Docket: A-256-15
Citation:
2016 FCA 88
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CORAM:
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NOEL, C.J.
STRATAS, J.A.
RENNIE J.A.
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BETWEEN:
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DAVID MICHAELS AND
MICHAELS INC.
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Appellants
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and
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MICHAELS STORES
PROCUREMENT COMPANY, INC. AND MICHAELS OF CANADA, ULC
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Respondents
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on
March 15, 2016).
RENNIE J.A.
[1]
This is an appeal from the decision dated April
24, 2015 of the Federal Court (per St. Louis J.) granting default
judgment against the appellants. The appellants advance multiple grounds of
appeal, which coalesce into three principal challenges: the judge erred in
finding the allegations in the Statement of Claim to have been made out; the
judge committed a palpable and overriding error in the exercise of her
discretion to hear the motion; and the order was overly broad.
[2]
At the outset of his submissions, the personal
appellant David Michaels sought to file what he characterized as an aid to
argument. This was in fact a fresh, 30 page memorandum of argument, which had
not been delivered to respondents’ counsel. We declined to accept this
document.
[3]
Following a review of the extensive motion
record before her, the Federal Court Judge found that the respondents had
established the allegations in the Amended Statement of Claim that they were
the owners of certain trademarks and that the marks had been infringed by the
appellants. The Court also found the allegations of passing off, deprecation of
goodwill and communication of false and misleading statements, contrary to the Trade-marks
Act (R.S.C., 1985, c. T-13), and the Competition Act (R.S.C., 1985,
c. C-34) to have been established. There was considerable evidence before the
Court that established actual confusion on the part of consumers of Michaels
Stores of Canada, ULC and its suppliers. The Notice of Appeal did not raise any
issue with respect to the findings of infringement and no error of law or
palpable and overriding error has been identified in the judge’s analysis of
the allegations of passing off and deprecation of goodwill.
[4]
The appellants further contend that the judge
breached the principles of natural justice in failing to grant an adjournment
and in not hearing from the corporate appellant.
[5]
The decision of the judge to proceed with the
merits of the motion was discretionary and that discretion was, in the
circumstances, reasonably exercised. The appellants had been given generous
delays by respondent’s counsel in order to allow them to defend. The statement
of claim was filed in April 2014. The long promised statement of defence did
not materialize and in March 2015, the respondents moved for default judgment. The
appellants neither cross-examined on the affidavits relied on in support of the
motion for default judgment, nor did they file a responding motion record. While
they had ample notice of the motion for default judgment, on return of the
motion they offered a draft statement of defence which was not filed, and on which
they indicated they would not, in any event, rely.
[6]
The corporate appellant also says that
procedural fairness was breached by reason of the fact that it was not allowed to
argue its position through David Michaels. However, at no time prior to the
motion for default judgment did the corporate respondent retain counsel, or
seek relief from the requirement of Rule 120 of the Federal Courts Rules,
SOR/98-106 that it appear through counsel. The decision of the Judge to require
compliance with the Federal Courts Rules is unassailable, as is the
decision not to allow David Michaels, personally, to give oral evidence on the
return of the motion.
[7]
Finally, there is no merit to the argument that
the order of the judge is without jurisdiction or overly-broad. It does not, as
urged, restrict the personal appellant, David Michaels, from using his own name
on the internet or in trade. The order only prevents the appellants from using
the word MICHAELS and similar marks in a confusing way.
[8]
Further, the jurisdiction to order delivery up
of the domain names in question (e.g. michaels.ca) is firmly rooted in statute.
Section 53.2 of the Trade-marks Act gives the Court a wide discretion to
grant the remedies it considers necessary to give effect to rights that have
been infringed, such as those under ss. 20(1.1) of the Trade-marks Act.
It provides that “if a Court is satisfied… that any act
has been done contrary to this Act, the court may make any order that it
considers appropriate in the circumstances...”. A statutory basis for
the order requiring delivery up of the domain name can also be found in subsection
20(2) of the Federal Courts Act (R.S.C. 1985, c. F-7), which gives the
Court jurisdiction to order any appropriate remedy known to common law or
equity: Merck v. Apotex, 2006 FCA 323 at para 123.
[9]
On the evidence before the judge, the domain
name was the mechanism by which the respondent’s mark was infringed, and was
the instrument of confusion in the marketplace. No palpable and overriding
error has been demonstrated in the judge’s discretionary decision to require
delivery up of the domain name.
[10]
The appellants also raised miscellaneous
arguments related to laches, limitations and the validity of the marks
in question. We see no merit in any of these arguments.
[11]
Accordingly, the appeal will be dismissed.
"Donald J. Rennie"
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