Osmose Pentox Inc. v. Société Laurentide Inc., 2005 FC 561

Date: 20050425

Docket: T‑697‑02

Citation: 2005 FC 561

Montréal, Quebec, the 25th day of April 2005

Present:          RICHARD MORNEAU, PROTHONOTARY

BETWEEN:

                                                        OSMOSE‑PENTOX INC.

                                                                                                                                               Plaintiff

                                                                           and

                                                    SOCIÉTÉ LAURENTIDE INC.

                                                                                                                                           Defendant

                                            REASONS FOR ORDER AND ORDER

[1]               The Court has before it a written motion by the plaintiff seeking decisions in its favour on a series of objections (in fact, nearly 92 objections) made by the defendant during the examination on discovery of the defendant’s representative André Buisson, an examination held on January 10, 2005.

Background

[2]               This motion was made in an intellectual property proceeding in which, specifically and essentially, the plaintiff charged the defendant with having infringed its rights in various ways to use of the trademark “Conservator”.

[3]               To date this matter has come before the Court several times, which is in itself unfortunate for the financial situation of the parties, who we may hope are only interested in seeing the dispute end. In this regard Gauthier J. of this Court, in a decision dated February 21, 2003, reminded the parties that it was expected that they [TRANSLATION] “proceed with the case harmoniously and diligently”.

[4]               On July 16, 2003, I allowed in part a motion by the plaintiff and at that time directed the defendant to amend its affidavit of documents to list a series of documents of a financial nature for 1998 to 2003 dealing with all the defendant’s products on which the words “Conservator” and “Conservateur” appear (hereinafter the products at issue). I thereby acknowledged that the plaintiff had a legitimate right to a reasonable determination of the defendant’s sales, profits and market share. At that time I also noted that the plaintiff could also hold an examination for discovery. I also dismissed the other remedies sought by the plaintiff.

[5]               It should be noted in passing that in that decision of July 16, 2003, I criticized the defendant for filing a deficient reply record in opposition to the plaintiff’s motion, in that the record did not contain, inter alia, an affidavit in support of the factual background which the defendant was seeking to establish in its written submissions.

[6]               To return to the plaintiff, as its motion was nevertheless only allowed in part, it filed an appeal. In a judgment dated September 5, 2003, Blais J. dismissed the appeal (citation 2003 FC 1036). However, he noted the following in the plaintiff’s favour at paragraph 10 of his reasons:

[10]         The prothonotary also noted that there will be an examination for discovery, and this led him to conclude, like myself, that further information and clarifications could be produced by the said examination, and it might eventually even lead to the filing of other documents if necessary, which could provide the Court with more complete evidence.

[7]               The plaintiff appealed this judgment to the Federal Court of Appeal. On September 20, 2004, the Court of Appeal dismissed the appeal (citation 2004 FCA 308), but noted the following in the plaintiff’s favour, at paragraphs 2 and 3 of its reasons:

[2]           We agree with the appellant’s arguments that the documents relating to the question of the calculation of profits should be released . . .

[3]           If it appears during the examination that other documents exist and are relevant to the points at issue, those documents are covered by the duty of disclosure just as much as those already disclosed. Such belated release opens the way to a supplementary examination.

[8]               It is thus clear that this Court and the Federal Court of Appeal have at all times held that the plaintiff could conduct a full examination on discovery of the defendant regarding the extent or scope of the alleged infringement by the plaintiff in respect of the products at issue.

Analysis

[9]               It should be noted at the outset that a question requires an answer in an examination on discovery if it is relevant to the points at issue between the parties, that is, if it is capable of directly or indirectly advancing one party’s case or damaging the other’s (see Sydney Steel Corp. v. Omisalj (The), [1992] 2 F.C. 193, at 197‑198).

[10]           With regard to the remedies sought by the plaintiff if it is successful on the merits on the issue of liability, it should further be noted that it appears to be concerned with the awarding of profits which the defendant may have made (see on this point paragraph 70 of the plaintiff’s written submissions in its motion record). In questions of intellectual property, it has been held that in order to establish a party’s profits, several types of financial information from a business must be considered. (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 indicated at pages 146‑147:

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.

[Emphasis added.]

[11]           It should be noted here that in her decision dated February 21, 2003, Gauthier J. dismissed a motion by the defendant under Rule 107 of the Federal Court Rules, 1998, now the Federal Courts Rules (the Rules), for the assessment of damage to be the subject of a subsequent reference. Consequently, the observations in paragraph 10, supra, continue to be fully applicable. Further, as noted in Kun Shoulder Rest Inc. v. Kun (Joseph) Violin and Bow Maker et al. (1997), 137 F.T.R. 163 (Kun), at page 166, paragraph 6:

[60]         . . . I ruled that, in general, questions bearing on intent were proper in this instance in that they could go to the type of damages to be awarded.

[12]           Finally, the defendant raised Kun in its written submissions several times as a basis for arguing that it did not have to answer certain factual questions. I think that the plaintiff is misapplying that case. Kun is simply intended to indicate that in an examination on discovery a witness cannot be referred to an allegation contained in pleading and asked to list the facts he intends to prove to establish that allegation. This is the sense in which the comments by my brother Hargrave should be understood when he says, at paragraph 16 of his reasons in Kun:

[16]         It is proper to ask a discovery witness to speak of all the facts, surrounding a certain incident, of which the witness either knows or must properly inform himself or herself about. It is never permissible to ask a discovery witness as to the facts relied upon in support of a certain allegation, for this requires the witness to choose facts and disclose how his lawyer might prove a given allegation. While a witness may know the general approach that his or her lawyer intends to take, a witness cannot know what facts will assist until he or she knows the law. The particular facts that will be relied upon is based upon counsel’s view of the law. An examination for discovery of a witness seeks to discover fact, not argument as to what is relevant in order to prove a given plea.

[13]           Additionally, two points should be noted before moving on to deciding the objections raised by the defendant.

[14]           First, in its written submissions contained in its reply record the defendant seeks to put forward a vast number of factual complaints tending to support the total or partial dismissal of the plaintiff’s motion. However, once again, and as was the case for the purposes of my order of July 16, 2003 (see paragraph 5, supra), its reply record is supported only by an affidavit with few details which does not in any way support the facts which might have led this Court to further limit the examination on discovery of the defendant’s representative. Certainly, the defendant cannot expect, based on a request to be exempted from complying with the rules of this Court, not to have to file a valid affidavit.

[15]           Second, the defendant asked that this Court not dispose of the plaintiff’s motion based on the parties’ written submissions, but rather also hold a hearing in person on the said motion. However, none of the reasons raised by the defendant in my view justifies the Court not proceeding simply on the basis of the parties’ written records. Consequently, this request by the defendant for a hearing is dismissed.

[16]           Accordingly, we must now turn to deciding the objections or undertakings at issue (hereinafter, the questions). In view of the large number of questions still outstanding, the plaintiff, in accordance with the well‑settled practice of this Court, sought to group the said questions into some 10 categories. Insofar as possible, we will attempt to limit ourselves to these major categories. This will sometimes be difficult, as the defendant dwelt on each individual question without really making much use of the classification by the plaintiff. This is unfortunate and does not in any way facilitate the Court’s work.

Category A

[17]           Seven questions or undertakings fall into this category. In my opinion, all should be answered since they deal with past and present statements of Mr. Buisson and directly or indirectly affect the essence of the case, namely the amplitude of the alleged infringement in monetary terms.

Category B

[18]           Three questions or undertakings fall into this category. To avoid any overstepping of limits or examination of someone other than Mr. Buisson, these three questions will not have to be answered as presented. However, the plaintiff will have to provide the statistics and orders to which the planner allegedly referred, so far as the products at issue are concerned.

Category C

[19]           I find six questions in this category. These questions will have to be answered, but so far as the products at issue are concerned.

Category D

[20]           There are four questions or undertakings here. For the reasons given by the plaintiff under this category, these four questions will have to be answered.

Category E

[21]           I find nine questions here. It is understandable that the plaintiff would be interested in the value added by use of the word “Conservator” on the label. However, in terms of relevance and so as to avoid getting into a fishing expedition, the defendant will only have to answer questions 157, 167 and E‑12.

Category F

[22]           There are 11 questions or undertakings in this category, which seeks to determine the motives or reasons behind the decision to put the word “Conservator” on the labels of the products at issue. The defendant’s intent is therefore in question here. I consider that it is proper for the plaintiff to proceed in this way, since in principle it could affect the extent of the damages. Accordingly, these questions will have to be answered. However, question 287 and undertakings E‑18 and E‑20 will be limited to the products at issue.

Category G

[23]           The eight questions or undertakings in this category will have to be answered, in view of the reasons put forward by the plaintiff.

Category H

[24]           The three undertakings in this category will have to be answered.

Category I

[25]           There are 20 questions or undertakings in this category.

[26]           Question 615 appears to seek an expert opinion. It will not have to be answered.

[27]           The other questions, which directly or indirectly affect reports or statistics on production, inventory and sales, will have to be answered but only insofar as they concern the products at issue and insofar as the information or documents exist.

Category J

[28]           Twenty‑three questions are at issue here.

[29]           Question 572 will have to be answered, only insofar as the products at issue are concerned.

[30]           Questions 732, 776 and 800 will not have to be answered.

[31]           The other questions or undertakings in this category will have to be answered, only insofar as the products at issue are concerned.

Conclusion

[32]           Accordingly, the Court directs André Buisson to again appear at his own expense at the place and location in Montréal to be agreed upon between the parties, or if the parties cannot agree, at a place and location to be determined by the plaintiff when serving a notification to André Buisson to appear, so that he may answer the questions which must be answered pursuant to these reasons and any further question arising from those questions. In any event, this continued examination shall be held and completed on or before May 25, 2005.

[33]           In order to facilitate and expedite the handling of this case, and although the Court acknowledges that the defendant’s reply record is more than deficient in this regard, the Court nevertheless authorizes the defendant, in a reply to be filed in accordance with the exercise described in paragraph 32, to designate any reply, if this is reasonable, as being the production of confidential commercial information to the plaintiff. If this is the case, then only an expert witness unrelated to the plaintiff, together with a solicitor of record and an attorney participating in the proceeding, who are not parties, may have access to such a reply.

[34]           As to any future schedule, counsel for each party shall within 20 days of completion of Mr. Buisson’s examination submit to the Court _ jointly insofar as possible _ a schedule in the form of a draft order to cover measures to be subsequently taken in the case at bar. Any schedule proposed by the parties shall be limited to measures which must be taken and demonstrate a proper concern for rapidity.

[35]           The plaintiff will be awarded costs on this motion.

Certified true translation

K. Harvey

                                     FEDERAL COURT

                              SOLICITORS OF RECORD

DOCKET:

STYLE OF CAUSE:

T‑697‑02

OSMOSE‑PENTOX INC.

                                                                         Plaintiff

and

SOCIÉTÉ LAURENTIDE INC.

                                                                     Defendant

WRITTEN MOTION DECIDED AT MONTREAL WITHOUT APPEARANCE BY PARTIES

REASONS FOR ORDER:               RICHARD MORNEAU, PROTHONOTARY

DATED:                                             April 25, 2005

WRITTEN SUBMISSIONS BY:

SOLICITORS OF RECORD: