Intel Corp. v. 3395383 Canada Inc., 2004 FC 218

Date: 20040211

Docket: T-1993-01

Citation: 2004 FC 218

Ottawa, Ontario this 11^th day of February 2004

Present:           THE HONOURABLE MADAM JUSTICE HENEGHAN

BETWEEN:

                                                             INTEL CORPORATION

                                                                                                                                                          Plaintiff

                                                                              - and -

                                                          3395383 CANADA INC. and

                                                            9047-9320 QUEBEC INC.

                                                                                                                                                    Defendants

                                               REASONS FOR ORDER AND ORDER

INTRODUCTION

[1]                 Intel Corporation (the "Plaintiff") appeals from the order of Prothonotary Morneau dated July 18, 2003, relating to the refusal by the Prothonotary to order the Defendant 3395383 Canada Inc. ("Canada Inc.") to answer certain questions set out in categories (a) and (b), except question 242, as set out in Appendix "A" to the Plaintiff's original notice of motion dated July 8, 2003.

FACTS

[2]                 The Plaintiff commenced this action on November 7, 2001, alleging unlawful use by Canada Inc. and 9047-9320 Quebec Inc. ("Quebec Inc.") of certain trademarks owned by the Plaintiff, thereby causing damage to the Plaintiff. The Plaintiff raised issues of infringement and confusion in its statement of claim; these allegations were denied by Canada Inc. and accordingly, remain unadmitted allegations of fact.

[3]                 The Plaintiff commenced its action against both Canada Inc. and Quebec Inc., but Quebec Inc. has since been dissolved pursuant to the applicable provisions of the laws of the Province of Quebec. For practical purposes, Canada Inc. is the only Defendant in this action.

[4]                 The Plaintiff undertook discovery examination of Mr. Michael Cuplowsky, as the representative of Canada Inc., on October 2, 2002. In the course of that examination, refusals were entered to certain questions asked on behalf of the Plaintiff. The original notice of motion before the Prothonotary, that is the notice of motion dated July 8, 2003, classified the outstanding refusals under three headings. The first, category "a", related to questions about the identification of Canada Inc.'s suppliers and customers. Questions 242, 245, 526 and 810 were in this group.

[5]                 Category "b" dealt with questions about email communications to Canada Inc. at the pentiumconstruction.com website which was in operation from October 1999. Category "c" covered one question which is not the subject of this appeal.

[6]                 The Prothonotary determined that questions 242 and 245 need not be answered since they showed an attempt by the Plaintiff to obtain information from the Defendant Canada Inc. about persons who might have been involved with the Defendant Quebec Inc. and who might have knowledge of the activities of that now dissolved corporate entity. He also found that question 245 was improper as being in the nature of a "fishing expedition". Questions 242 and 245 are as follows:

242           Make inquiries of Mr. Kotler to see if he can provide documents pertaining to suppliers of materials of the model home built by Quebec Inc.

245           Identify all of the subcontractors that were utilized in respect of the model home built by Quebec Inc.

[7]                 The Prothonotary upheld the refusal of Mr. Cuplowsky to answer the remaining questions in category (a) and (b), on the basis that these remaining questions were not relevant and were in the nature of a "fishing expedition", for the purpose of assisting the Plaintiff to establish its allegations of confusion or damage to its reputation. These questions are as follows

526           Produce a copy of each offer for purchase and sale in respect of each house sold by Canada Inc.

526           Produce a list of names and, to the best of the Defendant's knowledge, current location of each of the customers whom the Canada Inc. company has sold a house to.

810           Produce a list of suppliers and subcontractors to Canada Inc. with contact information

812           Produce a copy of every e-mail received at the e-mail address sales@pentiumconstruction.com

813           Search the archived files and deleted directory and produce any additional e-mails that have been received at sales@pentiumconstruction.com

814           Agree to an undertaking to produce all e-mails received in the future at sales@pentiumconstruction.com.

SUBMISSIONS

[8]                 The Plaintiff argues that the Prothonotary was clearly wrong and that he erred in fact and in principle in making his decision. The Plaintiff says that the Prothonotary misapprehended the facts with respect to question 245, concerning the identity of all subcontractors that were engaged to build a model home for Quebec Inc., and consequently, erred in upholding the refusal.

[9]                 As well, the Plaintiff argues that the Prothonotary erred in principle relative to question 245, by improperly finding it irrelevant and in the nature of a "fishing expedition". The Plaintiff says that the question arises from unadmitted allegations of facts in the pleadings and as such, it is relevant. It submits that it is a proper question and does not amount to an attempt to advance a cause of action that is not raised in the pleadings. The Plaintiff here relies on paragraphs 21 to 24 of its statement of claim, paragraph 12 of the amended defence and paragraph 6 of its amended reply.

[10]            The Plaintiff also argues that the Prothonotary erred in principle in upholding the Defendant's refusal to answer the remaining questions in category (a) and the refusal to answer all of the questions in category (b). Again, the Plaintiff says that these questions are relevant to the allegations made in the statement of claim that are denied by the Defendant and the Prothonotary erred in finding otherwise.

[11]            The Plaintiff argues that the Prothonotary erred in his application of the principle against using the discovery process as a "fishing expedition" and submits that it is entitled to ask questions of the Defendant's representative in order to elicit information that is relevant to its statement of claim. Specifically, the Plaintiff says that it has raised the issues of confusion and depreciation of goodwill in its statement of claim. Relying on Wonder Bakeries Ltd. v. Max Furman et al. (1958), 29 C.P.R. 154 (Ex. Ct.) and Superseal Corp. v. Glaverbel-Mecaniva Canada Limited (1975), 20 C.P.R. (2d) 77 (F.C.T.D.), rev'd (1975), 26 C.P.R. (2d) 140 (F.C.A.), the Plaintiff says it is entitled to rely on facts not within its knowledge to support a cause of action. It submits that its questions about the awareness of actual confusion or injury to its reputation depend upon knowing the identities of the persons who were exposed to the Defendant's trade-mark or trade name. It says that it has asked proper questions which should be answered.

[12]            The Plaintiff argues that its request for access to emails sent to the Defendant is proper because it is relevant. It says that there is no evidence of difficulty or impossibility on the part of the Defendant in providing this information. The Plaintiff argues that there is no evidence to support the Prothonotary's finding that contact by the Plaintiff with suppliers, customers and subcontractors "might lead to strain, and even disruption" of the Defendant's business, and says this statement is based on speculation. In making this finding, the Prothonotary has interfered with the Plaintiff's right to pursue relevant inquiries in an expeditious manner.

[13]            The Defendant argues, in reply, that the Plaintiff has no right to ask questions of its representatives about Quebec Inc. That corporate entity no longer exists and the Defendant is under no obligation to pursue lines of inquiry relative to it.

[14]            The Defendant further submits that the Plaintiff has failed to show that the Prothonotary erred in fact or in law in his decision. Rather, the Plaintiff is expressing a difference of opinion and that is insufficient to meet the test for reversing the Prothonotary's decision. The Defendant here relies on Anchor Brewing Co. v. Sleeman Brewing and Malting Co. (2001), 15 C.P.R. (4^th) 63 (F.C.T.D.) and Hayden Manufacturing Co. v. Canplas Industries Ltd. (1998), 86 C.P.R. (3d) 17 (F.C.T.D.).

[15]            The Defendant says that the questions in issue were properly characterized by the Prothonotary as being in the nature of a "fishing expedition". These questions are not relevant to the action and in any event, are too broad.

[16]            Further, the Prothonotary did have evidence before him to support his finding about the potential negative impact on the Defendant's business activities, if the Plaintiff were allowed to question the Defendant's customers and suppliers about confusion resulting from exposure to the Defendant's trade-names. The Defendant here refers to the affidavit of Mr. Cuplowsky that was before the Prothonotary. The Plaintiff did not cross-examine Mr. Cuplowsky.

[17]            The Defendant argues that the Plaintiff has failed to show that the decision of the Prothonotary is "clearly wrong" and that this appeal should be dismissed.

ANALYSIS

[18]            This is an appeal from the Order of Prothonotary Morneau upon the Plaintiff's motion arising from the refusal of the Defendant representative to answer certain questions during his discovery examination. Generally an order involving the responses to questions at discovery is considered to be a discretionary order: see James River Corp. of Virginia v. Hallmark Cards Inc. (1997), 72 C.P.R. (3d) 157 (F.C.T.D.). According to Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), a decision of a prothonotary will remain undisturbed on appeal unless it is clearly wrong in the sense that the exercise of discretion was based on a wrong principle of law or misapprehension of the facts or where the order raises a question vital to the final disposition of the case. The latter does not apply here, so the question is whether the Prothonotary clearly erred in fact or in principle in upholding the refusals.

[19]            The discovery examination process is governed by the Federal Court Rules, 1998, SOR/98-106, (the "Rules") Rules 237 to 248. Rule 240 sets forth the general principle that questions on discovery can be directed to matters that are relevant to any unadmitted allegation or fact raised in a pleading. Rule 240 provides as follows:

[20]            In his reasons, the Prothonotary reviewed the meaning of relevance in the context of discovery and its application to the issues in this action, that is the alleged infringement of the Plaintiff's trademark, together with allegations of confusion and depreciation of goodwill. He considered relevance, in terms of the breadth of the questions other than question 245 and concluded that those remaining questions were not relevant to the matters in issue and in any event, were too broad. In making his order, the Prothonotary considered and applied the principle against using the discovery process as a "fishing expedition".

[21]            The Prothonotary upheld the refusal to answer question 245 on the basis that this related to a corporate entity that is independent of the Defendant Canada Inc. Relying on Rule 241, he found that Canada Inc. was not obliged to make inquiries of another party who might have knowledge of the matters in issue in the action. I see no error of fact or in principle with this conclusion.

[22]            The Prothonotary maintained the Defendant's refusal to answer the remaining questions on the grounds that they represented an improper attempt by the Plaintiff to use the discovery process as a "fishing expedition" to obtain information to bolster its case.

[23]            The prohibition against using the discovery process in this way has been discussed in a number of cases including Burnaby Machine & Mill Equipment Ltd. v. Berglund Industrial Supply Co. Ltd. et al. (1984), 81 C.P.R. (2d) 251 (F.C.T.D.) and Crestbrook Forest Industries Ltd. v. Canada, [1993] 3 F.C. 251 (C.A.). In Burnaby, supra, the Court said as follows at pages 254-255:

In argument reference was made to the general tendency of the courts to grant broad discovery. ...

...

This must be balanced against the tendency, particularly in industrial property cases, of parties to attempt to engage in fishing expeditions which should not be encouraged. A recent example of this principle is found in the case of Monarch Marking Systems, Inc. et al. v. Esselte Meto Ltd. et al. (1983), 75 C.P.R. (2d) 130 at p. 133, in which Mahoney J. stated:

I accept the definition of a "fishing expedition", in the context of discovery, as given by Lord Esher M.R. in Hennessy v. Wright (No. 2) (1980), 24 Q.B.D. 445 at p. 448, a libel action:

"... the plaintiff wishes to maintain his questions, and to insist upon answers to them, in order that he may find out something of which he knows nothing now, which might enable him to make a case of which he has no knowledge at present".

I agree with the defendants. Notwithstanding the present state of the pleadings and that Rule 465(15), taken literally, is broad enough to encompass the questions of category 1, those questions are, in substance, a fishing expedition. They need not be answered.

[24]            Are the remaining questions relevant to the issues raised in this proceeding? The Plaintiff says they are, in light of the pleadings. Paragraphs 21 to 24 of the Statement of Claim, paragraph 12 of the Amended Defence, paragraph 22 of the Counterclaim and paragraph 6 of the Amended Reply provide as follows:

Statement of Claim

21.      The Defendants' unauthorized use of the trade-mark PENTIUM as aforesaid has caused and is likely to cause confusion with the Plaintiff's registered PENTIUM trade-mark, in that such use has led and is likely to lead to the inference that the Defendants [sic] services are provided, offered, advertised, or approved by the Plaintiff

22.      By their conduct and actions as aforesaid, the Defendants have infringed, and are deemed to have infringed the rights of the Plaintiff in trade-mark registration nos. TMA428,593 and TMA534,128, contrary to section 20 of the Trade-marks Act.

23.      By their conduct and actions as aforesaid, the Defendants have used the trade-mark that is the subject of registration nos. TMA428,593 and TMA534,128 in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto, contrary to section 22 of the Trade-marks Act.

24.      By their conduct and actions as aforesaid, the Defendants have directed public attention to their services and business in such a way as to cause or to be likely to cause confusion in Canada, at the time they commenced to do so, and thereafter, between their services and business and the wares, services and business of the Plaintiff, contrary to section 7(b) of the Trade-marks Act.

Amended Defence and Counterclaim

12.      The Defendant denies paragraphs 21, 22, 23 and 24 of the Statement of Claim.

22.      The PENTIUM trade-mark registration No TMA534128 is invalid, void and of no effect for the following reasons:

a)              The Plaintiff has abandoned the use of the PENTIUM trade-mark in Canada (section 18(1)(a) of the Trade-Marks Act) in association with precious metals and their alloys; jewellery, precious stones; clocks, bracelets, jewellrey, [sic] necklace charms, bracelet charms, and earring charms, cuff links, earrings, key chains, necklaces, necktie fasteners, lapel pins, money clips, necklace pendants, bracelet pendants, and earring pendants, piggy banks, tie pins, tie slides, trophies and watches; cardboard; photographs, adhesives for stationery or household purposes; playing cards, printers' type; binders; bookends, bookmarkers, boxes for pens, calendars, tablets, cards, pads, pens, pencils, folders, paperweights, pen and pencil holders, photograph stands, rulers, erasers, markers, desk sets, and bumper stickers, leather and imitations of leather; animal skins, hides; trunks and travelling bags, umbrellas, travel bags, luggage, school bags, back packs, beach bags, duffel bags, fanny packs, and umbrellas; steelwool; unworked or semi-worked glass (except glass used in building); earthenware (not included in other classes); mugs and sports bottles; t-shirts, shirts, tank tops, boxer shorts, leather jackets, sweaters, sweatshirts, sweat suits, coveralls, jackets, pants, shorts, ties, bandannas, headwear, namely baseball caps and night caps, bow ties, cardigans, gloves, gym suits, hats, jackets, jogging suits, neckties, polo shirts, scarves, infant rompers, smocks, socks and visors; sporting goods, namely footballs; decorations for Christmas trees; objects for children to play with, namely stuffed toys, plush toys, puppets, dolls, bean bags, board games, video games; and seasonal ornamentation, namely Christmas tree ornaments. The Plaintiff's use of the trade-mark in association with the above wares (if any) was only a token use to allow the filing of a declaration of use, and the plaintiff [sic] has since then, not used the trade-mark in association with all of the said wares in the normal course of trade. From such non use in the normal course of trade for a long period can be inferred the intention to abandon the trade-mark.

b)              The Plaintiff was not the person entitled to secure the registration (section 18(1) in fine, section 16(3) and section 40(2) of the Trade-mars [sic] Act) since it never used the trade-mark in Canada in association with the wares specified in the application, the whole contrary to what was stated in the declaration of use which was filed by the Plaintiff. If any use was ever made, it was not as a trade-mark (section 4 of the Trade-Marks Act) but as publicity devices for the promotion of its own microprocessors.

c)              The trade-mark is not distinctive at the time the proceedings bringing the validity of the registration into question are commenced (section 18(1)(b) of the Trade-Marks Act) since the Plaintiff has not exercised under licence, direct or indirect control (section 50(1) of the Trade-Marks Act) over the character or quality of the wares in association with which the PENTIUM trade-mark was allegedly used, namely: precious metals and their alloys; jewellery, precious stones; clocks, bracelets, jewellrey, [sic] necklace charms, bracelet charms, and earring charms, cuff links, earrings, key chains, necklaces, necktie fasteners, lapel pins, money clips, necklace pendants, bracelet pendants, and earring pendants, piggy banks, tie pins, tie slides, trophies and watches; cardboard; photographs, adhesives for stationery or household purposes; playing cards, printers' type; binders; bookends, bookmarkers, boxes for pens, calendars, tablets, cards, pads, pens, pencils, folders, paperweights, pen and pencil holders, photograph stands, rulers, erasers, markers, desk sets, and bumper stickers, leather and imitations of leather; animal skins, hides; trunks and travelling bags, umbrellas, travel bags, luggage, school bags, back packs, beach bags, duffel bags, fanny packs, and umbrellas; steelwool; unworked or semi-worked glass (except glass used in building); earthenware (not included in other classes); mugs and sports bottles; t-shirts, shirts, tank tops, boxer shorts, leather jackets, sweaters, sweatshirts, sweat suits, coveralls, jackets, pants, shorts, ties, bandannas, headwear, namely baseball caps and night caps, bow ties, cardigans, gloves, gym suits, hats, jackets, jogging suits, neckties, polo shirts, scarves, infant rompers, smocks, socks and visors; sporting goods, namely footballs; decorations for Christmas trees; objects for children to play with, namely stuffed toys, plush toys, puppets, dolls, bean bags, board games, video games; and seasonal ornamentation, namely Christmas tree ornaments.

Amended Reply

6.      The Plaintiff specifically denies the allegations in paragraph 22 of the Amended Statement of Defence and Counterclaim. The Plaintiff further states that the PENTIUM trade-mark has been and is used in association with the wares listed in trade-mark registration no. TMA534,128 in the normal course of the Plaintiff's trade. Such wares are manufactured for the Plaintiff under license and the Plaintiff maintains control over the character or quality of the wares.

[25]            The above-cited paragraphs from the pleadings show there are unadmitted allegations concerning the issues of confusion, infringement and depreciation. Accordingly, it may well be that the disputed questions could be relevant to the action and the general rule concerning the scope of discovery examination is that questions about those issues should, in the usual course, be answered. However, the matter does not end there.

[26]            In Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 24 C.P.R. (3d) 66 (F.C.T.D.), the Court reviewed the general principles applicable to the discovery examination process. While acknowledging the primacy of relevancy and that relevancy is a matter of law, not discretion, the Court has also recognized that there are limits to the discovery process and set forth a list of general principles. The following apply to the present situation and were set out in Reading & Bates, supra, by Justice McNair at pages 71-72:

...

3. The propriety of any question on discovery must be determined on the basis of its relevance to the facts pleaded in the statement of claim as constituting the cause of action rather than on its relevance to facts which the plaintiff proposes to prove to establish the facts constituting the cause of action. ...

4. The court should not compel answers to questions which, although they might be considered relevant, are not at all likely to advance in any way the questioning party's legal position: Canex Placer Ltd. v. A.-G. B.C., supra; and Smith, Kline & French Laboratories Ltd. v. A.-G. Can. (1982), 67 C.P.R. (2d) 103 at p. 108, 29 C.P.C. 117 (F.C.T.D.).

5. Before compelling an answer to any question on an examination for discovery, the court must weigh the probability of the usefulness of the answer to the party seeking the information, with the time, trouble, expense and difficulty involved in obtaining it. Where on the one hand both the probative value and the usefulness of the answer to the examining party would appear to be, at the most, minimal and where, on the other hand, obtaining the answer would involve great difficulty and a considerable expenditure of time and effort to the party being examined, the court should not compel an answer. One must look at what is reasonable and fair under the circumstances: Smith, Kline & French Ltd. v. A.-G. Can., per Addy J. at p. 109.

6. The ambit of questions on discovery must be restricted to unadmitted allegations of fact in the pleadings, and fishing expeditions by way of a vague, far-reaching or an irrelevant line of questioning are to be discouraged: Carnation Foods Co. Ltd. v. Amfac Foods Inc. (1982), 63 C.P.R. (2d) 203 (F.C.A.); and Beloit Canada Ltée/Ltd. v. Valmet Oy (1981), 60 C.P.R. (2d) 145 (F.C.T.D.).

[27]            In the present case, the Prothonotary determined that the remaining questions, that is questions 526, 810, 812, 813 and 814 were too broad. He characterized them as being in the nature of a "fishing expedition".

[28]            Question 526 relates to the production of each offer of purchase and sale relative to each house sold by the Defendant, as well as a list of the names and current location of each customer to whom the Defendant had sold a house. It appears that the Prothonotary found this question to be too broad, relative to unadmitted allegations in the pleadings. In my opinion, that conclusion is reasonable, particularly when that question is viewed in the context of the entire discovery examination of Mr. Cuplowsky.

[29]            Question 810, a request that the Defendant produce a list of suppliers and subcontractors with contact information, suffers from the same flaw, in my opinion. I see no error in principle in the Prothonotary's decision to uphold the Defendant's refusal to respond to this question.

[30]            Questions 812, 813 and 814 relate to a request for production of emails received at the email address "sales@pentiumconstruction.com". The Plaintiff allegedly seeks those emails in an effort to show actual confusion. However, according to the discovery examination of the Plaintiff's representative, the Plaintiff was aware that there was no evidence of such confusion. I refer to questions 30 and 57 that were posed to the Plaintiff's representative and the answers that were provided. This evidence was before the Prothonotary and formed part of the record on this appeal.

[31]            As well, I refer to Rule 242(1) which addresses the grounds upon which a party may object to questions during the discovery examination. Rule 242(1)(c) and (d) provides as follows:

[32]          I refer to the affidavit of Mr. Cuplowsky dated July 10, 2003, filed as part of the record before the Prothonotary. In his affidavit, Mr. Cuplowsky deposed that the Defendant could not access any emails that had been deleted from its files and further, that contact by the Plaintiff with the Defendant's customers, suppliers and subcontractors might be injurious to the Defendant's business. Mr. Cuplowsky was not cross-examined on this affidavit. Accordingly, I conclude that the Defendant has established a legitimate basis for objecting to the questions about the emails and contact with its customers and trades people.

[33]            In these circumstances, I conclude that the Prothonotary did not err in upholding the Defendant's refusal to answer these outstanding questions. The questions, as posed, are too broad and represent an improper attempt to elicit information when the Plaintiff itself is unaware of any instances of actual confusion, as alleged in the pleadings.

[34]            In the result, I see no basis for interfering with the Order under appeal and the appeal is dismissed with costs.

                                                  ORDER

The appeal is dismissed, with costs.

                                                                                           "E. Heneghan"

                                                                                                           J.F.C.

             FEDERAL COURT OF CANADA

    Names of Counsel and Solicitors of Record

DOCKET:                                              T-1993-01

STYLE OF CAUSE:              INTEL CORPORATION

Plaintiff

- and -

3395383 CANADA INC. and

9047-9320 QUEBEC INC.

Defendants

PLACE OF HEARING:                      TORONTO, ONTARIO

DATE OF HEARING:           AUGUST 11, 2003

REASONS FOR ORDER

AND ORDER BY:                  HENEGHAN J.

DATED:                          FEBRUARY 11, 2004

APPEARANCES BY:             Mr. Brian Isaac

Mr. Mark Biernacki

For the Plaintiff

Ms. Alexandra Steele

For the Defendants

SOLICITORS OF RECORD:        Smart & Biggar

Toronto, Ontario

For the Plaintiff                 

Leger Robic Richard Montréal, Quebec

For the Defendants

FEDERAL COURT OF CANADA

                                    Date: 20040211

       Docket: T-1993-01

BETWEEN:

INTEL CORPORATION

Plaintiff

- and -

3395383 CANADA INC. and

9047-9320 QUEBEC INC.

Defendants

REASONS FOR ORDER