Date: 20030930
Docket: T-1301-02
Citation: 2003 FC 1123
BETWEEN:
PARMALAT DAIRY & BAKERY INC.
Plaintiff/
Defendant to Counterclaim
and
COMPAGNIE GERVAIS DANONE S.A.
and
DANONE INC.
Defendants/
Plaintiffs by Counterclaim
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY:
[1] This is a motion by the defendants and plaintiffs by counterclaim (the defendants) under rule 107 of the Federal Court Rules, 1998 (the rules) that the Court essentially order the postponement of the examinations for discovery and the determination of remedial issues until after discovery and trial of the question of liability.
[2] Rule 107, in its relevant part, reads as follows:
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107.(1) The Court may, at any time, order the trial of an issue or that issues in a proceeding be determined separately.
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107.(1) La Cour peut, à tout moment, ordonner l'instruction d'une question soulevée ou ordonner que les questions en litige dans une instance soient jugées séparément.
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Context
[3] The plaintiff and defendant to counterclaim (the plaintiff) has brought an action against the defendants for trade-mark infringement and passing off. The plaintiff alleges that it is the owner of the following marks: LA CRÈME DU YOGOURT, LA CRÈME DU YOGOURT ET DESSIN, and LA CRÈME.
[4] The defendants have served and filed a statement of defence and a counterclaim to the plaintiff's action. The defendants deny any infringement of the plaintiff's supposed trade-marks and argue that they are not using the expression "LA CRÈME OF OUR YOGOURTS/DE NOS YOGOURTS" as a trade-mark and therefore that there can be no confusion with the alleged trade-marks of the plaintiff.
[5] The defendants have also brought a counterclaim attacking the validity of the registration of the trade-marks LA CRÈME DU YOGOURT and LA CRÈME DU YOGOURT & DESSIN. The defendants also allege that they have suffered damages as a result of false and misleading statements by the plaintiff tending to discredit the defendants' business and wares.
[6] Although it appears that this litigation is restricted to yogurt, it turns out that the parties are in direct competition with each other not only in the Canadian market but also in numerous other markets such as Europe, the United States and Latin America, as manufacturers and suppliers of food products.
[7] In regard to the potential remedies sought by the plaintiff in its main action, the plaintiff has not yet elected between its damages or the defendants' profits.
Analysis
[8] The applicable test on a motion such as this is the one formulated by the Court in Illva Saronno S.p.A. v. Privilegiata Fabbrica Maraschino "Excelsior" (T.D.), [1999] 1 F.C. 146, at page 154, paragraph 14, where the Court states:
Accordingly, on the basis of previous authority and in light of the changes introduced by the 1998 Rules, I would formulate the test to be applied under rule 107 as follows. On a motion under rule 107, the Court may order the postponement of discovery and the determination of remedial issues until after discovery and trial of the question of liability, if the Court is satisfied on the balance of probabilities that in the light of the evidence and all the circumstances of the case (including the nature of the claim, the conduct of the litigation, the issues and the remedies sought), severance is more likely than not to result in the just, expeditious and least expensive determination of the proceeding on its merits.
[9] For the following reasons I have decided that the defendants have in this instance discharged their duty to establish on a preponderance of probabilities that the possibility of saving time and money and achieving a just solution to the dispute is such that a departure is justified from the general principle that all issues posed in a proceeding be examined together.
A. Nature of the proceeding and the issues in dispute
[10] Under this heading, it should be noted that on the issue of liability the questions to be determined are fairly numerous albeit relatively straightforward. In this case the plaintiff has alleged infringement of its registered trade-marks and passing off, and the defendants have brought a counterclaim for invalidity and striking out of the plaintiff's marks as well as for damages for false and misleading statements. So there are four different causes of action on the issue of liability that the Court will have to consider.
[11] However, contrary to the plaintiff's submission, I think that technically the issues on which the defendants are seeking severance are not interrelated. There is a clear delineation among these issues. The Court must first determine whether the plaintiff's trade-marks are valid, whether they have been infringed, whether there is a proven situation of passing off, and whether false and misleading statements were made. It is only when all of these issues are adjudicated by the Court that the issue of relief will come into play.
B. Conduct of the litigation and the remedies sought
[12] It appears that at the present stage of the proceedings, the parties have invested very few resources on the issue of remedies. The evidence submitted by the defendants indicates that the affidavits of documents of the respective parties - and not only that of the defendants - are incomplete on the question of relief.
[13] It should be pointed out, moreover, that the examinations for discovery have not been held either on the issue of liability or on the issue of relief.
[14] Furthermore, the plaintiff appears to be tending toward an election of the defendants' profits, since its damages would not be great owing to the fact that the yogurt of each of the parties was simultaneously on the market for only a limited period of time.
[15] This means, therefore, that the question of the defendants' profits remains central without the award of an order under rule 107.
[16] The plaintiff has denounced the fact that the defendants submitted in support of their motion an affidavit from one of the solicitors acting on behalf of the defendants. Although that is the case and although paragraph 32 of this affidavit reflects what is more than certainly hearsay, it appears to me that this affidavit credibly describes, inter alia in its paragraphs 20, 21, 26, 27, 30, 31 and 33, an exercise, a lengthy and expensive process in regard to the calculation of the defendants' profits.
[17] It does not appear that this exercise has to be different from one encountered in other intellectual property cases where it has been held that in order to successfully determine a party's profits, it is necessary to look at a company's various financial data. (See Teledyne Industries, Inc. v. Lido Industrial Products Ltd. (1982), 68 C.P.R. (2d) 56; Diversified Products Corp. v. Tye-Sil Corp. (1990), 32 C.P.R. (3d) 385.) In Depuy (Canada) Ltd. v. Joint Medical Products Corp. (1996), 67 C.P.R. (3d) 145, the Federal Court of Appeal stated, at pages 146-47:
We are also of the view that had the motions judge correctly instructed himself in the law he would have granted the order sought. This is a patent infringement action in which the defence and counterclaim raise serious issues of validity. The plaintiffs reserve the right to seek an accounting of profits with the result that, if severance is not ordered, discovery will necessarily range across the whole of the defendants' business and not be limited to the single allegedly infringing item.
[18] Consequently, an order replicating the major conclusions of the defendants' motion will be issued.
[19] Costs on this motion are awarded to the defendants.
"Richard Morneau"
Prothonotary
Montréal, Quebec
September 30, 2003
Certified true translation
Suzanne Gauthier, C. Tr., LL.L.
FEDERAL COURT
Date: 20030930
Docket: T-1301-02
Between:
PARMALAT DAIRY & BAKERY INC.
Plaintiff/
Defendant to Counterclaim
and
COMPAGNIE GERVAIS DANONE S.A.
and
DANONE INC.
Defendants/
Plaintiffs by Counterclaim
REASONS FOR ORDER
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1301-02
STYLE: PARMALAT DAIRY & BAKERY INC.
Plaintiff/
Defendant to Counterclaim
and
COMPAGNIE GERVAIS DANONE S.A. and
DANONE INC.
Defendants/
Plaintiffs by Counterclaim
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: September 22, 2003
REASONS FOR ORDER OF RICHARD MORNEAU, PROTHONOTARY
DATED: September 30, 2003
APPEARANCES:
Elliott S. Simcoe for the plaintiff/defendant to counterclaim
Jacques A. Léger for the defendants/plaintiffs by counterclaim
SOLICITORS OF RECORD:
| Smart & Biggar
Ottawa, Ontario
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for the plaintiff/defendant to counterclaim
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| Léger Robic Richard
Montréal, Quebec
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for the defendants/plaintiffs by counterclaim
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