Tommy Hilfiger Licensing Inc. v. Doe, docket T-855-00

                                                                                                                      Date: 20000731

                                                                                                                   Docket: T-855-00

OTTAWA, ONTARIO this 31^st day of July 2000.

BEFORE: The Honourable Mr. Justice Pelletier

BETWEEN:

                                  TOMMY HILFIGER LICENSING, INC. and

                                        TOMMY HILFIGER CANADA INC.

                                                                                                                                 Plaintiffs

                                                                   - and -

                   JANE DOE and JOHN DOE and OTHER PERSONS, NAMES

                       UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,

                   MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN

   UNAUTHORIZED OR COUNTERFEIT TOMMY HILFIGER MERCHANDISE,

                      AND THOSE PERSONS LISTED IN SCHEDULE "A" TO

                                             THE STATEMENT OF CLAIM

                                                                                                                             Defendants

                                      REASONS FOR ORDER AND ORDER

PELLETIER J.

[1]         On Wednesday June 21, 2000, Maître Daniel Ovadia attended at the Marché de l'Encan M.J.T. Larose in Masson-Angers, Quebec in the company of Gary Osmond, Coordinator, Anti-counterfeiting Services at the law firm of Kestenberg Siegal Lipkus, and Constable François Cadotte of the Royal Canadian Mounted Police. They were there to locate and seize goods which infringed the intellectual property rights of various owners of well known trade-mark and copyright holders, including the plaintiff Tommy Hilfiger Licensing Inc. Their authority to do so derived from a "rolling Anton Piller" Order issued by Mr. Justice Rouleau of this Court.

[2]         Maître Ovadia's team located and seized goods belonging to the defendant Kattoura. They served the defendants with a copy of the Statement of Claim, the Anton Piller Order, and a Notice of Motion returnable July 11, 2000 at which the review of the execution of the Anton Piller Order would take place. Prior to the return date of the motion, the defendants were served with a copy of the Motion Record for the July 11, 2000 motion which included the affidavit of Maître Ovadia. That affidavit is brief, consisting of 3 paragraphs which provide as follows:

1.     Attached hereto and marked as Exhibit "A" to this Affidavit are true copies of the Solicitor's Reports relating to service of the documents referred to therein on the dates referred to therein. I have reviewed the contents of the Solicitor's Reports and confirm same to be true and accurate. In particular, I confirm that true copies of the documents referred to in the Solicitor's Reports were served on the person served at the location referred to in the Solicitor's Reports. Attached hereto as Exhibit "B" to this Affidavit is a CD-ROM containing digital electronic images of samples fo the items seized.

2.     I personally served the documents referred to in the attached Solicitors Reports. Particulars of the date of service, location of service, name of person or business served, Defendant Schedule Number, method of identification and manner f service are set out in the attached "Appendix of Service" attached as Exhibit "C" to this Affidavit.

3.     This Affidavit is made in support of a motion to review the Order of the Honourable Mr Justice Rouleau and to continuing the interim ex parte Order herein on an interlocutory basis until the trial of this action, and for no other or improper purpose.

[3] Attached as an Exhibit to that affidavit is an inventory of goods seized, which in the case of the defendants Brunet and Kattoura included 92 T shirts, 109 polo shirts, 3 shorts, 13 hats, 93 tank tops, 4 fleece, 10 long sleeve t-shirts.

[4] The Exhibit also included a narrative report in which Maître Ovadia outlined the steps he had taken in the course of the seizure. It includes the following paragraph:

5.             I confirmed that the goods seized, as particularized in the Solicitor's Report, were counterfeit for any one or more of the following reasons:

a)             There sere no valid neck labels, hang tags or packaging, as required by the Plaintiffs;

b)             The products were clearly of inferior quality to similar authentic products;

c)             The Plaintiff does not manufacture that particular product;

[5]         Upon the return of the motion of July 11, the Defendants attended without legal representation. I advised Maître Ovadia that I regarded the proof of infringement as inadequate and gave him leave to file a further affidavit to prove that the goods seized were counterfeit goods^[1]. The Defendants were advised to obtain legal advice. The motion was adjourned to the following Tuesday, July 18. Maître Ovadia asked that the interim injunction contained in the Anton Piller Order be extended until the date of the hearing. I advised that since I was not satisfied as to the evidence of counterfeiting, there was no basis upon which I could grant an injunction. As a result, the interim injunction lapsed and no order was made to replace it.

[6]         On July 18, the motion came before the Court by telephone conference call as the defendants had advised the court that they had retained counsel and that an adjournment would be requested. It was agreed that the motion would be adjourned to September 14 providing the parties could agree on terms, but if they could not, the matter of an interlocutory injunction until September 14, 2000 would be argued on July 21.

[7]         The matter came before me again on July 21. The further affidavit of Daniel Ovadia ("the second Ovadia affidavit") had been filed as had a Notice of Motion by the defendants seeking the dismissal of the Motion for review of the execution of the Anton Piller Order. Counsel for the Defendants, Maître Grant, agreed to the adjournment sine die of the defendants' motion on the basis that the disposition of the plaintiff's motion would essentially dispose of his motion as well. The parties were not able to agree on an interim disposition with regard to some of the defendants and so the motion for relief was argued before me.

[8]         The second Ovadia affidavit recites Maître Ovadia's qualifications to give evidence of infringement of the plaintiff's intellectual property rights. After establishing Mr. Ovadia's credentials, the affidavit goes on to say the following;

8. By virtue of my aforementioned experience and training, I have learned how to recognize a variety of features to distinguish legitimate Plaintiff's merchandise from counterfeit merchandise bearing unauthorized reproductions of the Plaintiff's Intellectual Properties. Accordingly, I was able to determine that the goods seized in this case, which I confirm I personally examined, are neither authorized by nor manufactured by or fro the Plaintiff(s) and are therefore counterfeit. Without restricting the generality of the foregoing, I confirm that the goods seized in this case, and more amply described in the Solicitor's Reports and Comments attached to my Affidavit sworn July 3^rd, 2000 and forming part of the Motion Record returnable in Ottawa on July 11^th, 2000, are counterfeit for each of but not limited to the following reasons:

a)             The Plaintiff(s) does not manufacture that particular product;

b)             There were no valid neck labels, hang tags or packaging as required by the Plaintiff(s);

c)             The products were clearly of inferior quality.

[9]         Because Mr. Ovadia's affidavit was before the Court, the application was argued by Mr. Lipkus, for whom Mr. Ovadia had been acting as agent.

[10]       Mr. Lipkus argued that the affidavit of Maître Ovadia was sufficient to establish that the goods were counterfeit, that is that they infringed upon the trade-marks and copyright of the plaintiff. According to Mr. Lipkus, Maître Ovadia's evidence should be passed as follows:

1)         He has examined the plaintiff's intellectual properties;

2)         He has examined the goods seized;

3)         He has formed the opinion that the goods infringe upon the properties which he reviewed at step one for one or more of the following reasons:

a)         The Plaintiff(s) does not manufacture that particular product;

b)         There were no valid neck labels, hang tags or packaging as required by the Plaintiff(s);

c)         The products were clearly of inferior quality.

[11]       In addition Mr. Lipkus pointed to evidence that some of the goods seized bore the same design as one which Rouleau J. had declared to be an infringement and which was reproduced in Schedule B1 to the Anton Piller Order.

[12]       Mr. Lipkus argued that the standard of proof on an interlocutory motion is not the standard of proof to be expected at the trial of the matter. In his view, the affidavit of Maître Ovadia was sufficient to establish that there was a prima facie case of infringement so that an interlocutory injunction should issue. Essentially, Mr. Lipkus's argument was that Mr. Ovadia's affidavit was expert evidence of counterfeiting.

[13]       Maître Grant, on behalf of the Defendants, argued that the evidence of counterfeiting was inadequate. In his view, there was no evidence that the goods sold by his clients were confusing with the trade-marks owned by the plaintiff. If there was such evidence, it was neutralized by the affidavit evidence of Mr. Kattoura who deposed that there was no confusion between his goods and the plaintiff's trade-marks.

[14]       The issue is the nature of the evidence required to obtain an interlocutory injunction upon the review of the execution of a "rolling" Anton Piller Order against a defendant. The evidence in this case consists of the opinion of an expert who says that he has examined the plaintiff's intellectual properties and the seized goods and he has concluded that the goods infringe upon the plaintiff's intellectual properties.    He points to three characteristics which may indicate that the goods do not originate with a source authorized by the owner of the intellectual properties. There is no reference to specific intellectual properties nor to specific goods. It is not possible, on the basis of the affidavit material to form an independent judgment as to the validity of Maître Ovadia's conclusion.

[15]       In my view, this is not sufficient. It is true, as Mr. Lipkus argues, that the standard of proof upon a summary application such as this one, is not the same as the standard of proof at trial. However, the standard of proof must be commensurate with the order sought, an interlocutory injunction and an order permitting the plaintiff to retain possession of the seized property.

[16]       In RJR-MacDonald Inc. v. Canada [1994] 1 S.C.R. 311 the Supreme Court held that in order to obtain an interlocutory injunction, the applicant must show a serious issue to be tried, irreparable harm if the injunction is not granted, and the balance of convenience must favour the applicant. With respect to the serious issue to be tried, the Court held that this should be determined on a very preliminary assessment of the merits, unless the decision will effectively put an end to the case:

At the first stage, an applicant for interlocutory relief in a Charter case must demonstrate a serious question to be tried. Whether the test has been satisfied should be determined by a motions judge on the basis of common sense and an extremely limited review of the case on the merits ..... A motions court should only go beyond a preliminary investigation into the merits when the result of the interlocutory motion will in effect amount to a final determination of the action, or when the constitutionality of a challenged statute can be determined as a pure question of law.

[17]       Most defendants against whom rolling Anton Piller Orders are executed do not attend the motion reviewing the execution of the order against them. Many of those who do attend are unrepresented by counsel and have little idea of how to advance their interests. This is hardly surprising since the premise upon which the "rolling" Anton Piller Order was granted was that the defendants are itinerant or do not carry out business from fixed premises. By far the greatest number of seizures are allowed to go to default judgment. In most cases, the disposition of the motion for review is the disposition of the claim, default judgment following as a matter of course.      Even in those cases where the defendants appear and are represented at the motion for review, the likelihood of a claim being defended to trial is remote. It is therefore incumbent upon the Court to go further than an "extremely limited review of the case on the merits" since in most cases it amounts to a final determination of the actions.

[18]       The Statement of Claim in support of which the Anton Piller Order is issued refers to trademark infringement and to passing off. In passing off, the defendant appropriates another's trademarks in an attempt to mislead consumers into believing that his goods are the goods of the owner of the trademark. Infringement occurs when a trader uses a mark which is confusing with the mark of another, the effect of which is to mislead consumers to believe that the goods originate with the latter. In copyright infringement, the issue is whether the defendant has copied the plaintiff's work. In all cases, the degree of resemblance between the impugned goods and the protected intellectual properties is material. One cannot infringe, or pass one's goods off, at large. Such conduct is always in reference to a specific work or mark. At the trial of this action, the plaintiff would have to prove that it was the owner of certain intellectual properties, that the defendants had either copied those properties or had approximated them to the point of causing confusion in the minds of consumers.

[19]       It would seem to follow that in order to establish that there is a serious issue to be tried, on the higher standard applicable to cases in which the interlocutory order effectively determines the outcome of the proceedings, the plaintiff would have to show that its marks or works have been copied or that the marks used on the defendant's goods are confusing with the plaintiff's marks, either because they are copies or they are sufficiently alike to be misleading. In this case, the plaintiff seeks to do this by putting before the Court the opinion of an expert who has examined the plaintiff's marks and the goods and has concluded that the goods infringe upon the plaintiffs marks and works or, in the words of the affidavit, they are counterfeit.

[20]       There is a body of law dealing with expert opinion in infringement proceedings which contemplates that such evidence is receivable, even on the ultimate issue.

      A review of other decisions suggests to me that it is well established that expert evidence in trade mark matters as well as in patent cases may be adduced. The case of Xerox of Canada Ltd. et al. v. IBM Canada Ltd. (1977), 3 C.P.R. (2d) 24, provides a thorough jurisprudential analysis of the admissibility of expert evidence in both civil and criminal matters and in his reasons, Collier J. had no difficulty in finding expert evidence admissible even when it dealt with the ultimate issue

      Andres Wines Ltd. v. Canadian Marketing International Ltd. [1986] F.C.J. No. 205

[21]       However, the question of admissibility of expert evidence is always dependent upon the subject matter before the Court. The premise underlying the admissibility of expert evidence is that the subject matter is such that a judge would be unlikely to understand it without the assistance of someone whose education or experience qualifies him to express an opinion for the assistance of the Court.

I turn to necessity. In Mohan, supra, Sopinka J., relying on the dicta of Dickson J. (as he then was) in [1982] 2 S.C.R. 24">R. v. Abbey, [1982] 2 S.C.R. 24, provides some guidance as to the applicable standard for determining whether expert evidence is necessary. At page 23 of Mohan he states:

     In [1982] 2 S.C.R. 24">R. v. Abbey, supra, Dickson J., as he then was, stated, at p. 42:

With respect to matters calling for special knowledge, an expert in the field may draw inferences and state his opinion. An expert's function is precisely this: to provide the judge and jury with a ready-made inference which the judge and jury, due to the technical nature of the facts, are unable to formulate. "An expert's opinion is admissible to furnish the Court with scientific information which is likely to be outside the experience and knowledge of a judge or jury. If on the proven facts a judge or jury can form their own conclusions without help, then the opinion of the expert is unnecessary" (Turner (1974), 60 Crim. App. R. 80, at p. 83, per Lawton L.J.)

This pre-condition is often expressed in terms as to whether the evidence would be helpful to the trier of fact. The word "helpful" is not quite appropriate and sets too low a standard. However, I would not judge necessity by too strict a standard. What is required is that the opinion be necessary in the sense that it provide information "which is likely to be outside the experience and knowledge of a judge or jury": as quoted by Dickson J. in [1982] 2 S.C.R. 24">R. v. Abbey, supra. As stated by Dickson J., the evidence must be necessary to enable the trier of fact to appreciate the matters in issue due to their technical nature.

Fairford First Nation v. Canada [1998] F.C.J. No. 47 para. 8

[22]       To the extent that the issue is whether certain goods duplicate in whole or in part the plaintiff's intellectual property, this is a matter of observation. By putting the trade mark or work next to the goods in question, a person of ordinary powers of observation ought to be able to come to a conclusion as to whether the protected properties have been wrongfully duplicated. To the extent that the issue is a particular plaintiff's business practices which may assist in identifying goods which have been produced without the plaintiff's authorization, this evidence may be given by someone familiar with the plaintiff's practices. Expert evidence is not required with respect to either issue.

[23]       I am therefore of the view that expert opinion is not receivable at this stage of the proceedings because the subject matter is not one which is likely to be outside the experience of a judge. Furthermore, most defendants in these proceedings are unrepresented. If they are to understand the case which they are to meet, they should be given the observations upon which the Court will decide whether a sufficient case has been made out to justify the seizure of their goods and the granting of an injunction against them.

[24]       This can be done by putting before the court the affidavit of someone who has examined the plaintiff's intellectual properties and the seized goods. The affidavit should set out the marks or works which are alleged to have been copied or made subject to confusion and identify the goods which bear the copied or confusing marks or designs. The plaintiff must also put the goods and the intellectual properties, or their images, before the court so that the court can assess the degree of similarity and arrive at a conclusion as to infringement or passing off.

[25]       If the owner of the marks has certain practices by which authentic goods can be distinguished from counterfeit goods, that information can be put before the court by describing the practice and then identifying the goods which do not conform to the practice. The identification should be sufficiently precise to allow the court to verify the information from the goods themselves if it wishes to do so.

[26]       While this is more onerous than the present practice, it is not intended to be, nor should it be, prohibitive. The plaintiff has at hand the registrations of its marks, and has the goods in its custody. Since the goods are routinely photographed, it ought not to be difficult to organize the material so that the photographs and the registrations can be corelated and the corelation identified in the affidavit. If the affidavit refers to the owner's licensing standards (tags, quality of goods, packaging etc.), such evidence could be given on information and belief since this is an interlocutory application, providing the source of the information is clearly identified, subject always to the court's preference for the best evidence if the issue is contentious.

While an Applicant may file an affidavit based on information and belief on an interlocutory motion, the Court may take notice of the fact that the person with personal knowledge of the facts deposed has not sworn an affidavit. Halder v. M.E.I., (1993), 58 F.T.R. 268 (F.C.T.D.).

      Kyekyeku v. Canada [1995] F.C.J. No. 59 per Muldoon J.

[27]       The evidence before the court in the two Ovadia affidavits does not meet this standard. It is not possible to determine from the affidavit which intellectual properties are said to be infringed by which goods. The intellectual property owner's requirements which serve to distinguish authorized goods from those which are not cannot be corelated to particular goods and therefore cannot be verified.

[28]       Turning to Mr. Lipkus' argument with respect to the garments bearing the design which is reproduced at Schedule B1 of the Anton Piller Order, the plaintiff has not identified which garments are said to bear this mark. It is not for the court to search the seized goods looking for the those which might bear the design in question. Beyond that, there is a logical fallacy in comparing goods to see if they resemble an infringing design. The test is whether the goods are confusing with or duplicate protected intellectual property. To say that the goods are confusing with or reproduce without authorization a mark or design for which the plaintiff cannot claim protection does not prove infringement. The comparison must be with the mark or design for which the plaintiff can claim protection. The argument that the plaintiff does have an interest in the mark reproduced in Schedule B1 because it has been found to be an infringing mark whose use can be enjoined is an attempt to have the court rely upon derivative evidence (comparison with an infringing design) rather than upon the best evidence (comparison with the mark for which the plaintiff can claim protection). I decline to proceed upon that basis.

[29]       I therefore find that the evidence is insufficient to establish that there is a serious issue to be tried and dismiss the application for an interlocutory injunction. I also order that the goods seized be returned to the defendants forthwith.

[30]       I wish to point out to the defendants that I have not decided that their goods do not infringe the plaintiff's trademarks or copyright. I have decided only that the plaintiff has not presented evidence which would permit me to issue an interlocutory injunction. The goods may yet be found to be counterfeit, and if they are, their sale will expose the defendants to a claim for damages as well as an accounting. The defendants should consider their position carefully.

[31]       I also wish to point out that my comments are limited to the question of the sufficiency of the affidavit evidence in support of an interlocutory injunction. They do not deal with the contents of the inventory which the order requires the plaintiffs to leave with the defendants upon removing goods from the defendant's possession. Nor do they change the requirements with respect to the solicitor's report which is provided as part of the material in support of the motion for review of the execution of the Anton Piller Order. Finally, it may be that the requirements imposed here have implications for costs. The plaintiffs may raise the issue of costs at the appropriate time.

                                               ORDER

THIS COURT HEREBY ORDERSthat for the reasons set out above:

1. Anita Brunet, George Kattoura, Gisèle Charette Tremblay, Robert Attieh and Geneviève Forget are added as defendants to the Statement of Claim;

2. The application for an interlocutory injunction against the defendants Anita Brunet, George Kattoura, Gisèle Charette Tremblay, Robert Attieh and Geneviève Forget is hereby dismissed;

3. The goods seized from the defendants shall be returned to the defendants forthwith;

4. Cost will be costs in the cause.

                                                                            "J.D. Denis Pelletier"            

                                                                                                          J.F.C.C.

FEDERAL COURT OF CANADA TRIAL DIVISION

NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD

COURT FILE NO.: T-855-00

STYLE OF CAUSE: TOMMY HILFIGER LICENSING, INC. ET AL -AND- JANE DOE ET AL

PLACE OF HEARING: Ottawa. Ontario DATE OF HEARING: July 21, 2000 REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE PELLETIER DATED: July 31, 2000

APPEARANCES

Mr. Lorne Lipkus                                                                       FOR PLAINTIFFS

Mr. Claude Grant                                                                      FOR DEFENDANTS

SOLICITORS OF RECORD:

Kestenberg Siegal Lipkus                                                    FOR PLAINTIFFS    Toronto, Ontario

Claude Grant, Avocat -Barrister                                          FOR DEFENDANTS Buckingham, Quebec