Date: 20050215
Docket: T-705-02
Citation: 2005 FC 243
Vancouver, British Columbia, Tuesday, the 15th day of February, 2005
Present: THE HONOURABLE MR. JUSTICE LEMIEUX
BETWEEN:
SEANIX TECHNOLOGY INC.
Plaintiff
- and -
SYNNEX CANADA LIMITED
SYNNEX INFORMATION TECHNOLOGIES, INC.
Defendants
REASONS FOR ORDER AND ORDER
[1] Seanix Technology Inc. ("Seanix") is the Plaintiff in a trade-mark infringement, passing off and depreciation of goodwill action filed in this Court on May 1, 2002.
[2] Seanix appeals the January 4, 2005, decision of Prothonotary Lafrenière (the "Prothonotary") allowing the Defendants' motion pursuant to Rule 75 of the Federal Court Rules, 1998 (the "Rules") to amend their statement of defence in order to add certain defences and to include a counterclaim challenging the validity of Seanix's two Canadian trade-mark registrations: No. TMA 443,918 for SEANIX, registered on June 15, 1995, and No. TMA 535,126, registered on October 19, 2000, for SEANIX and design.
[3] Seanix says the amendments sought by the Defendants assert a new cause of action, namely the invalidity and expungement of its trade-mark registrations.
[4] Seanix argues the Prothonotary erred in law in ruling that the Defendants were not required to establish that the amendments arise out of substantially the same facts as originally pleaded. According to Seanix's counsel, Rule 201 of the Federal Court Rules, 1998 (the "Rules") requires that a new cause of action sought by amendment must arise out of substantially the same facts as a cause of action in respect of which relief was previously and originally claimed in the action.
[5] The second alleged error made by the Prothonotary arises because the new cause of action in the Defendants' amendment asserts a claim for expungement of the Plaintiff's trade-marks on the ground, inter alia, there was an error in the claimed dates of first use stated in the trade-mark applications.
[6] Counsel for Seanix says it is plain and obvious that an error in a date of first use in a trade-mark application is not an available ground for expungement of a registration under section 18 of the Trade-marks Act (the "Act").
[7] The heart of the Prothonotary's reasons are contained in the following paragraphs:
The well-established rule is that an amendment should be allowed at any stage of an action unless it is shown that it is devoid of any chance of success, and provided that it does not result in an injustice to the other party that cannot be compensated by an award of costs. Being substantially in agreement with the Defendants' written representations, I see no basis for denying them leave to amend their pleading.
To begin with, it is not plain and obvious that the proposed amendments disclose no reasonable defence or cause of action. In addition, although the amendments raise new defences and a new cause of action in the counterclaim, no relevant limitation period has been missed. The Defendants were therefore not required to establish that the amendments arise out of substantially the same facts as originally pleaded. Moreover, I am satisfied that the proposed amendments do not involve the withdrawal of any admission, and that the Plaintiff was not lulled into a course of action that cannot easily be altered.
[Emphasis mine]
[8] Counsel for the Defendants argues the Prothonotary was correct in his application of Rules 75 and 201. According to him, the requirement in Rule 201 that a new cause of action in a proposed amendment to a pleading must arise out of substantially the same facts as in the cause of action originally plead has no application if no limitation period is in play as is the case here.
[9] He argues that the Prothonotary's decision is supported by (1) a contextual reading of Rule 201 with Rules 75, 76 and 77; (2) by the jurisprudence under the former Rules; and (3) by an examination of the proposals which led to the enactment of the new Rules.
[10] Proposed amendments which would advance additional claims or causes of action have consistently been found to be vital for the purposes of the test in Canada v. Aqua-Gem Investment Ltd., [1993] 2 F.C. 425 (C.A.) (see also Merck & Co. Inc. et al. v. Apotex Inc., 2003 FCA 488 at paragraph 25, and Louis Bull Band v. Canada 2003 FCT 732).
[11] In the circumstances, I am to exercise my discretion de novo.
[12] I do not propose to exercise my discretion in a manner different from that of the Prothonotary because, in my opinion, his decision is correct.
[13] The Federal Court of Appeal decision in Canderel v. Canada, [1994] 1 F.C. 3, which has consistently been followed, is authority for the proposition that an amendment should be allowed at any stage of an action for the purpose of determining the real question in controversy between the parties provided that to do so would not result in injustice to the other party not capable of being compensated by an award of costs and that it would be in the interests of justice to allow such amendment.
[14] In this case, I do not see prejudice to the Plaintiff should the Defendants'amendments be allowed and the Plaintiff has advanced no such argument before me.
[15] Furthermore, the controversy between the parties is whether the Defendants have infringed the Plaintiff's trade-marks. The defences advanced by the Defendants are proper and material defences to the Plaintiff's actions with the counterclaim rationally connected to those defences.
[16] It is clear that former Rules 424 and 427 permitted a new cause of action by way of amendment even though the limitation period for that cause of action had expired, provided that the new cause of action is based on the same or substantially the same facts as the cause of action originally pleaded and justice required the amendment to be made (see Domco Industries Ltd. v. Mannington Mills Inc. [1990] F.C.J. No. 269 (CA). I see nothing in the scheme of the new Rules which would alter this jurisprudence and indeed the Federal Court Rules Revision Project suggests a continuation of the former Rules in this respect.
[17] Finally, in respect to this first issue, I am of the view that Prothonotary Hargrave in Fox Lake Indian Band v. Reid Crowthers & Partners Ltd., [2003]1 F.C. 197 (T.D.) accurately analyses the proper interpretation of the former and the current Rules:
[21] There are a number of Federal Court cases which deal with amendment after a limitation has run. Under the pre-1998 Rules the Federal Court of Appeal emphasized that an amendment, adding a new cause of action, after the limitation period had expired, would be permitted where the new cause of action is based on the same or substantially the same facts as the originally pleaded cause of action, so long as it seemed just to do so: see, for example, Francoeur v. Canada, [1992] 2 F.C. 333 (C.A.), at page 337 and Domco Industries Ltd. v. Mannington Mills, Inc. (1990), 29 C.P.R. (3d) 481 (F.C.A.), at page 496; leave to appeal refused (1991), 127 N.R. 239n. More current, in that it was decided under the present Rules, is Scottish & York Insurance Co. v. Canada (2000), 180 F.T.R. 115 (F.C.T.D.), a decision of Mr. Justice Teitelbaum. There he was faced with the submission that a new cause of action might be raised, notwithstanding time had run, only where there were special circumstances which invoked rule 76. Rule 76 allows amendment to correct the name of a party, or alter the capacity in which a party brought an action, with rule 77 providing that such an amendment is proper, notwithstanding the expiration of a limitation. In Scottish & York the defendant, who opposed the amendment, submitted that amendments after limitation had run could only be granted within rule 76, that is dealing with correcting the name of a party or altering the capacity in which a party brought a proceeding. Mr. Justice Teitelbaum took broader views, including that rule 75, the general rule as to amendment, was not limited to the same type of amendments as described in [page215] rule 76 and that rule 201 allowed amendment to raise a new cause of action, so long as the cause of action arose out of substantially the same facts as the existing cause of action, even though time had run: see pages 124 and 125.
[Emphasis mine]
[18] As to the second issue related to the misstatement of the dates of first use, counsel for the Plaintiff argues innocent misstatement is what is present here and the case law is clear that this type of misstatement is no grounds to invalidate a registration.
[19] WCC Containers Sales Ltd. v. Haul-All Equipment Ltd. (2003), 28 C.P.R. (4th) 175 makes it clear that material false statements that are fundamental to registration may be a basis for invalidation and that in such circumstance neither fraud nor an intent to deceive is a necessary element.
[20] As I see it, it is not plain and obvious that the amendments disclose no reasonable defence. It is not my role on this appeal to anticipate whether an amendment will be successful at trial. This is a matter for the trial judge to determine on the evidence before him or her.
[21] Finally, I am not prepared to disturb the Prothonotary's cost award on the motion before him. Such a matter is purely discretionary and not vital to the case. The Plaintiff has not shown the Prothonotary was clearly wrong.
ORDER
This appeal is dismissed with costs in the cause.
(Sgd.) "F. Lemieux"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-705-02
STYLE OF CAUSE: SEANIX TECHNOLOGY INC.
- and -
SYNNEX CANADA LIMITED et al.
PLACE OF HEARING: Vancouver, BC
DATE OF HEARING: February 7, 2005
REASONS FOR ORDER AND ORDER: LEMIEUX J.
DATED: February 15, 2005
APPEARANCES:
Mr. Paul Smith FOR PLAINTIFF
Mr. Anthony Prenol FOR DEFENDANTS
Mr. Michael Vaillancourt
SOLICITORS OF RECORD:
Paul Smith Intellectual Property Law FOR PLAINTIFF
Vancouver, BC
Blake, Cassels & Graydon LLP FOR DEFENDANTS
Toronto, ON
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