Docket: T-2621-23
Citation: 2024 FC 1211
Ottawa, Ontario, July 30, 2024
PRESENT: The Honourable Mr. Justice Fothergill
BETWEEN: |
REMITBEE INCORPORATED |
Applicant/Appellant (Responding Party on Motion) |
and |
REMITLY, INC. |
Respondent (Moving Party on Motion) |
ORDER AND REASONS
[1] Remitly, Inc [Remitly] is the Respondent in an appeal brought pursuant to s 56 of the Trademarks Act, RSC 1985, c T-13 by the Appellant Remitbee Incorporated [Remitbee]. Remitly has brought a motion for an order summarily dismissing Rimtbee’s appeal on the ground that it is doomed to fail.
[2] The appeal concerns a decision of the Trademarks Opposition Board [TMOB]. Remitbee sought to register a trademark, but this was opposed by Remitly. The TMOB rejected most of Remitly’s grounds of opposition, but agreed that Remitbee had failed to demonstrate use of the proposed trademark during the relevant time period (Remitly, Inc v Remitbee Incorporated, 2023 TMOB 174 [Remitly]).
[3] For the reasons that follow, Remitly’s motion for summary dismissal of the appeal is denied with costs.
II. Background
[4] Remitbee is a Canadian corporation that facilitates money transfers using “software as a service”
[SAAS]. On July 28, 2017, Remitbee filed Trademark Application No. 1,849,817, for REMITBEE [the Mark].
[5] Remitly is a company based in the United States of America that offers money transfer services. The relationship between Remitly and Remitbee has been acrimonious. As the TMOB observed, “the parties are not strangers to each other”
(Remitly at para 3). In an earlier proceeding, Remitbee unsuccessfully opposed Remitly’s registration of its trademark (Remitbee Incorporated v Remitly Inc, 2022 TMOB 126). An appeal of that decision is currently before this Court (Docket No T-1758-22).
[6] Remitly opposed the registration of Remitbee’s Mark on numerous grounds: (1) there was no use of the Mark as of the date claimed because Remitbee did not exist at that time; (2) there was no use of the Mark as of the date claimed because Remitbee was operating illegally; (3) there was no use of the Mark by Remitbee because any demonstrated use was by a third party, Thamor Trading Corporation [Thamor]; (4) the application was made in bad faith; and (5) the Mark was not distinctive.
[7] The TMOB rejected all of the grounds of opposition advanced by Remitly but one. The TMOB found that Remitbee had failed to demonstrate use of the Mark as of the relevant date. Any use of the Mark by Thamor did not enure to Remitbee, given the absence of a licensing arrangement.
[8] The TMOB dismissed Remitly’s assertion that Remitbee was not legally authorized to use the Mark as of the date of the first claimed use due to Remitbee’s failure to register as a Money Services Business with the Financial Transactions and Reports Analysis Centre of Canada [FINTRAC]. Remitly maintained (and still maintains) that this was required by ss 5(h) and 11.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17.
[9] The TMOB acknowledged that non-compliance with a federal statute may justify rejection of an application on the ground that “the Registrar cannot condone the registration of a mark if the applicant’s use of the mark would violate Federal legislation”
(Remitly at para 55). However, the TMOB found that Remitbee’s failure to register with FINTRAC did not, in itself, establish a prima facie case of non-compliance with a federal statute. The TMOB also expressed some uncertainty regarding whether the claimed services, namely the electronic transfer of funds using SAAS, constituted the remittance of funds.
[10] The TMOB also dismissed Remitly’s allegation of bad faith arising from Remitbee’s failure to register with FINTRAC, finding that a contravention of legislation unrelated to the Trademarks Act was insufficient. Furthermore, there was nothing to suggest that Remitbee’s failure to register with FINTRAC, or its attempt to register its Mark without FINTRAC registration, were contrary to honest business practices or harmed the business of another.
III. Issue
[11] The sole issue raised by this motion is whether the Court should summarily dismiss Remitbee’s appeal under s 56 of the Trademarks Act.
IV. Analysis
[12] Appeals under s 56 of the Trademarks Act are ordinarily assessed against the appellate standard of review (Clorox Company of Canada, Ltd v Chloretec SEC, 2020 FCA 76 [Clorox] at para 20). However, s 56(5) permits a party to adduce new evidence on appeal:
(5) On an appeal under subsection (1), evidence in addition to that adduced before the Registrar may be adduced and the Federal Court may exercise any discretion vested in the Registrar.
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(5) Lors de l’appel, il peut être apporté une preuve en plus de celle qui a été fournie devant le registraire, et le tribunal peut exercer toute discrétion dont le registraire est investi.
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[13] As the Federal Court of Appeal explained in Clorox (at para 21):
When the new evidence is found to be material—which has been interpreted to mean “sufficiently substantial and significant” (Vivat Holdings Ltd. v. Levi Strauss & Co., 2005 FC 707 at para. 27, 276 F.T.R. 40) and of “probative value” (Tradition Fine Foods Ltd. v. Groupe Tradition’l Inc., 2006 FC 858 at para. 58, 51 C.P.R. (4th) 342)—subsection 56(5) of the Act states that the Federal Court “may exercise any discretion vested in the Registrar”. This is in the nature of an appeal de novo and calls for the correctness standard […]
[14] De novo review is limited by the extent of the new evidence. As Justice Johanne Gauthier explained in Seara Alimentos Ltda v Amira Enterprises Inc, 2019 FCA 63 (at para 22):
When new evidence is admitted on an appeal of a TMOB decision under section 56 of the Act, the Court undertakes a de novo review of the record. However, admitting new evidence does not necessarily displace the TMOB’s findings in respect of every issue. Only those issues to which the new evidence speaks warrants a fresh analysis by the Court […]
[15] The Court should not be overly strict in its treatment of new evidence: “both parties are entitled to submit fresh evidence. What may be surplus to requirements for one party may be critical to the outcome for the other”
(Cathay Pacific Airways Limited v Air Miles International Trading BV, 2015 FCA 253 at para 18).
[16] New evidence will be admitted if it is “sufficiently substantial and significant”
and of “probative value”
, i.e., material (Miller Thomson LLP v Hilton Worldwide Holding LLP, 2020 FCA 134 at para 53). Materiality is a question of mixed fact and law (at para 54).
[17] The power to summarily dismiss a proceeding is not explicitly mentioned in the Federal Courts Rules, SOR/98-106, but its exercise by the Courts is long-standing (Dugré v Canada (Attorney General), 2021 FCA 8 at para 19). The Federal Court of Appeal has recognized (at paras 20-22) that:
This power stems from the Court’s plenary jurisdiction (Canada (National Revenue) v. RBC Life Insurance Company, 2013 FCA 50, 443 N.R. 378, at para. 36; Lee v. Canada (Correctional Service), 2017 FCA 228 [Lee], at para. 6). This Court has not only the powers conferred by statute but also the powers necessary for its effective functioning (Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 CanLII 818 (SCC), [1998] 1 S.C.R. 626, 224 N.R. 241; Lee, at paras. 2, 7-15; Fabrikant v. Canada, 2018 FCA 171, at para. 3 and the cases cited therein). As the Court explains in Lee, the Federal Courts, as part of the judicial branch of the government, must have the powers necessary to manage their own proceedings (Lee, at para. 8).
This power also manifests itself in the Rules through the combined effect of Rule 74 (removal of proceedings brought without jurisdiction), Rule 4 (the gap rule) and Rule 55 (power to vary a rule, in this case Rule 74, in “special circumstances”).
In exercising this prerogative, this Court has recognized that appeals doomed to fail may be subject to summary dismissal based on its plenary powers to manage its proceedings (Lee, at para. 15). Appeals that are doomed to fail but nonetheless remain on the roll, waste judicial resources and impair access to justice for those who have a meritorious case (Hébert v. Wenham, 2020 FCA 186 [Wenham], at para. 8; Fabrikant v. Canada, 2018 FCA 224, at para. 25).
[18] A proceeding is “doomed to fail”
if it is “bereft of any possibility of success”
(George v Heiltsuk First Nation, 2022 FC 1786 at para 58; Viorganica Laboratories Inc v Société de Produits Nestlé, 2016 FC 431 at para 7). Dismissal in these circumstances “must be very exceptional and cannot include cases … where there is simply a debateable issue”
respecting the merits of the underlying matter (David Bull Laboratories (Canada) Inc v Pharmacia Inc (CA), 1994 CanLII 3529 (FCA), [1995] 1 FC 588 at page 600; see also Breslaw v Canada (Attorney General), 2004 FCA 264 at para 7).
[19] In the words of Justice David Stratas of the Federal Court of Appeal in Rahman v Public Service Labour Relations Board, 2013 FCA 117 [Rahman] at paragraph 7, the moving party must present:
[…] the sort of “show stopper” or “knockout punch” of the exceptional sort that strikes at the root of this Court’s power to entertain the appeal or the appellant’s ability to prosecute the appeal any further, rather than something concerning the substantive merits of the appeal, akin to the sort of thing routinely advanced by respondents at the hearing of the appeal […]
[20] In this appeal, Remitbee challenges two of the TMOB’s findings: (1) any use of the Mark by Thamor as of the relevant date did not enure to Remitbee due to the absence of a licensing arrangement; and (2) Remitbee did not demonstrate use of the Mark as of the relevant date.
[21] Remitbee has submitted new evidence on appeal. Remitly says the new evidence cannot be material, because Remitbee was not legally authorized to conduct business during the relevant time due to its failure to register with FINTRAC.
[22] It is unclear whether the lawfulness of Remitbee’s business operations is properly before the Court in this appeal. The TMOB rejected this ground of Remitly’s opposition to the registration of the Mark, finding that Remitly had not presented even a prima facie case of illegality. Remitbee does not challenge this determination on appeal, and there is no cross-appeal by Remitly regarding the grounds of opposition that were rejected.
[23] In any event, it cannot be said that Remitbee’s position that its business was operating lawfully is bereft of any chance of success, or that the appeal is doomed to fail. Remitbee emphasizes the description of Services in its application for the Mark, reproduced at paragraph 5 of the TMOB’s decision:
Software as a service (SAAS) provider in the field of online money transferring, namely, software as a service (SAAS) provider facilitating the electronic transfer of funds between individuals via mobile applications and via the Internet.
[24] Remitbee therefore argues that any alleged illegality, which is said to arise from Remitbee’s failure to register with FINTRAC as a Money Services Business [MSB], is unrelated to the Services in respect of which registration of the Mark was sought.
[25] The TMOB found as follows (Remitly at para 57):
I agree that the mere reference to a requirement to register with FINTRAC as an MSB, and reference to section 5(h) is not sufficient to establish a prima facie case of non-compliance with a Federal statute. As argued by the Applicant, this section of the Money Laundering Act merely indicates the entities to whom the Act applies. Furthermore, even if other provisions of the Money Laundering Act were indicated, I note that the Services are not remittance of funds per se, but rather software as a service that relates to electronic transfer of funds. Therefore, it is difficult to see how offering the Services specified in the application, could constitute a prima facie contravention of the Money Laundering Act.
[26] It is therefore clear that the legality of any use by Remitbee of the Mark, assuming this question is properly raised before the Court in this appeal, is very much “a debateable issue”
and “something concerning the substantive merits of the appeal”
.
[27] The same may be said of whether there was a licensing arrangement between Remitbee and Thamor that would permit the latter’s use of the Mark to enure to the benefit of the former. The TMOB found that Remitbee had failed to establish the existence of a licence, written or otherwise. New evidence may permit the Court to consider the issue de novo. Far from striking at the root of this Court’s power to entertain the appeal, the new evidence may enhance “the appellant’s ability to prosecute the appeal … further”
(Rahman at para 7). Remitby’s motion to have the appeal summarily dismissed on this ground is wholly without merit.
V. Conclusion
[28] Remitly’s motion to summarily dismiss Remitbee’s appeal must be denied.
VI. Costs
[29] Remitbee seeks costs payable “forthwith and on the highest possible scale”
. On April 30, 2024, Counsel for Remitbee sent a letter to counsel for Remitly, marked “With Prejudice”
, explaining the deficiencies in the motion for summary dismissal. The letter stated that, unless Remitly agreed to immediately withdraw the motion, it would bring the letter to the Court’s attention and seek “elevated costs on a solicitor-client scale or on such scale as this Court shall see fit to award”
.
[30] Remitbee says that Remitly should be sanctioned for its “continued practice of lodging unfounded, inflammatory allegations”
. Remitly has twice been reprimanded by this Court for the melodramatic and hyperbolic way in which its counsel has advanced its positions.
[31] Remitbee takes particular exception to the following paragraphs of Remitly’s initial written submissions and its reply:
120. Put simply, the entirety of RB’s case is built on illegal provision of money transfer/remittance services, and wearing a “SAAS costume” to disguise such failure to comply with the PC Act. Again, RB urges this Court to see through RB’s “charade”.
[…]
21. While RB argues at para 88 of its WR that it is presently (as distinct from on or before the Material Dates) a registered MSB, that is irrelevant. What matters is that it was a registered MSB at the time that it started purportedly offering money transfer/remittance services to Canadians. NOT after. Within the same paragraph, RB misleads this Court that transferring by way of SAAS does not constitute money transfer/remittance. How RB (mis)characterizes its own services matters not for the legality of RB’s operations as a MSB. What matters is what is prescribed by statute – the PC Act & Regulations.
[formatting original]
[32] In a Direction issued on April 8, 2024, Associate Judge Sylvie Molgat described the correspondence of counsel for Remitly as follows:
Once again, the Respondent has submitted a lengthy letter replete with bold type, italics and underlining, presumably liberally applied for added emphasis. A similar letter by the Respondent having previously been the subject of a Direction by this Court dated April 11, 2023, it appears that the impropriety of such correspondence being addressed to the Court was not made sufficiently clear in that prior Direction.
This latest letter dated March 28, 2024, again prompted by service on the Respondent of a motion record, also contains inflammatory allegations (inter alia) concerning “prior derailing, dishonest and unlawful conduct” by the Applicant, and submissions as to the merits.
[33] Associate Judge Molgat’s Direction included the following admonition:
Large bold font, italics and underlining, particularly when applied in conjunction, should be used most sparingly, if at all, in letters addressed to the Court.
[34] The use of inflammatory and hyperbolic language in the written submissions filed on behalf of Remitly, together with the excessive use of emphatic text formatting, has been unhelpful, distracting, and a departure from the professionalism this Court expects of experienced counsel. The situation is exacerbated by the prior warnings issued by this Court in this very proceeding.
[35] Rule 400(1) gives this Court “full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid”
(Canada (Attorney General) v Rapiscan Systems Inc, 2015 FCA 97 at para 10). Under Rule 401(1), costs may be awarded on motions. The “default”
for costs is expressed in Column III of Tariff B, unless the Court orders otherwise (Rule 407; Allergan Inc v Sandoz Canada Inc, 2021 FC 186 [Allergan] at para 25). Relevant factors for assessing costs are listed in Rule 400(3).
[36] Remitbee seeks lump sum costs in the amount of 50% of its legal fees incurred to respond to this motion, payable forthwith. According to Remitbee, the total amount (including tax) is $114,755.46. Remitbee therefore seeks reimbursement of 50% of this amount, i.e., $57,377.73. In the alternative, Remitbee requests a lump sum costs award of $25,000, payable forthwith.
[37] Remitly responds that Remitbee’s request for 25% to 50% of its actual costs is “severely disproportionate”
for a motion that was intended to be determined in writing pursuant to Rule 369. Remitbee insisted upon an oral hearing, and Remitly maintains that it should not have to pay for Remitbee’s choice of procedure.
[38] Remitly says it is “baffling”
that Remitbee would incur costs of more than $114,000 for a motion that raised a simple legal question, with no evidence tendered beyond an administrative assistant’s affidavit on which there was no cross-examination.
[39] During Remitbee’s lengthy oral submissions on the motion, the Court observed more than once that “overkill”
was not required. Remitbee needed to establish only that the issues raised by its appeal were debatable. This was a low threshold, and Remitly says that Remitbee should not have had to expend six figures in order to meet it.
[40] Remitly argues that costs should be in the cause. In the alternative, if costs are to be payable forthwith, then Remitbee says they should be awarded at the “default’ level: the mid-point of Column III of Tariff B”
(citing Allergan at para 25).
[41] Enhanced costs may be justified by a party’s “repeated accusations of dishonesty, malice and bad faith”
(Gordon v Canada, 2019 FC 1348 [Gordon] at para 13). This kind of unwarranted behaviour resulted in an award of enhanced costs in Gordon, where Justice Robert Barnes awarded costs at the upper level of Column V of Tariff B (at para 19).
[42] This motion was of no more than usual complexity. However, it potentially jeopardized Remitbee’s opportunity to pursue its appeal of the TMOB’s decision. Remitbee was therefore justified in incurring legal fees in a proportionate amount to safeguard its commercial interests. This includes the costs it incurred by insisting upon an oral hearing.
[43] Ultimately, the motion to dismiss Remitbee’s appeal was a waste of the parties’ and the Court’s resources. Some aspects of Remitly’s conduct are deserving of sanction. Costs will therefore be payable forthwith, in any event of the cause, at the high end of Column V of Tariff B.
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