Date: 20010322
Docket: T-1955-00
Neutral Citation: 2001 FCT 226
Ottawa, Ontario, this 22nd day of March, 2001
PRESENT: THE HONOURABLE MR. JUSTICE BLANCHARD
BETWEEN:
OAKLEY INC.
and
OAKLEY CANADA INC.
Plaintiffs
- and -
SHOPPERS DRUG MART INC.
Defendant
REASONS FOR ORDER AND ORDER
[1] On October 23, 2000, Oakley, Inc. and Oakley Canada Inc., hereinafter the plaintiffs initiated an action seeking a permanent injunction and damages for use of the plaintiffs copyrighted works and trade-marks through a claim for trade-mark and copyright infringement and passing off.
[2] On January 9, 2001, Shoppers Drug Mart Inc., hereinafter the defendant presented a motion for an order to strike portions of the amended statement of claim or in the alternative an order for particulars of various portions of the amended statement of claim. Further, the defendant requested an extension of time to deliver its statement of defence.
ANALYSIS
A) Rule 221(1) of the Federal Court Rules, 1998
[3] On a motion to strike the court is governed by Rule 221 of the Federal Court Rules, 1998, SOR/98-106, as amended, which reads :
221. (1) On motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it
(a) discloses no reasonable cause of action or defence, as the case may be,
(b) is immaterial or redundant,
(c) is scandalous, frivolous or vexatious,
(d) may prejudice or delay the fair trial of the action,
(e) constitutes a departure from a previous pleading, or
(f) is otherwise an abuse of the processof the Court, and may order the action be dismissed
or judgment entered accordingly.
221. (1) À tout moment, la Cour peut, sur requête, ordonner la radiation de tout ou partie d'un acte de procédure, avec ou sans autorisation de le modifier, au motif, selon le cas :
a) qu'il ne révèle aucune cause d'action ou de défense valable;
b) qu'il n'est pas pertinent ou qu'il est redondant;
c) qu'il est scandaleux, frivole ou vexatoire;
d) qu'il risque de nuire à l'instruction équitable de l'action ou de la retarder;
e) qu'il diverge d'un acte de procédure antérieur;
f) qu'il constitue autrement un abus de procédure. Elle peut aussi ordonner que l'action soit
rejetée ou qu'un jugement soit enregistré en conséquence.
[4] In Canada (A.G.) v. Inuit Tapirisat of Can., the Supreme Court of Canada set the appropriate standard to be applied on motions to strike pleadings:
As I have said, all the facts pleaded in the statement of claim must be deemed to have been proven. On a motion such as this a court should, of course, dismiss the action or strike out any claim made by the plaintiff only in plain and obvious cases and where the court is satisfied that "the case is beyond doubt" (...).[1]
[5] The onus is clearly on the moving party to establish that there are appropriate grounds to strike.
[6] However, the respondent to a motion to strike need only show that a reasonable cause of action exists. The threshold to be met by the respondent is quite low. Joyal J. in the Chez FM decision stated:
It might very well be that the link between the two defendants for the purposes of the action taken by the plaintiff is tenuous or indeed nonexistent. Nevertheless, a connection is alleged and it would be presumptuous of the Court to find otherwise. As the jurisprudence indicates; an order to strike should only be granted in clear and obvious cases.[2]
B) Rule 181 (2) of the Federal Court Rules
[7] Pursuant to Rule 181(2) a party may obtain particulars in relation to the pleadings of the adverse party, the Rule 181 (2) states that:
(2) On motion, the Court may order a party to serve and file further and better particulars of any allegation in its pleading.
(2) La Cour peut, sur requête, ordonner à une partie de signifier et de déposer des précisions supplémentaires sur toute allégation figurant dans l'un de ses actes de procédure.
[8] Before ordering further and better particulars, I must consider whether a respondent has sufficient information in the pleadings to understand the applicant's claim and therefore be in a position to meet the case before him.
[9] In the Gulf Canada Limited decision, Heald J.A. lists the criteria that ought to be considered on such a motion:
The functions of particulars, as set out in the English publication The Supreme Court Practice are: (1) to inform the other side of the nature of the case to be met; (2) to prevent surprise at trial; (3) to enable the other side to know the evidence it ought to be prepared with and to prepare for trial; (4) to limit the generality of the pleadings; (5) to limit and decide issues to be tried, and as to which discovery required; and (6) to tie the hands of the party so that he cannot without leave go into any matters not included.[3]
[10] Further, in Glaxo Canada Inc., Rouleau J. came to this conclusion on the conditions which are necessary for particulars to be ordered:
Proper pleadings define with precision and clarity the question in dispute between the litigants. Both parties are entitled to fair notice of the case which they are bound to meet so that they may procure evidence relevant to the issues disclosed by the pleadings.[4]
[11] In my view, there are two stages of disclosure in a proceeding. The first is directed to pleadings and the second is directed to the case to be met at trial. At the initial stage of pleadings, it is sufficient if the facts are known well enough to allow the defendant to identify the transactions in issue, as to be able to put its version forward. With regard to the second stage, or the case to be met at trial, this is a more demanding standard in that the defendant, (or plaintiff) is entitled to know exactly the nature and details of the claim against it. This is the function of discoveries. Therefore, at the pleading stage, the issue is whether you can plead meaningfully to the claim even if you do not know the details of the specific allegations.
[12] Having established generally the legal framework applicable to motions to strike and particulars, I will now turn to the pertinent facts of the case before me.
C) ISSUES
First Issue: Remedies
[13] The first issue deals with two questions relating to remedies. The defendant submits that the phrase "all income and" from paragraph 1(i) and paragraph 1(k) of the amended statement of claim should be struck.
[14] Counsel for the plaintiffs has agreed to delete paragraph 1(k) of the amended statement of claim since amendments to the Copyright Act[5] have eliminated any right to damages for conversion.
[15] As for paragraph 1(i) of the amended statement of claim which states:
1. The Plaintiffs claim:
(...)
(i) damages sustained by the Plaintiffs, an accounting of all income and the profits of the Defendant as a result or arising from or in connection with the infringement of the Copyrighted Work.[6]
[16] It is useful to reproduce subsections 34(1) and 35(1) of the Copyright Act which read:
34. (1) Where copyright has been infringed, the owner of the copyright is, subject to this Act, entitled to all remedies by way of injunction, damages, accounts, delivery up and otherwise that are or may be conferred by law for the infringement of a right.
34. (1) En cas de violation d'un droit d'auteur, le titulaire du droit est admis, sous réserve des autres dispositions de la présente loi, à exercer tous les recours -- en vue notamment d'une injonction, de dommages-intérêts, d'une reddition de compte ou d'une remise -- que la loi accorde ou peut accorder pour la violation d'un droit.
35. (1) Where a person infringes copyright, the person is liable to pay such damages to the owner of the copyright as the owner has suffered due to the infringement and, in addition to those damages, such part of the profits that the infringer has made from the infringement and that were not taken into account in calculating the damages as the court considers just.
35. (1) Quiconque viole le droit d'auteur est passible de payer, au titulaire du droit qui a été violé, des dommages-intérêts et, en sus, la proportion, que le tribunal peut juger équitable, des profits qu'il a réalisés en commettant cette violation et qui n'ont pas été pris en compte pour la fixation des dommages-intérêts.
(2) In proving profits, (a) the plaintiff shall be required to prove only receipts or revenues derived from the infringement; and (b) the defendant shall be required to prove every element of cost that the defendant claims.
(2) Dans la détermination des profits, le demandeur n'est tenu d'établir que ceux provenant de la violation et le défendeur doit prouver chaque élément du coût qu'il allègue.
[17] Hence, the Copyright Act does provide for an accounting of profits as a remedy, but not for an accounting of income. The Act, pursuant to subsection 35(2) clearly establishes the process that governs accounting of profits.
[18] Further, the Federal Court of Appeal in Beloit Canada Ltd. v. Valmet-Dominion Inc. analysed thoroughly the remedies available in copyright, trade-marks and patent infringements. The Court, in a unanimous decision, reviewed the accounting for profits remedy and stated:
[S]ection 53.2 of the Trade-marks Act and subsections 34(1) and 35(1) of the Copyright Act [where] the remedy of an accounting of "profits" is provided eo nomine.
(...)
The equitable remedy of an account was granted against the infringer of a patent, copyright or trade mark, on the premise that the infringer acted as the agent of the owner of the right and was therefore obliged to account for the profits earned through the infringement.[7]
[19] I find that paragraph 1(i) of the statement of claim, as presently drafted requesting an accounting of "all income", does not reflect a remedy provided for in the Copyright Act. I will therefore strike the words "all income and the" found in paragraph 1(i) of the statement of claim which will now read:
1. The Plaintiffs claim:
(...)
(i) damages sustained by the Plaintiffs, an accounting of profits of the Defendant as a result or arising from or in connection with the infringement of the Copyrighted Work.
Second Issue: Indefinite Terms
[20] The second issue arises in paragraphs 15 and 21 of the statement of claim, which read:
15. The Offending Ellipse Design has been prominently displayed in the Defendant's retail outlets. The Defendant's retail outlets offer for sale, amongst other things, eyewear and their parts and accessories, clothing, headwear, printed material and bags, watches and jewellery.
(...)
21. The Defendant's unathorized [sic] use of OAKLEY'S trade-marks and Copyrighted Work by virtue of the Defendant's use of the Offending Ellipse Design are likely to cause confusion in that members of the Canadian public have or will believe that the Defendant's services are provided, licensed or authorized by the Plaintiffs. Moreover, the Defendant's use of the Offending Ellipse Design in the same area as the Plaintiffs use the Ellipse Design would lead to the inference that certain products offered for sale in the Defendant's outlets are manufactured, licensed, performed or originate with the Plaintiffs or that the Plaintiffs are participants in the program.
[21] The defendant argues that a pleading must not be left open-ended. The two expressions complained of are the following:
1. at paragraph 15; - "amongst other things"
2. at paragraph 21 - "certain products".
The impugned phrases warrant further consideration in light of the following excerpts of the cross-examination of Richard Alderson, representative of the defendant:
164. Q. So in paragraph 15 of the Statement of Claim that's referred to in paragraph 7 of your affidavit, you could easily determine all of the product [sic] that you sell, that the defendant sells through its stores?
A. Not easily
Q. It's available to you?
A. Yes, sir.
(...)
180. Q. Sir, are you saying today that in terms of the expression "certain products" as it appears in paragraph 21 of the claim, after reviewing paragraphs 6, 7 and the registration attached and paragraph15, you have no idea what "certain products" is?
A. We have an idea as to what certain products is as they are stated in this claim.[8]
[22] At this stage of the proceedings and based on the cross-examination of Mr. Alderson I am satisfied that the defendant has a good understanding of what products are being referred to in paragraphs 15 and 21 of the statement of claim. In Embee Electronic Agencies, Marceau J. reviews the extent to which the defendant is allowed particulars of the plaintiff's evidence:
At that early stage, defendant is entitled to be furnished all particulars which will enable him to better understand the position of the plaintiff, see the basis of the case made against him and appreciate the facts on which it is founded so that he may reply intelligently to the statement of claim and state properly the grounds of defence on which he himself relies, but he is not entitled to go any further and require more than that.[9]
[23] In my view, the defendant has sufficient detail to see the basis of the case made against it and respond intelligently to the plaintiffs' claim. The request for particulars relating to paragraphs 15 and 21 is therefore denied.
Third Issue: Inconsistent language
[24] Counsel for the defendant submits that the plaintiffs' used ambiguous language in referring to the products in their claim. In fact an analysis of the statement of claim demonstrates that the plaintiffs used the terms "Wares"; "wares"; "products"; and "goods"apparently interchangeably without properly defining or identifying what goods were being referred to in the respective paragraphs of the pleadings A reading of the following paragraphs of the statement of claim illustrates the potential confusion:
1. In paragraph 6: the plaintiffs utilized and defined the term "the ‘Wares' ".
2. In paragraph 7: It is unclear if the word "wares" refers to "Wares" as defined in paragraph 6?
3. In Paragraph 9: the plaintiffs refer to "products and goods".
4. In paragraph 12: the plaintiffs refer to "wares".
5. In paragraph 21: the plaintiffs refer to "products".
[25] As established in the aforementioned Embee Electronic Agencies decision, particulars are allowed by this Court so that the defendant "may reply intelligently to the statement of claim and state properly the grounds of defence on which he himself relies.".[10] In analysing the abovementioned paragraphs, I find that the defendant, in order to properly respond to the claim, is entitled to particulars and the plaintiff must deliver particulars on the use of all terms relating to the "wares", "products" and "goods".
Fourth Issue: Irrelevancy
[26] On the matter of irrelevancy, the defendant essentially submits that paragraphs 7 and 18 of the amended statement of claim should be struck, and argues that a trade-mark application filed by the defendant is irrelevant to the current action of passing off or infringement of a registered trade-mark. The defendant further contends that the applications are under the jurisdiction of the Registrar of Trade-marks and therefore it would be prejudicial for this Court to entertain the matter. The Rothmans[11] case is advanced as authority to support this proposition.
[27] In the Rothmans case, the statement of claim included injunctive relief restraining the defendants from proceeding with four pending trade-mark applications. The Court held it did not have jurisdiction to grant the relief sought and that the matter must be first decided by the Registrar of Trade-marks.
[28] However, the injunctive relief sought in the case at bar deals with a registered trade-mark namely, the ELLIPSE DESIGN trade-mark. In this respect the Registrar has already registered the trade-mark.
[29] Bearing in mind the legal principles applicable to a motion to strike a claim, I find that counsel for the defendant has not met the burden facing it. In my view, paragraphs 7 and 18 set out material facts to the plaintiffs' claim. I find the information contained in those paragraphs relevant, at this stage of the pleadings. The paragraphs taken in their entirety may well set out issues that may be considered at trial.
[30] The defendant's contention that facts pleaded in paragraphs 7 and 18 will prejudice the trade-mark application before the Registrar is, in my view, without merit.
[31] The trade-mark disputes will move forward before the Registrar of Trade-marks and will be appropriately disposed of in that forum. I see nothing in the facts that are pleaded in paragraphs 7 and 18 that could in any way impugn the jurisdiction of the Registrar of Trade-marks. In my view the facts pleaded in paragraphs 7 and 18 are relevant and pertinent to the plaintiffs' claim. Thus, the Rothmans decision has no application to this case.
Fifth Issue: Ownership of Copyright
[32] On the matter of ownership of Copyright, counsel for the defendant argues that this Court should order that the plaintiffs provide particulars of how title moved from the original author to the plaintiffs, produce any assignment documents in respect of the copyright and provide particulars of the date on which the alleged artistic work was created.
[33] The production of a certificate of copyright registration[12] creates a rebuttable presumption of title and ownership. Absent any evidence to the contrary, the chain of title may well be irrelevant. As stated by the Supreme Court of Canada in the Circle Film Enterprises Inc. decision:
In my opinion, therefore, by the production of this certificate and in the absence of any evidence to the contrary, the plaintiff in this case has satisfied the burden of proof, both the primary burden -- that which rests upon a plaintiff as a matter of substantive law and is sometimes referred to as the risk of non-persuasion -- and also the secondary burden, that of adducing evidence (...)[13]
[34] I therefore find that, at this stage of the proceedings, the pleadings are sufficient and I will not order further particulars on the issue of ownership of copyright.
Sixth Issue: Irrelevant information
[35] On the sixth issue, counsel for the defendant alleges that paragraphs 12, 20 and 21 of the pleadings contain allegations appropriate to a trade-mark plea but not to a copyright plea. The defendant therefore contends that any reference to confusion, broad recognition and goodwill in the pleadings are not relevant to a copyright plea and any reference thereto should be struck.
[36] More specifically, the defendant submits that in paragraph 12 of the amended statement of claim, the plaintiffs have alleged that its copyrighted works have achieved a broad recognition and goodwill in Canada. According to the defendant, broad recognition and goodwill are relevant to a trade-mark plea, but are not relevant to a copyright plea.
[37] Further, in paragraph 20 of the amended statement of claim, the plaintiffs allege that the defendant's use of the ELLIPSE DESIGN would be likely to cause confusion with "Oakley's Copyrighted Work of Schedule ‘B' ". Counsel for the defendant argues that confusion is relevant to a trade-mark plea, but is not relevant to a copyright plea.
[38] Finally, in paragraph 21 of the amended statement of claim, the plaintiffs allege that the defendant's use of the plaintiffs' copyrighted work will likely cause confusion. Again, the defendant submits that confusion is relevant to a trade-mark plea, but is not relevant to a copyright plea.
[39] As stated previously, this Court will only strike pleadings if it is plain and obvious that they will not succeed, and it is the defendant that bears the onus of establishing that the pleadings should be struck on that basis. The facts here, relate to a logo, which combines inextricable elements of both trade-marks and copyright. Once again, to fully seize the essence of the claim, the attacked paragraphs must be read in their entirety and in the proper context.
[40] In my view, the difficult and complex issues which are raised by both counsel at this stage of the proceedings, without a full trial and proper discovery of the issues prevent me from resolving this issue at this stage of the proceedings. Is a logo more than a trade-mark? Is the expression of its artistic work also subject to copyright? As for the use of the term confusion, it also must be taken into context. I find that such use in the present case is relevant. Further, the striking of claims is a draconian measure and I find that counsel for the defendant has not met the heavy burden facing it. Therefore the impugned text will stand and the defendant's request on the sixth issue raised as outlined above will be denied.
Seventh Issue: Bare conclusions
[41] Firstly, in paragraph 20, counsel for the defendant argues that the plaintiffs make a bare allegation that the defendant "recklessly" traded off the reputation of the plaintiffs' ELLIPSE DESIGN trade-mark without providing material facts in support of the conclusion that the defendant's actions were reckless and as a result the defendant requested further particulars to be ordered.
[42] Further, counsel for the defendant submits that in paragraph 22, the plaintiffs' allege that there has been "actual confusion" in the marketplace and refer to being contacted by distributors, employees and consumers without providing a sufficient factual basis in support of this conclusion. Again the defendant requested further particulars be ordered.
[43] Counsel for the plaintiffs' argued that in paragraph 20, the term recklessly is associated with the material fact of knowledge and is not a bare affirmation.
[44] In fact, if we analyse the cross-examination of Richard Alderson, representative of the defendant, we can see that the defendant had a certain knowledge of the existence of the plaintiffs' trade-mark prior to taking the actions complained of:
51. Q. What did you find out in those investigations of the Oakley marks?
A. That the Oakley mark was one of the marks on the register that was brought to our attention by our outside counsel during the course of review of potential use of our mark, along with other marks on the register that are there.
Q. So your knowledge of Oakley's rights was at the time you were adopting your mark or after? It's available to you?
A. Well, because they showed up in the register, it must have been before.[14]
[45] The fact that the defendant had knowledge of the Oakley marks prior to adopting their mark is relevant to paragraph 20. It is certainly reasonable with this admission for the defendant to appreciate and understand the plea of "recklessness" that it must meet. At this stage of the proceedings, it is my view that paragraph 20 cannot be characterised as a bare allegation and will therefore be allowed to stand.
[46] As for the "actual confusion", pleadings are a statement of the material facts underlying the claim. They are not a catalogue of the evidence by which those facts will be proved. Pleadings should be as brief as possible and should not include detailed facts that are matters of evidence. As stated by Walsh J. in Cercast Inc.:
Pleadings should be kept as brief as possible and plaintiff should not be required to set out in its pleadings detailed facts which can more properly be brought forward at trial as part of its evidence. Neither should it be required to give details to defendants of facts that are well known to defendants already so that defendants are well aware of facts which they will have to meet.[15]
[47] In my view, the defendant is able to answer intelligently the allegation stated in paragraph 22. The pleadings sets forth contact by distributors, employees and consumers which in my view is sufficient in the present context to establish a sufficient factual basis for the conclusion. Thus, I find that paragraph 22 is sufficient at this stage of the proceedings for the defendant to file its defence.
Extension of Time
[48] Finally, in order to assure that the proceedings move promptly and given the fact that the defendant has the statement of claim in its possession since October 23, 2000, the defendant shall be ordered to serve and file its statement of defence within ten (10) days of the date of receipt of the particulars to be ordered on the third issue herein.
ORDER
THIS COURT ORDERS that:
1. On consent of the parties, the plaintiffs delete paragraph 1(k) of the amended statement of claim.
2. The words "all income and the" found in paragraph 1(i) of the statement of claim be struck from paragraph 1(i) which will now read :
1. The Plaintiffs claim:
(...)
(i) damages sustained by the Plaintiffs, an accounting of profits of the Defendant as a result or arising from or in connection with the infringement of the Copyrighted Work.
3. the plaintiffs provide particulars and clarify its position on the use of all terms relating to the "Wares"; "wares"; "products"; and "goods" with regards to paragraphs 6, 7, 9, 12 and 21 of the amended statement of claim within 5 days of the date of this order..
4. the defendant shall serve and file a statement of defence within 10 days from the time they receive the herein ordered particulars.
5. All other requests in this motion for orders to strike or particulars are denied except as herein provided.
6. No costs are awarded.
"Edmond P. Blanchard"
Judge
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1955-00
STYLE OF CAUSE: OAKLEY INC. ET AL. v. SHOPPERS DRUG MART INC.
PLACE OF HEARING: OTTAWA
DATE OF HEARING: FEBRUARY 6, 2001
REASONS FOR ORDER AND ORDER OF BLANCHARD, J.
DATED: MARCH 22, 2001
APPEARANCES:
GILLIAN M. SMITH FOR THE PLAINTIFFS
JEREMY E. WANT FOR THE DEFENDANT
SOLICITORS OF RECORD:
SIM, HUGHES, ASHTON & McKAY FOR THE PLAINTIFFS
TORONTO
SMART & BIGGAR FOR THE DEFENDANT
OTTAWA
[1] Canada (A.G.) v. Inuit Tapirisat of Can.[1980] 2 S.C.R. 735.
[2] Chez FM, Inc. v. Telemedia Communications Inc., [1991] F.C.J. No. 948.
[3] Gulf Canada Limited v. The Tug Mary Mackin and Sea-West Holdings Ltd. [1984] 1 F.C. 884.
[4] Glaxo Canada Inc. v. Department of National Health and Welfare of the Government of Canada et al. (1987), 15 C.P.R. (3d) 1 (F.C.T.D.).
[5] Copyright Act, R.S.C. 1985, c. C-42, s. 38(2), as amended S.C. 1997, c. 24 s. 20(1).
[6] Plaintiff's Statement of Claim, paragraph 1.
[7] Beloit Canada Ltd. v. Valmet-Dominion Inc [1997] 3 C.F. 497 at paragraphs 92 and 100.
[8] Cross-examination of Richard Alderson , January 26, 2001, at pp. 30 and 32.
[9] Embee Electronic Agencies Ltd. v. Agence Sherwood Agencies Inc. et al. (1979), 43 C.P.R. (2d) 285 (F.C.T.D.), at page 287.
[10] Ibid.
[11] Rothmans, Benson & Hedges Inc. v. Imperial Tobacco Ltd. [1997] F.C.J. No. 840
[12] Plaintiffs Record, Schedule B to the Amended Statement of Claim.
[13] Circle Film Enterprises Inc. v. Canadian Broadcasting Corp. [1959] S.C.R. 602.
[14] Cross-examination of Richard Alderson, supra, note 8 at p. 11.
[15] Cercast Inc. v. Shellcast Foundries Inc.(1973) 9 C.P.R. (2d) 18 at p. 27.