T-265-75
Brywall Manufacturing Ltd. (Plaintiff)
v.
Try-1 International Ltd. and Frank Tizel, Ed
Gaerber, J. A. Martineau (Defendants)
Trial Division, Walsh J.—Montreal, February 10;
Ottawa, February 14, 1975.
Trade marks—Practice--Application to intervene and for
interlocutory injunction—Plaintiff applying for registration of
trade marks "Ego" and "Chego" on ladies' wear—Seeking
injunction against sale in Canada by defendant of similar
goods bearing U.S. trade mark "Chego"—Intervention sought
against plaintiff by Chego International Inc. as U.S. registrant
and applicant in Canada—Whether intervention permissible
under Federal Court Rule 1716(2)(b)—Intervention permissi
ble under Federal Court Rule 5 invoked with arts. 208 and 209
of Quebec Code of Civil Procedure—Intervener permitted to
file defence, counterclaim and petition for interlocutory
injunction—Federal Court Rules 5, 1716(2)(6), 1721—Quebec
Code of Civil Procedure, arts. 208 and 209—Trade Marks
Act, R.S.C. 1970, c. T-10, s. 7(b), (c) and (e).
Plaintiff applied to register the trade marks "Ego" and
"Chego", and now seeks an injunction against the sale in
Canada by defendant of similar goods bearing the U.S. Trade
mark "Chego". Prospective intervener, Chego International
Inc., U.S. registrant of the mark, and applicant in Canada, had
a licensing agreement with defendant, after first having discus
sions with plaintiff. In spite of its awareness of the intention of
Chego International to use the mark in Canada, plaintiff went
ahead and applied for registration. Intervener alleges that, due
to full knowledge and disclosure, the filing by plaintiff con
stituted unfair competition contrary to section 7(e) of the Act.
Intervener also alleges serious prejudice as a result of an
interim order confirming an undertaking by defendant not to
use the mark in Canada pending result of plaintiffs' injunction
application. Also, intervener has formally advised plaintiff,
before these proceedings, that it has misappropriated the mark
by applying for registration following disclosure during discus
sions in connection with the licensing agreement, and seeks an
interlocutory injunction against plaintiff.
Held, permitting the intervention, intervener may file a
statement of defence, counterclaim and petition for an inter
locutory injunction. The Federal Court Rules make no specific
provision for such an intervention. However, Rule 5 provides
that where any matter is not otherwise provided for, practice
and procedure shall be determined by analogy to the rules, or
practice and procedure for similar proceedings in the province
in which the subject-matter relates. Intervener falls within the
confines of articles 208 and 209 of the Quebec Code of Civil
Procedure. It is a person interested in an action to which it is
not a party, and wishes to make an agressive intervention
claiming a right against plaintiff. It also seeks to be joined with
defendant to aid in the defence. While the intervention proceed
ings in Quebec are considered as separate proceedings even
when joined to the original action, they are heard at the same
time and a single judgment is rendered. Therefore, even if the
intervention is not permissible because of Rule 1716(2)(b), it
could be permitted by invoking Rule 5 together with articles
208 and 209. Rule 1721 could then be used to apply to the
counterclaim, the other provision of the Rules, with
modifications.
APPLICATION.
COUNSEL:
J. Leger for plaintiff.
J. Miller for defendants.
M. Lazarus for intervener.
SOLICITORS:
Leger, Robic & Pichette, Montreal, for
plaintiff.
Respitz, Sederoff & Co., Montreal, for
defendants.
Lazarus, Lehrer & Baer, Montreal, for
intervener.
The following are the reasons for judgment
rendered in English by
WALSH J.: In this double-barrelled motion,
Chego International Inc., an American corpora
tion, seeks permission to intervene in the present
proceedings to contest same and in its turn seeks
an interlocutory injunction against plaintiff to
enjoin it from selling ladies' wear and wears of all
kinds in connection with the trade mark "Chego"
or any similar name calculated to deceive or cause
confusion, drawing the public's attention to such
wears in Canada or passing off its wears as those
of the intervener labelled with the trade mark
"Chego". In order to understand the situation it is
necessary to briefly summarize the facts as dis
closed in plaintiff's statement of claim and notice
of motion for interlocutory injunction which was
adjourned to March 10, 1975, and in the present
motion by the prospective intervener.
Plaintiff, a Canadian company, was incorpo
rated in April 1973 and has been involved in the
importation, manufacture and distribution of
ladies' wear, including dresses, sweaters, blouses,
scarves, slacks, pant suits, and play suits which are
sold throughout Canada. It is alleged that defend
ant, Try-1 International Ltd., on or about Decem-
ber 17, 1974 began advertising and offering for
sale in Canada merchandise bearing the trade
mark "Chego" and that defendants, Frank Tizel,
Ed Gaerber, and J.A. Martineau were sales repre
sentatives of defendant in Toronto, Vancouver and
Montreal respectively. It is further alleged that
since April 1973 plaintiff has been using its unreg
istered trade mark "Ego" on its products and since
September 1974 the unregistered trade mark
"Chego". On January 14, 1975, eight days before
the institution of the present proceedings, it
applied to register the trade mark "Ego" in
Canada in association with ladies' wear in connec
tion with which it had allegedly been using it since
April 1973, and on October 21, 1974 it had
applied for the registration of the trade mark
"Chego" in association with the said wear in con
nection with which it had allegedly been using it
since September 1974. Plaintiff alleges that sales
across Canada in connection with the trade mark
'Ego" are in excess of $3,000,000 annually and
are increasing so that the trade mark "Ego" has
acquired a high degree of distinctiveness. Its use of
the trade mark "Chego" since September 1974 on
some of its merchandise was allegedly in order to
identify a certain variety of its products, specifical
ly ladies' pants, but it has the intention of using
said trade mark on all the variety of its products
and it contends that both names, "Ego" and "Che -
go" have become distinctive of plaintiff's products.
It alleges that since December 17, 1974 defendant
Try-1 began advertising and offering for sale in
Canada merchandise bearing the trade mark
"Chego" and advertised same in the trade maga
zine Style. These products are allegedly inferior or
different from those of plaintiff and the use of the
name "Chego" on them would lead to the infer
ence that they are manufactured or sold by plain
tiff. Moreover, defendants have allegedly solicited
the same clients or same category of clients as
those of plaintiff by passing off their merchandise
as being that of plaintiff and that despite a letter
written to defendant Try-1 on January 16, 1975
respecting the alleged infringement, defendant
Try-1 intends to continue its allegedly illegal
activities in Canada. Plaintiff invokes section 7(b),
(c) and (e) of the Trade Marks Act.
The prospective intervener for its part alleges
that it is the owner of the registered trade mark
"Chego" which was processed in the United States
Patent Office in August 1974 and that it has
applied for the registration of this trade mark in
Canada with a filing date as of November 2, 1974,
after it had been advised by its patent attorneys
that said trade mark would be available for regis
tration. The said mark was derived from the first
three letters of the surname of one of its principals,
Mr. Richard Chestnov and the first two letters of
the surname of another principal, Mr. Harvey
Gold. In September and October, 1974 they had
discussed with persons representing the plaintiff
the marketing and distribution of their products in
Canada after plaintiff's representatives had sought
to become its exclusive licensee for Canada. These
dicussions did not result in an agreement, however,
and prospective intervener then made a licensing
agreement with defendant Try-1 International
Ltd. During the course of these discussions, with
full awareness that prospective intervener intended
to ship goods to Canada under the trade mark
"Chego", plaintiff nevertheless filed an application
for registration of this mark, claiming a priority of
use as early as September 1, 1974 which registra
tion received a filing date of October 21, 1974. It
is further alleged that plaintiff's attorney during
the discussion of the licensing agreement, had full
knowledge and disclosure of the corporate name
and trade mark of intervener but nevertheless filed
the application for the trade mark "Chego" on
behalf of plaintiff, and that this is an act of unfair
competition contrary to section 7(e) of the Trade
Marks Act. It is further alleged that intervener is
suffering serious prejudice as a result of an interim
order made in this Court on January 27, 1975
confirming an undertaking by defendant not to
import and sell in Canada under the trade mark
"Chego" pending the decision on plaintiff's
application for an interlocutory injunction. The
prospective intervener has furthermore, on Janu-
ary 17, 1975, before the institution of the present
proceedings, formally advised plaintiff in writing
that it has illegally, irregularly and unlawfully
appropriated intervener's trade mark "Chego" by
applying for registration of same following the
disclosure of same to it in connection with the
discussions for the proposed licensing agreement.
It therefore seeks an interlocutory injunction
against plaintiff restraining it from using, advertis
ing, offering for sale or selling goods consisting of
ladies' wear of all kinds under the trade mark
"Chego" or any similar trade mark likely to cause
confusion with same.
It is evident that there is a serious issue to be
decided between plaintiff and the prospective
intervener, Chego International Inc., in this Court.
The question to be decided now is the procedure to
be adopted to bring this before the Court in an
orderly manner. Chego International Inc.'s prob
lem results from the fact that, according to its
attorneys, it has been advised by the attorneys for
defendant Try-1 International Ltd. that that cor
poration and the other defendants will be unlikely
to make a serious contestation of plaintiff's pro
ceedings, including its rights to the use of the trade
marks in question as their interests merely as
licensees of Chego International Inc. are in their
view insufficient to justify their indulging in costly
litigation. On the other hand, plaintiff has the
right to sue whom it chooses and cannot be direct
ed to make Chego International Inc. a party to its
proceedings against the present defendants. Chego
International Inc. for its part can institute pro
ceedings against plaintiff based on the same issues
which it seeks to raise by its present intervention
and motion for an interlocutory injunction against
plaintiff, but the Court would then have two sepa
rate actions before it. While they could probably
be joined on an appropriate motion to this effect,
there might be some question as to whether the
proceedings brought by Brywall Manufacturing
Ltd. against Try-1 International Ltd. and the
other defendants named therein, would be stayed
pending the determination of the issue between
Brywall Manufacturing Ltd. and Chego Interna
tional Inc. on the question of the trade marks,
especially if defendants were unwilling to cooper
ate with Chego International Inc. in seeking a stay
of such proceedings. Chego International Inc., not
being a party to these proceedings, if it proceeds
by way of a separate action against plaintiff,
would be unable to seek such a stay itself unless it
was permitted to intervene in the present proceed
ings. A default judgment rendered in the present
proceedings against defendants would imply a
recognition of the validity of plaintiff's unregis
tered trade mark and any judgment in the pro
ceedings between Chego International Inc. and
plaintiff, Brywall Manufacturing Ltd. could then
result in a contradictory judgment. On the whole,
therefore, I conclude that it is in the interests of
justice that Chego International Inc. should be
permitted to become a party to the present pro
ceedings by intervening therein since the principal
issue is clearly between it and plaintiff Brywall
Manufacturing Ltd. rather than between plaintiff
and the defendants named, although plaintiff had
every right to sue them provided the allegations in
its statement of claim respecting its trade marks
can be substantiated.
The problem arises from the fact that the Fed
eral Court Rules make no specific provision for
such an intervention. Rules 300, 304(3), 318 and
320 referred to in Chego International Inc.'s peti
tion for permission to intervene deal with different
matters altogether and can in no way be said to
establish this right. The only reference to interven
tion in the Federal Court Rules by a party who is
not a defendant but claims to have an interest is in
Rule 1010 which is applicable in Admiralty pro
ceedings only. Rules 1714 and 1715 deal with
joinder of causes or parties. Rule 1714 permits a
plaintiff in one action to claim relief against the
same defendant in respect of more than one cause
of action, and Rule 1715 merely permits two or
more persons to be joined together in one action as
plaintiff or defendant if separate actions were
brought by or against each of them from which a
common question of law or fact would arise, or if
all rights to relief claimed are in respect of or arise
out of the same fact, matter or thing. Neither rule
would appear to have direct application. Rule
1716(2)(b) permits the Court to order a person
whose presence before the Court is necessary to
ensure that all matters in dispute in the action may
be effectually and completely determined and
adjudicated upon, to be added as a party. This
might possibly be applied although to do so might
be over-stressing the necessity of the prospective
intervener becoming a party to the action to ensure
that all matters in dispute be adjudicated upon,
since if defendants were willing to raise the issue
relating to the validity of plaintiff's trade marks,
they would be able to do so in their defence. They
are allegedly unwilling to do so but there might be
some question as to whether this makes it "neces-
sary" to permit Chego International Inc. to inter
vene even though from its point of view it consid
ers this is necessary and desirable.
Rules 1717 to 1722 deal with counterclaims or
cross-demands but refer to situations in which it is
the defendant who has a right to institute such
proceedings, which is not the case here. It is true
that Rule 1721 makes the other provisions in the
Rules applicable with necessary modifications to
counterclaims or cross-demands so that if Rule
1716(2)(b) were interpreted so as to permit Chego
International Inc. to intervene it might also be
possible to permit a counterclaim by it against
plaintiff. Finally, we have Rules 1726 to 1731
dealing with third party and similar proceedings
but here again these Rules contemplate a defend
ant taking action to bring in the third party, which
is not the case here where defendants have not
taken and allegedly have no intention of taking
any such proceedings.
The prospective intervener relies also on Rule
5—the so-called "gap" Rule—which provides that
where any matter arising is not otherwise provided
for by any provision in any Act or the Rules or
orders of the Court, the practice and procedure
shall be determined by analogy either to other
provisions of the Rules or to the practice and
procedure in force for similar proceedings in the
court of the province in which the subject-matter
of the proceedings most particularly relates. Refer
ence was made to articles 208 to 215 of the
Quebec Code of Civil Procedure respecting volun
tary interventions which read in part as follows:
208. Any person interested in an action to which he is not a
party, or whose presence is necessary to authorize, assist or
represent a party who is incapable, may intervene therein at
any time before judgment.
209. Voluntary intervention is termed aggressive when the
third party asks that he be acknowledged as having, against the
parties or one of them, a right which is in dispute; it is termed
conservatory when the third party only seeks to be substituted
for one of the parties, in order to represent him, or to be joined
with such party in order to assist him, either to aid his action or
to support his pretensions.
210. Aggressive intervention constitutes a separate suit, even
when it is joined to the original action.
215. When the principal action and the intervention are
heard at the same time, a single judgment decides them both.
In the present case Chego International Inc. is
clearly a person interested in an action to which it
is not a party and it wishes to make an aggressive
intervention claiming that it has a right against the
plaintiff which is in dispute. At the same time it
seeks to be joined with the defendants to assist
them in connection with their defence. The inter
vention proceedings are apparently considered in
Quebec as separate proceedings even when joined
to the original action but they are heard at the
same time and a single judgment decides both.
This represents substantially the ends which are
sought in the present proceedings, so that even if
the intervention could not be permitted by reason
of Federal Court Rule 1716(2)(b), and I am not so
deciding, it could be permitted by invoking Rule 5
together with articles 208 and 209 of the Quebec
Code of Civil Procedure. Federal Court Rule 1721
could then be used to apply to the counterclaim
the other provisions of Federal Court Rules with
necessary modifications. Rules of practice are
intended to promote the orderly advancement of
litigation to trial on the merits and I am satisfied
that it is in the interests of justice that prospective
intervener Chego International Inc.'s intervention
and application for interlocutory injunction be per
mitted in the present proceedings so that all mat
ters in issue can be effectively dealt with by this
Court. Certain directions will be necessary how
ever. Permitting Chego International Inc. to inter
vene does not relieve the defendants named from
any obligation they may be under to file a defence
to the action brought against them or suffer the
consequences. While plaintiff does not of course
ask for any conclusions against intervener in its
proceedings, intervener may nevertheless file a
separate statement of defence in such proceedings
so as to attack plaintiff's rights to the use of the
trade marks in question. Rule 469(3) dealing with
interlocutory injunctions states that the plaintiff
may not make an application under this Rule
before the commencement of the action except in
case of urgency, and in that case the injunction
may be granted on terms providing for the com
mencement of the action and on such other terms,
if any, as seem just. The intervener in the present
proceedings asks for an interlocutory injunction
but this does not constitute a commencement of
proceedings against plaintiff. While I am not of
course granting the interlocutory injunction in this
order, I nevertheless, as a condition of receiving
intervener's petition for same at the same time as
the intervention, require intervener to promptly
file a statement of claim against plaintiff based on
the same grounds as the petition for interlocutory
injunction which counterclaim shall form part of
the Court record in the present proceedings and
must be served by the intervener-counterclaimant
on the plaintiff and defendants. Intervener must
file its defence to the proceedings herein, accom
panied by its counterclaim, within ten days of this
judgment or such further delay as may be allowed
by the Court. Intervener's motion for interlocutory
injunction against plaintiff is continued to March
10, 1975. Plaintiff shall have the right to examine
intervener on the affidavit accompanying its
motion or any further affidavits submitted in sup
port of same in the interval. Intervener shall be
entitled to participate with defendants in the
examination of plaintiff's witnesses in support of
any affidavit or affidavits filed in support of its
motion for an interlocutory injunction against
defendants. Costs shall be in the event of the
cause.
ORDER
Chego International Inc. is hereby permitted to
intervene in the present proceedings, and to file a
statement of defence attacking plaintiffs rights to
the use of the trade mark "Chego" or any other
name so similar as to be likely to deceive or cause
confusion. The said intervener shall, if it so desires,
within ten days of this order or such further delay
as may be allowed by the Court, file and serve on
plaintiff and on defendants a statement of claim
by way of counterclaim in the present proceedings
against plaintiff alleging unfair business practices,
passing off and infringement of its trade mark
"Chego", said counterclaim to be filed and served
at the same time as its statement of defence.
Intervener's motion for interlocutory injunction
against plaintiff is continued to March 10, 1975
with plaintiff having the right in the interval to
examine intervener on the affidavit accompanying
its said motion or any further affidavits submitted
in support of same. Intervener may participate
with defendants in the examination of plaintiffs
witnesses in connection with affidavits filed by
them in support of plaintiffs motion for interlocu
tory injunction against defendants.
Costs in the event of the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.