Date: 20100908
Docket: T-1804-07
Citation: 2010 FC 883
Ottawa, Ontario, September 8, 2010
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
TRACTOR SUPPLY CO. OF TEXAS, LP and
TRACTOR
SUPPLY COMPANY
Plaintiffs/
Defendants by Counterclaim
and
TSC
STORES L.P.
Defendant/
Plaintiff by Counterclaim
REASONS FOR ORDER AND ORDER
[1]
The plaintiffs seek a
stay of opposition proceedings currently pending before the Trade-marks
Opposition Board pertaining to the defendant’s Trade-mark Applications Nos.
1341965 and 1341975, pending the final disposition of this action.
[2]
For
the reasons that follow, I have concluded that a stay of the opposition
proceedings is not warranted. Consequently, the motion will be dismissed.
Background
[3]
The
plaintiffs and their predecessors have carried on business in the United States since the 1930’s
selling farm supplies, hardware and the like. In the 1960’s, the plaintiffs
expanded their business into Canada through a wholly-owned subsidiary. In 1987, the shares of
the Canadian subsidiary were sold to the subsidiary’s Canadian senior
management.
[4]
The
sale was governed by two contracts, the “Purchase Agreement” and the “Support
Agreement”, which purported to deal with rights to different forms of
intellectual property, including various trade-marks. There is a dispute
between the parties with respect to the nature and extent of the rights
conferred on the defendant by these agreements. The plaintiffs insist that the
defendant became a licensee of the trade-marks in question, whereas the
defendant claims ownership of the trade-marks.
[5]
On
April 3, 2007, the defendant applied to register “TSC Stores” and a design
version of “TSC Stores” in Canada.
[6]
By
statement of claim issued on October 12, 2007, the plaintiffs commenced this
action, seeking, amongst other things, a declaration that the plaintiffs are
the owners of the TSC trade name, and of a number of different trade-marks,
including, but not limited to “TSC Stores” and the design version of the “TSC
Stores” mark. The plaintiffs also seek expungement of a number of registered
Canadian trade-marks, damages for passing-off and an interim, interlocutory and
permanent injunction restraining the defendant from using the marks in issue.
[7]
On
November 30, 2007, the defendant filed a statement of defence and counterclaim,
wherein the defendant seeks numerous forms of relief, including a declaration
that the defendant is the owner of the “TSC Stores” trade-mark and the design
version of the “TSC Stores” mark, damages for trade-mark infringement and
injunctive relief.
[8]
In
early 2008, the plaintiffs commenced opposition proceedings before the Canadian
Intellectual Property Office in relation to the defendant’s application to
register the “TSC Stores” mark and the design version of the mark. The
plaintiffs now seek an order staying the opposition proceedings pending the
final disposition of this action.
[9]
Before
turning to consider the arguments advanced by each side as to whether a stay of
the opposition proceedings should be granted, a legal issue must first be
decided. That is, what the appropriate test is to be applied on a motion for a
stay such as this.
The Test to
be Applied
[10]
The
granting of a stay is a discretionary order, and I understand the parties to
agree that the Court's discretionary power to stay proceedings is one that must
be exercised sparingly, and only in the clearest of cases: see, for example, Mugesera
v. Canada (Minister of Citizenship and Immigration), 2005 SCC 39, [2005] 2
S.C.R. 91, at para. 12; Safilo Canada Inc. v. Contour Optik Inc., 2005
FC 278, [2005] F.C.J. No. 384, at para. 27, aff”d 2005 FCA 434, [2005] F.C.J.
No. 2118; Compulife Software Inc. v. Compuoffice Software Inc. (1997),
77 C.P.R. (3d) 451, [1997] F.C.J. No. 1772 (F.C.T.D.) at para. 16. and Varnam
v. Canada (Minister of National
Health and Welfare),
[1987] F.C.J. No. 511, 12 F.T.R. 34 (F.C.T.D.), at para. 7.
[11]
Where
the parties disagree is with respect to the test that should govern the
exercise of the Court’s discretion in circumstances such as this, where what is
sought to be stayed is one of two proceedings which are being pursued
simultaneously in different fora.
[12]
The
defendant submits that it is well established in the jurisprudence that the
applicable test is the tripartite test articulated by the Supreme Court of
Canada in RJR-MacDonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 311.
[13]
That
is, the defendant says that the plaintiffs must demonstrate:
(i) that a serious issue exists;
(ii) that they would suffer irreparable
harm if the stay is not granted; and
(iii) that the balance of convenience
favours the granting of the stay.
[14]
In
support of this contention, the defendant relies on the decision of this Court
in Prenbec Equipment Inc. v. Timberblade Inc., 2010 FC 23, [2010] F.C.J.
No. 25 at para. 26, as well as the decisions of the Federal Court of Appeal in Canada (Attorney General) v. Canada (Canadian International
Trade Tribunal),
2006 FCA 395, [2006] F.C.J. No. 1827 at para. 12, SC Prodal 94 SRL v.
Spirits International B.V., 2009 FCA 88, [2009] F.C.J. No. 330 at para. 8
and Canada (Attorney General) v.
United States Steel Corp., 2010 FCA 200, [2010] F.C.J. 902 at para. 4.
[15]
In
contrast, the plaintiffs argue that the proper test on a motion seeking to stay
one of two parallel proceedings is the two-part test described in Figgie
International Inc. v. Citywide Machine Wholesale Inc. (1993), 50 C.P.R.
(3d) 89, [1993] F.C.J. No. 662 at para. 6 (F.C.T.D.). There, Justice Rothstein
stated that to justify the granting of a stay of proceedings, two conditions
must be met, one positive and one negative. These are:
(i) The moving party must satisfy the
Court that the continuation of the action will work an injustice because it
would be oppressive or vexatious to him or would be an abuse of the process of
the Court in some other way; and
(ii) The stay must not cause an
injustice to the responding party. The onus is on the moving party to establish
these conditions.
[16]
The
plaintiffs point out that this was the test applied in Royal Bank of Canada
v. Canadian Imperial Bank of Commerce, [1994] F.C.J. No. 1341, 84 F.T.R.
148 (F.C.T.D.), a proceeding somewhat similar to this one. The plaintiffs also
rely on the decision in Prenbec Equipment Inc. in support of their
position.
[17]
Subsection
50(1) of the Federal Courts Act, R.S.C. governs stays of proceedings. It
provides that:
|
50. (1) The
Court may, in its discretion, stay proceedings in any cause or matter,
(a) on the
ground that the claim is being proceeded with in another court or
jurisdiction; or
(b) where for
any other reason it is in the interest of justice that the proceedings be
stayed.
|
50.
(1) La Cour a le pouvoir discrétionnaire de suspendre les procédures dans
toute affaire:
a)
au motif que la demande est en instance devant un autre tribunal;
b)
lorsque, pour quelque autre raison, l'intérêt de la justice l'exige.
|
[18]
The
plaintiffs rely on paragraph 50(1)(b) of the Act in support of their motion,
submitting that it is in the interests of justice that the opposition
proceedings be stayed.
[19]
There
is no question that the RJR-MacDonald test is often applied in stay
applications. It is undoubtedly applicable where what is sought to be stayed
is the enforcement of regulations, pending a judicial determination of their
constitutionality. Indeed, that was the issue before the Supreme Court of
Canada in the RJR-MacDonald case.
[20]
The RJR-MacDonald
test also clearly applies where what is sought to be stayed is the decision of
an inferior court or tribunal, pending an appeal or application for judicial
review of that decision. This was the situation facing the Federal Court of
Appeal in Canada (Attorney General) v. Canada (Canadian International
Trade Tribunal)
and Canada (Attorney General) v.
United States Steel Corp., both cited above.
[21]
However,
stays are also sought in circumstances where the RJR-MacDonald test has
no application. For example, a proceeding in one jurisdiction may be stayed in
favour of a proceeding brought in a different jurisdiction on the basis of the
principle of forum non conveniens or because the other forum is “more
appropriate”: see, for example, the decisions of the Federal Court of Appeal in
Apotex Inc. v. AstraZeneca Canada Inc., 2003 FCA 235, [2003] F.C.J. No.
838, application for leave to appeal dismissed [2003] 2 S.C.R., p. v, and Discreet
Logic Inc. v. Canada (Registrar of Copyrights), [1994] F.C.J. No. 582, 55
C.P.R. (3d) 167 (F.C.A).
[22]
A
stay of proceedings can also be granted on the basis that the conduct of state
actors is such that the proceeding in question constitutes an abuse of process:
see, for example, Mugesera, cited above, Canada (Minister of
Citizenship and Immigration) v. Tobiass, [1997] 3 S.C.R. 391, and Canada
(Attorney General) v. Sheriff, 2007 FCA 90, [2007] F.C.J. No. 380. Once
again, the RJR-MacDonald test has no application in such circumstances.
[23]
There
is a substantial body of jurisprudence dealing with situations where a stay is
being sought with respect to one of two related proceedings being pursued in
different fora: see, for example, Safilo Canada Inc. v. Contour Optik Inc.,
cited above; Plibrico (Canada) Limited v. Combustion Engineering Canada Inc.,
[1990] F.C.J. No. 36, 30 C.P.R. (3d) 312 (F.C.T.D.); Ass'n of Parents
Support Groups v. York, [1987] F.C.J. No. 141, 14 C.P.R. (3d) 263
(F.C.T.D.); Compulife Software Inc. v. Compuoffice Software Inc. (cited
above); 94272 Canada Ltd. v. Moffatt, [1990] F.C.J. No. 422 31 C.P.R.
(3d) 95 (F.C.T.D.); General Foods v. Struthers, [1974] S.C.R. 98.
[24]
The
principles to be derived from these decisions were summarized by Justice Dubé
in White v. E.B.F. Manufacturing Ltd., [2001] F.C.J. No. 1073 at para.
5, as follows:
1. Would the continuation of the action
cause prejudice or injustice (not merely inconvenience or extra expense) to the
defendant [the plaintiffs in this case]?
2. Would the stay work an injustice to
the plaintiff [the defendant in this case]?
3. The onus is on the party which seeks
a stay to establish that these two conditions are met.
4. The grant or refusal of the stay is
within the discretionary power of the judge.
5. The power to grant a stay may only be
exercised sparingly and in the clearest of cases.
6. Are the facts alleged, the legal
issues involved and the relief sought similar in both actions?
7. What are the possibilities of
inconsistent findings in both Courts?
8. Until there is a risk of imminent
adjudication in the two different forums, the Court should be very reluctant to
interfere with any litigant's right of access to another jurisdiction.
9. Priority ought not necessarily be
given to the first proceeding over the second or, vice versa.
[25]
In
considering which test should be applied in this case, I will start by
considering the recent decision of this Court in Prenbec Equipment Inc.,
cited above, which was relied upon by both sides in support of their respective
positions.
[26]
In Prenbec
Equipment Inc., the Court specifically considered the issue of the
appropriate test to be applied on a motion for a stay of patent re-examination
proceedings pending the final disposition of a patent infringement action in
the Federal Court.
[27]
At
paragraph 26 of the reasons, the Court identifies the RJR-MacDonald test
as the test to be applied on such a motion. However, the decision goes on in
the following paragraph to identify the factors listed in White v. E.B.F.
Manufacturing Ltd. as being relevant to the exercise of the Court’s
discretion. Moreover, a review of the Court’s ensuing analysis discloses no
explicit finding being made in relation to either the serious issue or balance
of convenience components of the RJR-MacDonald test. Instead, the
analysis seems to focus on the White v. E.B.F. Manufacturing Ltd.
factors.
[28]
In
the circumstances, I am of the view that the decision in Prenbec Equipment
Inc. is of limited assistance in this case.
[29]
There
is obviously some overlap between the White v. E.B.F. Manufacturing Ltd.
factors and the RJR-MacDonald test, particularly as the latter relates
to the issues of irreparable harm and balance of convenience. Given that what
is really in issue in this case is whether having the two proceedings continue
in tandem amounts to an abuse of process, I am of the view that considerations
such as those identified in White v. E.B.F. Manufacturing Ltd. are more
relevant and appropriate in considering a motion such as this than are the
three elements of the RJR-MacDonald test.
[30]
Having
identified the relevant test, the next matter to decide is whether I should
exercise my discretion to grant a stay in the circumstances of this case.
Should a Stay
be Granted in this Case?
[31]
When
this motion was originally brought, the plaintiffs were also seeking relief
from any implied undertaking that may apply in relation to documents obtained
by the plaintiffs from the defendant on discovery. The evidence filed by the
plaintiffs in support of the motion consists of the affidavit of Alex Stanton,
the Senior Vice-President of Finance and Strategy for Tractor Supply Company.
Mr. Stanton’s affidavit only addresses the implied undertaking issue.
[32]
Prior
to the return of the stay motion, the parties settled the implied undertaking
issue, which settlement is reflected in an August 18, 2010 Order of
Prothonotary Aronovitch. This Order provides that “The plaintiff, Tractor
Supply Co. of Texas, LP, and the defendant are relieved from any implied
undertaking”. The Order grants leave to file any evidence produced in this
action, including the examinations for discovery and documentary productions in
the opposition proceedings.
[33]
This
development distinguishes the facts of this case from the situation facing the
Court in the Royal Bank of Canada decision relied upon by the
plaintiffs. In granting a stay of proceedings before the Registrar of
Trade-marks in that case pending the resolution of an action in this Court,
Justice Noël was clearly influenced by the fact that the Royal Bank had
obtained evidence damaging to the opposing party through the discovery process,
which could not be led in the administrative proceedings before the Registrar
of Trade-marks.
[34]
This
state of affairs satisfied Justice Noël that the continuation of the
proceedings before the Registrar of Trade-marks could cause serious prejudice
to the Royal Bank, as the issues, including the validity of its trade-marks,
could not be fully debated before the Registrar of Trade-marks.
[35]
Justice
Noël found that the allegation made by the opposing party that the Royal Bank
“did not or could not use its trade-marks in relation to banking activities
based on a legal prohibition should not be shielded from examination in light
of the CIBC's own practice as revealed by the discovery in this action”. He
concluded that “[t]he continuation of the proceedings [before the Registrar of
Trade-marks] would be an abuse of the judicial process inasmuch as it would
allow decisions to be made without the benefit of highly relevant evidence in
circumstances where such evidence is known to exist and is available to both
parties: all quotes at para. 16.
[36]
In
light of the August 18, 2010 Order of Prothonotary Aronovitch, there is no
longer any concern that the plaintiffs will be precluded from adducing relevant
evidence in the opposition proceedings. In this regard, it should be noted that
not only does the affidavit of Alex Stanton not identify any specific evidence
that the plaintiffs will be unable to put before the Trade-marks Opposition
Board, it also fails to identify any other prejudice that will be suffered by
the plaintiffs if the opposition proceedings are not stayed.
[37]
A
review of the pleadings in this action together with the statements of
opposition in the opposition proceedings discloses that there is some
commonality of parties between the two matters, although is appears that the
Tractor Supply Company is not a party to the opposition proceedings. There is
also some overlap between the issues raised in the two proceedings as relates
to nature and extent of the defendant’s rights with respect to the “TSC Stores”
trade-mark and the design version of the “TSC Stores” mark. However, the
relief sought in the two proceedings is different.
[38]
In
the opposition proceedings, the plaintiffs seek the dismissal of the
defendant’s applications for registration of the two marks in question. In
contrast, in this Court, the plaintiffs are seeking a declaration that they are
the owners of the TSC trade name, and of a number of different trade-marks,
including, but not limited to the two in issue in the opposition proceedings.
The plaintiffs are also seeking expungement of various registered Canadian
trade-marks (not including the two in issue in the opposition proceedings which
have yet to be registered), damages and injunctive relief.
[39]
While
there is always some risk of inconsistent findings whenever two matters proceed
in different fora, the plaintiffs have not persuaded me that there is a
significant risk of inconsistent findings in this case. This is not a situation
such as that facing the Court in the Royal Bank case discussed earlier,
where the substantial differences in the evidentiary record in the two
proceedings gave rise to a real risk of inconsistent results.
[40]
Furthermore,
unlike the situation that faced the Court in Prenbec Equipment Inc.,
there is no suggestion that allowing the opposition proceedings to continue
could render this action nugatory: see Prenbec Equipment Inc. at para.
45.
[41]
In
this regard, it should be observed that in the event that the plaintiffs lose
before the Trade-marks Opposition Board, it is always open to them to amend
their statement of claim in this action to seek expungement of the registration
of the two disputed marks on the ground of lack of entitlement.
[42]
The
plaintiffs also argued at the hearing of this motion that the Trade-marks
Opposition Board is not well-positioned to decide the complex issues of
credibility that surround the question of ownership to the trade-marks in
question. Not only was this argument not even mentioned in the plaintiffs’
memorandum of fact and law, the plaintiffs have also failed to identify what
these credibility issues are with any degree of particularity.
[43]
Consequently,
while I accept that the continuation of the opposition proceedings may cause
inconvenience and expense to the plaintiffs, they have not persuaded me that it
would be oppressive or vexatious or an abuse of process in some other way.
[44]
I am
also satisfied that the delay in the proceedings before the Trade-marks
Opposition Board denying the defendant access to the trade-mark registration
process and the potential statutory advantages of having registered trade-marks
would cause prejudice to the defendant: see Novopharm Ltd. v. Eli Lilly and
Co., [1998] F.C.J. No. 1634 84 C.P.R. (3d) 292 (F.C.T.D) at para. 9.
[45]
Finally,
I note that the opposition proceedings have been ongoing since February of
2008. Evidence has been filed by both sides, and cross-examinations have taken
place on that evidence. Additional evidence obtained from the discoveries in
this action is now being put before the Trade-marks Opposition Board as a
result of Prothonotary Aronovitch’s August 18 Order. One would have thought
that if the plaintiffs were really concerned about prejudice or injustice
arising from the Trade-marks Opposition Board proceedings, the motion for a
stay would have been brought long before this.
[46]
The
plaintiffs have thus failed to persuade me that this is one of “the clearest of
cases” where it is in the interests of justice that a stay of the proceedings
before the Trade-marks Opposition Board should be granted. Consequently, the
plaintiffs’ motion is dismissed.
Would the
Result have been Different had I Applied the RJR-MacDonald Test?
[47]
Before
concluding, and in the event that a reviewing Court were to take a different
view as to the legal test applicable on a motion such as this, I would simply
note that my conclusion that the motion should be dismissed would not have
changed, had I applied the RJR-MacDonald test.
[48]
To
be entitled to a stay using the RJR-MacDonald test, the party seeking
the stay must adduce clear and non-speculative evidence that irreparable harm
will follow if their motion is denied: see, for example, Aventis Pharma S.A.
v. Novopharm Ltd. 2005 FC 815, [2005] F.C.J. No. 1019, at para. 59, aff'd 2005 FCA 390, 44 C.P.R. (4th) 326.
[49]
As
was noted earlier, the affidavit of Alex Stanton addresses the prejudice that
the plaintiffs say they would have faced before the Trade-marks Opposition
Board, had they not been relieved from their implied undertaking. That is no
longer in issue, in light of Prothonotary Aronovitch’s August 18 Order. There
is no clear and non-speculative evidence before the Court of any other form of
irreparable harm that will be suffered by the plaintiffs if the Trade-marks
Opposition Board proceedings are not stayed.
Costs
[50]
I am
of the view that the defendant should have its costs of the motion, which are
fixed at $1,500.
ORDER
THIS COURT ORDERS AND ADJUDGES
that the motion for a stay is dismissed, with costs to the defendant
fixed in the amount of $1,500.
“Anne
Mactavish”
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