Date: 20030827
Docket: T-1018-03
Citation: 2003 FC 1006
Toronto, Ontario, August 27th, 2003
Present: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
S. H. LEGGITT COMPANY dba MARSHALL GAS CONTROLS
and MARSHALL BRASS
Plaintiff
and
FAIRVIEW FITTINGS & MANUFACTURING LIMITED
and FAIRVIEW FITTINGS & MANUFACTURING INC.
Defendants
REASONS FOR ORDER AND ORDER
[1] The Defendant, Fairview Fittings & Manufacturing Inc. ("Fairview U.S."), moves to have itself removed as a party defendant, and to strike all references to Fairview U.S. from the Statement of Claim. The premise of the motion is that the Plaintiff has failed to make any allegations against Fairview U.S. which give rise to any cause of action in Canada and, consequently, this Court has no jurisdiction.
Background
[2] This is an action for passing off, brought pursuant to sections 7(b) and (c) of the Trade Marks Act. The Plaintiff, S.H. Leggitt Company d/b/a/ Marshall Gas Controls and Marshall Brass ("Marshall"), is the owner of trade marks comprising a distinctive get up and distinguishing guise applied to two stage propane gas regulators. Marshall pleads that its trade marks, "Regulator Design 254" and "Regulator Design 290" (the "Marshall Trade Marks"), have acquired distinctiveness and protectable reputation and goodwill in Canada as designating two stage propane gas regulators originating from Marshall, and distinguish such regulators from those of others.
[3] The Statement of Claim names two defendants, Fairview Fittings & Manufacturing Limited ("Fairview Canada"), which is alleged to be a Canadian corporation, and Fairview U.S., which is alleged to be a corporation organized and existing under the laws of Delaware, with offices in Wheatfield, New York. The Defendants are former distributors of Marshall's two stage propane gas regulators. Marshall alleges that the Fairview defendants advertised and sold genuine Marshall two stage propane gas regulators as being "the original two piece design from Marshall". Since November 2002, the Defendants have been supplying and substituting regulators that do not originate with Marshall ("Fairview Regulators"), in lieu of genuine Marshall model 254 and 290 regulators, when orders are placed with the Defendants in respect of two stage propane gas regulators incorporating the model numbers "254" and "290". The Fairview Regulators are virtually identical, in terms of get up, to original Marshall regulators.
[4] Marshall alleges that the activities of the Defendants will cause confusion. It claims that customers who recognize the get up of Marshall regulators, as designating a product originating from Marshall, will be confused, or misled, by the Defendants advertising, and selling, a product having a virtual identical get up. Marshall pleads that the risk of confusion and deception is particularly acute where customers who have previously obtained genuine Marshall regulators from the Defendants are supplied with goods having a virtually identical get up, yet do not originate from Marshall, or where the Fairview Regulators are substituted for Marshall regulators. The issue of incorrect attribution of origin also arises in cases of product failure where the manufacturing source of the defective product may be linked with the product get up. As such, Marshall alleges that the Defendants have directed public attention to their wares or business, and have passed off the Fairview Regulators as and for those of Marshall, contrary to sections 7(b) and (c) of the Trade Marks Act.
Position of Fairview U.S.
[5] Fairview U.S. submits that the Statement of Claim contains no allegations against it which give rise to any cause of action in Canada. Its argument is twofold. First, Fairview U.S. maintains that although the Statement of Claim alleges acts performed by Fairview U.S. constitute passing off, none of the activities are alleged to have taken place in Canada. It therefore follows that allegations that relate to activities outside of Canada are outside the jurisdiction of this Court. Secondly, Fairview U.S. argues that the activities which Marshall alleges to have been performed in Canada are activities which, even if taken to be true, fall short of the standard required to prove a breach of trade-marks rights.
Analysis
[6] The proper test for the striking out of pleadings, either in whole or in part, has been laid down by the Supreme Court of Canada in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959. as follows: "...assuming that the facts as stated in the statement of claim can be proved, is it "plain and obvious" that the plaintiff's statement of claim discloses no reasonable cause of action? Only if the action is certain to fail because it contains a radical defect....should the relevant portions of a plaintiff's statement of claim be struck out." Accordingly, the power to stop an action, and decide it without benefit of trial, should be exercised sparingly.
[7] A party who seeks to strike out a statement of claim bears a heavy onus: Waterside Ocean Navigation Company, Inc. v. International Navigation Ltd. et al., [1977] 2 F.C. 257. In my view, the semantic objection of the type raised by Fairview U.S. falls far short of being a "radical defect" mandated by Hunt v. Carey, especially where the pleading, when read as a whole, clearly communicates the cause of action being asserted by Marshall.
[8] The root of the argument by Fairview U.S. is to be that the words "in Canada" do not appear in each of paragraphs 18 to 25 of the Statement of Claim, notwithstanding that the actions described therein are bracketed by that very wording in the introductory and concluding paragraphs. For the sake of clarity, paragraphs 16 to 25 of the Statement of Claim are reproduced below.
16. The business of the Defendants Fairview Canada and Fairview U.S. includes the sale and distribution of propane gas regulators, including Marshall's Model 254 and Model 290 two stage gas propane regulators having the get up and guise shown in Schedules A and B hereto. The Defendants have advertised and sold genuine Marshall gas regulators in Canada as aforesaid under their catalogue numbers GR-254-00 and GR-290-00 as being "the original two piece design from Marshall". In placing orders under Defendant's catalogue numbers GR-254-00 and GR-290-00, Canadian customers received genuine Marshall Model 254 and Model 290 products. The Defendant's use of the numbers "254" and "290" in its catalogue created a nexus with Marshall's use of Model numbers 254 and 290.
17. By reason of the facts set forth in paragraph 16 above, the Defendants conveyed a message to purchasers and users of gas regulators in Canada that they were a reseller and supplier of genuine Marshall products, particularly the well known gas regulators manufactured and sold by Marshall under its Model numbers 254 and 290.
18. Since approximately November 2002, the Defendants have been selling, offering for sale and advertising gas regulators that are virtual clones of Marshall's Model 254 and Model 290 gas regulators, but which do not originate with Marshall ("Fairview Regulators"). As a matter of first impression, the Fairview Regulators are indistinguishable from the genuine Model 254 and Model 290 gas regulators characterized by Marshall's Regulator 254 and Regulator 290 trade marks, as more particularly shown in Schedule D hereto.
19. The Fairview Regulators as aforesaid are manufactured by the Defendants, on their behalf or at the direction of either or both defendants. The Fairview Regulators incorporate and reproduce the get up and guise shown in Schedules A and B hereto and thus constitute an unauthorized use of the Plaintiff's Regulator Design 254 and Regulator Design 290 trade marks.
20. Since at least as early November 2002, the Defendants have been supplying and substituting the Fairview Regulators in lieu of genuine Marshall Model 254 and 290 gas regulators, for orders placed with Defendants in respect of gas regulators incorporating the model numbers "254" and "290".
21. The Defendants use the Plaintiff's trade marks in association with the Fairview Regulators, even though the Fairview Regulators do not originate with Marshall. Moreover, advertising and promotional material distributed by the Defendants in respect of the Fairview Regulators feature and reproduce Marshall's trade marks as aforesaid.
22. By reason of the activities as set out hereabove in paragraphs 18-21, the Defendants have copied and misappropriated the get up of Marshall's gas regulators. The aforesaid activities of the Defendants have been deliberate and with full knowledge that the appearance and get up of the Marshall Model 254 and Model 290 regulators, and the use of the model numbers 254 and 290 to designate same, are distinctive of the Plaintiff Marshall.
23. The activities of the defendant as aforesaid cause or are susceptible of causing confusion or deception in the marketplace. Customers and end users of gas propane regulators will be deceived into believing that the Fairview Regulators originate with Marshall, when this is not the case.
24. The Fairview Regulators are not manufactured by or under the control of Marshall, and Marshall has no means of ensuring that the Fairview Regulators comply with Marshall's manufacturing standards or performance characteristics, for which Marshall's regulators have acquired a reputation. Should the Defendants' regulators, which appear as virtual clones of the Marshall 254 and Marshall 290 regulators, fail or otherwise not conform to the expectation of the purchaser or end user, there will be a presumption that the regulators in question originated with Marshall, when this is not the case.
25. The passing off or substitution by the Defendants of regulators that are substantially identical to the Marshall Model 254 and Model 290 regulators, that reproduce or are otherwise associated with Marshall's trade marks as aforesaid, yet do not originate with Marshall results in actual or potential confusion amongst actual or potential customers and end users of Marshall products. The actions of the Defendants further causes irreparable harm to Marshall in that the goodwill associated with Marshall's Regulator Design 254 and Regulator Design 290 trade marks is damaged and eroded.
26. By reason of the activities as set out hereabove in paragraphs 16-25, the Defendants have directed public attention to their wares or business in such a way as to cause or be likely to cause confusion in Canada with the wares or business of the plaintiff Marshall, contrary to section 7(b) of the Trade Marks Act.
[9] The contention by Fairview U.S. is, in essence, a complaint over semantics, and falls far short of the standard required to strike a pleading. The passage above begins with the allegation that the Defendants have advertised and sold genuine Marshall regulators. Paragraphs 16 and 17 specify that such activities took place in Canada. Paragraphs 18 to 25 set out subsequent acts of the Defendants which underpin Marshall's claim that the Defendants have misappropriated Marshall's trade mark rights. Paragraph 26 then refers back to the preceding paragraphs, incorporating them by reference, and alleges that "the Defendants have directed public attention to their wares or business in such a way as to cause or be likely to cause confusion in Canada with the wares or business of the plaintiff Marshall, contrary to section 7(b) of the Trade Marks Act. (emphasis added)". As such, the portion of the statement of claim that pleads the activities of the Defendants begins, and ends, with reference to activities taking place in Canada.
[10] A fair reading of the entire passage, and in particular the incorporation by reference in paragraph 26, gives notice to Fairview U.S. that Marshall is pleading that all of the acts of the Defendants described in paragraphs 18 to 25 are alleged to have taken place in Canada.
[11] Fairview U.S. does not dispute that Marshall has pleaded the existence of trade mark rights and alleged activities of the Defendants which would give rise to a cause of action under section 7(b) and (c) of the Trade Marks Act, except that such activities are not specifically recited as having occurred in Canada. Whether or not Marshall has enforceable trade mark rights in the Regulator Design 254 and Regulator Design 290 marks is a question of fact. Similarly, whether the activities of either or both Defendants gives rise to liability under sections 7(b) and (c) of the Trade Marks Act is likewise a contested question of fact: Kirkbi AG and Lego Canada Inc v. Ritvik Holdings Inc. et al., [2003] FCA 297. It is well settled that a motion to strike is not the proper forum for resolving contested questions of fact.
[12] Given its stringency, the test for striking out requires that the pleading be given a fair and liberal reading, and not be subjected to technical parsing. Where the pleading conveys sufficient information to enable the other party to discern the case being advanced against it, it will not be struck, notwithstanding gaps or imperfect drafting, as was held by Layden-Stevenson, J. in Pharmaceutical Partners of Canada Inc. v. Faulding (Canada) Inc ,(2002), 21 C.P.R. (4th) 166 at p.172.:
"although a pleading may be very broad and encompassed in general terms, it should not be struck out so long as a cause of action, however tenuous, can be gleaned from a perusal of the Statement of Claim. The onus, on the party moving to strike, is heavy and it must be shown it is beyond doubt that the case cannot possibly succeed at trial¼although some elements may be missing and others incomplete, if the pleadings contain enough information to allow the opposing party to know with some certainty the case to be met, the pleading will not be struck."
[13] Having regard to the principles espoused by Hunt v. Carey and Pharmaceutical Partners, supra, the existence of a cause of action can certainly be gleaned from the allegations as pleaded in the Statement of Claim, notwithstanding that the words "in Canada" are not recited in all paragraphs. The draconian remedy of striking out should not be invoked simply because two words are missing from a pleading that is otherwise intelligible. In view of the foregoing, it is not obvious that this Court lacks jurisdiction over Fairview U.S.
[14] If Fairview U.S. takes the position that it has not itself carried out any activities in Canada that would give rise to liability in Canada, it should deny Marshall's allegations and plead the facts upon which it relies, by way of defence. This is without prejudice to the right of Fairview U.S. to request particulars of any allegations, if such are required for pleading.
ORDER
THIS COURT ORDERS that
1. The motion be dismissed, with costs awarded to the Plaintiff in the cause.
"Roger R. Lafrenière"
Prothonotary
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1018-03
STYLE OF CAUSE: S. H. LEGGITT COMPANY dba MARSHALL GAS CONTROLS and MARSHALL BRASS
Plaintiff
and
FAIRVIEW FITTINGS & MANUFACTURING LIMITED and FAIRVIEW FITTINGS & MANUFACTURING INC.
Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: AUGUST 11, 2003
REASONS FOR ORDER
AND ORDER: LAFRENIÈRE P.
APPEARANCES: Mr. Jeffrey Jenkins
Ms. Susan Beaubien
For the Plaintiff
Mr. Bruce W. Stratton
Mr. Henry Lue
For the Defendant,
Fairview Fittings & Manufacturing Inc.
SOLICITORS OF RECORD: Borden Ladner Gervais LLP
Ottawa, Ontario
For the Plaintiff
Dimock Stratton Clarizio LLP
Barristers & Solicitors
Toronto, Ontario
For the Defendant,
Fairview Fittings & Manufacturing Inc.
FEDERAL COURT
Date: 20030827
Docket: T-1018-03
BETWEEN:
S. H. LEGGITT COMPANY dba MARSHALL GAS CONTROLS and MARSHALL BRASS
Plaintiff
and
FAIRVIEW FITTINGS & MANUFACTURING LIMITED and FAIRVIEW FITTINGS & MANUFACTURING INC.
Defendants
REASONS FOR ORDER
AND ORDER