Docket: T-1024-06
Citation: 2011 FC 1526
Ottawa, Ontario,
December 28, 2011
PRESENT: The
Honourable Mr. Justice Zinn
BETWEEN:
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THE
GAP, INC., GAP (ITM) INC. AND GAP (CANADA) INC.
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Plaintiffs/
Defendants by
Counterclaim
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and
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G.A.P.
ADVENTURES INC.
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Defendant/
Plaintiff by
Counterclaim
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REASONS FOR ORDER AND ORDER
[1]
G.A.P Adventures Inc. appeals the Order of the Case
Management Judge granting leave to the plaintiffs (The Gap) to amend their statement
of claim. The statement of claim has previously been amended twice and the
trial of the action is set to commence in six months.
[2]
The Gap was granted leave to file its proposed
Thrice Amended Statement of Claim to amend paragraph 1(b)(ii) that currently
reads as follows:
1. The
plaintiffs’ claim:
…
b. An
interim, interlocutory and permanent injunction restraining the defendant and
its officers, directors, agents, servants, employees, and representatives and
all those under their control, and anyone having knowledge of this order, from:
…
ii using
or displaying GAP, or any confusingly similar mark, as, or as part of, any
trade mark, trade name, corporate name, domain name, or otherwise, in
association with the advertisement, distribution and/or sale of clothing and retail
store services;
The amended
paragraph would read as follows:
1. The
plaintiffs’ claim:
…
b. An
interim, interlocutory and permanent injunction restraining the defendant and
its officers, directors, agents, servants, employees, and representatives and
all those under their control, and anyone having knowledge of this order, from:
…
ii using
or displaying GAP, or any confusingly similar mark, as, or as part of, any
trade mark, trade name, corporate name, domain name, or otherwise, in
association with the advertisement, distribution and/or sale of clothing,
and or any retail store services including online retail store
services;
[3]
“Discretionary orders of prothonotaries
ought to be disturbed by a motions judge only where (a) they are clearly wrong,
in the sense that the exercise of discretion was based upon a wrong principle
or a misapprehension of the facts, or (b) in making them, the prothonotary
improperly exercised his or her discretion on a question vital to the final
issue of the case: Canada v. Aqua-Gem Investments Ltd.,
[1993] 2 F.C. 425 (C.A.), per MacGuigan J.A., at pp.
462-63:” Z.I. Pompey Industrie v ECU-Line N.V., 2003 SCC 27 at paragraph 18, [2003] 1 S.C.R. 450. As was recently
observed by the Court of Appeal: “On appeal to the Federal Court, it was
incumbent on the appellant to show that the Prothonotary’s discretionary order
was “clearly wrong.”
[4]
The appellant submits that the Order ought to be
overturned and The Gap denied leave to amend its statement of claim because:
i.
The proposed amendment is inconsistent with the
body of the claim;
ii.
The amendment is not supported by the material
facts pleaded in the claim;
iii.
The amendment permits The Gap to withdraw a
substantial admission; and
iv.
The proposed amendment is overbroad and extends
beyond rights of The Gap.
[5]
In this appeal we have the advantage of a
transcript of the hearing before the Case Management Judge, which includes his
decision. The transcript shows that the Case Management Judge correctly stated
the test for permitting an amendment as set out in Canderel Ltd v Canada,
[1994] 1 FC 3:
An amendment should be allowed at any stage of an action for
determining the real questions in controversy, however, the amendment should
not result in injustice to the other party which is not capable of being
compensated for by an award of costs. The amendment should serve the interests
of justice. While an amendment may be sought at any stage of a trial, the
closer a party is to the end of trial, the more difficult it becomes to prove
the amendment does not work an injustice.
[6]
It is submitted that the amendment requires that
“retail stores” in the body of the claim includes G.A.P. Adventures’ business
of online sales of travel. The appellants says that this is not supported by
the pleadings and it points to paragraphs 22 to 24 of the statement of claim in
which it is said that three specific retail stores are referenced and thus the
claim expressly excludes online activities.
[7]
The appellant submits that the requested
amendment “raises a new claim and cause of action that is not supported by the
body of the statement of claim and thus dramatically expands the scope of the
action.” The Gap submits that the proposed amendment “updates or
particularizes certain allegations” in the claim as it currently reads.
[8]
The appellant submits that the Case Management
Judge erred in accepting the submission of the responding parties that the
proposed amendment “simply particularizes what is already at issue in the
claim.” Having read the pleadings and the parties’ submissions I find that it
was open to the Case Management Judge to conclude, as he did, that “it is
abundantly clear that the whole issue of the use of the trademark in connection
with online services has been in play since the outset of this proceeding.” I
acknowledge that the original statement of claim does not use the word
“e-commerce” but there are references to “domain name,” and “electronic files”
and a prayer to have the domain name <www.gap.ca> transferred to the
plaintiff.
[9]
Further, I do not accept the submission of the
appellant that the amendment is not supported by the facts pled or expands the
scope of the injunction against “retail store” use as currently claimed. The statement
of claim does not seek an injunction related to the use of the impugned trade
mark with respect to a “retail store” but with respect to “retail store services.”
The phrase ”retail store services” may reasonably be said to mean more than
merely operating a brick and mortar building from which one sells goods and
services. The services of a retail store in this day and age may well
include online advertising, tweeting, emailing customers and prospective
customers, and offering goods over the internet, thus giving the customer the
convenience of shopping at home. It is the 21st Century equivalent to
the 20th Century catalogue shopping and mail order, which arguably
are also retail store services. For these reasons I cannot find that the Case
Management Judge was “clearly wrong” in the determination he made.
[10]
In any event, even if I were to agree with the
appellant that the previous claim expressly excluded internet services, the
question that would then have to be addressed is whether the amendment granted
by the Case Management Judge results in an injustice to the appellant that
cannot be compensated in an order for costs. In this respect I agree with the following
statement made by the Case Management Judge: “I don’t have any concrete
examples of things that were done that would cause you prejudice by virtue of
an amendment at this juncture.”
[11]
The only injustice evident to me is if the amendment
is not granted. In that circumstance, all of the real questions in controversy
might not all be addressed in one trial and, as the Case Management Judge
noted, that may result in another action and the resulting waste of judicial
resources and resources of the parties.
[12]
I further reject the submission of the appellant
that in permitting this amendment, the Case Management Judge has permitted the plaintiffs
to resile from an admission that online services offered by the appellant prior
to 2005 were accepted. The submission that there was such an admission is
based on the statement in the claim that in opening retail stores the appellant
“materially expanded” its use of the allegedly infringing trade mark. The
appellant says that by using that turn of phrase The Gap drew a line between
those activities of the appellant that were “legitimate and those which
allegedly infringe the rights of the Plaintiff.” I am not convinced that
this mere turn of phrase can be read as an admission that the conduct prior to
this expansion, whether it was a material expansion or not was accepted. I do
not find that the Case Management Judge was clearly wrong, and in fact I share
his view, that he was “not satisfied that in fact there is any clear cut
positive admission that in any way is being withdrawn by the Plaintiff
regarding the pursuit of on-line retail store services.”
[13]
The parties have agreed to a time for the
appellant to examine a representative of The Gap for an additional four hours
of discovery in January. When one compares that to another trial and all of
its processes, time, and costs, the interests of justice are met by permitting
the amendment. One could only reach a contrary conclusion if one were
satisfied that there was a real injustice to the appellant; however, it has
failed to provide any evidence on which the Court finds on the balance of probabilities
that an injustice existed.
[14]
The appeal will be dismissed. The appellants
sought leave to serve and file an Amended Statement of Defence to the Thrice Amended
Statement of Claim. That is granted. It is hoped that the parties may agree
on the period within which the amended defence shall be served and filed;
however, if they are unable to do so, they may seek the direction of the Case Management
Judge.
ORDER
THIS
COURT ORDERS that:
1. The appeal of the decision of the Case Management
Judge permitting the plaintiffs to amend their statement of claim is dismissed;
2. The defendant is granted leave to file an amended
statement of defence within a period to be either agreed upon by the parties or,
if there is no agreement, as set by the Case Management Judge; and
3. The
plaintiff is awarded its costs of the appeal, in the cause.
"Russel W. Zinn"
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