Canada Post Corp. v. Epost Innovations Inc., 2001 FCT 305

Date: 20010406

Docket: T-1022-99

Citation: 2001 FCT 305

BETWEEN:

                        CANADA POST CORPORATION,

                                                                                              Plaintiff,

                                                 - and -

                             EPOST INNOVATIONS INC.

                                                                                          Defendant.

                                REASONS FOR ORDER

HARGRAVE, P.

[1]    The Plaintiff, Canada Post Corporation ("Canada Post") takes exception to the use by the Defendant, E-Post Innovations Inc. ("Epost"), of the words CYPOST and EPOST as a trade name or domain name on the basis that those words are confusing or likely to be confused with Canada Post's official marks, trademarks and trade names. Canada Post sets out in the Statement of Claim that sections 9 and 11 of the Trade-marks Act, R.S.C. 1985, c. T-13, as amended, contain the prohibition against the use of such marks by anyone other than Canada Post, so long as there has been public notice of the adoption of such marks.

[2]    In its Defence and Counterclaim Epost pleads, among other things, that Canada Post has adopted "a business practice contrary to honest commercial usage in Canada" (paragraph 31 of the defence and paragraph 46 (d) of the relief sought) a practice forbidden by section 7(e) of the Trade-marks Act. Further, Epost submits, in paragraphs 32 and 33 of the Defence and Counterclaim that section 9(1)(n) (iii) of the Trade-marks Act, which forbids the use of any mark adopted by a public authority, i.e. here Canada Post, is unconstitutional as a matter pertaining to property and civil rights, contrary to section 92(13) of the Constitution Act of 1867. Subsequently Epost pleads various Charter and Bill of Rights issues.

[3]                The motion, as filed, also dealt with particulars, however counsel advised that the parties had resolved that issue. At issue now, on this motion, is the use by Epost of section 7(e) of the Trade-marks Act as a defence and the attacks by Epost on section 9 of the Trade-marks Act: Canada Post says that the paragraphs in the Defence and Counterclaim which rely on these arguments, paragraphs 31 and 46(d) in the first instance and paragraphs 32-45 and 46(f) in the second instance, ought to be struck out pursuant to Rules 221(1)(a), (b) and (d). Those Rules and the case law^[1] provide that, accepting the facts in the pleading as proven, where it is plain, obvious and beyond doubt that a pleading will not succeed, because it discloses no reasonable cause of action or defence, being a motion relying on Rule 221(1)(a), the offending provisions in the pleading may be struck out. In order to succeed on a motion to strike out under Rule 221(b) or (d) it is for Canada Post to show that the pleading in the Counterclaim is so clearly immaterial, scandalous, frivolous or vexatious so as to be obviously forlorn and futile: see Burnaby Machine & Mill Equipment Ltd. v Berglund Industrial Supply Ltd. (1982), 64 C.P.R. (2d) 206 at 210 (F.C.T.D.). I do not take the "obviously forlorn and futile" test as setting a different standard from Hunt, Operation Dismantle or Inuit Tapirisat, referred to in the first footnote. Indeed, in Burnaby Machine & Mill, Mr. Justice Dubé refers to the then recent decision in Inuit Tapirisat when considering the test for striking out. The onus on a party to bringing such a motion is heavy. In this instance success is mixed. I will now consider this in more detail.

ANALYSIS

[4]                I will begin with the applicable Trade-marks Act provisions. Section 7 of that Act provides, in part:

No person shall . . .

(e)             do any other act or adopt any other business practice contrary to honest industrial or commercial usage in Canada.

Section 9(1)(n)(iii) is the section upon which Canada Post relies for protection of their marks:

No person shall adopt in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for . . .

(n)            any badge, crest, emblem or mark . . .

(iii) adopted and used by any public authority, in Canada, as an official mark for wares or services,

in respect of which the Registrar has, at the request of Her Majesty or the university or public authority, as the case may be, given public notice of its adoption and use. . .

Epost utilizes these provisions from the Trade-marks Act in its counterclaim. As I have indicated Epost contends in the Counterclaim that Canada Post has engaged in practice contrary to honest commercial usage:

31.            In requesting the Registrar of Trade-marks to give public notice of the alleged adoption and use of the marks CYBERPOSTE and CYBERPOST pursuant to section 9(1)(n)(iii) of the Trade-marks Act without having previously used the marks, and by asserting the rights that flow from such public notices, the Defendant by Counterclaim (Plaintiff) has acted or adopted "a business practice contrary to honest commercial usage in Canada" and contrary to section 7(e) of the Trade-Marks Act.

The reference to section 9(1)(n)(iii) in the above-quoted portion of the Counterclaim is then picked up by Epost in paragraph 33 of the Counterclaim:

33.            Section 9(1) (n)(iii) of the Trade-marks Act expropriates the proprietary rights or persons throughout Canada to use any mark, as a trade-mark or otherwise, in respect of which the Registrar has given public notice of the adoption and use as an official mark. Section 9(a)(n)(iii) of the Trade-marks Act therefore encroaches on exclusive provincial legislative jurisdiction in relation to property and civil rights in the province contrary to section 92(13) of the Constitution Act.

[5]                There follows, in paragraphs 35 through 45 of the Counterclaim, allegations which include pleas that section 9(1)(n)(iii) of the Trade-marks Act is contrary to the fundamental right of enjoyment of property and equality under sections 1(a) and 1(b) of the Canadian Bill of Rights. This provision of the Trade-marks Act is also said to be contrary to section 1(d) of the Canadian Bill of Rights, guaranteeing freedom of speech and is also said to be contrary to section 2(e) of the Canadian Bill of Rights in that, by purporting to grant absolute rights in an official mark, section 9(1)(n)(iii) of the Trade-marks Act deprives Epost of a fair hearing and moreover is a limitation of a fundamental freedom of expression contrary to section 2(b) of the Charter of Rights. There is said to be discrimination under section 15(1) of the Charter of Rights because the rights to a mark given by section 9(1)(n)(iii) of the Trade-marks Act are considerably broader rights than given to ordinary business people and business entities. Further the above referred-to sections of the Bill of Rights and of the Charter of Rights are said to be infringed upon because the Registrar of Trademarks did not, at the relevant time, inquire whether Canada Post was public authority. Finally, Epost pleads that section 24(1) of the Charter of Rights allows Epost to apply to the Court and here Epost, in its Counterclaim, also refers to section 52(1) of the Constitution Act which provides for the primacy of the Constitution of Canada:

The Constitution of Canada is the supreme of Canada, and any law that is inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect.

[6]                Corresponding to the above pleas in the Counterclaim are paragraphs 46(d) and 46(f) being the relief sought by Epost. In paragraph 46(d) Epost seeks a declaration that Canada Post has acted contrary to honest industrial or commercial usage in Canada, that being a prohibition in section 7 of the Trade-marks Act. In paragraph 46(f) Epost seeks a further declaration that section 9(1)(n)(iii) of the Trade-marks Act is void and inoperative as contrary to various portions of the Constitution Act, the Canadian Bill of Rights and the Canadian Charter of Rights and Freedoms, which portions I have noted above.

[7]                The main thrusts of Canada Post's argument to have these provisions struck out are first, that section 7(e) of the Trade-marks Act has been held to be unconstitutional in all situations; second, that section 9(1)(n)(iii) of the Trade-marks Act is valid federal legislation and does not encroach upon the provincial area of property and civil rights under section 92(13) of the Constitution Act; and third, that section 9(1)(n)(iii) of the Trade-marks Act is not contrary to either the Bill of Rights or the Charter of Rights. I will now deal with these general areas, together with the positions of Epost.

Section 7(e) of the Trade-marks Act

[8]                In justification of its use of section 7(e) of the Trade-marks Act, Epost says it is constitutional legislation which may be used to round out a regulatory scheme, here referring to [1977] 2 S.C.R. 134">MacDonald v. Vapor Canada Ltd. [1977] 2 S.C.R. 134. There the Supreme Court of Canada held that section 7(e) could not be justified as federal legislation, for it could not be justified under section 91(2) of the British North America Act, but went on to suggest that section 7(e), while generally invalid as federal legislation, as a clear invasion of provincial legislative power, section 7 might be nourished for federal purposes if it rounded out a regulatory scheme prescribed by Parliament in the exercise of legislative power in relation to patents, copyrights, trade marks and trade names:

Section7 is, however, nourished for federal legislative purposes in so far as it may be said to round out regulatory schemes prescribed by Parliament in the exercise of its legislative power in relation to patents, copyrights, trade marks and trade names. The subparagraphs of s.7, if limited in this way, would be sustainable, and, certainly, if s.7(e) whose validity is alone in question here, could be so limited, I would be prepared to uphold it to that extent. I am of opinion, however (and here I draw upon the exposition of s.7(e) in the Eldon Industries case), that there is no subject matter left for s.7(e) in relation to patents, copyright, trade marks and trade names when once these heads of legislative power are given an effect under the preceding subparagraphs of s.7 ([1977] 2 S.C.R. 134">MacDonald v. Vapor Canada, supra, at page 172).

Epost relies upon the comment of Chief Justice Laskin, in Vapor Canada, as the basis for an argument that section 7(e) rounds out the regulatory scheme set out in section 9(1)(n)(iii) of the Trade-marks Act. One must keep in mind that Chief Justice Laskin's comment is an orbiter dictum and while it may be a powerful orbiter dictum, it is not binding as to precedent. I would also emphasize the concluding comment which Chief Justice Laskin makes in the above passage from Vapor Canada, that "However . . . there is no subject matter left for s.7(e) in relation to patents, copyright, trade marks and trade names when once these heads of legislative power are given an effect under the preceding paragraphs of s.7...".

[9]                Next, Epost refers to Decloet Bros. Ltd. v. Balinte (1981), 56 C.P.R. (2d) 102, a decision in which the Federal Court of Appeal refused to strike out a plea based on section 7(e) of the Trade-marks Act because the Supreme Court of Canada, in Vapor Canada (supra), did not declare that section 7(e) of the Trade-marks Act was absolutely ultra vires:

"The opinion expressed by the learned trial judge that the [1977] 2 S.C.R. 134">MacDonald Vapor case . . . has not declared para. 7(e) of the Trade-marks Act, ultra vires, absolutely, is, I believe, a fairly arguable position to take and a difficult issue such as this is not one which should be decided in an exceptional procedure like this application to strike." (page 103).

[10]            Canada Post, in urging that the pleas of Epost, based on section 7(e), ought to be struck out, relies upon subsequent authority, in which the courts, particularly the Federal Court of Appeal, examined Chief Justice Laskin's statement in Vapor Canada in more detail than did the Court of Appeal in Decloet v. Balinte (supra). First, in Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. (1987), 14 C.P.R. (3d) 314, Mr. Justice of Appeal MacGuigan, writing for the Court, noted:

I believe that close reading of the Chief Justice's over-all analysis will also support the constitutionality of s. 7 (apart from s-s. 7(e)) when applied to "round out" the regulatory scheme of the Act. (p. 323 emphasis added)

[11]            The qualification from Asbjorn Horgard and Chief Justice Laskin's comment in Vapor Canada (supra) that "I am of the opinion, however . .. that there is no subject-matter left for s.7(e) in relation to patents, copyright, trade marks and trade names . . . " were picked up by Mr. Justice Mahoney, for the Court of Appeal in Bousquet v. Barmish Inc., (1993), 46 C.P.R. (3d) 510 at 512-513. There the Court of Appeal, in an expungement matter, found that section 7(e) of the Trade-marks Act was not constitutionally valid, even as to applying it to round out a regulatory scheme.

[12]            The final case relied upon by Canada Post concerns a motion to strike out portions of a Defence and Counterclaim which relied on section 7(e). In Levi Strauss & Co. v. L.A. Jazz Ltee. (1995), 61 C.P.R. (3d) 302, Madam Justice Tremblay-Lamer considered a line of cases beginning with Vapor Canada. There the defendants had submitted that while section 7(e) of the Trade-marks Act was "hanging on by its fingernails", that provision was still not ultra vires the federal parliament. In her review of various cases, Madam Justice Tremblay-Lamer refers to McCabe v. Yamamoto & Co. (America) Inc., (1989) 23 C.P.R. (3d) 498 at 507, where Mr. Justice Joyal had, in the view of the Court of Appeal in Bousquet, misunderstood Vapor Canada when he concluded that section 7(e) might still be intra vires. Madam Justice Tremblay-Lamer notes that Mr. Justice Joyal reversed the position that he had taken in McCabe and in Figgie International Inc. v. Schoettler, (1994) 53 C.P.R. (3d) 450, at p. 458, struck out various paragraphs in the statement of claim on the grounds that section 7(e) of the Trade-marks Act dealt with an area within the competence of provincial legislation and therefore any pleading which relied upon section 7(e) should be struck out. Madam Justice Tremblay-Lamer, in Levi Strauss, came to a clear view that section 7(e) was unconstitutional in all situations:

In my view, it is clear that the Court of Appeal has ruled that s.7(e) is unconstitutional in all situations. (p. 306)

In the result she therefore struck out various paragraphs from the defendant's pleading and relief sought, on the basis that section 7(e) of the Trade-marks Act was wholly unconstitutional.

[13]            Here, Epost tries to avoid this conclusion by submitting that the Courts which decided Vapor Canada, Bosquet and Asbjorn Horgard, did not specifically consider the constitutional validity of section 7(e). Leaving aside that the decisions in those judgments and in Bousquet and Barmish are, to me, clear enough authority to allow a court to strike out pleas based on section 7(e), as ultra vires the federal government, the decision of the Federal Court in Levi Strauss is clear authority as to the unconstitutionality of section 7(e) in all situations.

[14]            On this basis paragraphs 31 and 46(d) of the Defence and Counterclaim clearly disclose no reasonable cause of action and should be struck out. I now turn to section 9(1)(n)(iii) of the Trade-marks Act in the context of property and civil rights in the provincial sphere.

Division of Powers: Constitutionality of section 9(1)(n)(iii) of the Trade-marks Act

[15]            The argument made by Epost in paragraph 32 and 33 of the Counterclaim is that section 9(1)(n)(iii) of the Trade-marks Act expropriates the proprietary rights of anyone in Canada to use a mark or trade-mark when the Registrar has given notice of its use as an official mark. This, the argument continues, encroaches on the exclusive jurisdiction of provincial legislatures in relation to property and civil rights under section 92(13) of the Constitution Act. More specifically, the term "public authority", which is the characterization given to those whose use of a mark is protected in section 9 of the Trade-marks Act, is a term so broad as to expand section 9(1)(n)(iii) so it encroaches on the provincial powers in relation to property and civil rights. I do not see how Insurance Corporation of British Columbia v. Registrar of Trademarks, (1980) 44 C.P.R. (2d) 1, a decision of the Federal Court Trial Division, a case referred to by Epost, assists Epost, except to the extent that Mr. Justice Cattanach notes that while the scope of the subsection protecting marks of public authorities is broad, parliament expressed that idea clearly.

[16]            Epost also refers to Canadian Olympic Association v. Registrar of Trademarks, (1982) 59 C.P.R. (2d) 53, affirmed by the Court of Appeal (1983) 67 C.P.R. (2d) 59. There the issue was whether Canadian Olympic Association was a public authority within the contemplation of section 9 of the Trade-marks Act. Mr. Justice Mahoney, as he then was, took a broad view of the entities parliament intended to embrace in the term "public authority" and held that the Canadian Olympic Association was such. The Court of Appeal took a similarly broad view, even noting that it was not necessary that the authority have obligations or duties to the public (see pages 68 and 69). This certainly does broaden the concept of a public authority, but I do not see that section 9(1)(n)(iii) thereby encroaches on a provincial power in relation to property and civil rights.

[17]            Canada Post refers to the Court of Appeal's brief discussion of section 9 of the Trade-marks Act, in a constitutional context, in Canadian Olympic Association v. Konica Canada Inc. (1992), 39 C.P.R. (3d) 400. There, Mr. Justice of Appeal Hugessen looked upon both section 9 and section 11 of the Trade-marks Act as sections which were not ultra vires the federal government, for their purpose is manifestly to round out, to complete and to be functionally related to the regulatory scheme of the Trade-marks Act as a whole:

In the second place, the respondent alleged that the words "or otherwise" as they appear in ss.9 and 11 of the Trade-marks Act were ultra vires the Parliament of Canada as they are unlimited in application and can operate so as to restrict freedom of speech and to restrain the exercise of ordinary civil rights within the provinces. The Attorney-General of Canada sought and obtained leave to intervene on this point but we did not find it necessary to call upon him. In my view, a reading of the plain words of ss. 9 and 11 in their context restricts the scope of the words "or otherwise" to use of an official mark, or one so nearly resembling it as to be likely to be mistaken for it, in connection with a business. When so read, the prohibition is functionally related to the regulatory scheme of the Act as a whole. Its purpose is manifestly to round out and complete that scheme and it is not ultra vires: see, in the same vein, this court's decision with regard to another section of the Act in Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. (1987), 14 C.P.R. (3d) 314, D.L.R. (4^th) 544, [1987] 3 F.C. 544.

                                                                                                                                   (p. 409)

The focus of the Court of Appeal was on the words "or otherwise", however, the Court of Appeal went to note that what was at stake was the use of an official mark, or a mark resembling an official mark, so as to be confusing and that when looked at in this context the prohibition in section 9 of the Trade-marks Act "is functionally related to the regulatory scheme of the Act as a whole." and that the purpose "to round out and to complete that scheme" was not ultra vires the government of Canada. Interestingly, Mr. Justice of Appeal Hugessen referred back to the Asbjorn Horgard case (supra) as a case in the same vein. There the Court of Appeal, considering the Vapor Canada case (supra) looked upon portions of section 7 of the Trade-marks Act as part of an overall scheme, the provisions being constitutionally valid as they rounded out the whole trade-mark legislation scheme and thus did not expand the federal jurisdiction, but merely completed "an otherwise incomplete circle of jurisdiction." (p. 324).

[18]            I do not see that the broad approach taken by the courts to the term "public authority" extends section 9(1)(n)(iii) into the regulation of property and civil rights. Rather the provision is constitutionally valid as it merely rounds out the trade-marks scheme. This plea not only discloses no reasonable claim, but also brings up an immaterial aspect clearly within ambit of section 221(1)(d), an aspect which may delay the fair trial of the action. Paragraphs 32 and 33 of the Counterclaim are therefore struck out.

Freedom of Speech under the Bill of Rights and the Charter of Rights

[19]            In relation to paragraphs 37, 41 and 42 of the Counterclaim, Epost makes the argument that section 1(d) of the Canadian Bill of Rights guarantees freedom of speech and that section 9(1)(n)(iii) of the Trade-marks Act, by granting absolute rights in an official mark, limits freedom of speech contrary to section 1(d) of the Canadian Bill of Rights. Moreover, the same section of the Trade-marks Act, in granting absolute rights in an official mark and thus prohibiting its use by others, limits the freedom of expression guaranteed by section (2)(b) of the Charter.

[20]            Canada Post submits that the Charter of Rights has overridden the provisions of the Bill of Rights except as to section 1(a) and 2(e) of the Bill of Rights. Thus in the view of Canada Post one need only consider section 2(b) of the Charter of Rights, providing fundamental freedoms of thought, belief, opinion and expression. This is consistent with the view expressed by Hogg on The Constitutional Law of Canada, looseleaf edition, Carswell, Toronto, 1992 at page 32-2 and 33-10. However, Hogg notes, at footnote 8 at page 32-2 that his view is inconsistent with dicta in Sing v. Minister of Employment and Immigration, [1985] 1 S.C.R. 177, a case relied upon by Epost.

[21]            In Singh Mr. Justice Beetz, at page 224, cautions that by section 26 of the Canadian Charter of Rights and Freedoms, the Charter not be construed to deny the existence of any other rights or freedoms that exist in Canada. Thus, the reasoning goes, the Canadian Bill of Rights retains all of its force and effect:

Thus, the Canadian Bill of Rights retains all of its force and effect, together with the various provincial charters of rights. Because these constitutional or quasi-constitutional instruments are drafted differently, they are susceptible to producing cumulative effects for the better protection of rights and freedoms. But this beneficial result will be lost if these instruments fall into neglect. It is particularly so where they contain provisions not found in the Canadian Charter of Rights and Freedoms and almost tailor made for certain factual situations such as those in the case at bar.

Indeed, Epost points out that section 1(d) of the Bill of Rights applies to corporations and protects corporate speech, in that it is not limited to individuals. The Charter does not protect corporations: for example see Irwin Toy Ltd. v. Attorney General of Québec (1989), 1 S.C.R. 927, heading "(5) Fundamental Justice", at page 935, being a portion of the head note. Epost submits that should the Bill of Rights, in due course, be found to be broader than the Charter of Rights, Epost would be entitled to rely upon both in advancing its case.

[22]            Canada Post takes the position that section 9(1)(n)(iii) of the Trade-marks Act does not limit the freedom of speech or freedom of expression of persons, referring to Canadian Olympic Association v. Konica (supra) at page 409 and to Cie Générale des Etablissements Michelin-Michelin v. C.A.W. Canada (1997), 71 C.P.R. (3d) 348 (F.C.T.D.) at 386 through 404 wherein Mr. Justice Teitelbaum considered the protection offered by section 2(b) of the Charter of Rights and whether the defendant's freedom of expression had been limited by the Trade-marks Act.

[23]            Here Epost makes a good point. Reliance on section 2(b) of the Charter is arguable and indeed, in RJR-McDonald v. Canada, [1995] 3 S.C.R. 199, tobacco legislation restricting advertising was struck down on the grounds that it violated section 2(b) of the Charter. In the result, while the pleas may be difficult to establish, paragraphs 37, 41 and 42 of the Defence and Counterclaim disclose an arguable cause of action, one that may not be struck out as plainly, obviously and beyond doubt a pleading which will not succeed. Paragraphs 37, 41 and 42 of the Defence and Counterclaim shall remain, together with those portions of paragraph 46(f) which relate to the relevant relief under the Canadian Bill of Rights, and the Charter of Rights.

Equality under section 1(b) of the Bill of Rights and Section 15(1) of the Charter

[24]            In paragraphs 35, 36 and 43 of the Counterclaim, Epost pleads that section 9(1)(n)(iii) of the Trade-marks Act expropriates the proprietary rights of persons to use a mark as a trademark where the Registrar of Trade-marks has given public notice of its adoption and use without allowing anyone to participate or oppose that process. In the result Epost says that section 9(1)(n)(iii) deprives persons, including Epost, of their fundamental right to enjoyment of property contrary section 1(a) of the Canadian Bill of Rights and their fundamental right of equality before the law and to the protection of law, contrary to section 1(b) of the Bill of Rights. Moreover, in section 43 of the Counterclaim, Epost pleads section 15 of the Charter, which provides for equality before and under the law and a right to equal protection and equal benefit of law without discrimination. The plea goes on that because rights to a mark may be given by the Registrar under section 9(1)(n)(iii) are more than the rights given to ordinary business people and businesses, this equates to unreasonable and unjustified discrimination.

[25]            Canada Post submits that the offending sections of the Counterclaim, paragraph 35, 36 and 43, ought to be struck out. Canada Post's argument begins that the Charter has supplanted all but sections 1(a) and 1(e) of the Bill of Rights. Under the preceding section of my analysis I have pointed out that this is not necessarily so, referring to the Supreme Court of Canada decision in Singh v. Minister of Employment and Immigration. Canada Post then goes on to submit that section 9(1)(n)(iii) of the Trade-marks Act is not invalid as being contrary to section 15(1)(n) of the Charter, or to section 1(b) of the Bill of Rights, referring to Smith Kline & French Laboratories Ltd. v. Attorney General of Canada (1986) 12 C.P.R. (3^rd) 385, a decision of the Federal Court of Appeal. In the latter, Smith Kline, as licensees and inventors of a medicine, sought a declaration that section 41(4) of the Patent Act of 1970, had no force or effect by reason, among other thing, of section 15 of the Charter. In dismissing the appeal, the Court of Appeal found that the specific section of the Patent Act did not deny the Plaintiff the equality guaranteed by section 15(1) of the Charter. The Court pointed out that at a basic level the equality guaranteed by section 15 of the Charter is only the right of those similarly situated to receive similar treatment (page 390). The issue thus becomes whether, in the particular case, the parties in question are in a similar situation:

Thus too with s. 15. The rights which it guarantees are not based on any concept of strict, numerical equality amongst all human beings. If they were, virtually all legislation, whose function it is, after all, to define, distinguish and make categories, would be in prima facie breach of s. 15 and would require justification under s.1. This would be to turn the exception into the rule. Since courts would be obliged to look for and find s. 1 justification for most legislation, the alternative being anarchy, there is a real risk of paradox: the broader the reach given to s. 15 the more likely it is that it will be deprived of any real content.

The answer, in my view, is that the text of the section itself contains its own limitations. It only proscribes discrimination amongst the members of categories which are themselves similar. Thus the issue, for each case, will be to know which categories are permissible in determining similarity of situation and which are not. It is only in those cases where the categories themselves are not permissible, where equals are not treated equally, that there will be a breach of equality rights.

                                                                                                                               (Page 391)

This concept of equal treatment within categories does not particularly help Canada Post, for the issue is a factual one to be decided in each instance.

[26]            Counsel for each side relies upon the authority of the Canadian Olympic Association v. McArthur (1987) 18 C.P.R. (3^rd) 376, a decision of the Trade Marks Opposition Board, at pages 380 through 382. Yet that case involved a voluntary request, in the form of a trademark application, that the applicant be awarded additional rights flowing from trademark registration. There section 15(1) of the Charter was held not to "...appear to have been available to the applicant in this case..." (page 381), in view of the decision in Smith-Kline. The Trade Marks Opposition Board in Canadian Olympic Association relied upon Mr. Justice Hugessen's comment in Smith-Kline that section 15 of the Charter did not come into play when the discrimination resulted directly from a voluntarily assumed package of rights and obligations. That of course does not apply in the present instance, there being no voluntary obtained package of rights and obligations.

[27]            The position of Epost on all of this is that the issue, whether section 9(1)(n)(iii) deprives businesses and persons of their equality rights and section 15(1) of the Charter has not been conclusively determined by a court of competent jurisdiction. To this Epost adds that section 9(1)(n)(iii) is contrary to the objectives of the Trade-marks Act in that it extends protection to public authorities, rather than protecting the good will of trademarks held statutorily or at common law by businesses and business people, that being the true objective of the Trade-marks Act. The submission then continues that since there is no rational connection between the impugned section of the Trade-marks Act and the purpose of trademark legislation, there could be no justification of the discrimination under section 1 of the Charter.

[28]                        Canada Post is unable to refer to any case law establishing that the plea based on equality before the law and protection of the law is a pleading which plaining, obviously and beyond doubt will not succeed, or that it is immaterial and may delay a fair trial of the action. Rather, given the absence of determinative case law and the observation of Mr. Justice Hugessen, in Smith-Kline, that much depends on the factual issue of determining the categories of the parties and whether they are similar categories, I am unable to say that paragraph 35, 36 and 43 of the Defence and Counterclaim clearly disclose no reasonable cause of action, or material, or may delay the fair trial. Those paragraphs shall remain.

Enjoyment of Property and due Process under section 1(a) and 2(e) of the Bill of Rights

[29]            The challenge here is to paragraphs 34, 38 & 39 of the Counterclaim and again in paragraph 36 in a different context, in which Epost sets out that section 1(a) of the Bill of Rights guarantees the "right of the individual to ... enjoyment of property, and the right not to be deprived thereof except by due process of law." This argument continues with the submission that section 9(1)(n)(iii) of the Trade-marks Act not only expropriates proprietary rights to use the mark, but also, where the Registrar has given public notice of the adoption and use of an official mark, deprives another person of the right to participate in and oppose the process. Thus, in the view of Epost, they have been deprived of their fundamental right to enjoyment of property without due process under section 1(a) of the Bill of Rights and also of their fundamental right of equality before the law and protection of the law contrary to section 1(b) of the Bill of Rights. In paragraph 38 of the Counterclaim, Epost submits that section 2(e) of the Bill of Rights comes into effect:

2. Every law of Canada shall, unless it is expressly declared by an Act of the Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as not to abrogate, abridge or infringe or to authorize the abrogation, abridgement or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to ...

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations; ..

This line of reasoning is completed in section 39 of the Counterclaim on the basis that section 9(1)(n)(iii) of the Trade-marks Act purports to grant absolute rights in an official mark and since no person has a right to participate or oppose the process leading to this grant, an entity such as Epost is deprived of fair hearing, contrary to section 2(e) of the Bill of Rights.

[30]            Canada Post submits that section 9(1)(n)(iii) is not invalid as contrary to sections 1(a) and 2(e) of the Bill of Rights, referring to Insurance Corporation of British Columbia v. International Commercial Bank of China (1994) 56 C.P.R. (3^rd) 555, a decision of the Trade Marks Opposition Board. The brief reasons in that case end with a rather tentative conclusion, the sitting member of the Trade Marks Opposition Board doubting that he had the jurisdiction to consider section 9(1)(n)(iii) in light of sections 1 and 2 of the Bill of Rights and then going on to doubt the a trademark is a sort of property right contemplated by the Bill of Rights, for in the view of the tribunal a trademark application, that being at issue, was more the nature of a voluntary request to be granted additional rights flowing from trademark registration (pages 559-560). Counsel in the present instance were unable to refer me to any other case law directly on point.

[31]            Counsel for Canada Post, in reply, reply that in some aspect might have been part of initial submissions, here submitted that there was no expropriation under section 9(1)(n)(iii) and referred to various authorities, some in other motion records and some without citation. As an example of one of several oral references is that to Park Avenue v. Wickes and Simmons, characterized as a Court of Appeal decision of about ten years ago, baring on section 9 and expropriation. Perhaps counsel was referring to Park Avenue Furniture Corp. v. Wickes/Simmons Bedding Ltd. et al. (1991) 37 C.P.R. (3^rd) 413, legislation of the Federal Court of Appeal: that case has no relevance whatsoever: perhaps counsel was referring to some other decision. Canada Post counsel referred to Insurance Corporation of British Columbia v. Registrar of Trademarks (1980) 44 C.P.R. (2^nd) 1, as to the effect of section 9(1)(n)(iii) of the Trade-marks Act:

Clearly s. 9(1)(n)(iii) contemplates the use of an official mark which a public authority has seen fit to adopt to be a use exclusive to that authority.

         (page 13)

                                                                     . . . .    

I fully realize the consequences. A public authority may embark upon a venture of supplying wares and services to the public and in so adopt an official mark. Having done so then all other persons are precluded from using that mark and, as a result of doing so, on its own initiative, the public authority can appropriate unto itself the mark so adopted and used by it without restriction or control other than its own conscience and the ultimate will of the electorate expressed by the method available to it.

That, in my opinion, is the intention of Parliament which follows from the language of s. 9 of the Act and that is the policy which Parliament, in its omnipotent wisdom, has seen fit to implement by legislation.                                                                                                                 (page 14)

[32]            I am not certain that the difference between expropriation as used by Canada Post and appropriation as in Insurance Corporation of British Columbia (supra), the taking away and the taking possession of, is a distinction which assists Canada Post, for exactly what happened in a present instance would seem to be an issue at least in part of fact. Here I would again note that in the context of striking out for want of a reasonable want of action, I must take the facts pleaded as proven. Thus the issue should be one for the Trial Judge. Counsel for Canada Post also refers to Societe Canadienne des Postes v. Postpar Inc. (1988) 20 C.I.P.R. 180, a decision of the Quebec Superior Court, as baring on section 9(1)(n)(iii) of the Trademark Act and section 2(b) of the Charter. Certainly at page 197 of Postpar, Mr. Justice Halperin, in the context of the Charter, adopts the view of Mr. Justice of Appeal Tarnopolsky in R. v. Videoflicks (1985) 14 D.L.R. (4^th) 10 at 47, that mere regulation as to time and place does not infringe on freedom of expression, the issued in Videoflicks being Lords Day legislation, somewhat removed from Trademark protection. However, Postpar does not comment, on balance, assist Canada Post, for at page 225 Mr. Justice Halperin expressly stops short of exploring section 9 of the Trademark Act.

[33]            Counsel of Canada Post suggested, by letter, after this matter was heard, that there is a way in which a party prejudiced by an appropriation of a mark under section 9(1)(n)(iii) of the Trade-marks Act might receive a hearing, referring to Magnotta Winery Corp. v. Vintners Quality Alliance of Canada (1999) 1 C.P.R. (4^th) 68. Madam Justice Reed noted that there was no remedy under section 57 of the Trade-marks Act, but left open the possibility of remedies under section 56 of the Trade-marks Act or by way of Judicial Review pursuant to section 18.1 of the Federal Court Act (page 78), however those routes to a remedy are only suggestions, for she is uncertain as to what might be the correct procedure. She notes that it will be for the Court of Appeal to decide. Leaving aside that Magnotta Winery dealt only with an extension of time, Madam Justice Reed's dicta, that there might be some ready and in the present instance, by extension, that there might be some remedy for a party aggrieved by the appropriation of a trademark under section 9(1)(n)(iii) of the Trade-marks Act, at some future time, is rather nebulous. It does not detract substantially from the argument of Epost that the expropriation or appropriation of the mark has been done without Epost having a chance to be heard.

[34]            I am not aware of any on point authority touching upon section 9(1)(n)(iii) and the Bill of Rights, other than I.C.B.C. vs International Commercial Bank of China (supra). In view of the rather tentative nature of the conclusion, I would hesitate in striking out paragraphs 34, 36, 38 & 39 of the Counterclaim either as plainly, obviously and beyond doubt pleadings that will not succeed, or as obviously as forlorn and futile pleadings. All the more so in that counsel for Epost refers to Singh v. Minister of Immigration (supra) for the concept that section 2(e) of the Bill of Rights protects a fundamental right, that of a fair hearing, a right independent of and broader than section 1 of the Bill of Rights, which deals with human rights and fundamental freedoms:    See page 228 of Singh. While Singh involved the rights of individuals in an Immigration context, I do not see that his general comment of Mr. Justice Beetz should be so limited. Paragraph 34, 36, 38 & 39 shall remain.

Paragraphs 40, 44, 45 and 46 (f)

[35]            These paragraphs of the Counterclaim relate to Epost's allegation that section 9(1)(n)(iii) of the Trade-marks Act is void and inoperative by reason of the Bill of Rights and the Charter of Rights. The position of Canada Post is simply that section 9(1)(n)(iii) of the Trade-marks Act is valid and thus these paragraphs should be struck out as disclosing no reasonable defence and as being immaterial and so delaying a fair trial of the action.

[36]            The status of these paragraphs is established in my earlier considerations of section 9(1)(n)(iii). It may well be that, after a trial of the action, Canada Post's view that section 9(1)(n)(iii) of the Trade-marks Act is valid, will prevail, however, at this stage I am not convinced that it is plain, obvious and beyond doubt that section 9(1)(n)(iii) is valid. Thus paragraphs 40, 44, 45, 46(f) shall remain.

CONCLUSION

[37]            To summarize, paragraphs 31, 32, 33 and 46(d) of the Defence and Counterclaim are struck out, without leave to amend. Paragraphs 34, 35, 36, 37, 38, 39, 41, 42, 43, 44, 45 and 46(f) shall remain.

[38]            That various paragraphs in the Defence and Counterclaim remain is not to say that Epost will be successful at trial. Rather the situation is that Canada Post has not been able to meet the heavy onus on a party seeking to strike out a pleading.

[39]            Success being divide, costs are in the cause.

(Sgd.) "John A. Hargrave"

Prothonotary

Vancouver, British Columbia

6 April 2001

                         FEDERAL COURT OF CANADA

                                      TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  T-1022-99

STYLE OF CAUSE:Canada Post Corporation v. Epost Innovations Inc.

PLACE OF HEARING:                                 Vancouver, B.C.

DATE OF HEARING:                                   22 January 2001

REASONS FOR ORDER OF HARGRAVE, P.

DATED:                     6 March 2001

APPEARANCES:

Timothy Lo                  FOR PLAINTIFF

Simon Adams              FOR DEFENDANT

SOLICITORS OF RECORD:

Timothy Lo

Smart & Biggar

Vancouver B.C.           FOR PLAINTIFF

FOR DEFENDANT