PRESENT: The Honourable Mr. JusticeShore
BETWEEN:
Defendant by Counterclaim
and
JAGUAR CARSLIMITED and FORD MOTOR COMPANY OF CANADA, LIMITED/FORDDU CANADA LIMITEE carrying on business as JAGUAR CANADA
Defendants/
Plaintiffs by Counterclaim
REASONS FOR ORDER AND ORDER
BACKGROUND
[1] The Plaintiff brought an action against the Defendants for trademark infringement. The Plaintiff was unsuccessful at trial. The Court allowed the parties time to file submissions regarding costs. The Court has now received, reviewed and considered these submissions. These reasons relate to the issue of the costs to be awarded.
CONSIDERATIONS
[2] Although it is recognized that costs are at the discretion of the Court according to Rule 400(1) of the Federal Courts Rules, SOR/98-106 (Rules), a non-exhaustive list of factors delineated in Rule 400(3) assist in formulating an inherent logic to the determination. The general rule is that costs follow the event and absent exceptional circumstances should be awarded to the successful litigant on a party to party basis.
[3] The fundamental principle is that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party. (Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233 (T.D.) aff'd (2001), 1999 F.T.R. 320 (C.A.).
[4] In this instance, the Plaintiff was unsuccessful. It is noted that, although the Defendants requested damages or the Plaintiffs profits for infringement of the "JAGUAR" trademark, neither was awarded. The novel issues as described in the actual decision, as well as the context and circumstances of the action constitute special reasons for that.
[5] The importance and complexity of the issues (Rule 400(3)(c)) are acknowledged by the Court. The legal issues, in and of themselves, are of high importance to owners of famous trademarks. Clarification of the law, in areas of depreciation, goodwill, deception, confusion and distinctiveness, is both important and complex. These issues are now on the agenda of national importance as evidenced by the Supreme Court of Canada's review of the law of famous trademarks in the Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée (Veuve Clicquot) and Mattel, Inc. v. 3894207 Canada Inc. (Mattel) cases. The judgment in Remo and Jaguar was rendered on January 16, 2006, the Veuve Clicquot and Mattel cases had been heard in October of 2005 but the judgments of the Supreme Court of Canada had not been rendered prior to the issuance of the Remo and Jaguar judgment. The concept of what is, and what is not, direct situation specific brand extension demonstrated a need for examination and explanation.
[6] Written offers to settle (Rule 400(3)(e)) also require consideration. Since 1995, Jaguar Cars proposed a settlement whereby Jaguar Cars would own the trademark, Jaguar, for the goods in question and give Remo a royalty-free licence. In 1997, Jaguar proposed, in writing, that Remo could transfer its trademark rights to Jaguar with a licence back to Remo and payment to Remo of $25,000.00 U.S. This offer was not withdrawn, nor various versions of it. Plaintiff's proposal to settle the action called for a payment by the Defendants of 5.7 million. As the case calls attention to novel issues and entry into unchartered territory in litigation, therefore, both parties could not have been expected to have seen a clear outcome under the particular circumstances and context at the inception of the action or during its course.
[7] Although the case is one of mixed fact and law, this does not mean, as suggested by the Plaintiff, that it is not complex. The Pink Panther Beauty Corp v. United Artists Corp. (C.A.), [1998] 3 F.C. 534, [1998] F.C.J. No. 441 (QL) "connection" principle (there must be a link between the parties' wares) is easy enough to state, but complex to apply. The Court must weigh and balance a number of factors, including:
(a) industry practice;
(b) extent of use of both parties' marks;
(c) senior user's dealing in junior user's wares;
(d) senior user's expansion plans (speculative v. realistic);
(e) brand extension theory.
[8] There were a number of important issues in this case, for example, while Section 22 of the Trade-Marks Act, R.S.C. 1985, c. T-13 may be routinely pleaded in trademark actions, it is rarely the subject of the Court's full analysis. While clearly supported by legislation and case law, these facts presented the first opportunity for a Canadian Court to decide issues such as whether the owner of a registered mark was in violation of section 22, whether a long-standing registration should be expunged because section 22 had been violated and whether the principle in Orkin Exterminating Co. Inc. v. Pestco Co. of Canada Ltd. (1985), 5 C.P.R. (3d) 433, was equally applicable to junior users who adopt a senior user's mark for wares within the latter's zone of expansion.
[9] As to paragraph 6 of the Plaintiff's Written Representations, Justice Barbara Reed in, Apotex Inc. v. Syntex Pharmaceuticals International Ltd., [1999] F.C.J. No. 1465 (QL) (cited affirmatively in Champion International Corp. v. Sabina (The), 2003 FCT 39, [2003] F.C.J. No. 64 (QL)), stated a paragraph 9:
This case, while not the most complex of patent cases, did exceed the average complexity of an average case. An increase in complexity justifies an increase above column III level costs. The amount of work was average for a patent proceeding, but exceeded that of an "average case."
[10] The complexity of this proceeding greatly exceeds the complexity of an average case.
[11] The Court takes into account the voluminous work as per Rule 400(3)(g). From its inception of the action, in 1991, it appears that neither party, each, for its respective reasons in the context and circumstances, knew exactly what it is that would be necessary and, as a result, more rather than less was prepared for the trial. Without casting aspersions as to the reasons for the voluminous material, a solution had to be found for a novel situation, brought into question in a context where neither party was aware of the other's products; and the concept of brand extension, although previously treated, had, as yet, not been the subject of unique and extensive case law formulation; all of which, after fourteen years of preparation, led to an eight-week trial, 6000 exhibits, 200 binders, dozens of brochures and tens of actual accessory samples, twelve binders of closing arguments and a 90 page summary by each party.
[12] In addition to the extensive work of each counsel on both sides and that of their respective assistants, as described in the overview to the actual judgment, a formidable task was undertaken, with special mention, by Ms. Bettina Murphy, a paralegal, who served as an archivist to one party but, in fact, assisted both, throughout the course of the trial, with most remarkable earnest devotion and noteworthy ability to locate and organize the very large number of documents.
The Defendants` expert witnesses assisted the court in very small measure, if in anything, overall, that had not been presented by other sources. Such expertise and counterproof by the Plaintiff accounted for approximately thirteen days of trial and a significant portion of both written and oral argument.
CONCLUSIONS
[13] To give assistance to the Assessment Officer, the Court directs an assessment of the costs of the Defendants at an increased scale:
(a) Two counsel at trial at the top end of Column IV of Tariff B;
(b) One paralegal at trial at half the amount of one counsel;
(c) Trial preparation at the top end of Column IV of Tariff B.
(d) Assessment of all other items set out in the Defendants' proposed Bill of Costs in accordance with the range of units at the top end of Column III of Tariff B;
(e) To assess the costs of the Defendants' expert witnesses and all related expenses, thereto in the sum of 20% of the total amount, recalling the reservations extensively specified in their regard in the actual judgment. (Recognizing that most of that which was useful was also confirmed or available from other sources.)
(f) Due to the inherent legal complexities, a novel context and circumstances, the Defendants' offer should increase the costs, excluding disbursements, by a factor of 1.3 rather than double them. [At the commencement of the trial, all efforts of settlement had dissipated and during the trial, there were no written offers from either party brought forward for consideration. Accordingly, the conditions for awarding double costs under Rule 420(2)(b) were not in existence and as such the Defendants' costs since the commencement of this action should not be doubled. Recognizing the interpretation given in Rule 420 by the Federal Court of Appeal in Francosteel Canada Inc. v. African Cape (The) (C.A.), [2003] 4 F.C. 284, [2003] F.C.J. No. 385 (QL), the Court concludes that the Defendants' offer to settle does not qualify for double costs. Nevertheless, the Court recognizes that it can take the offer into account within its overall discretion regarding costs under Rule 400. Noteworthy, in this regard is Halford v. Seed Hawk Inc., 2004 FC 1259, [2004] F.C.J. No. 1541 (F.C.A.) (QL). In the Court's view, the Defendants' offer was unequivocal and contained elements of compromise. Therefore, in the circumstances, the Defendants' offer should increase its costs, excluding disbursements, by a factor of 1.3, rather than double them.]
(g) To allow the Defendants' usual disbursements, in addition, it is left to the Assessment Officer, if the parties cannot reach a compromise on any of the above issues from (a) to (g), to determine the appropriate amounts unresolved between the parties.
ORDER
THIS COURT ORDERS that
1. The Defendants' fees for services rendered be increased by a factor of 1.3, excluding disbursements;
2. The Defendants' costs should be assessed at the upper end of Column IV of Tariff B;
3. The Defendants are to recover only 20% of the total amount for any sum in respect of and related to their expert witness fees;
4. The Defendants are entitled to recover the usual disbursements which they have incurred.
5. If the parties cannot reach a compromise to determine the appropriate amount, or any amounts in respect of 1 to 5 of the above, (which, in summary, refers to paragraph 14 of the Conclusions, inclusive of (a) to (g) above), it will be left to the Assessment Officer to do so.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
STYLE OF CAUSE: Remo Imports Ltd. v Jaguar Cars Limited and others
MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS AND ORDER OF THE HONOURABLE MR. JUSTICESHORE
WRITTEN REPRESENTATIONS BY:
Mr. Richard Uditsky
FOR PLAINTIFF
Mr. J. Douglas Wilson
Mr. William D. Regan
Ms. Pauline Bosman
FOR DEFENDANT
SOLICITORS OF RECORD:
McMillan Binch Mendelsohn LLP
Montreal, Quebec
FOR PLAINTIFF
Ridout & Maybee LLP
Toronto, Ontario
FOR DEFENDANTS