Date: 20061017
Docket: T-1591-05
Citation: 2006 FC
1229
OTTAWA, Ontario, October 17, 2006
PRESENT: The Honourable Mr. Justice Teitelbaum
BETWEEN:
DISTRIMEDIC
INC.
Plaintiff
and
DISPILL INC. and
RICHARDS PACKAGING INC.
Defendants
AND
BETWEEN:
RICHARDS PACKAGING INC.
Plaintiff by counterclaim
and
DISTRIMEDIC INC., ROBERT POIRIER
and CLAUDE FILIATRAULT
Defendants by counterclaim
REASONS FOR ORDER AND ORDER
[1]
This is a
motion to appeal, brought by the Defendants and Plaintiff by Counterclaim,
Dispill Inc. and Emballages Richards Inc. (Richards), the Order of Prothonotary
Morneau dated June 29, 2006, which ordered that particulars be furnished by
Richards in their Defence and Counterclaim and which struck out certain
paragraphs and selected text from the same document pursuant to Rule 221(1)(a),
(b) and (c) of the Rules for Regulating the Practice and
Procedure in the Federal Court of Appeal and the Federal Court, SOR/98-106
(Federal Court Rules).
[2]
Distrimedic
Inc. (Distrimetric) filed a Statement of Claim dated September 26, 2005 and
amended on November 3, 2005, seeking a declaration of non-infringement of
Canadian Patent No. 2, 207, 045 (045 Patent) under subsection 60(2) of the
Patent Act, R.S.C. 1985, c. P-4.
[3]
On
November 8, 2005, Richards filed a document with the Canadian Intellectual
Property Office (“CIPO”) in order to register a disclaimer for the 045 Patent,
pursuant to subsection 48(1) of the Patent Act.
[4]
On or
about December 1, 2005, Richards filed a Statement of Defence and Counterclaim,
in which their allegations of infringement of the 045 Patent as well as
infringement of Richards’ DISPILL trade-mark by Distrimedic and Robert Poirier
and Claude Filiatrault rely in large part on the disclaimer filed on November
8, 2005.
[5]
On
December 20, 2005, the Commissioner of Patents at the CIPO refused the
disclaimer filed by Richards, deciding that it would have widened the scope of
one of the claims of the 045 Patent, which is not permitted in the context of a
disclaimer. Richards is currently seeking judicial review of the Commissioner’s
decision, particularly, a writ of mandamus requiring the Commissioner to
register/make effective the disclaimer and a declaration that the disclaimer
was filed and is effective as of its filing date of November 8, 2005. The
Notice of Application for judicial review was filed on January 18, 2006
(Federal Court file no. T-92-06).
[6]
On
December 21, 2005, Distrimedic sent a letter to Richards requesting further
particulars and requesting that certain allegations be struck from the Defence
and Counterclaim. By letters dated January 6, 2006 and January 18, 2006,
Richards replied that they would not amend their Defence and Counterclaim
accordingly.
[7]
As a
result, Distrimedic filed a Notice of Motion dated February 2, 2006 before this
Court for an order that further particulars be added, as well as to strike out
certain allegations from the Defence and Counterclaim.
[8]
Meanwhile,
on February 8, 2006, Distrimedic brought a motion to the Court to grant it
status as a respondent or intervener in the judicial review proceedings
discussed above (T-92-06). Prothonotary Morneau in an Order dated February
27, 2006 granted party status to Distrimetric.
[9]
On June
29, 2006, Prothonotary Morneau ordered Richards to serve an amended Statement
of Defence and Counterclaim containing some of the particulars requested by
Distrimedic and further ordered that the paragraphs and selected text subject
to the motion to strike be struck out.
[10]
Finally,
by Notice of Motion dated July 10, 2006, Richards brought a motion to have
Prothonotary Morneau’s decision reversed with respect to the striking out of
the paragraphs and selected text in question. This is the issue that is now
before this Court.
[11]
Prothonotary Morneau
held that there was no valid disclaimer affecting the 045 Patent as a result of
the Commissioner’s negative decision as to the filing of the Richards’
disclaimer, and that, consequently, paragraph 13 and selected text from
paragraphs 14, 18(a), 18(c)(i) and 32 of Richards’ Defense and Counterclaim be
struck out, stating that it was plain and obvious that the allegations
contained therein were immaterial and frivolous, in accordance with Rule 221(1)
of the Federal Court Rules.
[12]
Additionally,
Prothonotary Morneau ordered that certain paragraphs in the same Defense and
Counterclaim be struck out, specifically the text which related to claims by
Richards that their trademark, DISPILL, under trade-mark registration number
547,764 was infringed. Richards alleged that their trademark was infringed by a
violation of subsection 7(c) and section 22 of the Trade-marks Act,
R.C.S. 1985, c. T-13. Prothonotary Morneau reasoned that, even if one was to
give a more than liberal interpretation to these paragraphs and to the Trade-marks
Act, there were no material facts alleged in Richards’s Defense and
Counterclaim to support such claims, and therefore, they did not disclose any
reasonable cause of action.
[13]
Lastly, Prothonotary
Morneau ordered Richards to serve and file an amended Statement of Defense,
which would then be followed by a Reply and Defense by Counterclaim from
Distrimetric.
APPLICANT’S SUBMISSIONS
Standard of review
[14]
The
applicants first set out the standard of review to be applied to appeals from
prothonotaries, relying on Merck & Co. v. Apotex Inc. ((2003), 30
C.P.R. (4th) 40 (F.C.A.) at page 53, leave to appeal to S.C.C.
refused 30 C.P.R. (4th) vii) and Canada v. Aqua-Gem Investments
Ltd. ([1993] 2 F.C. 425
(C.A.) at page 463). Discretionary orders of prothonotaries may be set aside on
an appeal when questions raised in the motion are vital to the final issue of
the case, meaning that it is vital to the result of the case, or if 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 the facts.
[15]
The applicants submit
that the decision to strike certain paragraphs of the Statement of Defense and
Counterclaim are vital to the issue before the Court, and, thus, the Court
should exercise its discretion de novo (Canada v. Aqua-Gem Investments Ltd. ([1993] 2 F.C. 425 (C.A.) at page 463 and Zambon
Group S.P.A. v. Teva Pharmaceutical Industries Ltd. (2005), 44 C.P.R. (4th)
173 (F.C.) at page 177).
Striking out pleadings
[16]
The applicants argue
that their pleadings should not be struck out for failure to disclose a
reasonable cause of action under Rule 221(1)(a) of the Federal Court Rules
because the pleadings disclose causes of action that have some chance of
success, and that it is proper to assume that all facts in the pleadings are
true. Furthermore, the applicants submit their pleadings should not be struck
out on the grounds that they are frivolous or vexatious or an abuse of process
(Rule 221(1)(c) and (f).
[17]
The applicants
further rely on Apotex Inc. v. Wellcome Foundation Ltd. (1996), 68
C.P.R. (3d) 23 (F.C.T.D., at page 41) to argue that the test to strike out is a
difficult test to meet: “[…] if there is a scintilla of success in a claim, a
Court should not strike it down. […] The case law is clear that it has to be
beyond doubt.” Furthermore, the onus of proof is a heavy one on the party
seeking to strike pleadings (Apotex Inc. v. Syntex Pharmaceuticals
International Limited (2005), 44 C.P.R. (4th) 23 (F.C.) at page
33, affirmed 47 C.P.R. (4th) 328 (F.C.A.) (Q.L.)).
[18]
Lastly, the
applicants argue that a pleading should not be struck unless it is plain and
obvious that it has no chance of success, even though it may call for a complex
or novel application of the law (Pason Systems Corp. et al. v. Varco Canada
Limited et al. 2006 FCA 100 at pages 3-4). Therefore, the applicants argue
that if there is the possibility of debate concerning interpretation of the Patent
Act relied on by a party, then that question should be argued in the
context of a trial on the merits.
Striking references to the disclaimer
[19]
The
applicants submit that
eliminating references to the disclaimer would not secure the just
determination of the proceeding in accordance with Rule 3 of the Federal Court
Rules and would be an abuse of process, in that it would be used for an
improper purpose, especially since Distrimedic has also relied on the
disclaimer to argue that they should intervene in the judicial review
application. Furthermore, the defendants to the counterclaim have intervened in
the record of the disclaimer even though there is no procedure in the Patent
Act for such an intervention.
[20]
The
applicants argue that the
legislative history and case law suggest that, while the CIPO has not
registered the disclaimer, it still has an effect in law and should be
considered (Canadian Celanese Ltd. v. B.V.D. Co. Ltd. [1939] 2 D.L.R. 289 (P.C.) at pages
291 and 294; R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867 at page 885; Bayer
Aktiengesellschaft and Bayer Inc. v. Pfizer Research and Development Co.,
N.V./S.A. (2002), unreported at page 2; Monsanto Co. v. Commissioner of
Patents (1976), 28 C.P.R. (2)d 118 (F.C.A.) at page 119; Cooper &
Beatty v. Alpha Graphics Ltd. (1980), 49 C.P.R. (2d) 145 (F.C.T.D.) at page
163; section 48 of the Patent Act R.S.C. 1985 c. P-4; Act to Amend
Patent Act R.S.C. 1985 c. 33 (3rd Supp.); and Intellectual
Property Law Improvement Act S.C. 1993 c. 15).
Striking references to trade-mark
infringement
[21]
The applicants argue
that paragraphs 30 and 38 of Richards’ Statement of Defense and Counterclaim
contain support for allegations in respect to trade-mark infringement referred
to in paragraphs 18(c)(iii), 18(c)(vi), 18(d)(iii), 18(d)(iv), 18(d)(viii),
45(i) and 45(ii) of the same document.
[22]
In the applicant’s
motion record, the applicants rely on sections 20 and subsections 22(1), 4(1),
4(2) of the Patent Act, as well as on case law to support their
allegations.
Order sought by the applicants
[23]
The
Applicants thus seek an order by this Court setting aside paragraphs 1(c), 1(e),
2 and 3 of Prothonotary Morneau’s Order; extending the time for Richards to
serve and file the amended Statement of Defence and Counterclaim required in
the order until 30 days after the disposition of this motion; and that costs be
payable to the applicants at all levels.
RESPONDENT’S SUBMISSIONS
Standard of review
[24]
The
respondents do not make any submissions regarding the appropriate standard of
review of decisions of prothonotaries. During the hearing, counsel stated that
they did not contest the applicants’ submissions and left the matter to this
Court to determine the appropriate standard of review.
Striking out pleadings
[25]
The respondents,
Distrimedic, support Prothonotary Morneau’s decision to strike out certain
pleadings in accordance with Rule 221(1) of the Federal Court Rules. They argue
that pleadings should be struck out if they do not meet the criteria listed in
Rule 221(1).
[26]
First, the
respondents argue that the pleadings must achieve certain objectives, which
were set out in Gulf Canada Ltd. V. Tug “Mary Mackin” ([1984] 1 F.C. 884
at 889, (F.C.A.), such as inform the opposing party as to the nature of the
case they must meet, enable the opposing party to properly prepare for trial
and limit the issues to be tried.
[27]
Secondly, relying on Glaxo
Canada Inc. v. Department of National Health and Welfare ((1987), 15 C.P.R.
(3d) 1 at pages 10-11, (F.C.T.D.), the respondents argue that pleadings must
disclose the claims of the parties in sufficient detail and clarity so as to
enable the parties to understand the questions in dispute and grounds of the
debate and enable the tribunal to examine the truthfulness of the claims
[28]
Third, a party may
not bring its claim to trial if its allegations are not based on specific
material facts, and hence, its pleading will fail for lack of evidence (Caterpillar Tractor Co.
v. Babcock Allatt Ltd. (1982), 67 C.P.R. (2d) 135, at pages 138-139
(F.C.T.D.), affirmed (1983), 72 C.P.R. (2d) 286 (F.C.A.)).
[29]
Fourth,
the respondents argue that failure to ground a conclusion in law on material
facts, especially when there has been a request for particulars, allows the
Court to infer that there exists no reasonable cause of action (Precision
Metalsmiths Inc. v. Cercast Inc. (1966), 49 C.P.R. 234 at page 247 (Ex. Ct.)).
Striking references to the
disclaimer
[30]
The
respondents’ main argument is that Prothonotary Morneau was correct when he
concluded that, since the Court has not yet, by way of judicial review,
pronounced itself on the matter of the disclaimer filed and rejected by CIPO,
the claims containing references to the disclaimer found in the Defence and
Counterclaim should be struck out.
[31]
The respondents argue
that the disclaimer is invalid or of no effect, using case law to support their
arguments (Monsanto Co. v. Commissioner of Patents (1976) C.P.R. (2d)
118 at page 119 (F.C.A.); Free World Trust v. Électro Santé Inc., [2000]
2 S.C.R. 1024 at paragraphs 41-42).
Striking references to
trade-mark infringement
[32]
With regards to
trade-mark infringement, the respondents argue that Prothonotary Morneau was
correct when he ordered to strike out the relevant paragraphs and certain text
from the Defense and Counterclaim, since even if one were to give a more than
liberal interpretation to these and to the Trade-marks Act, it is plain
and obvious that the Defense and Counterclaim do not introduce any material
facts which constitute use of the registered trade-mark DISPILL or of a
trade-mark or trade-name creating confusion with DISPILL; the selections are
conclusions of law unsupported by material facts.
[33]
Pursuant to Rule
221(1)(a) of the Federal Court Rules, these selections would disclose no
reasonable cause of action.
[34]
The respondents agree
that Richards holds exclusive and registered rights to the trademark under
sections 19 and 20 of the Trade-marks Act. Hence, the respondents’ main
argument is that material facts must be alleged to demonstrate infringement.
They argue that, in their Defense and Counterclaim, Richards fail to bring
material facts to demonstrate infringement, even after receiving a request for
particulars.
[35]
Therefore, these
paragraphs and certain text should be struck out for reasons of disclosing no
reasonable cause of action.
[36]
The respondents argue
that the same reasoning applies to allegations of violations of subsection 7(c)
– dealing with passing off – and section 22 – dealing with depreciation of
goodwill – of the Trade-Marks Act.
Order sought by the respondents
[37]
The respondents seek
an order dismissing the motion to appeal, maintenance of Prothonotary Morneau’s
Order, and costs from the applicants at all levels.
ISSUES
[38]
The issues to be
considered in this appeal are the following:
a.
Did Prothonotary
Morneau err in law by concluding that selected text from the Defendant’s
Statement of Defense and Counterclaim which refer to the disclaimer be struck
out pursuant to Rule 221(1)(b) and (c) of the Federal Court Rules on the
grounds that they are immaterial and frivolous?
b.
Did Prothonotary
Morneau err in law by ordering that certain paragraphs, which allege a
trademark infringement in the Defense and Counterclaim, be struck out pursuant
to Rule 221(1)(a) of the Federal Court Rules on the grounds that they disclose
no reasonable cause of action?
ANALYSIS
Statutory scheme
|
221. (1) On motion, the Court may, at any
time, order that a pleading, or anything contained therein, be struck out,
with or without leave to amend, on the ground that it
(a)
disclosed no reasonable cause of action or defence, as the case may be,
(b) is
immaterial or redundant,
(c) is
scandalous, frivolous or vexatious,
(d) may
prejudice or delay the fair trial of the action,
(e)
constitutes a departure from a previous pleading, or
(f) is
otherwise an abuse of the process of the Court,
and may order
the action be dismissed or judgment entered accordingly.
|
221. (1) À tout moment, la Cour
peut, sur requête, ordonner la radiation de tout ou partie d’un acte de
procédure, avec ou sans autorisation de le modifier, au motif, selon le
cas :
a) qu’il ne révèle aucune
cause d’action ou de défense valable;
b) qu’il n’est pas pertinent
ou qu’il est redondant;
c) qu’il est scandaleux,
frivole ou vexatoire;
d) qu’il risque de nuire à
l’instruction équitable de l’action ou de la retarder;
e) qu’il diverge d’un acte de
procédure antérieur;
f) qu’il constitue autrement
un abus de procédure.
|
[40]
According to
subsection 48(1) of the Patent Act, it is possible in certain
circumstances to file a disclaimer in order to narrow a claim in a patent:
|
48. (1) Whenever, by any mistake, accident
or inadvertence, and without any willful intent to defraud or mislead the
public, a patentee has
(a)
made a specification too broad, claiming more than that of which the patentee
or the person through whom the patentee claims was the inventor, or
(b) in
the specification, claimed that the patentee or the person through whom the
patentee claims was the inventor of any material or substantial part of the
invention patented of which the patentee was not inventor, and to which the
patentee has no lawful right,
the patentee
may, on payment of a prescribed fee, make a disclaimer of such parts as the
patentee does not claim to hold by virtue of the patent or the assignment
thereof.
|
48. (1) Le breveté peut, en
acquittant la taxe réglementaire, renoncer à tel des éléments qu’il ne
prétend pas retenir au titre du brevet, ou d’une cession de celui-ci, si, par
erreur, accident ou inadvertance, et sans intention de frauder ou tromper le
public, dans l’un ou l’autre des cas suivants :
a) il a donné trop d’étendue
à son mémoire descriptif, en renvendiquant plus que la chose dont lui-même,
ou son mandataire, est l’inventeur;
b) il s’est représenté dans
le mémoire descriptif, ou a représenté son mandataire, comme étant
l’inventeur d’un élément matériel ou substantiel de l’invention brevetée,
alors qu’il n’en était pas l’inventeur et qu’il n’y avait aucun droit.
|
[41]
Section 7
of the Trade-marks Act deals with passing-off:
|
7. No person shall
(a)
make a false or misleading statement tending to discredit the business, wares
or services of a competitor;
(b)
direct public attention to his wares, services or business in such a way as
to cause or be likely to cause confusion in Canada, at the time he commenced
so to direct attention to them, between his wares, services or business and
the wares, services or business or another;
(c)
pass off other wares or services as and for those ordered or requested;
(d)
make use, in association with wares or services, of any description that is
false in a material respect and likely to mislead the public as to
(i)
the
character, quality, quantity or composition,
(ii)
the
geographical origin, or
(iii)
the mode
of the manufacture, production or performance
of
the wares or services; or
(e)
do any other act or adopt any other business practice contrary to honest
industrial or commercial usage in Canada.
|
7. Nul ne peut :
a) faire une déclaration
fausse ou trompeuse tendant à discréditer l’entreprise, les marchandises ou
les services d’un concurrent;
b) appeler l’attention du
public sur ses marchandises, ses services ou son entreprise de manière à
causer ou à vraisemblablement causer de la confusion au Canada, lorsqu’il a
commencé à y appeler ainsi l’attention, entre ses marchandises, ses services
ou son entreprise et ceux d’un autre;
c) faire passer d’autres
marchandises ou services pour ceux qui sont commandés ou demandés;
d) utiliser, en liaison avec
des marchandises ou services, une désignation qui est fausse sous un rapport
essentiel et de nature à tromper le public en ce qui regarde :
(i)
soit
leurs caractéristiques, leur qualité, quantité ou composition,
(ii)
soit
leur origine géographique,
(iii)
soit
leur mode de fabrication, de production ou d’exécution;
e) faire un autre acte ou
adopter une autre méthode d’affaires contraire aux honnêtes usages
industriels ou commerciaux ayant cours au Canada.
|
[42]
Section 19
of the Trade-marks Act states as follows:
|
19. Subject to sections 21, 32
and 67, the registration of a trade-mark in respect of any wares or services,
unless shown to be invalid, gives to the owner of the trade-mark the
exclusive right to the use throughout Canada of the trade-mark in respect of those
wares or services.
|
19. Sous réserve des articles
21, 32 et 67, l’enregistrement d’une marque de commerce à l’égard de
marchandises ou services, sauf si son invalidité est démontrée, donne au
propriétaire le droit exclusif à l’emploi de celle-ci, dans tout le Canada,
en ce qui concerne ces marchandises ou services.
|
[43]
Subsection
20(1) of the Trade-marks Act deals with the rights of the owner of a registered
trade-mark:
|
20. (1) The right of the owner
of a registered trade-mark to its exclusive use shall be deemed to be
infringed by a person not entitled to its use under this Act who sells,
distributes or advertises wares or services in association with a confusing
trade-mark or trade-name, but no registration of a trade-mark prevents a
person from making
(a)
any bona fide use of his personal name as a trade-name, or
(b)
any bona fide use, other than as a trade-mark,
(i)
of the
geographical name of his place of business, or
(ii)
of any
accurate description of the character or quality of his wares or services,
in
such a manner as is not likely to have the effect of depreciating the value
of the goodwill attaching to the trade-mark.
|
20. (1) Le droit du
propriétaire d’une marque de commerce déposée à l’emploi exclusif de cette
dernière est reputé être violé par une personne non admise à l’employer selon
la présente loi et qui vend, distribue ou annonce des marchandises ou
services en liaison avec une marque de commerce ou un nom commercial créant
de la confusion. Toutefois, aucun enregistrement d’une marque de commerce ne
peut empêcher une personne :
a) d’utiliser de bonne foi
son nom personnel comme nom commercial;
b) d’employer de bonne foi,
autrement qu’à titre de marque de commerce :
(i)
soit le
nom géographique de son siège d’affaires,
(ii)
soit
toute description exacte du genre ou de la qualité de ses marchandises ou
services,
d’une
manière non susceptible d’entraîner la diminution de la valeur de
l’achalandage attaché à la marque de commerce.
|
[44]
Subsection
22(1) of the Trade-marks Act states:
|
22. (1) No person shall use a
trade-mark registered by another person in a manner that is likely to have
the effects of depreciating the value of the goodwill attaching thereto.
|
22. (1) Nul ne peut employer
une marque de commerce déposéepar une autre personne d’une manière
susceptible d’entraîner la diminution de la valeur de l’achalandage attaché à
cette marque de commerce.
|
Standard
of review
[45]
As submitted by the
applicants, discretionary orders of prothonotaries may be disturbed on appeal
to a judge when questions raised in the motion are vital to the final issue of
the case, meaning that it is vital to the result of the case, or if 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 the
facts (Merck & Co. v. Apotex Inc. (2003) C.P.R. (4th) 40
(F.C.A.), at paragraph 19, leave to appeal to S.C.C. refused 30 C.P.R. (4th)
vii; Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.)).
[46]
The decision to
strike certain paragraphs of the Statement of Defense and Counterclaim is vital
to the final issue of the case, therefore, Prothonotary Morneau’s decision may
be reviewed de novo (Zambon Goup S.P.A. v. Teva Pharmaceutical
Industries Ltd. (2005, 44 C.P.R. (4th) 173 (F.C.), at paragraph
10).
Striking references to the disclaimer
[47]
The
selected text in question is contained in paragraphs 13, 14, 18(a), 18(c)(i)
and 32 of the Defence and Counterclaim, which read:
13. As to Paragraphs 16-18 of the Amended
Statement of Claim, the Defendants state that on or about November 8, 2005,
Richards Packaging filed a disclaimer in respect of Canadian Patent No. 2, 207,
045 which stated the following in respect of claims 15-21: […]
14.
By its manufacture, use, marketing, offering for sale and sale of the
DISTRIMEDIC Product, and by its promotion and inducement of such use, the
Plaintiff has threatened to infringe and infringed the exclusive right,
privilege and liberty of Richards Packaging as claimed in claims 1-28 of the
Canadian Patent No. 2, 207, 045 prior to the disclaimer and claims 1-15,
17-28 of Canadian Patent No. 2, 207, 045 as they read after the disclaimer
and continues to infringe such exclusive rights.
18. The Defendant Richards Packaging
(Plaintiff by Counterclaim) claims:
(a)
a declaration that Canadian Patent No. 2,207,045 and current claims 1-15,
17-28 thereof and claims 1-28 of Canadian Patent No. 2,207,045 prior to
the disclaimer are valid;
[…]
(c)
a declaration that Distrimedic, Robert Poirier (“Poirier”) and Claude
Filiatrault (“Filiatrault”) have:
(i)
threatened to infringe and infringed current claims 1-15, 17-28 of Canadian
Patent No. 2, 207, 045 and prior to the disclaimer in respect of Canadian
Patent No. 2,207,045 threatened to infringe and infringed claims 1-14,
22-28 and prior claims 15-21 of Canadian Patent No. 2,207,045.
32.
Filiatrault and Poirier arranged for Distrimedic to manufacture, use, market,
offer for sale and sell the DISTRIMEDIC, Product, and by its promotion and
inducement of such use, Filiatrault, Poirier and Distrimedic have threatened to
infringe and infringed the exclusive right, privilege and liberty of the
Defendant Richards Packaging (Plaintiff by Counterclaim) as claimed in claims
1-28 of Canadian Patent No. 2,207,045 prior to the disclaimer and claims
1-15, 17-28 of Canadian Patent No. 2,207,045 as they read after the disclaimer
and Filiatrault, Poirier and Distrimedic continue to infringe such exclusive
rights.
[48]
Prothonotary Morneau
held that references to the disclaimer contained in all of paragraph 13, as
well as the underlined text in paragraphs 14, 18(a), 18(c)(i) and 32, should be
struck out on the grounds that they are immaterial and frivolous, pursuant to
Rule 221(1)(b) and (c).
[49]
The test to be
applied to determine if pleadings should be struck out is if it is plain and
obvious that they disclose no reasonable cause of action. In other words, in
order to strike out pleadings, the Court must be satisfied that they do not
disclose a cause of action that has some chance of success (Operation
Dismantle v. The Queen, [1985] 1 S.C.R. 441). The
test for striking a pleading on the grounds that it is frivolous or vexatious
or an abuse of the process of the Court is just as stringent as the test for
striking out a statement of claim (Waterside Ocean Navigation Co. v.
International Navigation Ltd., [1977] 2 F.C. 257).
[50]
As stated by Madam
Justice Danièle Tremblay-Lamer in Apotex Inc. v. Wellcome Foundation Ltd.
(1996), 68 C.P.R. (3d) 23 (F.C.T.D.), the test for striking out pleadings is
very high:
In conclusion, I would like to reiterate that striking
out pleadings is a draconian measure. The defendants may not have a strong case
on some of the issues raised by the plaintiffs in their motion. However, the
test in my view is stringent: if there is a scintilla of success in a claim, a
Court should not strike it down. As pointed out by counsel for the defendant
Apotex, this is not a mini-trial or a summary judgment proceeding where I could
have resolved some of the issues. The case law is clear that it has to be
beyond doubt. Despite able argument by counsels for the plaintiff Wellcome, I
have not been convinced that there is sufficient lack of substance to use this
draconian measure, thereby depriving the defendants of their day in Court.
[51]
The onus of proof on
the party seeking to strike pleadings is a heavy one (Apotex Inc. v. Syntex
Pharmaceuticals International Ltd. (2005), 44 C.P.R. (4th) 23
(F.C.), at paragraph 31, affirmed 47 C.P.R. (4th) 328 (F.C.A.)).
[52]
As for immateriality,
the Court generally will refuse to strike out “surplus statements” that are not
prejudicial (Apotex Inc. v. Glaxo Group Ltd., 2001 FCT 1351). Generally,
doubt is to be resolved in favor of permitting the pleading so that the
relevant evidence in support of the pleading may be brought before the trial
judge (Apotex Inc. v. Glaxo Group Ltd., 2001 FCT 1351). In this case,
the references to the disclaimer are not necessarily surplus statements that
are not prejudicial; they are immaterial nevertheless since the disclaimer has
not, for the moment, been accepted and registered with CIPO, and therefore,
should not form part of the Defense and Counterclaim.
[53]
As for frivolity, a
frivolous action includes an action where the pleadings are so deficient in factual
material that the defendant cannot know how to answer (Kisikawpimootewin v.
Canada, 2004 FC 1426). Furthermore, the plain and obvious test should apply
in cases of frivolity as well. (Sweet v. Canada (1999), 249 N.R. 17 (Fed. C.A.),
at paragraph 6).
[54]
Prothonotary Morneau
was correct when he concluded that, so long as this Court had not resolved the
issue of the alleged disclaimer in the context of the judicial review
proceeding (T-92-06), there is no valid disclaimer that can be relied upon in
this proceeding. As a result, Prothonotary Morneau properly concluded that the
paragraphs and selected text at issue in the Defense and Counterclaim should be
struck out.
[55]
The appropriate
remedy available to Richards to challenge the Commissioner’s Decision concerning
the disclaimer is the judicial review proceeding introduced (T-92-06). Should
Richards be successful in that judicial review proceeding, they may then move
this Court to allow them to amend their pleadings to reintroduce allegations
based on the disclaimer into the Defense and Counterclaim.
[56]
This Court agrees
with Prothonotary Morneau that until the issue of the validity and effect of
the disclaimer has been judicially reviewed, the references to the disclaimer
should be struck out of the Defense and Counterclaim on the grounds that they
are immaterial and frivolous pursuant to Rule 221(1)(b) and (c) of the Federal
Court Rules.
Striking references to trade-mark
infringement
[57]
The
selected text in question is contained in paragraphs 18(c)(iii), 18(c)(v),
18(c)(vi), 18(d)(iii), 18(d)(iv), 18(d)(viii), 18(d)(ix) and 45(i), (ii), (iv)
of the Defence and Counterclaim, which read:
18. The Defendant Richards Packaging
(Plaintiff by Counterclaim) claims:
(c)
a declaration that Distrimedic, Robert Poirier (“Poirier”) and Claude
Filiatrault (“Filiatrault”) have:
[…]
(iii)
threatened to infringe and infringe the exclusive rights of the Defendant
Richards Packaging (Plaintiff by Counterclaim) under Trade-mark Registration
No. 547,764 for DISPILL in association with pill dispenser to sort out pills,
tablets or capsules (the “DISPILL trade-mark”);
[…]
(v)
passed off their businesses, wares and services and for the business, wares and
services and for the business, wares and services of the Defendant Richards
Packaging (Plaintiff by Counterclaim);
(vi)
used the DISPILL trade-mark in a manner likely to have the effect of
depreciating the value of the goodwill attaching to the DISPILL trade-mark; and
[…]
(d)(iii)
selling, advertising or otherwise using in Canada in association with their
businesses, services or wares, the DISPILL trade-mark, the Richards Packaging
Label Colour Trade-marks as defined below, or any other trade-marks, corporate
names or trade names that are confusing with the DISPILL trade-mark, or the
Richards Packaging Label Colour Trade-marks;
[…]
(d)(iv)
infringing the exclusive rights of the Defendant Richards Packaging (Plaintiff
by Counterclaim) to the use of the DISPILL trade-mark;
[…]
(d)(viii)
using the DISPILL trade-mark or any other trade-marks that are confusing with
the DISPILL trade-mark in a manner likely to have the effect of depreciating
the value of the goodwill attaching to the DISPILL trade-mark;
(d)(ix)
appropriating the benefit of the reputation and goodwill built up by Richards
Packaging in association with the DISPILL trade-mark; and […]
45. By reasons of the foregoing,
Distrimedic, Poirier and Filiatrault have:
(i)
infringed and, by virtue of Section 20 of the Trade-marks Act, are deemed to
have infringed Richards Packaging’s exclusive right to the use throughout Canada of the DISPILL trade-mark;
(ii)
used the DISPILL trade-mark in a manner likely to have the effect of
depreciating the value of the goodwill attaching thereto, contrary to law and
to Section 22(1) of the Trade-marks Act;
[…]
(iv)
wrongfully passed off their businesses, services and wares as and for the
businesses, services and wares of the Defendant Richards Packaging (Plaintiff
by Counterclaim) contrary to Section 7(c);
[58]
Prothonotary Morneau
reasoned that these paragraphs and selected text be struck out pursuant to Rule
221(1)(a) of the Federal Court Rules as they disclose no reasonable cause of
action or defense.
[59]
No reasonable cause
of action has been determined to exist where no material facts are alleged
against the defendant (Chavali v. Canada, 2002 FCA 209, affirming 2001
FCT 268). In this motion, the respondents rightly argue that there are no
material facts supporting Richards’ allegations of trade-mark infringement.
[60]
There is infringement
of exclusive rights where the alleged infringer used the trade-mark as
registered or sold, distributed or advertised wares or services in association
with the trade-mark so as to create confusion.
[61]
In any trade-mark
infringement action, the plaintiff must allege material facts demonstrating
that the defendant used the trade-mark in question within the definition of
deemed use found in subsection 4(1) of the Trade-marks Act:
The
concept of “use” is fundamental to trade-mark law generally and is a critical
linchpin within the Trade-marks Act. Use comes into play for purpose of,
inter alia, registration, infringement and depreciation of goodwill.
However, what use means in each of these instances is not necessarily the same.
Use for the purpose of proving infringement requires that: (1) the defendant’s
use of the trade-mark is within the s. 4 definition of deemed use; and (2) such
use must be use as a trade-mark. (Fox on Canadian Law of Trade-marks
and Unfair Competition, 4th ed., Toronto
(Ont.), Thomson Carswell, 2005, at page 7-8)
[62]
Section 4 of the Trade-marks
Act defines use of the trade-mark:
|
4. (1) A trade-mark is deemed to be used
in association with wares if, at the time of the transfer of the property in
or possession of the wares, in the normal course of trade, it is marked on
the wares themselves or on the packages in which they are distributed or it
is in any other manner so associated with the wares that notice of the association
is then given to the person whom the property or possession is transferred.
(2) A
trade-mark is deemed to be used in association with services if it is used or
displayed in the performance or advertising of those services.
…
|
4. (1) Une marque de commerce
est réputée employée en liaison avec des marchandises si, lors du transfert
de la propriété ou de la possession de ces marchandises, dans la pratique
normale du commerce, elle est apposée sur les marchandises mêmes ou sur les
colis dans lesquelles ces marchandises sont distribuées, ou si elle est, de
toute autre manière, liée aux marchandises à tel point qu’avis de liaison est
alors donné à la personne à qui la propriété ou possession est transférée.
(2)
Une marque de commerce est réputée employée en liaison avec des services si
elle est employée ou montrée dans l’exécution ou l’annonce de ces services.
[…]
|
[63]
Hence, there is no
use of a trade-mark in association with wares without transfer of the wares:
According
to s. 4(1), in order for a trade-mark to be deemed used in association with the
wares, the trade-mark must be marked on the wares themselves, on the packaging
or in a manner “so associated with the wares that notice of the association is
then given to the person to whom the property or possession is transferred”.
Marking the wares with the trade-mark is the easiest way to conform to the use
requirements, but it is not essential. If the trade-mark is not affixed to the
wares or the packages containing the wares, there must be notice of the
association given to the person to whom the wares are transferred. This notice
can be given in a number of ways, but the notice must also be given at the time
of the transfer of the wares. (Fox on Canadian Law of Trade-marks and Unfair
Competition, above, at page 3-49)
[64]
Transfer of wares
also means a transfer of possession:
In
order for the use to be considered at the time of transfer, there must be a
transfer of possession. Entering into an agreement or placing an order for
wares is not considered use; use will not occur until the wares have had a
transfer of possession. […] (Fox on Canadian Law of Trade-marks and Unfair
Competition, above, at page 3-55)
[65]
Richard refers to the
use of a trade-mark in association with “services” in its written representations
but the Defense and Counterclaim do not refer to “services” offered by the
Defendants to the Counterclaim. The concept of use of a trade-mark in
association with services is therefore inapplicable to this proceeding.
Nevertheless, there are no allegations that present material facts that
demonstrate the use of a trade-mark in association with services and there are
no allegations of services being performed or advertised by the Defendants to
the Counterclaim.
[66]
The pleadings do not
introduce any material facts indicating use of the registered trade-mark
DISPILL or indicating that the Defendants by Counterclaim sold, distributed or
advertised wares or services in association with a trade-mark or trade-name so
as to create confusion with the registered trade-mark DISPILL.
2. Claims relating to subsection 7(c)
of the Trade-marks Act
[67]
The cause of action
described at subsection 7(c) of the Trade-marks Act is a
codification of the common law action of “passing off by substitution” (Fox
on Canadian Law of Trade-marks and Unfair Competition, above, at page 4-15)
[68]
An action based on
subsection 7(c) of the Trade-marks Act must satisfy the following
criteria:
[…]
Passing off by substitution will be established where, in answer to an order
for what plainly appears to be the plaintiff’s goods, the defendant, without
any explanation of the circumstances, supplies corresponding goods of his own
or someone else’ manufacture without any enquiry whether the plaintiff’s goods
or merely equivalent goods are required. In order, however, to found a case of
passing off by substitution it must be clear that the words in which the order
was given referred to goods of the plaintiff and nobody else. It must be clear
that proper notice was given to the retailer as to the articles desired and
that something was substituted for that which was ordered. It is not an
improper substitution of goods or services if the purchaser is told that the
goods or services he asked for are not available and agrees to take others in
their place. (Fox on Canadian Law of Trade-marks and Unfair Competition,
above, at page 4-16)
[69]
The portions of the
pleadings at issue regarding the claim of passing off by substitution contain
no material facts necessary to support such a claim. As a result, the paragraphs
and selected text listed above should be struck out as disclosing no reasonable
cause of action.
3. Claims relating to section 22 of the Trade-marks
Act
[70]
To satisfy the
criteria necessary to ground an action under section 22 of the Trade-marks Act,
a plaintiff must allege use of the registered trade-mark by the defendant:
For
a plaintiff to succeed in a s. 22 action, it must first show that the defendant
has used its registered trade-mark. The courts have interpreted this use
requirement to mean that the defendant’s conduct must fall within the s. 3
definition of use. […]
Provided the defendant’s use of
the plaintiff’s registered trade-mark falls within the s. 4 definition of
deemed use, the first requirement of the s. 22 action is met. However, the
courts have held that the use by the defendant must be consistent with the
specifics of the registration as to whether the plaintiff’s trade-mark is
registered in association with wares or services. If the plaintiff’s trade-mark
is only registered in association with wares, the defendant’s use of the
trade-mark must fall within the s. 4(1) definition of use for wares. In other
words, if the defendant were to use the plaintiff’s trade-mark in advertising
only, such would not constitute use sufficient to meet the s. 22 requirement if
the plaintiff’s trade-mark were only registered for use in association with
wares. […] (Fox on Canadian Law of Trade-marks and Unfair Competition,
above, at page 7-23)
[71]
As explained
previously, Richards has not provided any material facts to establish use of
the registered trade-mark DISPILL by the Defendants to the Counterclaim. As a
result, the paragraphs and selected text listed above should be struck out as
disclosing not reasonable cause of action.
[72]
Following the plain
and obvious test applied by Prothonotary Morneau, I agree that the text of
paragraphs 18(c)(iii), 18(c)(v), 18(c)(vi), the words in paragraph 18(d)(iii)
that are underlined in the notice of motion, 18(d)(iv), 18(d)(vii),
18(d)(viii), 18(d)(ix), 45(i), 45(ii) and 45(iv) of the Defense and
Counterclaim do not disclose any reasonable cause of action since they do not
introduce any material fact tending to establish violations of the Trade-marks
Act and of the trade-mark DISPILL. These should, therefore, be struck
pursuant to Rule 221(1)(a) of the Federal Court Rules.
CONCLUSION
[73]
This Court finds that
Prothonotary Morneau did not err in law by concluding that selected text from
Richards’ Statement of Defense and Counterclaim which refer to the disclaimer
be struck out pursuant to Rule 221(1)(b) and (c) of the Federal Court Rules on
the grounds that they are immaterial and frivolous.
[74]
This Court further
finds that Prothonotary Morneau did not err in law by ordering that certain
paragraphs, which allege a trade-mark infringement in the Defense and
Counterclaim, be struck out pursuant to Rule 221(1)(a) of the Federal Court
Rules on the grounds that they disclose no reasonable cause of action.
[75]
Therefore, the motion
for appeal of the order of Prothonotary Morneau dated June 29, 2006 is dismissed
with costs.
ORDER
THIS COURT ORDERS that
1. This motion for appeal be
dismissed.
2. Costs be granted to the
respondent.
“Max M. Teitelbaum”
FEDERAL
COURT
Names of Counsel
and Solicitors of Record
DOCKET: T-1591-05
STYLE OF CAUSE: Distrimic inc.
Plaintiff
- and -
DISPILL
INC. and EMBALLAGES
RICHARDS.
INC.
Defendants
PLACE OF HEARING: TORONTO, Ontario
DATE OF HEARING: August 14, 2006
REASONS FOR ORDER
AND ORDER BY: Teitelbaum,
J.
DATED: October 17, 2006
APPEARANCES BY:
Mr. Louis Gratton Plaintiff
Mr. Dale Schlosser
Mr. Shane Hardy Defendants
SOLICITORS OF RECORD:
Ogilvy Renault
Montréal, Qc Plaintiff
Lang Michener LLP
Toronto, ON Defendants
Email this Content