996), 110 F.T.R. 284 that an alternate witness be knowledgeable and able to give broad discovery.
2. Apotex v. GlaxoSmithKline and SmithKline Beecham, July 23, 2004 (Morneau P.) Motion to Strike Out Party /Federal Court Rules 104(1)(a) and 208 /Patented Medicines (Notice of Compliance) Regulations
GlaxoSmithKline brought a motion seeking a declaration that it is not a proper and necessary party to the action instituted by Apotex under s. 8 of the Regulations. GlaxoSmithKline based its argument on r.104(1)(a) and 208, as well as the decision rendered by the Federal Court in Apotex Inc. v. Eli Lilly and Company Inc. and Eli Lilly Canada Inc., 2004 FC 502 (the Lilly U.S. decision).
Held: Motion dismissed. The Lilly U.S. decision is currently under appeal to the Federal Court of Appeal and Morneau P. was not prepared to prejudge whether the Court of Appeal will affirm or overrule the decision of the trial judge. In addition, the motion that led to the Lilly U.S. decision was a motion for summary judgment, whereas this motion is tantamount to a motion to strike adjudication, which must meet a stringent test.
3. Apotex v. Merck et al., July 27, 2004 FCTD (Martineau J.) Affidavit of Documents /Production of Documents/Standard of Review of Interlocutory and Discretionary Order
Appeal from an interlocutory decision of a prothonotary refusing to order production of certain documents. Apotex sought to have the documents included in Merck's further and better affidavit of documents. Apotex asserted that the prothonotary erred in principle and in law, and exercised her discretion on the basis of a wrong principle or a misapprehension of the facts as to what factors should guide the court. Further, Apotex argued that the prothonotary did not give effect to the Federal Court of Appeal's judgment to the effect that both parties are entitled to examinations for discovery on issues relating to the remedy of an accounting in lieu of damages.
Held: Motion dismissed. The standard of review for an interlocutory and discretionary order made by a prothonotary was set out in Canada v. AquaGem Investment Ltd. (1993), 149 N.R. 273 (F.C.A.). The prothonotary did not err in law; did not fail to give effect to the Court of Appeal's judgment; and was not clearly wrong in refusing to order production of documents she found to be irrelevant to the issues between the parties.
The right to conduct discovery is not absolute. It is subject to the requirements of reasonableness and relevance under the Rules and applicable jurisprudence. Apotex bears the burden of showing that Merck's production is inadequate and must demonstrate that documents 1) exist; 2) are in the possession or control of Merck; and 3) are relevant. The trial judge determines ultimate relevance. Whether a document is relevant to an issue is based on a reasonable interpretation of the pleadings. If an issue is not raised in the pleadings, a party is not entitled to conduct a “fishing expedition”. Furthermore, a party may not raise irrelevant allegations simply to enlarge the area of discovery. Relevance is also affected by application of res judicata and issue estoppel. If, by application of these principles, a party cannot rely upon a document or use it to affect either party's case, the document is fundamentally irrelevant.
The prothonotary did not err in refusing to order production of documents in the four specific categories requested by Apotex. First, documents relating to Merck's delay in prosecuting the '349 patent were irrelevant as this matter had been conclusively determined in a previous action. Second, documents regarding Merck's mislabeling of vasotec tablets as containing enalapril maleate had no relevance or connection to Apotex or its infringing activities. This connection must exist in order for “past conduct to be relevant to a refusal of equitable relief [accounting of profits] under the 'clean hands' doctrine.” Third, documents relating to the “tenuous nature” of the '349 patent were irrelevant as the validity of the '349 patent had been conclusively determined in a previous action. Finally, documents regarding Merck's market interference in respect of Apotex's attempts to sell its product were not required to be produced as Apotex had not explained in its motion record what it meant by “interference”.
4. Abbott Laboratories v. Pharmascience and Canada (Minister of Health), July 29, 2004 FCTD (Gibson J.) Standard of Review of Prothonotary's Decision /Patented Medicines (Notice of Compliance) Regulation
Appeal from a decision by Aronovitch P. granting a 105 day extension to Abbott of the 24-month period set out in s.7(1)(e) of the Regulations. Abbott originally sought the extension to allow the notice of application to be heard and determined, such that Abbott's counsel of choice is available to argue the case. Pharmascience appealed and sought the shortening of the 24-month period, while on cross-appeal Abbott sought an extension of the 105 days it was granted.
Held: Appeal and cross-appeal dismissed. Gibson J. referred to numerous cases which stand for the proposition that discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless they are clearly wrong or raise questions vital to the final issue of the case. In addition, case management judges in complex matters must be given “elbow room.” Gibson J. ruled that a prothonotary appointed to assist a case management judge, as Prothonotary Aronovitch was in this matter, is herself a case management judge. However, Gibson J. ruled that the issue of the extension of the 24-month as set out in s.7(1)(e) was vital to the final issue of the case. Gibson J. therefore undertook this appeal on a de novo basis. However, Gibson J. could find no reason whatsoever for reaching a conclusion different from that reached by the Prothonotary.
5. Grand Tank (International) and Davlin Holdings v. Destiny Oilfield Rentals and Harding, August 5, 2004 FCTD (Hargrave P.) Motion for Particulars/Specificity of Particulars/Federal Court Rule 359
Leave to amend the motion granted. The defendant filed a motion for particulars without first requesting particulars either by a letter or by a demand for particulars. Although a letter or demand is no longer required by the rules, it is nevertheless “virtually a precondition to a motion for particulars”, allowing counsel time to reflect, negotiate and reach agreement as to the required particulars. Similarly, although r.359 no longer requires the setting out of the “precise” relief sought, the substance of the rules call for specificity and Form 359 (the form used for the motion) does mention that the “precise” relief is to be laid out. Opposing counsel and the Court should not have to hunt through the Statement of Claim and affidavits to determine the thrust of a motion because it is vague.
6. Apotex v. Merck and Merck Frosst Canada, August 16, 2004 FCTD (Martineau J.) Federal Court Rule 107/Bifurcation Order /Determination of Entitlement to Elect Accounting Before Discovery on Damages
Motion by Merck for a bifurcation order pursuant to r. 107 of the Rules asking that the question of their entitlement to elect an accounting of the profits flowing from Apotex's infringement of their patent be determined separately, and prior to, any discovery into quantification of damages or profits. Merck argued that having the outstanding issues determined sequentially would avoid unnecessary cost, effort and delay. Specifically, Merck sought first a determination of entitlement, including the completion of the necessary discoveries and hearing. Following a decision of entitlement, a reference would be held to address questions as to; the extent of infringement, Merck's damages, and the profits of Apotex. In addition, if entitlement was established, Merck sought that discoveries as to the extent of infringement and quantum of profits be held prior to Merck making its election, and discoveries on Merck on the question of damages only occur if Merck elected to take damages.
Held: Motion granted. Found, on balance of probabilities, that to proceed in such a fashion would more likely than not result in the most just, expeditious and least expensive determination of the proceeding on its merits. Making an initial determination on entitlement to an accounting would narrow the scope of discovery. If entitlement were not established, further discovery into profits would be irrelevant. Found that it was reasonable to permit discovery into profits before Merck needed to make its election, and to delay discovery into Merck's damages until election is made, again because discovery may be rendered irrelevant. Found that any disadvantage to Apotex was merely procedural in nature, and clearly outweighed by the advantages.
7. Merck et al. v. Apotex, August 23, 2004 FCTD (Morneau P.) Extent of Discovery in a Patent Case
Motion by Apotex for determination of the objections raised during examinations for discovery. Virtually all of the many objections to be determined have to do with the scope of Apotex's attack on the validity of the patent that is cited by Merck. In this action, Merck alleges that Apotex has sold Lisinopril and thereby infringed its patent. Apotex is trying to bring down the patent not only by arguing grounds of invalidity peculiar to the compounds entering into the patent but also by comparing the compounds within that patent with the compounds that are not.
Held: Motion dismissed. Any information and any document not yet produced that has to do with compounds outside the patent are items of information that, while having some relevance according to the approach taken by Apotex, are nevertheless of minimal usefulness, and must yield in the face of troubles and inconvenience of all kinds that the search for and production of such information can engender in this case.
8. CCH Canada v. Law Society of Upper Canada, August 25, 2004 FCA (Linden, Rothstein, Sharlow JJ.A.) Increased Costs
Motion by respondent (LSUC) for increased costs. In a copyright infringement action that went all the way to the Supreme Court, the Trial Division did not make an award of costs, the Court of Appeal ordered each party to bear its own costs and the Supreme Court awarded costs throughout to LSUC. CCH submits that costs with respect to the Court of Appeal should be awarded on the basis of the high end of Column III of Tariff B.
Held: Success on the motion divided. An award of increased costs is justified because this was an important, complex and novel case and the defendant was entirely successful. However, at the conclusion of the Court of Appeal stage, LSUC only requested costs at the high end of Column IV of Tariff B. Although it now feels that it is entitled to higher costs given its success before the Supreme Court, that success did not change the amount of work involved in the appeal before this Court. LSUC awarded “increased costs, but temper a lump sum award having regard to the Law Society's earlier representation seeking increased costs only at the high end of Column IV.” Interest to run from the date of the Court's original judgment.
CCH gave 3 reasons why the Court of Appeal has no discretion to award increased costs. 1) Any application for increased costs should be made to the Supreme Court. 2) An order by the Supreme Court of “costs throughout” leaves no discretion to this Court to order costs other than under Column III of Tariff B. 3) The fact that LSUC represented to the Supreme Court that there were no special circumstances regarding costs means that this Court should infer that the Supreme Court meant that no increased costs should be awarded. These arguments were rejected by the Court for the following reasons: 1) An award of “costs throughout” by the Supreme Court remits to the respective lower courts the determination of costs in respect of the proceedings in each Court.; 2) Ordering increased costs is not inconsistent with the Supreme Court's award of “costs throughout” since that direction is neutral and only requires that costs be awarded in accordance with the rules of the Court.; 3) LSUC's representation that there were no “special circumstances” was only referring to whether or not there was justification for solicitor-and-client costs.
9. Apotex et al. v. Pharmascience, August 31, 2004 FCTD (Blais J.) Extent of Discovery in a Patent Case
Appeal from the decision of the Prothonotary requiring that the defendant answer questions of a technical but predominantly factual nature but not answer questions on matters of expert opinion, or common general knowledge, or questions of law, or questions that are irrelevant. In this pharmaceutical patent infringement action, the plaintiffs allege infringement based on the content of the tablets, not the way they function. The plaintiffs are seeking answers in discovery on the pleadings of non-infringement and invalidity. The defendants argue that any question related to functionality is not related to the material facts in the pleadings, but rather to expert opinion. In regards to invalidity, the defendant claims that the plaintiffs fail to acknowledge that “common general knowledge” of a person skilled in the art is necessarily expert opinion and outside the scope of discovery.
Held: Appeal dismissed, the order of the Prothonotary stands. The Prothonotary did not apply the wrong principle of law or misapprehend the facts.
10. Sunsolar Energy Technologies v. Flexible Solutions International et al., September 1, 2004 FCTD (Rouleau, J.) Parties /Pleadings/Naming Defendant Parties
Defendants' appeal of Prothonotary's decision to not strike defendant O'Brien as a party. Defendants submitted that neither the Statement of Claim nor the particularized Statement of Claim contained any allegations of actions directed at the defendant O'Brien. Apart from "under the authority and guidance" of the corporate defendant, the infringement actions were alleged to have been done by the corporate defendants or "by persons acting on their behalf".
Held: Appeal allowed. Defendant O'Brien struck as a party defendant. Relying on Mentmore Manufacturing v. National Merchandise Manufacturing, 40 C.P.R. (2d), the allegations in the Statement of Claim (as well as the particularized Statement of Claim) did not provide any facts to which a defendant or the court could turn in order to conclude that there was a "deliberate, willful and knowing pursuit of a cause of conduct that was likely to constitute infringement or reflected any indifference to the risk of it". A pronouncement by the Prothonotary that "as president of both corporate defendants, he could have been involved in deliberate acts" could not support his conclusion refusing to strike Mr. O'Brien as a defendant. The Prothonotary applied the wrong legal principle.
11. Canada (Minister of Health) and Canada (Attorney General) v. Apotex, September 1, 2004, FCA (Richard, C.J., Décary J.A., Evans J.A.) Disclosure of Communications between the Minister and her Legal Advisors/Legal Privilege Impliedly Waived Because Relied on Communications in Statement of Defence.
Appeal from the Federal Court dismissing an appeal from Lafrenière P. The Prothonotary ordered disclosure of communications between the Minister and her legal advisors. The Minister had impliedly waived legal privilege by relying in her statement of defence on the fact that she had consulted with her lawyers in order to demonstrate the reasonableness of the delay in issuing an NOC to Apotex. As an alternative to disclosure of the communications, the Prothonotary invited the Minister to undertake not to rely on the fact of the consultations in its defence to Apotex' action.
Held: Appeal dismissed with costs. No reversible error committed by the trial judge in declining to interfere with the Prothonotary's order.
12. AB Hassle et al. v. Apotex and Canada (Minister of Health); AstraZeneca v. Apotex and Canada (Minister of Health) September 2, 2004 FCTD (Lemieux J.) Motion Seeking Filing of Reply Affidavit/Standard of Review of Prothonotary/Federal Court Rule 312/Patented Medicines (Notice of Compliance) Regulations (Regulations).
Appeals by Apotex of the prothonotary's refusal to grant Apotex' motion to file reply affidavits to an affidavit filed on behalf of one of the applicant's experts (the Lindquist2 affidavit). Lindquist2 details the test results that Dr. Lindquist performed on the Apotex tablets in relation to the determination of a subcoating and in situ separating layer. Apotex sought to introduce four reply affidavits addressing the results and methods of Dr. Lindquist given that new techniques were described in Lindquist2. The Prothonotary refused leave as the affidavits were not proper reply evidence. He further stated that serious prejudice would result to the applicants in that they would not be able to respond due to the late stage of the proceedings.
Held: Appeal allowed. Leave granted to Apotex to file its proposed affidavits in reply in both proceedings. A discretionary order of a Prothonotary ought not to be disturbed on appeal to a judge unless (a) the questions in the motion are vital to the final issue of the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of facts. The Court has discretion under r. 312 to allow the filing of affidavits beyond those initially filed. The principles governing the application of r. 312 are whether the additional material will (a) serve the interests of justice; (b) assist the Court in making its final determination; and (c) cause substantial or serious prejudice to the applicants. Lemieux J. held that it is proper reply evidence within r. 312 for Apotex to challenge the results and methods in Lindquist2 and it is wrong to say in this context that the proposed affidavits are a reiteration of previous evidence and a reintegration of old results. The issue is at the heart of the proceedings and it is critical to the success of either party. Cross-examination on Lindquist2's affidavit is not a substitute for written reply evidence in this context. There will be no prejudice to the applicant in granting leave for reply as counsel for Apotex consented to a proper reply by the applicant.
13. Faulding (Canada) v. Pharmacia Italia & Upjohn, September 16, 2004 FCTD (Heneghan J.) Motion to Vary Protective Order /Grounds of Foreign Litigation
Motion by Pharmacia Italia to vary a protective order such that it could obtain copies of documents from the Federal Court Registry.
Held: Applying the test from SmithKline and French Laboratories Limited v. Canada, [1989] 3 F.C. 540, the conduct of litigation in other parts of the world and the commencement of proceedings in Canada pursuant to the Patent Medicine (Notice of Compliance) Regulations do not constitute a "truly compelling" reason or circumstance to justify variation of the existing protective order.
II. OTHER COURT DECISIONS
1. Celanese Canada et al. v. Murray Demolition et al., February 6, 2004 OSCJ (MacFarland, Macdonald and Campbell JJ.) Anton Piller Order/Seizure of Privileged Documents/Disqualification of Solicitors
In a seizure conducted pursuant to an Anton Piller Order, some privileged documents were seized and ultimately viewed by the plaintiff's solicitors and U.S. counsel. This is an appeal from Nordheimer J.'s dismissal of a motion to have the plaintiff's solicitors removed from the case.
Held: Appeal allowed. The Motions Judge erred in requiring the defendant to demonstrate that it was prejudiced by the disclosure of its privileged documents - such an approach defeats the whole purpose of privilege. Prejudice should have been presumed. In addition to the solicitors being removed, the plaintiff is precluded from receiving advice or information from its U.S. counsel with respect to this or related litigation.
2. R. v AFC Soccer, May 19, 2004 MCA (Huband, Philp and Steel JJ.A.) Copyright Infringement/Legal Status of Business Name
Appeal as to conviction and sentence of AFC Soccer on one count of copyright infringement. The original information was laid against both AFC Soccer and the individual who was its sole proprietor. Upon entry of a guilty plea by AFC Soccer, the Crown stayed all charges against the individual. The lower court misunderstood the reference to AFC Soccer as a company to mean that it was a corporation, but it is just a business name.
Held: Conviction quashed on the basis that the indictment itself is a nullity. A business name cannot be charged or convicted of an offence pursuant to either the Copyright Act or the Criminal Code.
3. Pro Swing v. Elta Golf, June 30, 2004 OCA (Moldaver, Gillese and Blair JJ.A.) Enforcement of Non-monetary Foreign Judgments
Appeal from an order that allowed a motion for summary judgment by Pro Swing in an action seeking the enforcement of a U.S. consent decree and contempt order. Elta argued that the U.S. orders cannot be enforced in Ontario because they were not judgments for fixed sums of money. The Motions Judge was persuaded that the requirement for a fixed sum might be relaxed depending on the circumstances.
Held: Appeal allowed. Although the Court of Appeal agreed that the time is ripe to re-examine the rules governing the enforcement of foreign non-monetary judgments, no matter how the rule is relaxed the foreign judgment must be sufficiently certain in its terms that the Ontario courts can enforce it without having to interpret its terms or vary it. This is not the case here where the foreign orders are ambiguous in respect of material matters. In particular it was not clear if the U.S. order meant that Elta is enjoined from marketing infringing golf clubs within the jurisdiction of the U.S. court or anywhere in the world. (The Court of Appeal noted that Pro Swing may have other remedies in Ontario such as taking action based on the settlement agreement or for infringement of trade-mark rights.)
4. National Process Equipment v. Ronald Sigurdson et al., July 20, 2004 ACQB (MacLeod J.) Passing Off/Injunction
The plaintiff claims an injunction and damages against the defendants for passing off with respect to the plaintiff's business of the sale, distribution and servicing of pumps and compressors. The defendant Sigurdson was at one time a senior employee and shareholder of a predecessor corporation of the plaintiff, Wilron Equipment Ltd. When Sigurdson wanted to expand Wilron's business to the Atlantic provinces his business partners did not support the expansion but agreed that Sigurdson would undertake the expansion on his own, using a separate corporation, Wilron Eastern Limited, which acted as a branch of Wilron Equipment. In 1996, Sigurdson resigned from Wilron Equipment and executed a Non-Competition Undertaking. Wilron Equipment's assets ultimately became owned by the plaintiff who intended to phase out use of the name Wilron. It changed its mind when it discovered that Sigurdson, after the expiry of his non-competition term, incorporated various companies with similar names, such as Wilron Pump and Compressor Ltd. and National Pump and Compressor Ltd.
Held: Plaintiff awarded injunctive relief and damages. The three necessary components of a passing off action have been met. Wilron Equipment Ltd. had significant good will and reputation in the use of the name Wilron which passed to the plaintiff via a share sale. Although there was no document that specifically stated that Wilron Eastern transferred its goodwill to Wilron Equipment, the Court held that the transfer by Wilron Eastern to Wilron Equipment of its distribution rights, employees, and assets and inventory related to the pump and compressor business it had been carrying on, using the name Wilron, included its goodwill. The Court also found that the plaintiff had never abandoned the good will associated with Wilron, but even if it had, residual goodwill would remain for a significant period. Once passing off is shown, damages are presumed.
5. Uniform Custom Countertops and Dufour v. Royal Designer Tops, Nguyen and Vu, August 9, 2004 OSCJ (Hoy J.) Anton Piller Order/Material Disclosure/ Confidential Information
Defendants seek an order to set aside an Anton Piller Order, pursuant to which the plaintiffs copied the hard drives of Royal's computers. The defendants submit that the plaintiffs failed to disclose material facts that would have affected the granting of the Order and failed to meet the test necessary for granting an Anton Piller order.
Held: Anton Piller Order set aside. “Had all of the facts favourable to the defendants known to the plaintiffs been disclosed on the ex parte application, an aura of fraud and dishonesty would not have been created and the presiding judge would not have concluded that there was a grave danger, or real possibility, that evidence would be destroyed.” The plaintiff's factum gave the misleading impression that the value of the software was very significant and the plaintiffs did not disclose that UCC was in a precarious financial position before Royal began competing with it. The confidential information which the plaintiffs alleged was taken was not in the computer program and in any event that information was both old and known to the individual defendant.
6. Law Society of British Columbia v. Canada Domain Name Exchange, August 17, 2004 BCCA (Sigurdson J.) Passing Off/Domain Name/Damages
The plaintiff seeks a permanent injunction to restrain the defendant from using or transferring domain names registered in the defendant's name, namely lawsocietyofbc.ca and lsbc.ca. The plaintiff also seeks general damages for harm to its reputation and goodwill, as well as punitive damages. The defendant sells domain names. Lawsocietyofbc.ca and lsbc.ca direct Internet users to an adult site or a political site.
Held: Injunction granted. The use of the defendant's domain names is a representation that the sites and the locations to which they are directed are associated with the plaintiff. Evidence of actual confusion is not needed here where the misrepresentation is so obvious. Potential damage is presumed where there is a loss of control over a party's reputation. General damages awarded in the amount of $4000 based on the facts that the defendant abided by the interim injunction, the domain names were used for only a short period of time and no actual damages have been proven. Punitive damages not awarded because the Court concluded that the defendant's president did not have a good understanding of his legal position.
III. OPPOSITION BOARD DECISIONS
1. Editions Albert René v. TMR Theatrical Productions, April 23, 2004 (Carrière) Confusion/Judicial Notice
Use-based application for ASTERIX for production of customized music, videos, theatrical productions, seminars and conferences used by corporations to achieve business communication goals. Opposition based, inter alia, on s. 12(1)(d) due to confusion with ASTERIX registered for books and other wares and s. 30(b).
Held: “Videos” to be deleted from statement of services because the applicant's evidence showed that it had not used the mark on videos as of the claimed date of first use. Section 12(1)(d) ground failed because the parties' marks have coexisted for decades without confusion and there are significant differences between the parties' wares and services and the nature of their trades. The Registrar refused to take judicial notice of certain facts concerning the opponent's ASTERIX mark.
2. Loblaws v. No Frills Auto and Truck Rental, May 4, 2004 (Martin) Confusion /Section 50(1)
Use-based application for NO FRILLS for car and truck rental, leasing and sales. Opposition based, inter alia, on s. 16 due to confusion with NO NAME and NO FRILLS previously used for the operation of a business selling various wares, including groceries, household items and miscellaneous products.
Held: Opposition rejected. Confusion not likely because of the inherent weakness of the marks, the absence of any significant reputation for the opponent's marks and the disparity between the wares, services and trades of the parties. Although the opponent did evidence use of its marks, the Registrar did not take that into consideration because the use was by licensees and he found that simply parroting the words of s. 50(1) is insufficient to claim the benefit of that section. The opponent should have adduced evidence that supports a conclusion that it exercised control over the character and quality of the wares/services sold by its licensees. Obiter: Even if the opponent had adequately evidenced its alleged licensing arrangements, the Registrar still would have found no likelihood of confusion.
3. Chico's Concept v. Utex, May 5, 2004 (Martin) Section 30(e) Statutory Requirement /Confusion
Proposed-use application for LA CHICA for clothing. Opposition based, inter alia, on s.30(e) and s. 16 due to confusion with CHICO'S which is the subject of the opponent's prior application for clothing.
Held: Application refused based on s. 16. Confusion likely due to the resemblance between the wares, trades and marks. The opponent submitted that the application should also be refused under s. 30(e) because the applicant only stated that it intended to use the trade-mark and did not say that it intends to use the mark “by itself or through a licensee” or “by itself and through a licensee” as set out in the Act. The Registrar responded that the Act is worded disjunctively so satisfying either branch of the statement satisfies the statutory requirement.
4. Baron Philippe de Rotschild v. Cantina, May 6, 2004 (Carrière) Confusion
Use-based application for CADIS for wines and liqueurs. Opposition based, inter alia, on s.12(1)(d) due to confusion with CADET and MOUTON CADET registered for wine.
Held: Opposition rejected. Confusion not likely because the marks do not sound alike, they do not suggest the same idea and the applicant's mark is inherently distinctive.
5. Luxo Laboratories v. Magistral Fabrication, May 10, 2004 (Carrière) Confusion/Res Judicata
Proposed-use application for HERBALBOOST for natural products helping the organism to stay healthy, specifically pills, hard gelatin capsules, capsules, elixir, shampoo, creams, lotions, balms. Opposition based, inter alia, on s. 12(1)(d) due to confusion with BOOSTER registered for hair and skin care products. The applicant then deleted shampoo, creams, lotions and balms from its statement of wares.
Held: Application refused because the Registrar was “unable to determine toward whom the balance of probabilities tilts.” Since the onus lies on the applicant, the Registrar's inability resulted in the opposition succeeding. The opponent asked the Registrar to rely on findings in a Federal Court expungement action concerning its use of its mark; the Registrar declined, in part because there is no res judicata since the parties there were not the same as those here.
IV. SECTION 45 DECISIONS
1. Smart & Biggar v. Oy Lahden Polttimo, May 27, 2004 (Savard) Use of Mark with Additional Matter
MALTAX registered for malt extract.
Held: Registration maintained. Although the labels filed displayed MALTAX 200 F and MALTAX 1500, 200 F and 1500 would probably be perceived as representing different formulations of MALTAX malt extract. The labels therefore show use of MALTAX per se.
2. Relativity Productions v. King, May 27, 2004 (Savard) Special Circumstances
SUBURBIA registered for a board game.
Held: Registration expunged. Even though the registration issued based on use, the registrant states that the board game has not yet been offered for sale. The registrant has not met the three criteria that are necessary to establish special circumstances justifying non-use. 1. The mark has been registered for five years without use. 2. Use has been delayed “by positive developments in her two careers”, i.e. a voluntary decision to pursue other activities. 3. Although the registrant has a solid determination to market this game imminently, she seems to have stopped her efforts as a result of the launch of a board game bearing the identical mark by the requesting party. The requesting party's use does not justify putting the registrant's launch on hold.
3. 97060 Canada v. Salant, May 28, 2004 (Savard) Special Circumstances
JJ. FARMER registered for clothing.
Held: Registration expunged. The owner stated that the mark has not been in use because it filed for Chapter 11 Bankruptcy, but that it is now taking steps to resume use. The registrant has not met the three criteria that are necessary to establish special circumstances justifying non-use. The non-use extended over seven years, including a three year period of time before the registrant filed for bankruptcy. There is no justification for the lack of use during that 3 year period and no particulars have been provided of any steps taken towards commencing use of the mark in the near future.
4. Bereskin & Parr v. Direct Source Special Products, May 31, 2004 (Savard) Sufficiency of Evidence/Hearsay
DANCE MIX registered for pre-recorded records, tapes, CDs and video tapes.
Held: Registration amended to delete records. The original owner became bankrupt during the three year period covered by the s. 45 notice. The current owner provided evidence of the bankrupt company's use, relying on business records that were turned over to it. The Registrar accepted such evidence, rejecting the requesting party's submissions that it should be disregarded as hearsay.
