Date: 20020219
Docket: T-1517-01
Montréal, Quebec, February 19, 2002
Present: Mr. Richard Morneau, Prothonotary
BETWEEN:
BENISTI IMPORT-EXPORT INC.
Plaintiff
(Defendant by counterclaim)
and
MODES TXT CARBON INC.
Defendant
(Plaintiff by counterclaim)
ORDER
The plaintiff's motion to strike out is dismissed with costs.
However, the plaintiff shall have thirty (30) days from the date of this order in which to serve and file its reply and defence to the counterclaim.
Richard Morneau
Prothonotary
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L
Date: 20020219
Docket: T-1517-01
Neutral citation: 2002 FCT 179
BETWEEN:
BENISTI IMPORT-EXPORT INC.
Plaintiff
(Defendant by counterclaim)
and
MODES TXT CARBON INC.
Defendant
(Plaintiff by counterclaim)
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY:
[1] Through its motion, the plaintiff-defendant by counterclaim (the plaintiff) is seeking to obtain, under Rule 221(1)(a) of the Federal Court Rules, 1998 (the Rules) the striking out of a series of paragraphs in the statement of defence and counterclaim (the counterclaim) filed by the defendant-plaintiff by counterclaim (the defendant).
[2] In the alternative, should it not be successful on the motion to strike, the plaintiff is asking for further particulars concerning most of these paragraphs, under Rule 181.
[3] However, in its submissions the plaintiff did not dwell on the latter aspect of the motion, an aspect that I would not have allowed in any event.
Tests for striking out
[4] Under Rule 221 now, it is possible to seek to have all or part of a pleading struck out in the context of an action.
[5] This rule reads as follows:
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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) discloses 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.
(2) No evidence shall be heard on a motion for an order under paragraph (1)(a).
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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.
Elle peut aussi ordonner que l'action soit rejetée ou qu'un jugement soit enregistré en conséquence.
(2) Aucune preuve n'est admissible dans le cadre d'une requête invoquant le motif visé à l'alinéa (1)a).
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[6] This rule is the equivalent of Rule 419 of the old Federal Court Rules. The case law developed under that rule is therefore applicable to Rule 221.
[7] Accordingly, under Rule 221(1)(a), it has to be clear and manifest (see [1980] 2 S.C.R. 735">Canada (A.G.) v. Inuit Tapirisat, [1980] 2 S.C.R. 735, page 740) that all or part of the defendant's counterclaim discloses no reasonable cause of action.
[8] The Court record indicates that on or about August 23, 2001, the plaintiff served and filed an action against the defendant in relation to the usurpation of its rights in industrial design No. 92684 and trade mark "'n1".
[9] On or about November 9, 2001, the defendant filed and served a statement of defence and counterclaim.
[10] Essentially, the paragraphs of the counterclaim that the plaintiff is seeking to have struck out read as follows:
33. Benisti has made false and/or misleading statements tending to discredit the business, wares and services of TXT and its fall-winter collection, including style numbers 1800 and 1801 contrary to Section 7(a) of the Trade-Marks Act. In particular, Benisti has alleged to the TXT's customers, distributors and agents that the TXT collection infringes industrial design registration number 92684. These representations were made by Benisti for the purpose of unfairly obtaining a competitive advantage in the market place and, as a result, Benisti has profited by these misrepresentations whereas TXT has suffered damages.
34. More particularly, Benisti forwarded cease and desist letters to two (2) of TXT's largest and most important clients, namely La Maison Simons Inc. and Boutique Vincent d'Amérique Inc. Such letters claimed that TXT's article of clothing bearing style numbers 1800 and 1801 infringe Benisti's industrial design number 92684. Benisti made these comments with full knowledge, or in reckless disregard, of the material facts alleged in this Counterclaim as the basis for invalidating industrial design registration number 92684.
35. As a direct result of Benisti's actions, TXT's has suffered losses for which it is entitled to claim damages.
36. Benisti's statements were made with the unfair purpose of discrediting TXT's business, reputation and goodwill. TXT is therefore entitled to punitive damages as a consequence thereof.
[11] According to the plaintiff, although the defendant, in paragraph 33 of its counterclaim alleges that its proceeding is based on paragraph 7(a) of the Trade-marks Act, R.S.C. 1985, c. T-13 (the Act), no allegation of false or misleading statements pertaining to any trade-mark was reproduced in the counterclaim. However, the plaintiff argues, if paragraph 7(a) is to apply, the issue must be related exclusively to a trade-marks question.
[12] Within the strict framework of a motion to strike out under Rule 221(1)(a), the issue in this case is whether it is clear and obvious in law that the plaintiff's position is justified.
[13] Notwithstanding the plaintiff's sustained efforts to persuade me otherwise, I think this question must be answered in the negative, for the following reasons.
[14] Paragraph 7(a) of the Act reads as follows:
| 7. No person shall
(a) make a false or misleading statement tending to discredit the business, wares or services of a competitor;
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7. Nul ne peut :
a) faire une déclaration fausse ou trompeuse tendant à discréditer l'entreprise, les marchandises ou les services d'un concurrent;
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[15] Although this paragraph is found in the Act, it has already been held to apply to situations involving patents and copyright as well.
[16] To that extent, the plaintiff's position is already under strong attack.
[17] In ITT Hartford Life Insurance Co. of Canada v. American International Assurance Life Co. (1997), 79 C.P.R. (3d) 441, at page 447, it is stated:
A number of decisions of this Court have also dealt with the constitutionality of section 7 of the Trade-marks Act, namely Riello Canada Inc. v. Lambert (1986), 8 C.I.P.R. 286, 9 C.P.R. (3d) 324 (F.C.T.D.), Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. (1987), 14 C.P.R. (3d) 314 (F.C.A.), and Motel 6 Inc. v. No. 6 Motel Ltd. (1981), 56 C.P.R. (2d) 44 (F.C.T.D.). As one author writes, "[t]o the extent section 7 is joined to patent, trade marks or copyright matters, it would appear that the Federal Court of Canada will accept its validity" (M. Chromecek et al., World Intellectual Property Guidebook (Matthew Bender & Co., Inc., 1991), p. 8-8 § 8D).
[18] In Mattel Can. Inc. v. GTS Acquisitions Ltd. (1989), 25 C.I.P.R. 192, my colleague Giles, at pages 193-94, even states that paragraph 7(a) of the Act covers any intellectual property matter. He states:
I dismissed the motion because the injunctive relief sought against the plaintiff was in part beyond the jurisdiction of this Court. The reasons of Chief Justice Laskin in [1977] 2 S.C.R. 134">MacDonald v. Vapour Can. Ltd., [1977] 2 S.C.R. 134, 22 C.P.R. (2d) 1, 7 N.R. 477, 66 D.L.R. (3d) 1, as explained by Mr. Justice MacGuigan in Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd., [1987] 3 F.C. 544, 13 C.I.P.R. 263, 14 C.P.R. (3d) 314, 38 D.L.R. (4th) 544, 80 N.R. 9, 12 F.T.R. 317 (note) (C.A.), indicated that s. 7 of the Trade Marks Act, R.S.C. 1970, c. T-10 is within the jurisdiction of the Parliament of Canada only to the extent that it forms part of a scheme for the regulation of intellectual property. Therefore, s. 7(a) of the Trade Marks Act cannot be read as generally prohibiting the making of false or misleading statements tending to discredit the business, wares or services of a competitor, but only as prohibiting the making of such false and misleading statements in association with a trade mark or other intellectual property.
[19] Counsel for the plaintiff made much of the Supreme Court of Canada decision in [1977] 2 S.C.R. 134">MacDonald et al. v. Vapour Canada Ltd., [1977] 2 S.C.R. 134.
[20] The ratio of this judgment has to do with the constitutional invalidity of paragraph 7(e) of the Act. So what is said in this judgment about the scope of the other provisions of the Act is in the nature of obiter dictum. Moreover, although the following passage from page 172 does not refer to "industrial designs", we cannot clearly and obviously dismiss the proposition of the defendant's counsel in this case that the Supreme Court in [1977] 2 S.C.R. 134">MacDonald wished to emphasize the major intellectual property vehicles and was not consciously trying to rule out "industrial designs", which it discusses earlier at page 165. These two extracts read as follows:
At page 165:
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It is said, however, that s. 7, or s. 7(e), in particular, may be viewed as part of an overall scheme of regulation which is exemplified by the very Act of which it is a part and, also, by such related statutes in the industrial property field as the Patent Act, R.S.C. 1970, c. P-4, the Copyright Act, R.S.C. c. C-30 and the Industrial Design Act, R.S.C. 1970, c. I-8.
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On dit toutefois que l'art. 7, ou l'al. e) en particulier, peut être considéré comme une partie d'un système général de réglementation englobant la loi même où il est inséré ainsi que des lois connexes comme la Loi sur les brevets, S.R.C. 1970, ch. P-4, la Loi sur le droit d'auteur, S.R.C. 1970, ch. C-30 et la Loi sur les dessins industriels, S.R.C. 1970, ch. I -8.
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At page 172:
| The position which I reach in this case is this. Neither s. 7 as a whole, nor section 7(e), if either stood alone and in association only with s. 53, would be valid federal legislation in relation to the regulation of trade and commerce or in relation to any other head of federal legislative authority. There would, in such a situation, be a clear invasion of provincial legislative power. Section 7 is, however, nourished for federal legislative purposes in so far as it may be said to round out regulatory schemes prescribed by Parliament in the exercise of its legislative power in relation to patents, copyrights, trade marks and trade names. The subparagraphs of s. 7, if limited in this way, would be sustainable, and, certainly, if s. 7(e) whose validity is alone in question here, could be so limited, I would be prepared to uphold it to that extent. I am of opinion, however [...]
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En l'espèce, j'en viens à la conclusion suivante. Ni l'art. 7 dans son ensemble, ni l'al. c) considéré seul ou en relation avec l'art. 53, n'est une loi fédérale valide relative à la réglementation des échanges et du commerce ou une autre rubrique de compétence fédérale. Il y a empiétement sur la compétence législative provinciale dans la situation comme elle se présente. Toutefois l'art. 7 comprend des dispositions visant les fins de la loi fédérale dans la mesure où l'on peut les considérer comme un complément des systèmes de réglementation établis par le Parlement dans l'exercice de sa compétence à l'égard des brevets, du droit d'auteur, des marques de commerce et des noms commerciaux. Si les alinéas de l'art. 7 se limitaient à cela, ils seraient valides et, si l'al. e) qui est le seul dont la constitutionnalité soit contestée en l'espèce, pouvait être ainsi restreint, je serais certainement prêt, à maintenir dans cette mesure sa validité. Je suis toutefois d'avis [...]
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[21] The fact that it is easier to extend the protection of section 7 of the Act to some matters expressly referred to in section 91 of the Constitution Act, 1867 (heads 22 and 23 in section 91, that is, patents of invention and discovery and copyrights) might not be as meaningful as the plaintiff's counsel hopes, since section 7 itself is in a statute the subject matter of which does not fall with the express powers of section 91 of the Constitution Act, 1867.
[22] The plaintiff also referred the Court to the Federal Court of Appeal decision in Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd., [1987] 3 F.C. 544. Although the Court refers in
that judgment to the Supreme Court decision in [1977] 2 S.C.R. 134">MacDonald, the ratio of Asbjorn is addressed to the constitutional validity of paragraph 7(b) of the Act, and not paragraph 7(a). In Asbjorn, then, the Court was not centrally concerned by anything other than the ratio that it had to decide. Accordingly, this judgment is of limited value in the debate that concerns us.
[23] As to the judgments in Ital-Press Ltd. v. Sicoli (1999), 86 C.P.R. (3d) 129 and Concept Omega Corp. v. Logiciels KLM Ltée (1987), 21 C.P.R. (3d) 77, they are addressed to situations where the facts of the case could not be related to a federal intellectual property statute. In the case at hand, the Industrial Design Act, R.S.C. 1985, c. I-9 is certainly part of the equation that is said to be covered by paragraph 7(a) of the Act.
[24] For the preceding reasons, I am unable to conclude that it is clear and obvious in the context of this motion that a situation involving an industrial design cannot, like a situation involving a trade-mark, a patent or copyright, pertain to and be covered by paragraph 7(a) of the Act.
[25] Accordingly, the plaintiff's motion to strike out will be dismissed with costs.
Richard Morneau
Prothonotary
Montréal, Quebec
February 19, 2002
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20020219
Docket: T-1517-01
Between:
BENISTI IMPORT-EXPORT INC.
Plaintiff
(Defendant by counterclaim)
and
MODES TXT CARBON INC.
Defendant
(Plaintiff by counterclaim)
REASONS FOR ORDER
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET NO: T-1517-01
STYLE: BENISTI IMPORT-EXPORT INC.
Plaintiff
(Defendant by counterclaim)
and
MODES TXT CARBON INC.
Defendant
(Plaintiff by counterclaim)
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: February 4, 2002
REASONS FOR ORDER OF MR. RICHARD MORNEAU, PROTHONOTARY
DATED: February 19, 2002
APPEARANCES:
Jacques A. Léger for the plaintiff (defendant by counterclaim)
Allen D. Israel for the defendant (plaintiff by counterclaim)
SOLICITORS OF RECORD:
| Léger Robic Richard
Montréal, Quebec
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for the plaintiff (defendant by counterclaim)
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| Lapointe Rosenstein
Montréal, Quebec
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for the defendant (plaintiff by counterclaim)
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