T-3387-81
Phillip Morris Incorporated (Applicant)
v.
Imperial Tobacco Limited (Respondent)
Trial Division, Mahoney J.—Ottawa, November 3
and 6, 1981.
Trade marks — Respondent moves for discovery of appli
cant, cross-examination on applicant's affidavits and for an
order that the expungement proceeding sought by the appli
cant with respect to the trade mark MARLBORO be heard on
common evidence with the action for trade mark infringement,
related to the same trade mark, instituted by respondent
against the applicant — Applicant moves to stay the infringe
ment action pending conclusion of expungement proceeding —
Applicant markets Marlboro cigarettes in the United States —
Respondent is the owner of the trade mark MARLBORO in
Canada — Infringement action stayed — Motions for discov
ery, cross-examination and hearing together of the two pro
ceedings, denied — Trade Marks Act, R.S.C. 1970, c. T-10, s.
57 — Federal Court Rules 448, 453, 465, 704, 705.
MOTIONS.
COUNSEL:
J. Osborne, Q.C. and R. Perry for applicant.
N. Fyfe for respondent.
SOLICITORS:
Gowling & Henderson, Ottawa, for applicant.
Smart & Biggar, Ottawa, for respondent.
The following are the reasons for order ren
dered in English by
MAHONEY J.: Presently before the Court are
motions by the respondent herein seeking discov
ery of the applicant and cross-examination on the
affidavits it filed and an order that this proceeding
be heard on common evidence with an action for
trade mark infringement, Court No. T-4425-81
in which the respondent has sued the applicant.
The applicant moves to stay the infringement
action pending conclusion of these proceedings.
These proceedings were commenced June 26,
1981; the infringement action was commenced
September 14.
This is an expungement proceeding under
section 57 of the Trade Marks Act' in respect of
the trade mark MARLBORO registered September
1, 1932, for use in connection with the sale of
tobacco and certain products, including cigarettes.
The proceeding is governed by Rule 704 which
contemplates, unless otherwise ordered, a sum
mary proceeding in which the evidence is to be
entirely by affidavit, filed and served within pre
scribed time limits, and that there be no discovery
or cross-examination on affidavits. Pursuant to
order, the applicant's affidavit material, filling 17
banker's boxes, was filed August 11. The respond
ent has not yet filed its reply and now moves for
orders, pursuant to Rules 705 and 448, requiring
the applicant to make and file an affidavit of
documents; under Rules 705 and 453, permitting
inspection of the documents so disclosed; under
Rules 705 and 465, permitting examination for
discovery and, under Rule 704(7), permitting
cross-examination of the deponents of all of the
applicant's affidavits filed herein.
The infringement action is in respect of the
same trade mark. No defence has yet been filed. It
would be difficult, if not impossible, to deal with
the applicant's motion to stay it separately from
the respondent's motion to have the proceedings
tried together on common evidence.
Perhaps everything I have to say in this para
graph is not in evidence. To the extent that it is
not, I believe I can and should, at this stage of the
proceedings, take judicial notice of it. The appli
cant markets Marlboro cigarettes in the United
States. They are a big seller. The respondent owns
the trade mark in Canada. One or the other of
them saw a problem in this situation and decided
to seek its resolution. There was no amicable reso
lution. The applicant beat the respondent to the
punch by commencing these proceedings which
was, so far as I am aware, the only avenue by
which the applicant could have brought the issue
to court. The financial stakes may well be very
high. There is presently some evidence as to the
extent of past marketing of the applicant's Marl-
boro cigarettes in Canada. It will, no doubt, be
disputed and I do not intend presently to consider
1 R.S.C. 1970, c. T-10.
it one way or another. However, there is no doubt
that the applicant promotes the sale of those ciga
rettes in the United States extensively, and that
there is a considerable spillover of that promotion
into Canada. It would not be surprising if the
applicant entertains a desire to cash in on that
spillover.
It is my firm impression that the applicant has
the greater interest in speeding the resolution of
the issue of the validity of the trade mark registra
tion. It also has priority in commencing proceed
ings bringing that into issue. That is not a deter
mining factor but it is a factor. If the priority were
with an action, I should think the Court would be
`slow to permit a defendant in an infringement
action to pre-empt the plaintiff by commencing a
proceeding such as this. Since the defence has not
been filed in the action, all of its issues are not
defined; however, it is clear that, if this proceeding
results in expungement of the register, the
infringement action must fail; if it does not, the
respondent may yet decide that the remedies it
may obtain in respect of the alleged past infringe
ments may not be worth the price of the game.
The validity or otherwise of the registration should
be more expeditiously determined in this proceed
ing than in the action. It should also be determined
at considerably less expense to the parties and to
the public in summary proceedings than in an
action. All relevant evidence can as readily be
adduced in this proceeding as in the action. I
therefore propose to stay the infringement action
and to deny the motion that the two proceedings
be heard together. It appears to me to be in the
interest of justice to do so.
As to the motion for discovery and cross-exami
nation, it will be dismissed with costs because of its
prematurity. None of the discovery or cross-exami
nation sought is necessary to permit the respond
ent to reply to the originating notice of motion.
This is, of course, without prejudice to the
respondent's right to apply for discovery and/or
leave to cross-examine in respect of any issue that
may properly be raised by the pleadings, when
closed, or as to any particular affidavit or affida
vits. Time for filing the reply will be extended to
November 20, 1981. The applicant is entitled to
costs herein.
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