Date: 20040109
Docket: T-815-01
Citation: 2004 FC 21
Ottawa, Ontario, this 9th day of January, 2004
Present: THE HONOURABLE MR. JUSTICE O'REILLY
BETWEEN:
LIFEGEAR, INC.
and PRIDE INTERNATIONAL INC.
Plaintiffs
and
URUS INDUSTRIAL CORPORATION
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
[1] LifeGear Inc. makes exercise equipment. It produces a machine called an elliptical trainer, under the trade-mark "Saturne". Pride International Inc. is a sales agent for LifeGear products. Urus Industrial Corporation, the defendant, carries on a variety of commercial ventures including distribution of consumer goods. It had a contract to distribute LifeGear's elliptical trainers. It did so under the name "Koolatron" and so will be referred to by that name in these reasons.
[2] LifeGear alleges that Koolatron sold counterfeit versions of the Saturne elliptical trainer in violation of LifeGear's trade-mark. It, and Pride, began an action against the defendant and brought a motion for summary judgment on its claim. Justice Hugessen heard and granted, in part, the plaintiffs' motion. He found that the defendant had breached s. 19 of the Trade-marks Act, R.S.C. 1985, c. T-13, in respect of its use of the trade-mark "Saturne" (relevant enactments are set out in Annex "A"). Justice Hugessen gave oral reasons at the hearing of the motion on December 6, 2002, and issued written reasons on December 10, 2002 (Lifegear Inc. v. Urus International Corp., 2002 FCT 1285, [2002] F.C.J. No. 1745 (QL) (T.D.)). Some weeks later, on February 4, 2003, he issued a formal order.
[3] The plaintiffs allege that the defendant failed to respect Hugessen J.'s decision and, further, that it violated his formal order. They brought these proceedings against the defendant for contempt of court on those two grounds: Rules 466 and 467 of the Federal Court Rules, 1998, SOR/98-106. Prothonotary Lafrenière issued an order on March 28, 2003, requiring the defendant to show cause why it should not be found in contempt.
[4] I find that the plaintiffs have proved beyond a reasonable doubt that the defendant failed to respect Hugessen J.'s reasons and violated his formal order. Further, I find that the defendant's conduct amounted to contempt of court. I will deal each of the grounds separately, and discuss the legal elements of contempt thereafter.
I. The Reasons (December 6, 2002)
[5] On its motion for summary judgment, the plaintiffs sought an injunction against the defendant. The defendant argued against it, but Hugessen J. rejected its position. He said:
Accordingly, the plaintiff is entitled to summary judgment declaring it to be the owner of the Canadian registered trade mark "Saturne" and declaring the defendant to have infringed that mark. It is also entitled to injunctive relief against the defendant and its officers and employees in the usual terms forbidding further breaches of the plaintiff's mark. It is also entitled to an order to deliver up in the usual terms. (At para. 11.)
[6] Justice Hugessen directed the plaintiffs to prepare a draft order. In due course, they composed a draft and tried to obtain the defendant's consent to it. However, the defendant objected to various parts of it and refused to approve it. The plaintiffs presented their draft to Hugessen J. in a written motion. In turn, he issued a formal order in terms virtually identical to the plaintiffs' draft.
[7] The plaintiffs argue that the defendant had a legal duty to comply with Hugessen J.'s reasons, presented orally on December 6, 2002 and in writing on December 10, 2002, even though his formal order was not issued until February 4, 2003. Their argument raises, first, a point of law: did the defendant have a duty to comply with Hugessen J.'s reasons? Second, if so, did the defendant breach that duty?
(a) The Duty to Comply with Reasons
[8] The law is clear on this point. The Supreme Court of Canada has held that a person must comply with a court's decision from the point at which it was rendered, whether or not a formal judgment has yet been signed: Baxter Travenol Laboratories of Canada Ltd. v. Cutter (Canada) Ltd., [1983] 2 S.C.R. 388 (QL). Justice Dickson (as he then was), stated:
Reasons for decision are not meant to be tentative. The hiatus between reasons for decision and formal judgment simply provides an opportunity to settle the precise language to implement the judge's conclusions. Once a judge has rendered his decision by giving reasons, and assuming any prohibitions contained therein are clearly worded, it is not, in my view, open to any person to flout his disposition of the case on the ground that there is no judgment yet in effect. The situation after reasons for decision is very different from a situation in which the defendant acts prior to any court determination. Once reasons for decision have been released, any action which would defeat the purpose of the anticipated injunction undermines that which has already been given judicial approval. Any such action subverts the processes of the court and may amount to contempt of court. (At p. 398.)
[9] Accordingly, the defendant had a duty to comply with Hugessen J.'s decision at the point at which it was issued - beginning on December 6, 2002, when the decision was rendered in open court in the presence of counsel for the defendant.
[10] There is, of course, an important condition set out in Dickson J.'s statement: the prohibitions contained in the court's reasons must be "clearly worded" before a person can be expected to obey them. Here, Hugessen J. said that the plaintiffs were entitled to an injunction against the defendant "in the usual terms forbidding further breaches of the plaintiff's mark," as well as an order "to deliver up in the usual terms." Were these directions "clearly worded"?
[11] It is certainly clear that as of December 6, 2002 the defendant was required to stop infringing the plaintiffs' trade-mark for Saturne elliptical trainers immediately and to begin delivering to the plaintiffs materials that infringed that trade-mark. I do not see any room for doubt about that whatsoever. Indeed, the formal order of February 4, 2003, while expressed in somewhat more detailed and precise language, adds nothing of any substance to what was said by Hugessen J. on December 6, 2002. The defendant did object to some aspects of the plaintiffs' draft order, which was intended to capture the scope of Hugessen J.'s decision. However, it did not appear to have any major doubts or concerns about the parts relating to its obligation to refrain from selling and advertising Saturne products and to deliver up infringing material.
[12] The question, then, is whether the defendant complied with the decision of Hugessen J. delivered on December 6, 2002?
(b) Did the Defendant Breach its Duty to Comply with the Court's Reasons?
[13] At the time of the December 6, 2002 decision of Hugessen J., Koolatron was still selling counterfeit Saturne elliptical trainers. Justice Hugessen stated in his written reasons of December 10, 2002:
There is, however, no dispute whatever over the fact and it is indeed admitted that the defendant has sold and is apparently still selling elliptical trainers in Canada not of the plaintiff's manufacture and bearing the "Saturne" trade mark. (At para. 4.)
[14] Thereafter, the defendant continued to offer those products for sale through its website: www.koolatron.com. As such, the defendant clearly failed to comply with Hugessen J.'s order of December 6, 2002 to stop infringing LifeGear's Saturne trade-mark. Further, the defendant did not deliver up to the plaintiff's any infringing material. Accordingly, I must conclude, inescapably, that the defendant failed to comply with Hugessen J.'s decision.
[15] There remains, of course, the question whether the defendant's conduct amounted to contempt of court. I will address this question below, after considering whether the defendant also violated the formal order of February 4, 2002.
II. The Order (February 4, 2003)
[16] As mentioned, the February 4, 2003 order, in substance, was identical to what was said by Hugessen J. in December 2002. The order is attached as Annex "B" to these reasons. Its main elements were the prohibition on further trade-mark infringements by the defendant, including advertising the offending Saturne product, and the obligation to deliver up infringing materials.
[17] On February 7, 2003, Mr. Steve Milo, Product Manager at Pride International Inc., explored the defendant's website, noticed that Saturne elliptical trainers were still being offered for sale and attempted to buy one on-line. He succeeded. The product arrived by courier on February 21, 2003. It was clearly a fake. It was contained in a box with Koolatron's logo, not LifeGear's. The box was smaller than the usual shipping container, and so was the product inside. However, the box indicated that the product was a "Saturne". Inside was an owner's manual and an instructional videotape. These materials contained the word "Saturne" in various places but were not produced by LifeGear. LifeGear's name was absent from the machine's footpads, unlike on the genuine product.
[18] Mr. Arun Kulkarni, President of Koolatron, said that he did nothing in response to Hugessen J.'s earlier decision of December 6, 2002. However, after he received Hugessen J.'s order of February 4, 2003, he took steps to have Saturne products removed from the website. He explained that the website was run by a third party in India. While the order was faxed to his counsel on February 5, 2003, Mr. Kulkarni testified that he did not receive it until a day or two later. At that point, it was February 8th in India - a Saturday - and nothing could be done right away. It was Tuesday, February 11, 2003, before the Saturne product was erased from the website.
[19] As for the obligation to deliver up infringing materials, Mr. Kulkarni stated that he told his staff about the February 4th order and asked them to pull out any material relating to the Saturne product. Some materials - videotapes and flyers - were delivered to LifeGear in early March 2003. About a month later, Koolatron staff found some more owner's manuals and videotapes and these were also delivered to LifeGear. No Saturne boxes were ever delivered. Mr. Kulkarni said that at some point his staff found some boxes but he ordered them destroyed instead of delivering them to LifeGear. A statistical report on Koolatron's profits from Saturne elliptical trainers showed an inventory of 65 units on February 26, 2003. Based on this document, the plaintiffs felt Koolatron should have made further deliveries of infringing materials. Mr. Kulkarni explained that this inventory included products from another manufacturer, customer returns and some original LifeGear units.
[20] Again, based on this evidence, I must conclude that the defendant failed to comply with Hugessen J.'s order of February 4, 2003. It continued to offer for sale, and actually sold, counterfeit Saturne elliptical trainers after that date. The defendant's website continued to advertise and provide a mechanism for purchasing counterfeit products for at least a week after the February 4th order. Koolatron also failed to deliver up any infringing materials until a month after the order. It took another month to supply further materials. It destroyed boxes bearing the Saturne trade-mark instead of delivering them to the plaintiffs, contrary to the clear terms of the order.
[21] The next question is whether the defendant's conduct amounted to contempt of court.
III. Was the defendant's conduct contemptuous?
[22] Contempt of court, even in civil proceedings, verges on criminal conduct. As with crimes, the definition of contempt includes both physical and fault elements, both of which must be proved beyond a reasonable doubt. Proof that a person has disobeyed a court decision or order would satisfy the physical element and, as noted above, has been proved beyond a reasonable doubt in this case.
[23] The corresponding fault element of contempt is knowledge of the terms of the court order that was disobeyed: Merck & Co. v. Apotex Inc. (2003), 227 D.L.R. (4th) 106 (F.C.A.), at 139; Tamec Inc. v. 2804166 Canada Inc (c.o.b. Centre régional de fax), [1995] F.C.J. No. 1632 (QL) (T.D.). In this case, the defendant Koolatron clearly knew about both Hugessen J.'s decision of December 6, 2002 and his order of February 4, 2003. Mr. Kulkarni testified that he received copies of all important documents relating to this litigation and that his counsel kept him informed of all developments. He had personal knowledge of both this Court's decision and its formal order.
[24] Knowledge of a court order, combined with failure to comply, equals contempt of court. The plaintiffs have proved both of these elements beyond a reasonable doubt and, therefore, I must find the defendant in contempt. Evidence of any good faith efforts by the defendant to comply with the Court's orders may be relevant to penalty, but it does not negate the existence of the essential elements of contempt, which are clearly present here (Merck, above). The same is true with respect to evidence that the contempt may have been purged by the defendant's subsequent acts of compliance.
IV. Conclusion
[25] The plaintiffs have proved beyond a reasonable doubt that the defendant knowingly failed to comply with Hugessen J.'s decision of December 6, 2002 and his formal order of February 4, 2003. I will receive written submissions from the parties on the issues of penalty and costs.
JUDGMENT
THIS COURT'S JUDGMENT IS that:
1. The defendant knowingly failed to comply with Hugessen J.'s decision of December 6, 2002 and his formal order of February 4th, 2003;
2. The parties may file written submissions on the issues of penalty and costs on or before January 30, 2004.
"James W. O'Reilly"
Judge
Annex "A"
| Trade-marks Act, R.S.C. 1985, c. T -13
Rights conferred by registration
19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services. R.S.C. 1985, c. T-13, s. 19; S.C. 1993, c. 15, s. 60.
Federal Court Rules, 1998, SOR/98-106
Contempt
466. Subject to rule 467, a person is guilty of contempt of Court who
(a) at a hearing fails to maintain a respectful attitude, remain silent or refrain from showing approval or disapproval of the proceeding; (b) disobeys a process or order of the Court; (c) acts in such a way as to interfere with the orderly administration of justice, or to impair the authority or dignity of the Court; (d) is an officer of the Court and fails to perform his or her duty; or (e) is a sheriff or bailiff and does not execute a writ forthwith or does not make a return thereof or, in executing it, infringes a rule the contravention of which renders the sheriff or bailiff liable to a penalty.
Right to a hearing
467. (1) Subject to rule 468, before a person may be found in contempt of Court, the person alleged to be in contempt shall be served with an order, made on the motion of a person who has an interest in the proceeding or at the Court's own initiative, requiring the person alleged to be in contempt (a) to appear before a judge at a time and place stipulated in the order; (b) to be prepared to hear proof of the act with which the person is charged, which shall be described in the order with sufficient particularity to enable the person to know the nature of the case against the person; and (c) to be prepared to present any defence that the person may have.
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Loi sur les marques de commerce, L.R.C. 1985, ch. T-13
Droits conférés par l'enregistrement
19. Sous réserve des articles 21, 32 et 67, l'enregistrement d'une marque de commerce à l'égard de marchandises ou services, sauf si son invalidité est démontrée, donne au propriétaire le droit exclusif à l'emploi de celle-ci, dans tout le Canada, en ce qui concerne ces marchandises ou services. L.R. (1985), ch. T-13, art. 19; 1993, ch. 15, art. 60.
Règles de la Cour fédérale (1998), DORS/98-106
Outrage
466. Sous réserve de la règle 467, est coupable d'outrage au tribunal quiconque : a) étant présent à une audience de la Cour, ne se comporte pas avec respect, ne garde pas le silence ou manifeste son approbation ou sa désapprobation du déroulement de l'instance; b) désobéit à un moyen de contrainte ou à une ordonnance de la Cour; c) agit de façon à entraver la bonne administration de la justice ou à porter atteinte à l'autorité ou à la dignité de la Cour; d) étant un fonctionnaire de la Cour, n'accomplit pas ses fonctions; e) étant un shérif ou un huissier, n'exécute pas immédiatement un bref ou ne dresse pas le procès-verbal d'exécution, ou enfreint une règle dont la violation le rend passible d'une peine.
Droit à une audience
467. (1) Sous réserve de la règle 468, avant qu'une personne puisse être reconnue coupable d'outrage au tribunal, une ordonnance, rendue sur requête d'une personne ayant un intérêt dans l'instance ou sur l'initiative de la Cour, doit lui être signifiée. Cette ordonnance lui enjoint :
a) de comparaître devant un juge aux date, heure et lieu précisés; b) d'être prête à entendre la preuve de l'acte qui lui est reproché, dont une description suffisamment détaillée est donnée pour lui permettre de connaître la nature des accusations portées contre elle; c) d'être prête à présenter une défense. |
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Annex "B"
DATE: 20030204
Docket: T-815-01
OTTAWA, ONTARIO, THIS 4TH DAY OF FEBRUARY 2003
PRESENT: THE HONOURABLE MR. JUSTICE HUGESSEN
B E T W E E N :
LIFEGEAR, INC.
and PRIDE INTERNATIONAL INC.
Plaintiffs
- and -
URUS INDUSTRIAL CORPORATION
Defendant
and
URUS INDUSTRIAL CORPORATION
Plaintiff by Counterclaim
- and -
LIFEGEAR, INC.
and PRIDE INTERNATIONAL INC.
Defendants by Counterclaim
ORDER
UPON MOTION made by the Plaintiffs for, inter alia, summary judgment, and upon reviewing the materials filed by the parties and upon hearing submissions of counsel for the parties,
THIS COURT ORDERS AND ADJUDGES as follows:
26. The Plaintiff, LifeGear Inc., is the owner of the Canadian registered trade-mark "SATURNE" (registration number TMA526,906).
27. Canadian trademark registration number TMA526,906 ("SATURNE") has been infringed by the Defendant contrary to section 19 of theTrade-marks Act.
28. The Defendant, its officers, directors, employees, agents and all those over whom they exercise control, shall be restrained from either directly or indirectly manufacturing, importing, distributing, offering or displaying for sale, selling, storing, shipping, or advertising exercise equipment in association with any trade-mark or designation:
a) comprising or containing the word SATURNE; or
b) confusingly similar with the SATURNE trade-mark.
29. The Defendant, its officers, directors, employees, agents and all those over whom they exercise control, shall cease and desist from broadcasting or authorizing the broadcasting of any media incorporating the SATURNE trade-mark or any trade-mark confusingly similar therewith.
30. The Defendant, its officers, directors, employees, agents and all those over whom they exercise control, shall cease displaying the SATURNE trade-mark or any confusingly similar trade-marks on its website, www.koolatron.com, and on any other website operated by the Defendant, its officers, directors, employees, agents and all those over whom they exercise control.
31. The Defendant shall deliver to the Plaintiff Lifegear all signs, advertising, packaging, labelling, promotional video tapes, containers, wares and any other materials in the Defendant's possession, custody or control that contains the trade-mark SATURNE or any word confusingly similar with the SATURNE trade-mark.
32. The Defendant's counterclaim is dismissed in its entirety.
33. The Defendant shall pay costs to the Plaintiffs in respect of this motion for Summary Judgment, assessed under Column III of Tariff B of the Federal Court Rules, 1998.
"Justice Hugessen"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-815-01
STYLE OF CAUSE: LIFEGEAR INC., ET AL. v.URUS INDUSTRIAL CORPORATION
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: September 23, 2003
REASONS FOR JUDGMENT
AND JUDGMENT BY: THE HONOURABLE MR. JUSTICE O'REILLY
DATED: January 9, 2004
APPEARANCES:
Mr. James H. Buchan FOR THE PLAINTIFFS
Mr. Brian Belmont FOR THE DEFENDANT
SOLICITORS OF RECORD:
GOWLINGS LAFLEUR HENDERSON LLP
Barristers & Solicitors
Commerce Corut West, Suite 4900
Toronto, ON M5L 1J3 FOR THE PLAINTIFFS
BELMONT, FINE & ASSOCIATES
Barristers & Solicitors
1120 Finch Ave. West, Suite 601
Toronto, ON M3J 3H7 FOR THE DEFENDANT