Date: 19980309
Docket: T-323-97
BETWEEN:
HAVANA HOUSE CIGAR & TOBACCO MERCHANTS LTD.
EMPRESA CUBANA DEL TABACO trading as
CUBATABACO and HABANOS S.A.,
Plaintiffs,
- and -
MORINO NAEINI carrying on business as
PACIFIC TOBACCO, PACIFIC CIGAR and PACIFIC TOBACCO
& CIGARS and OREX COMMUNICATIONS LTD. carrying on business
as PACIFIC TOBACCO & CIGARS, PACIFIC TOBACCO and PACIFIC CIGAR,
and PACIFIC CIGAR AND TOBACCO CORP., carrying on business as PACIFIC
CIGAR and PACIFIC TOBACCO and FARAH KASHEFI, carrying on business as
PACIFIC TOBACCO and PACIFIC TOBACCO & CIGARS and ASA CIGAR
CONNOISSEUR CORP., carrying on business as CIGAR CONNOISSEUR,
Defendants.
REASONS FOR ORDER
MR. JOHN A. HARGRAVE, PROTHONOTARY
[1] These reasons arise out of the Defendants' Motion, heard and decided 3 March 1998, to strike out portions of the Statement of Claim, or alternatively for particulars of copyright design and transfer and for cross-examination of the deponents of the Plaintiffs' Affidavits of Documents.
BACKGROUND
[2] The Plaintiffs, Empresa Cubana Del Tabaco, trading as Cubatabaco ("CUBATABACO") and Habanos S.A. ("HABANOS") are the Cuban state suppliers and exporters of cigars. The Plaintiff, Havana House Cigar & Tobacco Merchants Ltd. ("HAVANA HOUSE"), is a Canadian importer and distributor of tobacco products, particularly cigars. The Plaintiffs claim the ownership of a dozen well-known cigar trademarks, including Montecristo Habanas and Partagas. The Plaintiffs seek, among other things, injunctive and declaratory relief and damages, arising out of allegations of passing off and trademark and copyright infringement.
[3] While the various brand names of cigars have been around for many years, indeed, well into the nineteenth century in some instances, HAVANA HOUSE is a relative newcomer, having been incorporated in Canada in 1988. HAVANA HOUSE, as well as claiming Trade-marks Act rights to ten well-known brands of cigars, pursuant to registrations under the Act between 1993 and 1996, also claims rights under the Copyright Act in the artistic designs for the bands on and the packaging of Montecristo Habanas and of Partagas cigars. This claim of copyright is in part the focus of the Defendants' Motion and is set out in paragraphs 17 through 20 of the Amended Statement of Claim.
[4] To go back a little, the Statement of Claim was filed 26 February 1997, naming as Defendants Morino Naeini and Pacific Tobacco & Cigars and Orex Communications Ltd. carrying on business as Pacific Tobacco & Cigars. Mr. Naeini has interests in those Defendants and has carried on the business of importing and selling various brands of cigars, said to include Montecristo Habanas and Partagas cigars, for a number of years. Those Defendants, with the assistance of their former lawyers, filed a Defence, 1 April 1997. The Statement of Claim was amended 27 October 1997, to add a number of new Defendants and to make several changes of substance. The new Defendants have not yet filed a defence.
CONSIDERATION
Striking Out Plea of Copyright:
[5] The original Defendants, having filed a Defence, ought not, at this stage, to be able to obtain particulars for pleading. I also recognize that, as a general principle, parties may not move to strike out matters they have already pleaded to. Of course this does not prevent a motion, after a pleading, on the grounds that there is no reasonable cause of action. Nor does it preclude a motion to strike out on the basis of a response given by a plaintiff, on examination, which contradicts material allegations of fact in the statement of claim: see for example Mayflower Transit Ltd. v. Marine Atlantic Inc. (1989) 29 F.T.R. 30 at 33 - 34, a decision of Mr. Justice MacKay.
[6] In this instance there are several factors which allow the Defendants to bring the present Motion to strike out at this stage in the action. First, the cross-examination of Mr. Abel Ortego, Marketing Director of HAVANA HOUSE, contradicts the portion of the Statement of Claim which the Defendants desire struck out. Second, the Plaintiffs substantially amended the Statement of Claim, 27 October 1997, including by adding a number of Defendants. The new law firm and counsel retained by the Defendants has not filed an amended defence on behalf of the original Defendants. Finally, and more important, new counsel has not filed any defence on behalf of the Defendants added by amendment.
[7] Counsel for the Plaintiffs submits that all of the Defendants are substantially one and that the Defendant, Mr. Naeini, is their spokesman. However Mr. Naeini is not the owner of all of the corporate Defendants, but rather appears to be an owner or a person otherwise interested. I am not about to pierce corporate veils on this basis. By reason of these procedural facts the Defendants, certainly the newly added Defendants, may bring the present Motion to strike out, or alternatively, to obtain particulars.
[8] Paragraphs 17 through 20 of the Statement of Claim set out, as I have said, a claim to copyright in the design works contained in two Schedules to the Statement of Claim, being banding and packaging for Montecristo Habanas and Partagas cigars:
| "THE PLAINTIFF'S, HAVANA HOUSE RIGHTS UNDER THE COPYRIGHT ACT |
| 17. HAVANA HOUSE is the owner of the copyright subsisting in Canada in the artistic design works shown in Schedules "O" and "P" hereto and all modifications, amendments and changes thereto. |
| 18. The artistic design works referred to in paragraph 18 [sic] above and shown in Schedules "O" and "P" hereto are original works, originally authored by employees for hire of its predecessor-in-title. The employees who authored the works at all materials times were Spanish citizens. |
| 19. Copyright subsists in Canada in the said artistic design works and HAVANA HOUSE is the owner thereof by the virtue of the provision of the Copyright Act and, in particular, in Sections 5, 6, and 13 thereof. |
| 20. HAVANA HOUSE is the only person entitled, in Canada, to import or reproduce the said artistic design works, or a substantial taking thereof in any material form whatsoever.". |
Here I would note that the copyrights in question are not registered copyrights.
[9] Critical to the claim of HAVANA HOUSE, under paragraphs 17 through 20 of the Statement of Claim, is Section 13(4) of the Copyright Act which invalidates any assignment or grant of a copyright unless it is in writing:
| "13.(4) The owner of the copyright in any work may assign the right, either wholly or partially, and either generally or subject to territorial limitations, and either for the whole term of the copyright or for any other part thereof, and may grant any interest in the right by licence, but no assignment or grant is valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by his duly authorized agent." (emphasis added). |
None of the Affidavits of Documents declare an assignment of copyright, or even that the document of assignment was but no longer is in the possession of any of the Plaintiffs, requirements under Rule 448(2).
[10] The fact that a Plaintiff HAVANA HOUSE is unable to produce written assignments of the copyrights to which it lays claim is not necessarily fatal however the evidence must establish, on the balance of probabilities, that a written assignment existed. This principle is set out in Motel 6, Inc. v. No. 6 Motel Limited [1982] 1 F.C. 638. There the issue was a claim to copyright under what was then Section 12(4) of the Copyright Act, but is now Section 13(4) of the Act. Mr. Justice Addy sums this up at page 647:
| "I quite accept the proposition of counsel for the plaintiff that section 12(4) is a substantial legal requirement and not a rule of evidence. Therefore, the assignment itself need not necessarily be produce if the evidence establishes that it existed and conformed to that section. The evidence, however, falls far short of establishing on a balance of probabilities that an assignment in writing ever existed, much less one that was signed by Greene or his agent or of establishing who the assignee might have been.". |
In the Motel 6 decision, Mr. Justice Addy found there was only speculation that a written assignment might have existed and thus, the plaintiff having failed to establish ownership, the claim for copyright infringement was dismissed.
[11] As I say the foundation of paragraphs 17 through 20 of the Statement of Claim must be a written assignment of the copyrights in the artistic designs for Montecristo Habanas and Partagas cigars, banding and boxing. That none of the Plaintiffs declared, in their Affidavits of Documents, either an existing written assignment or the existence of a lost assignment, that raises substantial doubt as to the validity of the claim of the Plaintiff, HAVANA HOUSE, to copyright rights in Montecristo Habanas and Partagas packaging.
[12] The Defendants also point to the evidence of Mr. Abel Ortego, given on cross-examination on an Affidavit of 9 January 1998, in support of a motion for an interlocutory injunction. This evidence is to the effect that while HAVANA HOUSE claims as the owner of various registered trademarks, including Montecristo Habanas and Partagas, there was never any assignment of those trademarks, trademarks which go back many years, nor was Mr. Ortego familiar with any written or oral licence. This may be indicative of the general approach of HAVANA HOUSE to its business, but has no bearing on the present Motion.
[13] To strike out a portion of a statement of claim is not easy. A defendant must show, beyond doubt, that the plea will not succeed. If it is not a futile plea, but rather one which has some chance of success, a motion to strike out fails. The claim of copyright, as pleaded, has a number of other difficulties, but at this point I am not prepared to say it is futile, for the Plaintiffs may yet be able to show written assignment or probability that written assignment existed, or given the decades which have gone by since the packaging in question was designed and the nationalization of the cigar industry in Cuba, a series of written assignments and grants.
Particulars of Acquisition of Copyright:
[14] The Defendants, or at least those added by way of amendment and who have not pleaded to the Statement of Claim, are certainly entitled to know something of the way in which the Plaintiff acquired copyright rights in the Montecristo Habanas and Partagas cigars banding and packaging so they may plead intelligently.
[15] Counsel for the Plaintiff referred me to case law to the effect that particulars of publication, authorship and the like need not be provided, being readily apparent and more appropriate as a subject matter for discovery: for example Canadian Olympic Association v. National Gym Clothing Ltd. (1985) 2 C.P.R. (3d) 145. That line of authority deals with registered copyrights where the particulars are readily obtained from the registration. In a situation such as the present, with unregistered copyrights, for which the Plaintiff must clearly establish a chain of title underlying its claim to copyright benefits, the Defendants are entitled to such particulars: see for example Durand & Cie v. Lapatrie Publishing Co. Ltd. (1952) 15 C.P.R. 86 at 90 - 92 (Ex. Crt.). The Plaintiffs will therefore provide the requested particulars including those of authorship, predecessors in title and assignments by which HAVANA HOUSE asserts ownership of those artistic design works. All parties are now pressing for a speedy resolution to the action. The written assignment is absolutely essential to the copyright claim of the Plaintiffs. The Defendants have sought the particulars for some time and thus the present Motion comes as no surprise. The Plaintiffs will provide the particulars within 15 days.
[16] In the event that the Plaintiffs are not able to provide written assignments of the copyrights in the Montecristo Habanas and Partagas packaging, or show on the balance of probabilities that written assignments existed, they should keep in mind that an action is not a speculative exercise, to be launched, in whole or in part, where it is clear that the onus of proof rests upon the plaintiff and yet the plaintiff has no evidence or foundations of fact on which to support its claims. This sort of situation was dealt with by Mr. Justice Addy in Caterpillar Tractor Co. v. Babcock Allatt Ltd. (1983) 67 C.P.R. (2d) 135, in which the plaintiff brought a motion to strike out portions of the defence which merely restated or rephrased portions of the Patent Act, but which were grounded on no material facts. Now in Caterpillar Tractor the plaintiff, after receiving the defence, took a fresh step in the action and chose to examine for discovery, which had the effect of closing the pleadings. However it became clear, during discovery, that the defendant had made an unsupported plea. The defendant, faced with the motion to strike out, submitted that as pleadings were effectively closed the plaintiff was precluded from requesting particulars and was prevented from seeking to have the action struck out for lack of particulars. Mr. Justice Addy characterized the plaintiff's motion not as a question of sufficiency of pleadings, but rather of lack of evidence and pointed out that under Rule 419 the court might strike out a pleading, at any stage of an action, where it is frivolous, vexatious, prejudicial, embarrassing or might otherwise constitute an abuse:
| "If a party has no grounds for making an allegation in a pleading, then, there is no basis for maintaining the allegation. It is not an answer to an application to strike out, for the party to say that, if he had unrestricted discovery of his opponent, he might then be in a position to sustain the allegation." (p. 138). |
[17] Mr. Justice Addy struck out the two offending paragraphs. In the present instance, particularly given the pressure to determine this matter, it is time for the Plaintiffs to either provide particulars or consider amending the Statement of Claim to withdraw the four paragraphs and ancillary relief provisions which the Defendants seek to have struck out for, as I have said, this action ought not to be a speculative exercise, for the onus of providing an assignment rests with the Plaintiffs and yet, to date, they have provided no evidence of such. This idea is neatly summed up in the Caterpillar Tractor case at p. 139:
| "A court proceeding is not a speculative exercise and actions are not to be launched or continued nor are defences to be allowed to stand where it is clear that the person making the allegation has no evidence to support it and where the onus of proof rests on that person. It has, in my view, been fully established that the allegations in paras. 9(b) and 10(b) are frivolous and vexatious and may prejudice or embarrass a fair trial and constitute an abuse of the court. There is no real dispute on these issues and the plaintiff should not be put in the position of meeting allegations which have no foundation in fact. The paragraphs will be struck out. The result would have been the same if full particulars had in fact been given originally and then, on discovery, there had been an admission that the facts alleged were fictitious. It happens too frequently and especially in patent and other industrial property cases, that in attacking the validity of a patent or title to a trademark or copyright, all textbook grounds of attack are automatically inserted regardless of whether or not they are relevant or whether there is any possibility of any evidence existing to support them.". |
The disposition of the present Motion, which is merely for particulars, is without prejudice to the Defendants, should they view the particulars as deficient, bringing on a new motion to strike out.
Examination on Affidavits of Documents
[18] Turning now to the request for cross-examination of the deponents of the Affidavits of Documents filed by each of the Plaintiffs, I would first note that while the Plaintiff HAVANA HOUSE has provided an Affidavit of Documents and a Supplemental Affidavit of Documents, together containing a total of 31 documents, much of the material declared consists of trademark registrations and copyright designs. In the case of HABANOS, its Affidavit of Documents sets out they have some privileged material, but nothing else. The Affidavit of Documents of CUBATABACO, declares three trademark registrations, a 1962 design for the H Upmann Habanas cigar and a distribution agreement between CUBATABACO and HAVANA HOUSE which, incidentally, has not been declared by HAVANA HOUSE in its Affidavit or Supplemental Affidavit of Documents. In each of the four Affidavits of Documents Schedule C, relevant documents no longer in the possession of a party, contains a nil entry.
[19] In the present instance counsel for the Defendants, referring both to the Affidavits of Documents and to the Affidavits in support of this Motion, submits discovery of documents has been less than complete. On an application for cross-examination on an affidavit of documents I may look not only at the affidavits themselves, but also at the pleadings and proceedings. I have also in mind that discovery of documents, before examination for discovery and trial, is one of our most important procedures and that it ought to be for the Plaintiffs, who in this instance bring the claim and should know the background, to present more than just a minimal or even no production of documents as in the case here. However the Defendants, in pressing for further documents through cross-examination on Affidavits of Documents, must have some persuasive evidence that documents are available, but have not been produced, rather than mere speculation, intuition and guesswork.
[20] If some specific documents have been overlooked, or if it appears that many documents have been withheld, although it may not be clear which documents or classes of documents have been withheld, the Plaintiff may have a remedy by way of cross-examination on Affidavits of Documents, a remedy allowed, for example, in Nelma Information Inc. et al. v. Holt et al. (1985) 50 C.P.C. 16 (Ont. H.C.).
[21] The Affidavits of Documents of all three Plaintiffs and the Supplemental Affidavit of HAVANA HOUSE set out, in the usual wording, that the deponent has conducted a diligent search of corporate records, has made appropriate inquiries and has disclosed all of the documents relevant to the action, being unaware of any other relevant documents other than those that are listed. There are obviously specific documents missing and I have in mind here the assignments of copyright to HAVANA HOUSE, which ought to have been listed either as documents held by HAVANA HOUSE or documents held at one time by HAVANA HOUSE but which are, for some reason, no longer in the possession of HAVANA HOUSE. Counsel says the Plaintiffs do not know if they have written assignments and therefore could not refer to them on disclosure of documents. However the Plaintiffs have had over a year since commencement of this action and ought to have put their tackle in order long ago. There are also general gaps in the production of documents, being a total gap in the case of the Plaintiff, HABANOS, a near total gap in production in the case of CUBATABACO and a rather meagre production on the part of the Plaintiff, HAVANA HOUSE. There are also a number of apparent categories of missing documents including those dealing with distribution of the Plaintiffs' cigars into Canada, advertising as alleged by HAVANA HOUSE, sales in Canada, loss of profit, use of copyright and passing off.
[22] Counsel for the Plaintiffs submits that his clients produced much material in past interlocutory motions and that such documents ought to be considered as produced. Further, counsel for the Plaintiffs suggests that if a document is declared by one party, or perhaps by one of several plaintiffs, it need not be listed by another party in its affidavit of documents. This is not within the spirit or the intent of the Rules. It overlooks the basic premise that disclosure of documents is a matter of relevance, not discretion: this is clearly required by Rule 448(2)(a) which provides that an affidavit of documents must contain various lists "... of all documents relevant to any matter in issue ..." which a party possesses. A party is obliged to list every relevant document in its possession, even those documents which do not have to be produced: see for example Skoye v. Bailey [1971] 1 W.W.R. 144 at 145 - 146 (Alta. C.A.) and Re-Max Real Estate (Edmonton) Ltd. v. Border Credit Union Ltd. [1988] 6 W.W.R. 146 (Master Funduk, Alta. Q.B.). Turning from listing documents to production, two distinct concepts, to say a document need not be produced because the other side already has it, from another source, is an inappropriate answer: see for example Canada Southern Petroleum Ltd. v. Amoco Canada Petroleum Co. Ltd. [1995] 5 W.W.R. 720 at 723 (Alta. Q.B.). Given the apparent gaps in the production of documents, without any reasonable explanation, this is an instance in which the Plaintiff should have a remedy.
[23] I have considered whether the exploration for additional documents might be as well handled during examination for discovery, but have rejected that idea for various reasons. To mention just several reasons, it is only fair that counsel for the Defendants have a full set of documents to consider in preparing for examination for discovery. Further, the Plaintiffs' nominees for discovery may know little about the existence of further documents. Finally, if the Defendants are successful in ferreting out further documents, on examination for discovery, or the existence of further documents, there would very likely be additional examinations for discovery, adding delay and expense. The deponents of the Plaintiffs' Affidavits of Documents are therefore to be produced for cross-examination.
CONCLUSION
[24] The Plaintiffs shall provide particulars of each of the authors of the Montecristo Habanas and Partagas cigar banding and packaging, including the relationship between each author and any predecessors in title to the banding and packaging designs, together with copies of any assignments of copyright.
[25] The Defendants will have cross-examination at Toronto of the deponents of the Affidavits of Documents filed by the three Plaintiffs. If the parties are unable to set convenient dates, within the expedited timing of this action, they may apply to have dates set.
[26] As to the cost of bringing the deponents to Toronto for cross-examinations, the Plaintiffs have, at least to some degree, brought the necessity of cross-examination upon themselves. Each side will bear half the cost of bringing the witnesses to Toronto.
[27] The Defendants having been successful on this Motion they are entitled to costs in any event at the end of the day.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
9 March 1998
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: T-323-97
| STYLE OF CAUSE: HAVANA HOUSE CIGAR & TOBACCO MERCHANTS LTD., EMPRESA CUBANA DEL TABACO trading as CUBATABACO and HABANOS S.A., |
Plaintiffs,
- and -
| M ORINO NAEINI carrying on business as PACIFIC TOBACCO, PACIFIC CIGAR and PACIFIC TOBACCO & CIGARS and OREX COMMUNICATIONS LTD. carrying on business as PACIFIC TOBACCO & CIGARS, PACIFIC TOBACCO and PACIFIC CIGAR, and PACIFIC CIGAR AND TOBACCO CORP., carrying on business as PACIFIC CIGAR and PACIFIC TOBACCO and FARAH KASHEFI, carrying on business as PACIFIC TOBACCO and PACIFIC TOBACCO & CIGARS and ASA CIGAR CONNOISSEUR CORP., carrying on business as CIGAR CONNOISSEUR, |
Defendants.
PLACE OF HEARING: Vancouver, BC
DATE OF HEARING: March 3, 1998
Reasons for Order of the Court by: Mr. John A. Hargrave, Prothonotary
Dated: March 9, 1998
APPEARANCES:
| Mr. Kenneth McKay for Plaintiff |
| Mr. Michael Manson for Defendant |
SOLICITORS OF RECORD:
| Kenneth McKay for Plaintiff |
| Sim, Hughes, Ashton & McKay |
| Michael Manson for Defendant |
Smart & Biggar