Federal Court of Appeal Decisions

     A-240-97

CORAM:      STRAYER J.A.

DESJARDINS J.A.

LÉTOURNEAU J.A.

BETWEEN:

     LEVI STRAUSS & CO. and

     LEVI STRAUSS & CO. (CANADA) INC.

     Appellants

     (Plaintiffs)

AND:

     ROADRUNNER APPAREL INC.

     Respondent

     (Defendant)

     REASONS FOR JUDGMENT

LÉTOURNEAU J.A.

         This is an appeal by Levi Strauss & Co. and Levi Strauss & Co. (Canada) Inc. from the order of a motions judge, dated March 6, 1997, not to strike out paragraphs 18 and 21 of the Statement of Defence of the Respondent (Roadrunner Apparel Inc.) pursuant to Rule 419(1) of the Federal Court Rules.

         The paragraphs relate to the Appellants' trade-mark rights in Canada to use a double arcuate design applied to the hip pocket of jeans-type garments. They read:

18.      The Plaintiffs have acquiesced in and condoned the use of double arcuate designs applied to the rear pockets of jeans or similar garments by others in Canada or, in the alternative, the Plaintiffs have failed to diligently enforce their alleged rights in the alleged trade-mark against others.

21.      The Defendant states that the Plaintiffs' action is frivolous and vexatious and intended only to try to harass and intimidate the Defendant. The Plaintiffs have threatened numerous jeans manufacturers and/or vendors, some of whom are outlined in Schedule "A" with legal action and have in fact commenced action against some manufacturers/vendors of jeans in Canada, for allegedly infringing registration number UCA39879. However, the Plaintiffs have failed to diligently pursue and prosecute those actions and have avoided the final adjudication of their alleged rights. By this course of action, the Plaintiffs attempt to interfere with said jeans manufacturers/vendors' business and maintain the Plaintiffs' market share.

a)      Paragraph 18 and the defence of acquiescence

         The Appellants argue in relation to the allegation of acquiescence found in paragraph 18 that the defence of acquiescence is personal to a defendant and, consequently, that a defendant cannot rely on a plaintiff's acquiescence to the use of its trade-mark by third parties. The contention is that the behaviour of a plaintiff toward other parties is irrelevant to the determination of an issue between the plaintiff and a specific defendant who does not claim acquiescence in relation to itself. In support of their position, the Appellants have referred us to American authorities, but to no Canadian precedents in the matter.

         It is not necessary for us to decide the point as submitted and argued by the Appellants. I am satisfied that paragraph 18 ought to be read as a whole with paragraphs 16 and 17 of the Statement of Defence which specifically allege that the double design applied to the rear pockets of jeans has lost the distinctiveness claimed by the Appellants because it has been widely used in the past by a number of companies and still is in common use in Canada¹. It is, in my view, in this context of loss of distinctiveness that the Respondent's reference to acquiescence by the Appellants to the use of its trade-mark in the market place ought to be read and understood. The owner of a trade-mark may by his personal conduct or own behaviour, including acquiescence to the use of the trade-mark by others, irremediably compromise the distinctiveness of the mark and the validity of the registration². Consequently, it is quite proper for a defendant in an infringement lawsuit to allege such fact in its Statement of Defence provided it is supported by a factual base. The motions judge properly found that the Respondent had provided statements of fact supporting its allegation and I see no reason to intervene in the exercise of his discretion not to strike the part of paragraph 18 which refers to acquiescence.

b)      Paragraph 21 and the allegation that the Appellant's lawsuit is frivolous and vexatious

         Paragraph 18 contains an alternative pleading which alleges that "the Plaintiffs have failed to diligently enforce their alleged rights in the alleged trade-mark against others". It is a re-statement in part of paragraph 21 and ought to be assessed with it.

         The Appellants submit that the Respondent questions in paragraphs 18 and 21 the motive for bringing the lawsuit and that motive does not constitute at law a defence. They further submit that these allegations are immaterial and irrelevant and would prejudice and delay the fair trial of the action.

         For its part, the Respondent basically submitted to us that what it alleges in its Statement of Defence is that the Appellants, under the guise of a valid enforcement of their trade-mark, are in fact abusing the process of the Court. The Respondent wants to establish that the abuse of process resides in the Appellants' action or course of conduct which is designed to harrass him and other users of the trade-mark and also to avoid by all means a determination of the validity of their registration.

         I think that the validity of paragraph 21 and the relevant portion of paragraph 18 stands to be decided on the principles applicable to an abuse of process of the Court and that, in this context, motive is highly relevant.

         The concept of abuse of process has developed both in substantive and procedural law. It is well settled law, from the point of view of substantive law, that an abuse of process is an actionable tort. As Henry J. stated in Tsiopoulous v. Commercial Union Assurance Co.³ when dealing with a counterclaim for damages for abuse of process:

"This cause of action arises when the processes of law are used for an ulterior or collateral purpose. It is defined as the misusing of the process of the courts to coerce someone in some way entirely outside the ambit of the legal claim upon which the court is asked to adjudicate. It occurs when the process of the court is used for an improper purpose and where there is a definite act or threat in furtherance of such purpose."

         In Fleming's The Law of Torts⁴, the learned author distinguishes between certain forms of abuse of legal procedure such as malicious arrest and execution and the concept of abuse of process:

"Quite distinct, however, are cases where a legal process, not itself devoid of foundation, has been perverted for some extraneous purpose, such as extortion or oppression. Here an action will lie at the suit of the injured party for what has come to be called "abuse of process"."

         A review of the authorities shows that the essential element of the tort of abuse of process is that the abuser must have used the legal process for a purpose other than that which it was designed to serve, in other words for a collateral, extraneous, ulterior, improper or illicit purpose⁵. The gist of the tort is the misuse or perversion of the Court's process and there is no abuse when a litigant employs regular legal process to its proper conclusion, even with bad intentions⁶.

         Abuse of process has also been invoked as a procedural defence, especially in criminal law when the proceedings were oppressive or vexatious or offensive to the principles of fundamental justice and fair play⁷. When successful, the defence has resulted in a stay of the proceedings.

         However, the procedural defence of abuse of process knows of no legal barrier in the sense that its application is not limited to the field of criminal law, but extends to other fields such as civil, constitutional or administrative law⁸. There is nothing to prevent its application to an infringement lawsuit. The abuse of process notion proceeds from a rationale unconnected with the various segments of the law in which it can be invoked. It is a request to a Court to vindicate its process and protect it from abuse by litigants and I, for one, would be very loath to deny a litigant the right to raise the issue in its Statement of Defence and seek our protection against such an abuse when there is a factual basis to support the claim.

         Again, I think the motions judge properly exercised his discretion when he came to the conclusion that there was a supporting factual basis for the allegation made by the Respondent and refused to strike paragraph 21 and the relevant portion of paragraph 18.

         Finally, I wish to add that the difficulties for a defendant of proving a misuse or perversion of the process on the part of a plaintiff seeking to enforce its trade-mark through the legal process cannot be underestimated. However, this is not a valid ground for denying a defendant such possibility.

         For these reasons, the appeal should be dismissed with costs here and below.

     "Gilles Létourneau"

     J.A.

"I agree

     B.L. Strayer J.A."

"I concur,

     Alice Desjardins

             J.A."

     A-240-97

CORAM:      STRAYER J.A.

DESJARDINS J.A.

LÉTOURNEAU J.A.

BETWEEN:

     LEVI STRAUSS & CO. and

     LEVI STRAUSS & CO. (CANADA) INC.

     Appellants

     (Plaintiffs)

AND:

     ROADRUNNER APPAREL INC.

     Respondent

     (Defendant)

     Heard at Ottawa, Wednesday, October 15, 1997

     Judgment rendered at Ottawa, Monday, October 27, 1997

REASONS FOR JUDGMENT BY:      LÉTOURNEAU J.A.

CONCURRED IN BY:      STRAYER J.A.

     DESJARDINS J.A.

__________________

¹      Paragraphs 16 and 17 read:      16.      A double arcuate stitching design applied to the rear pockets of jeans or similar garments was not, at the time these proceedings were commenced, and is not at the present time, distinctive of the Plaintiffs or either of them. At the time these proceedings were commenced and at the present time, a double arcuate design applied to the rear pockets of jeans or similar garments were used by a number of companies and was used in the past and was in common use in Canada. Brands of jeans which have been offered for sale in Canada or are presently offered for sale in Canada having such a design are listed at Schedule"A" to the Statement of Claim. The identity of other manufacturers and sellers of jeans in Canada who also apply double arcuate design to the rear pockets of their jeans or similar garments is currently unknown to the Defendant. As a result of such use and/or registration, the Plaintiffs' trademark is not distinctive and the registration is therefore invalid and the Defendant pleads and relies upon Section 18(1)(b) of the Trademarks Act.      17.      A double arcuate design has been and currently continues to be commonly applied to the rear pockets of jeans or similar garments for the purposes of ornament or decoration and therefore is not adapted to distinguish the wares of the Plaintiffs from those of others. The Defendant therefore states that a double arcuate design is not a trademark within the meaning of Section 2 of the Trademarks Act, R.S.C. 1985 c. T. 13, as amended.

²      Hughes on Trade Marks, (Toronto: Butterworths, March 1997) at para. 32, p. 459:      "The owner of a trade mark may lose his exclusive rights if he permits the widespread use of it by rival trades, either by conscious or negative action... The more often a mark is used by third parties, the less the protection affords. Distinctiveness can be lost where a trade mark owner permits use by third parties".      See also D. Vaver, Intellectual Property Law, (Toronto: Carswell, 1997) at p. 228.

³      (1986) 32 D.L.R. (4th) 614, at 616 (O.H.C.). See also Guilford Industries Ltd. v. Hankinson Management Services Ltd. et al., (1973) 40 D.L.R. (3d) 398 (B.C.S.C.); Atland Containers Ltd. v. Macs Corp Ltd. et al., (1974) 7 O.R. (2d) 107, 54 D.L.R. (3d) 363 (O.H.C.); Unterreiner v. Wilson et al., (1982) 142 D.L.R. (3d) 588, affirmed (1983) 146 D.L.R. (3d) 322 (Ont. C.A.).

⁴      4th ed. (1971), pp. 547 and 548.

⁵      Grainger v. Hill, (1838) 132 E.R. 769; D.K. Investments Ltd. v. S.W.S. Investments Ltd., (1984) 59 B.C.L.R. 333 (S.C.), affirmed (1986) 6 B.C.L.R. (2d) 291 (C.A.); Hedley v. Air Canada, (1994) 23 C.P.C. (3d) 352 (Ont. Gen. Div.); Canada Metal Col. v. Heap, (1975) 7 O.R. (2d) 185 (C.A.); Norman v. Soule et al., (1990) 7 C.C.L.T. (2d) 16 (B.C.S.C.); R. Cholkan & Co. v. Brinker, (1990) 71 O.R. (2d) 381 (H.C.). See also L. Klar, Tort Law, 1st ed. (Toronto: Carswell, 1991), pp. 50-51; G. Fridman, The Law of Torts in Canada, Vol. 2 (1990), pp. 250-251; G. Fridman, Fridman on Torts, (1990) pp. 587-589; Solomon & Feldthusen, Cases and Materials on the Law of Torts, 3rd ed. (1991), p. 70; J. Irvine, The Resurrection of Tortious Abuse of Process, (1989), 47 C.C.L.T. 217.

⁶      Grainger v. Hill, supra.

⁷      R. v. Curragh Inc., [1997] 1 S.C.R. 537; R. v. O'Connor, [1995] 4 S.C.R. 411; R. v. Keyowski [1988] 1 S.C.R. 657; R. v. Power, [1994] 1 S.C.R. 601.

⁸          See for example General Food Ltd. v. Struthers Scientific & International Corp., [1974] S.C.R. 98 where Pigeon J. said that patent owners and their attorneys are expected to avoid unnecessary costs and that the unreasonable multiplication of proceedings is an abuse of the worst kind; Borley v. Fraser River Harbour Commission, (1995) 92 F.T.R. 275 (F.C.T.D.) where an action was struck out as an abuse of process where it sought to raise issues that had been or could have been litigated in proceedings that had been finally determined in the Superior Court of the Province; Kastner v. Painblanc (1994), 176 N.R. 68 (Fed. C.A.) where it is an abuse of the Court's process for a plaintiff to start proceedings in the hope that something will turn up; Oak Bay Marine Group v. Jackson, [1994] 3 F.C. 177 (T.D.) where an action which arose out of the same facts as an action instituted four years earlier involving repetitious evidence and argument from the ealier case was struck out as an abuse of process; Musqueam Indian Band v. Canada (Min. of Indian & Northern Affairs), [1990] 2 F.C. 351 (T.D.) where it is an abuse of process to relitigate an issue based on facts which were decided on by the Supreme Court of Canada; Favor v. Winnipeg (City), [1989] 3 W.W.R. 374 (C.A.) where the plaintiff's action was dismissed as an abuse of process since the validity of the expropriation had already been decided in an earlier proceeding); Crown Trust Co. v. Rosenberg (1983), 38 C.P.C. 109 (Ont. H.C.) where a request for information [on an examination carried out pursuant to a subpoena to be used on a motion] was an abuse of process; Brand v. College of Physicians and Surgeons (Saskatchewan), [1989] 5 W.W.R. 516 (Q.B.) where a delay in the institution of proceedings may constitute an abuse of process.