Docket: T-2094-14
Citation: 2015 FC 980
Ottawa, Ontario,
August 18, 2015
PRESENT: The
Honourable Madam Justice McVeigh
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BETWEEN:
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HEATHER RUTH
MCDOWELL
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Applicant
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and
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AUTOMATIC
PRINCESS HOLDINGS, LLC
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Respondent
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JUDGMENT AND REASONS
[1]
This is an application for judicial review under
section 18.1 of the Federal Courts Act, RSC 1985, c F-7, of the decision
of the Member of the Trademarks Opposition Board (the “Board”). The Board
refused the Applicant’s (hereinafter “McDowell”) request for leave to file an Amended
Statement of Opposition.
I.
Factual Background
[2]
On August 25, 2003, the Respondent, Automatic
Princess Holdings, LLC (hereinafter “Automatic”) filed Trademark Application
No. 1,187,510 to register the trademark HONEY B. FLY. The trademark application
was approved in September 2009 and advertised in the Trademarks Journal in
December 2009.
[3]
McDowell filed a Statement of Opposition against
Automatic’s mark on May 2, 2010. The opposition was based on non-entitlement
and non-distinctiveness but McDowell did not file evidence of prior use of
marks. McDowell owns registrations for the trademarks HONEY and HONEY &
DESIGN. McDowell has opposed twelve applications for marks using the word “Honey”
alone or in combination for those wares or services covered by her
registrations.
[4]
Automatic filed a counter statement in response
on July 6, 2010.
[5]
On November 8, 2010, McDowell filed the affidavit
of Elenita Anastacio that included two registrations TMA767,075 (HONEY) and
TMA767,134 (HONEY & DESIGN). Elenita Anastacio was cross-examined on her
affidavit by Automatic on May 25, 2011.
[6]
Automatic filed a witness affidavit on January
21, 2013. No reply evidence was filed by either party. On March 19, 2014, McDowell
indicated they would not file written argument and requested an oral hearing. Automatic
filed written argument on July 25, 2014 and requested a hearing date on August
24, 2014.
[7]
McDowell realized by inadvertence that it had
failed to amend the Statement of Opposition that would update the change from
pending application to registration and add the new ground of section 12(1)(d).
[8]
On August 14, 2014, four years after McDowell commenced
the opposition, McDowell requested leave to file an Amended Statement of Opposition
to add a new ground. The proposed amendment was to plead section 12(1)(d) of
the Trade-marks Act, RSC 1985, c T-13 (the “Act”) which changes the
evidentiary burden needed to show the use of the registered marks. The
evidentiary stage had closed and Automatic had filed its written arguments.
[9]
On August 20, 2014, the Board requested
submissions from Automatic on the request for amendment, and on September 3,
2014, Automatic objected to the request. On September 10, 2014, McDowell filed
comments to Automatic’s submissions.
[10]
On September 16, 2014, the Board refused leave
to file an Amended Statement of Opposition after considering the factors as set
out in Part VII of Practise in Trade-mark Opposition Proceedings.
[11]
The Board determined that the request for leave
to amend the Statement of Opposition was made at a very late stage in the
proceedings which was after McDowell had received Automatic’s written argument.
The Board found that McDowell did not provide an adequate explanation for the
delay other than to say it was by inadvertence. The Board found that the
amendment was of some importance to McDowell because it added a ground of
opposition which did not require McDowell to show use of the registered marks
at issue.
[12]
The Board found that Automatic was prejudiced
because the effect of the amendment would allow McDowell to “split its case”,
which even if accidental, is not in the interests of justice. The Board determined
that it appeared from the file that McDowell’s leave to amend the application was
prompted after reviewing Automatic’s written arguments.
[13]
The Board stated that it considered the factors
as set out in the Practise in Trade-mark Opposition Proceedings notice,
in effect as of March 31, 2009, and refused the request to amend.
[14]
On September 23, 2014, McDowell sent another
request for the Board to reconsider the decision and on September 24, 2014, Automatic
made submissions against the reconsideration.
[15]
In response to the request for reconsideration,
the Board stated that he did not make an error in understanding the facts of McDowell’s
submissions. Nor was there a clear error of law in refusing the request for
leave to amend the Statement of Opposition. On October 7, 2014, the Board
rejected the reconsideration request.
II.
Interlocutory Decision-Special Circumstances
[16]
The preliminary issue to be addressed is whether
this interlocutory decision should it be judicially reviewed before the
administrative process is complete or are there special circumstances to allow
it to be judicially reviewed.
[17]
The parties agree that refusing to grant leave
to amend the Statement of Opposition is an interlocutory decision (Simpson
Strong-Tie v Peak Innovations Inc, 2008 FCA 235) and that an interlocutory
decision can only be reviewed when special circumstances exist (Szczecka v
Canada, [1993] FCJ No 934 (FCA) at para 4 (“Szczecka”)).
[18]
The Court in Szczecka, above, stated that
this rule is applied to avoid “breaking up cases”, delay, expense and because
of interference with the sound administration of justice and ultimately bringing
it into disrepute.
[19]
The Board in making its decision relied on the
Notice to Profession that sets out the factors to consider when deciding
whether to amend the Statement of Opposition.
[20]
The Notice to profession (Notice) says:
VII Leave pursuant to Rules 40 and 44(1)
of the Regulations
Leave to amend a statement of opposition or
counter statement or to file additional evidence will only be granted if the
Registrar is satisfied that it is in the interests of justice to do so having
regard to all the surrounding circumstances including:
1. the stage the opposition proceeding has
reached;
2. why the amendment was not made or the evidence not filed
earlier;
3. the importance of the amendment or the
evidence, and;
4. the prejudice which will be suffered by
the other party.
III.
Special or Exceptional Circumstances
[21]
Without special or exceptional circumstances,
parties cannot proceed to the court system until the administrative process is
complete. Parties must pursue all effective remedies that are available within
the administrative process and only if the process is complete or there is no
effective remedy, may they proceed to court (CB Powell Ltd v Canada (Border
Services Agency), 2010 FCA 61). This means that special circumstances may
exist if there is no other appropriate remedy (see Szczecka).
[22]
Where the parties do not agree is that McDowell
argues there are no adequate alternative remedies within this proceeding which
meets the test of special circumstances so the decision should be reviewed. Automatic
on the other hand says there are alternative remedies to pursue so these facts
do not constitute special circumstances.
IV.
Adequate Remedies
[23]
McDowell relies on Parmalat Canada Inc v
Sysco Corporation, 2008 FC 1104 (“Parmalat”) and Dairy Processors
Association of Canada v Dairy Farmers of Canada, 2014 FC 1054 (“Dairy
Processors”), for support. McDowell submits that like those cases there is
a special circumstance because there is no remedy available within this
administrative process.
[24]
The applicant in Parmalat sought to add a
new ground of opposition under section 22(1) of the Act, which the board found
not to be an appropriate ground of opposition.
[25]
In Parmalat, Mr. Justice Lemieux held
that special circumstances were found to exist following refusal to grant leave
to amend a Statement of Opposition. This finding was because at the end of the
opposition proceeding, which is an appeal to the Federal Court under section 56
of the Act, the court found that there does not exist an adequate remedy other
than to judicially review the interlocutory decision. Section 56 only permits
the Federal Court on appeal of a trademark opposition to deal with issues found
within the Statement of Opposition (Parmalat at 25 citing McDonald’s
Corp v Coffee Hut Stores Ltd, [1994] FCJ No 638 (QL) at 16). The court
found not granting leave to amend to be an error of law as there was no other
remedy for that error of law.
[26]
McDowell submits that this case is analogous to Parmalat,
as they requested leave to file an Amended Statement of Opposition to include
an additional ground of opposition. McDowell’s position is that the decision is
finally dispositive of substantive rights because it deprives McDowell from
raising arguments based on section 12(1)(d) before the Opposition Board or on
appeal.
[27]
In Dairy Processors, the court also
found special circumstances existed to review a refusal to amend a Statement of
Opposition because the court did not find remedies existed in alternative
judicial proceedings. Mr. Justice Locke found that a separate proceeding
pursuant to the section of the Act in the proposed amendment or an expungement
action involved proceedings that are separate from the original opposition. He
concluded that the alternative remedies contemplated in Szczecka and CB
Powell must be remedies available within the context of the proceeding at
issue and not separate proceedings outside of the opposition (Dairy
Processors at 23). Mr. Justice Locke found that the board member
erroneously concluded that the new ground of opposition was invalid, thus
weighing in favour of no alternative remedy available.
[28]
In contrast to Parmalat and Dairy
Processors, Automatic relies on Indigo Books & Music Inc v C & J
Clark International Ltd, 2010 FC 859 (“Indigo”). In Indigo, Mr.
Justice O’Keefe found that special circumstances did not exist because the
applicant had adequate remedies available in the form of alternative judicial
proceedings pursuant to section 40 of the Act. As a result, the Court in Indigo
did not judicially review the interlocutory decision.
[29]
Mr. Justice O’Keefe determined there were two
alternative judicial proceedings available to Indigo; either to commence
an action pursuant to the section sought to be added to the Statement of Opposition
or to commence an expungement proceeding if the trademark applications
proceeded to registration. Mr. Justice O’Keefe found these to be appropriate
remedies to deal with Indigo’s substantive rights and noted that the
fact that leave to amend was not granted does not automatically result in
special circumstances. The facts of each case determine whether there are
special circumstances to allow judicial review of an interlocutory decision to
proceed.
[30]
Further submissions by McDowell argue that
“special circumstances” are present when interlocutory decisions are “finally
dispositive” of a substantive right allowing for judicial review. McDowell says
that the policy rationale to decline to hear appeals from interlocutory
decisions is because the appeals proceed on the basis that all contested issues
may be reviewed in one hearing (CHC Global Operations v Global Helicopter
Pilots Assn, 2008 FCA 344).
[31]
McDowell states that in this case, all contested
issues will not be reviewed on appeal and so do not fall within the policy
rationale. An interlocutory decision that may not finally dispose of a party’s
main argument may still deprive a party of the ability to make arguments in the
alternative based on other substantive grounds and as such, is also “finally
dispositive”.
[32]
Automatic submits that no special circumstances
exist to support judicial review of the Board’s decision to refuse leave to
amend the Statement of Opposition. Automatic states that McDowell’s argument
that special circumstances do exist is because McDowell was refused the chance
to add a new ground of opposition and that the decision is finally dispositive
is akin to arguing that special circumstances exist each time an amendment is
refused.
[33]
I agree with Automatic that just because leave
to amend was refused does not mean that there are special circumstances. The
Federal Court rejected this exact argument in Indigo where the Court
stated that the fact that the amendments were not allowed does not
automatically result in special circumstances being established.
[34]
Indigo provides
that the facts of some cases where an amendment is refused may provide special
circumstances which allow judicial review of an interlocutory decision. As
stated in Indigo, certain facts give rise to special circumstances, but as
is clearly set out in CB Powell, there must really be special and almost
exceptional circumstances existing to allow judicial review of an interlocutory
decision.
[35]
The following purpose as stated in CB Powell
is appropriate to repeat:
[32] This prevents fragmentation of the
administrative process and piecemeal court proceedings, eliminates the large
costs and delays associated with premature forays to court and avoids the waste
associated with hearing an interlocutory judicial review when the applicant for
judicial review may succeed at the end of the administrative process anyway…
[36]
Even without the Amended Statement of Opposition,
it is possible that McDowell will succeed in the opposition hearing anyway,
without the added expense to both parties of what in my view amounts to
“splitting the case”.
[37]
Secondly, if following the reasoning in Indigo,
that remedies must only be available within the ongoing administrative process,
it would allow for each “special circumstance” argued to “split the case” which
is exactly what the jurisprudence in Szczecka warns against.
[38]
Such certain facts as described in Indigo
are found where the decision involved an erroneous conclusion that the proposed
new ground of opposition was invalid as in Dairy Processors at 43, 44
and Parmalat at 36. The previous two cases are distinguishable as in
those cases the refusal to grant the amendment was based on the incorrect
conclusion that the grounds for opposition to be added could not form an
opposition unlike this case where there was no finding by the Board.
[39]
Parmalat did
present special circumstances because the Board held that the Opposition Board did
not have authority to inquire into issues of depreciation and found that section
22 was not a proper ground for opposition. Similarly, in Dairy Processors
the judicial review was allowed because there was an incorrect conclusion that
sections 30 and 7 could not be a valid ground of opposition.
[40]
Contrary to those two cases, in the decision at
issue here there is no error on a question of law or whether section 12(1)(d)
could be pled as a ground of opposition. Also the Board on these facts did not
refuse to grant leave based on jurisdictional issues.
[41]
The Board based the refusal on the criteria set
out in the Notice to Profession found in paragraph 20 above. McDowell
made the argument that the prejudice they will suffer should be considered as
it is far greater than the prejudice to Automatic. Further, McDowell submits
that Mr. Justice Locke in Dairy Processors added that comparison as a
new factor to consider. I do not need to determine if Dairy Processors added
a new factor as in this case the Board did look at the prejudice to both
parties despite not being determinative of the matter as the availability of
other remedies was. The Board’s decision is not finally dispositive of the
substantive rights of McDowell because other remedies are available.
[42]
Regarding the availability of alternative
remedies, McDowell relies on the conclusion in Dairy Processors in
support of a finding of special circumstances however that finding was
two-fold. First Mr. Justice Locke’s interpretation of CB Powell meaning
that all effective remedies in the current proceeding must be exhausted and
secondly, in his view there was an error in law as to the validity of the
ground of opposition to be added. I respectfully disagree with Mr. Justice
Locke’s interpretation by pointing to CB Powell at paragraph 31 where
the court summarizes its position by stating:
Put another way, absent exceptional
circumstances, courts should not interfere with ongoing administrative
processes until after they are completed, or until the available, effective remedies
are exhausted.
Emphasis added
[43]
In my view, available, effective remedies
include expungement proceedings under section 57, in the event the marks
proceed to registration or, McDowell may commence an action against Automatic
by alleging use of the mark is a breach of a separate 12(1)(d) proceeding. Finally,
McDowell may still be successful on the basis of the outstanding opposition
application.
[44]
This prevents “splitting the case” and also
prevents unnecessary expense and delay for both parties particularly if the
opposition proceeding is successful anyway. If McDowell is not successful, then
they may pursue the alternative remedies as described in the above paragraph as
well as an appeal on the grounds contained within the Statement of Opposition
pursuant to section 56.
[45]
Sufficient special circumstances do not exist to
proceed with judicial review of this interlocutory decision. My finding is
based primarily on Mr. Justice O’Keefe’s reasoning and also partly on
distinguishing the facts in Dairy Processors, which do not match the
facts of this case.
[46]
In sum, the Court should not exercise its
discretion to judicially review this interlocutory decision in the interests of
justice.
[47]
The parties were not able to come to an
agreement regarding costs. The parties provided me with their draft bills. I
will award costs to Automatic to be payable forthwith by McDowell in the amount
of $3,500.00
THIS COURT’S JUDGMENT is that
1.
The application is dismissed;
2.
Costs are awarded to the Respondent to be
payable forthwith by the Applicant in the amount of $3,500.00.
"Glennys L. McVeigh"
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