Date: 20000225
Docket: T-2359-92
IN THE MATTER OF ss. 52 and 53 of the
Trade-Marks Act, R.S.C. 1985, c. T-13
BETWEEN:
HUGO BOSS A.G., SIGA CORP, and
HUGO BOSS CANADA INC.
Plaintiffs
- and -
JOHN DOE and JANE DOE and OTHER PERSONS
UNKNOWN TO THE PLAINTIFFS WHO OFFER FOR
SALE, SELL, IMPORT, MANUFACTURE, ADVERTISE,
| OR DEAL IN COUNTERFEIT HUGO BOSS APPAREL AND THOSE |
| PERSONS LISTED IN APPENDIX A TO THE STATEMENT OF CLAIM |
| Defendants |
AND
| Docket: T-2360-92 |
IN THE MATTER OF ss. 7, 9, 19, 20, 25, 50, 52 and 53
of the Trade-Marks Act, R.S.C. 1985, c. T-13
BETWEEN
POLO RALPH LAUREN CORPORATION,
MODES ALTO-REGAL INC.,
POLO RALPH LAUREN, L.P., and
THE POLO/LAUREN COMPANY, L.P.
Plaintiffs
- and -
JOHN DOE and JANE DOE and OTHER PERSONS UNKNOWN
TO THE PLAINTIFFS WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, ADVERTISE, OR DEAL IN COUNTERFEIT
POLO RALPH LAUREN APPAREL AND THOSE PERSONS
LISTED IN APPENDIX A TO THE STATEMENT OF CLAIM
Defendants
REASONS FOR ORDERS
GIBSON J.:
[1] The HUGO BOSS plaintiffs and the POLO RALPH LAUREN plaintiffs (the "applicants"), by amended notices of motion dated the 6th of August and the 10th of August, 1999, each filed the 11th of August, 1999, seek show cause orders pursuant to Rules 466(b) and 467 of the Federal Court Rules, 19981 requiring Crossroads Market Ltd. and Gerry Kendall to answer, if they can, why they should not be held in contempt of orders of this Court. In more specific terms, the applicants seek orders requiring Crossroads Market Ltd. and Gerry Kendall (the "Crossroads Defendants") to appear before the Court to answer, if they can, why they should not be held in contempt of:
| 1. ...The Interlocutory Injunction Order[s] rendered December 5, 1997 by the Honourable Mr. Justice Hugessen ("the Hugessen Order[s]"), in that the Crossroads Defendants, and their employees and agents have aided and abetted certain Vendor Defendants ... to: |
| a) infringe the exclusive right of the Plaintiffs under [certain registered trade -marks specified in the notices of motion and hereinafter referred to as the BOSS and POLO Trade-marks]; |
| b) manufacture, print, sell, offer or display for sale, distribute, or otherwise deal with clothing and related items bearing the BOSS and POLO Trade-marks; |
| c) use the BOSS and POLO Trade-marks or any other trade-mark confusing with the BOSS and POLO Trade-marks in association with or on articles of clothing and related items or in advertising, promoting or displaying the BOSS and POLO Trade-Marks; and |
| d) direct public attention to their wares in such a way as to cause or be likely to cause confusion in Canada between their wares and the wares of the [applicants]. |
| 2. ...the Interlocutory Injunction Order[s] rendered March 11, 1996, by the Honourable Mr. Justice Rothstein ("the Rothstein Order"), in that, in direct and blatant breach of the terms of the Rothstein Order, they have aided and abetted: |
| ...Ms. Luong Que VU, and |
| ...Ms Lisa CHAU (a.k.a. Ms. Dau CHAU) |
| (hereinafter collectively the "Vendor Defendants") in breaching the Rothstein Order, said Vendor Defendants having: |
| (a) infringed the exclusive right of the Plaintiffs under the BOSS and POLO Trade-marks; |
| (b) manufactured, printed, sold, offered or displayed for sale, distributed, or otherwise dealt with clothing and related items bearing the BOSS and POLO Trade-marks; |
| (c) used the BOSS and POLO Trade-marks or any other trade-mark confusing with the BOSS and POLO Trade-marks in association with or on articles of clothing and related items or in advertising, promoting or displaying the BOSS and POLO Trade-marks; and |
| (d) directed public attention to their wares in such a way as to cause or be likely to cause confusion in Canada between their wares and the wares of the applicants. |
| 3. ...[this] Court for acting in such a way as to interfere with the orderly administration of justice, or to impair the authority or dignity of the Court by: |
| (a) participating in, promoting and permitting, with knowledge of the Hugessen Order and the Rothstein Order, the distribution, promotion, sale, and offering for sale of counterfeit products bearing the BOSS and POLO Trade-marks at the Crossroads Flea Market; and |
| (b) engaging, with knowledge of the Hugessen Order and the Rothstein Order, in flagrant and systematic disregard for the Hugessen Order and the Rothstein Order by operating a flea market in conjunction with the Vendor Defendants and permitting the large scale vending of counterfeit articles (including counterfeit BOSS and POLO garments) on the premises of the Crossroads Market. |
[2] In both applications, the applicants also seek their costs of the application "...and all other proceedings relating to the alleged acts of contempt ..." forthwith after assessment.
THE PARTIES
[3] The applicants are well-known to this Court as manufacturers of clothing and related items which prominently display the BOSS and POLO Trade-marks. They are also well-known to this Court because they are actively engaged before the Court, through the use of rolling anton piller orders, in defending their trade-marks. I am satisfied that it is fair to say that the applicants are also well-known to the general public, albeit not perhaps by their specific corporate names, as marketers of high-end clothing and related items.
[4] According to the evidence before the Court on the applications, Crossroads Market Ltd. and its principal, Gerry Kendall, operate the "Crossroads Flea Market" in the northeastern quadrant of Calgary, Alberta.
THE ORDERS OF THIS COURT THAT ARE AT ISSUE
[5] The Rothstein Orders, each dated the 11th of March, 1996, issued at Toronto, reviewed the rolling anton piller orders issued in favour of the applicants, added the Vendor Defendants as defendants named in Appendix A to the respective statements of claim and enjoined the Vendor Defendants, generally in the terms quoted above from the notices of motion.
[6] The "Hugessen Orders" are not both orders of Mr. Justice Hugessen. On the POLO RALPH LAUREN file, the order in question is dated the 27th of November, 1997 and was issued by Mr. Justice Pinard at Ottawa. It reviews the execution of the rolling anton piller order on that file. It adds Crossroads Market Ltd. as a defendant. It enjoins Crossroads Market Ltd. from doing the things that the Vendor Defendants are enjoined from doing.
[7] The "Hugessen Order" on the HUGO BOSS file is actually an order of Mr. Justice Hugessen. It is dated the 5th of December, 1997 and was issued at Ottawa. It is the same in substance as the order of Mr. Justice Pinard dated the 27th day of November, 1997 except that, of course, the injunction relates to the BOSS Trade-marks, not the POLO Trade-Marks.
[8] It is worthy of note that neither of the "Hugessen Orders" enjoins Crossroads Market Ltd. from aiding and abetting or facilitating the operations of the Vendor Defendants and neither extends in its scope to Gerry Kendall.
THE EVIDENCE ON THE APPLICATIONS
[9] The evidence on each of the applications is essentially identical. It consists of two affidavits sworn by an associate in the law firm representing the applicants. The affiant attests that he has been "...actively involved in anti-counterfeit litigation since 1995" and as such has personal knowledge of the litigation in issue which he has supplemented by file review and knowledge derived from information and belief.
[10] The affiant attests essentially that Crossroads Flea Market is a large flea market operated by Crossroads Market Ltd. located in northeast quadrant of Calgary, Alberta and that Gerry Kendall is and has been the principal operator of Crossroads Market Ltd. since at least 1992.
[11] The affiant attests on information and belief that the applicants first learned of activity at Crossroads Market in 1992 when the anton piller orders at issue were executed on various other vendors in the Calgary region. Crossroads Market was apparently identified as a source for counterfeit goods in Calgary.
[12] A solicitor on behalf of the applicants visited Mr. Kendall in late October 1992 and advised him that Crossroads Market. had been named as a source of counterfeit goods. The solicitor provided Mr. Kendall with copies of the anton piller orders of the applicants and of one other well-known marketer of clothing and related goods. The solicitor explained the broad powers granted by the anton piller orders. Once again on information and belief, the affiant attests that Mr. Kendall "...undertook to ensure that counterfeit BOSS, POLO and GUESS products would not be sold in his market." Mr. Kendall also named a source for counterfeit shirts that had been marketed at Crossroads Market and it is attested that the identification proved to be accurate.
[13] The affiant attests that by the winter of 1993, it came to the attention of the applicants or their representatives that Crossroads Market was again a primary source for counterfeit goods in the Calgary area. A solicitor on behalf of the applicants wrote to Mr. Kendall on the 10th of January, 1994 expressing disappointment that Mr. Kendall had failed to abide by his earlier undertaking to stop the counterfeit activity at Crossroads Market. The letter advised Mr. Kendall of the potential liability of the operator of the market if he permitted the infringing activities to continue. Mr. Kendall apparently appeared to be cooperative. That notwithstanding, the applicants or their representatives again received reports of counterfeit activity at the Crossroads Market in the winter of 1995. Further executions of anton piller orders, albeit not in relation to clothing, were carried out at the Crossroads Market in late December of 1995.
[14] Further executions were again carried out at the Crossroads Market in March of 1996 with extensive seizures being made of allegedly counterfeit merchandise of five marketers including the applicants. It was as a result of these executions and seizures that the Vendor Defendants were added as defendants. Apparently during the course of these executions and seizures, the affiant attests that he "...had an opportunity to observe the workings of the Crossroads Market, and how it was organized and run." He attests that Crossroads Market Ltd. and the vendors at the market appear to operate "...as a joint business venture"... .
[15] Gerry Kendall apparently interacted during the course of 1996 execution and seizures with members of the executing and seizing group. This interaction was apparently facilitated by the fact that Mr. Kendall"s office was "...in a position to readily monitor the activities in the market." He was apparently uncooperative.
[16] In February, 1999, further executions were carried out and seizures made at the Crossroads Market, in conjunction with the Calgary police. The affiant attests that the goods seized during these executions were estimated by media coverage to have a value in the range of $1,000,000., with more than 10,000 hats, T-shirts, sweaters and jackets seized. It is attested that among those against whom executions were carried out and from whom seizures were made on this occasion were the Vendor Defendants.
THE HEARING OF THE APPLICATIONS
[17] The hearing of the applications proceeded ex parte before me at Calgary, Alberta on the 22nd of November, 1999. This, despite the fact that the solicitor for the Crossroads Defendants was served with notice of the applications. I note at this point that, while in the notices of motion, Crossroads Market Ltd. and Gerry Kendall are identified as the "Crossroads Defendants", Gerry Kendall is not a defendant in either of the actions underlying these applications. During the course of the hearing, I expressed a wish to have evidence, above and beyond that contained in the affidavits that were before me, that the applicants had aggressively pursued the defence of their interests against the Crossroads Defendants. In the result, the applications were adjourned. Subsequently, on the 14th of January, 2000, the applicants obtained default judgments against Crossroads Market Ltd.
ANALYSIS
[18] The issue before the Court is whether or not, on the evidence before it that does not disclose that either of the Crossroads Defendants directly infringed the injunctions contained in the Rothstein Orders and Hugessen Orders, show cause orders should nonetheless go against them based upon the evidence before the Court of their alleged aiding and abetting of the Vendor Defendants, when the Crossroads Defendants had firsthand knowledge of the injunctions, and of their alleged interference with the orderly administration of justice and impairment of the authority and dignity of this Court by their alleged actions.
[19] I am satisfied that a prima facie case that a contempt has been committed by the Crossroads Defendants has been made out on the material before the Court and that, in the result show cause orders should go against each of the Crossroads Defendants.2
[20] In Baxter Travenol Laboratories of Canada Limited et al. v. Cutter (Canada), Ltd.3, Mr. Justice Dickson, as he then was, wrote at pages 396-7:
| The general purpose of the court"s contempt power is to ensure the smooth functioning of the judicial process. Contempt extends well beyond breach of court orders. ... |
| ... |
| Contempt in relation to injunctions has always been broader than actual breaches of injunctions. Cattanach J. recognized this in the present case. Thomas Maxwell is named in the show cause order as having committed contempt in his personal capacity although he is not a party to the action. He is not personally bound by the injunction and therefore could not personally be guilty of a breach. Nevertheless, Cattanach J. acknowledged he could still be found in contempt if he, with knowledge of its existence, contravened its terms. Although technically not a breach of an injunction, such an action would constitute contempt because it would tend to obstruct the course of justice;... [references to an earlier version of the Federal Court Rules and citations omitted] |
[21] In Polo Ralph Lauren Corp. v. Cato4, Madame Justice Reed wrote at page 556:
| It is clear that a person who is not named as a party in an order can be guilty of contempt for aiding and abetting a breach of that order. This was firmly established in Seaward v. Paterson [1897] 1 Ch. 545 (C.A.). The Court of Appeal, held, at page 554, that the jurisdiction the Court has to make a contempt order against a third party is based on the premise that: |
| He is bound, like other members of the public, not to interfere with, and not to obstruct, the course of justice; and the case, if any, made against him must be this - not that he has technically infringed the injunction, which was not granted against him in any sense of the word, but that he has been aiding and abetting others in setting the Court at defiance, and deliberately treating the order of the Court as unworthy of notice. |
| The Supreme Court of Canada in dicta, in T Poje v. A. G. for British Columbia, [1953] 1 S.C.R. 516 at pages 518-519, adopted the rationale of the Seaward decision. The Court referred to the difference between actual breach of an injunction and actions which amount to an obstruction of justice in contempt cases. See also Baxter Travenol Laboratories of Canada Ltd. et al. v. Cutter (Canada), Ltd., ... for a case where someone not actually bound by an injunction was held to be guilty of contempt on the ground that the actions of that person constituted an interference with the orderly administration of justice and the impairment of an order of the Court. ... [citations omitted] |
CONCLUSION
[22] Show cause orders will go on both applications against each of Crossroads Market Ltd. and Gerry Kendall. Counsel for the applicants is invited to submit draft orders for the consideration of the Court with the contempt hearings to be held at Calgary, Alberta. In submitting the draft orders, counsel should advise the Court of his best estimate of the time that will be required for the contempt hearings. On receipt of orders in a form satisfactory to the Court, hearing dates will be inserted into the orders by the Court bearing in mind the concern of counsel for the applicants that hearing dates not be earlier than two months following the date of the orders.
[23] There will be no orders as to costs at this time. Costs is a matter best left to the discretion of the judge conducting the contempt hearings.
____________________________
Judge
Ottawa, Ontario
February 25, 2000
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