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T-4448-80
Asbjorn Hogard A/S (Plaintiff) v.
Northwest Tackle Manufacturing Limited and Gibbs Tool and Stamping Works Ltd. (Defend- ants)
Trial Division, Walsh J.—Toronto, June 1; Ottawa, June 4, 1981.
Practice — Trade marks — Action for declaration of pass ing off, invalidity and for expungement from register — Motion by plaintiff for an order that officers of defendants attend to be examined for discovery and that service be effect ed on defendants' solicitors — Motion by defendants to deter mine whether paras. 7(a),(b) and (c) of Trade Marks Act are ultra vires and whether the Court has jurisdiction over the action based on paras. 7(a),(b) and (c) — Whether, there should be a preliminary determination of the question of law under Rule 474 — Defendants' motion dismissed — Plaintiffs motion adjourned sine die — Trade Marks Act, R.S.C. 1970, c. T-10, ss. 7(a),(b),(c), 57, 58 — Federal Court Rules 465(8), 474.
Plaintiff moves for an order that an officer of each of the defendants attend to be examined for discovery and that service be effected on their solicitors. The action seeks a declaration that the defendants have passed off their wares for those of the plaintiff contrary to section 7 of the Trade Marks Act. It also asks for a declaration that defendant Gibbs' trade mark "NORSE SILDA" is void and that the trade mark be expunged from the register. It further seeks an injunction restraining the defendants from using the trade mark or words similar to "STINGSILDA" and packaging similar to plaintiff's, for fishing lures in Canada. The defendants seek a determination pursuant to Rule 474 as to whether paragraphs 7(a),(b) and (c) of the Act are ultra vires and whether the Court has jurisdiction over the action based on the paragraphs. The issue is whether to set down as a preliminary issue a determination of a question of law under Rule 474.
Held, the defendants' motion is dismissed and that of the plaintiff is adjourned sine die. Rule 474 leaves it to the discretion of the Court to determine whether it deems it expedient to set down a question of law for determination. The leading jurisprudence appears to indicate that it should be done if the decision of the Court on the question of law will determine the entire issue before the Court. It cannot be concluded at this stage of the proceedings that if a decision of the question of law was adverse to plaintiff then the action seeking expungement of the trade mark from the register would therefore of necessity fail on a question of procedure. There-
fore, the present action, because of its dual nature is not an appropriate one in which to set down as a preliminary issue a determination of a question of law under Rule 474. The plaintiff's motion does not need to be dealt with.
MacDonald v. Vapor Canada Ltd. [1977] 2 S.C.R. 134, referred to. Motel 6, Inc. v. No. 6 Motel Ltd. [1982] 1 F.C. 638, referred to. The Clarkson Co. Ltd. v. The Queen [1978] 1 F.C. 481, referred to. Canadian Pacific Air Lines, Ltd. v. The Queen [1976] 1 F.C. 494, referred to. Cardinal v. The Queen [1977] 2 F.C. 698, applied.
MOTION. COUNSEL:
K. D. McKay for plaintiff.
B. Edmonds and G. Clarke for defendants.
SOLICITORS:
Donald F. Sim, Q.C., Toronto, for plaintiff.
McCarthy & McCarthy, Toronto, for defend ants.
The following are the reasons for judgment rendered in English by
WALSH J.: Two motions came on for hearing in this matter, the first being defendants' motion seeking determination pursuant to Rule 474 of the Rules of this Court of questions of law as to whether paragraphs (a),(b) and (c) of section 7 of the Trade Marks Act, R.S.C. 1970, c. T-10, are ultra vires and whether this Court has jurisdiction over the portion of the subject-matter of the action based on the said paragraphs (a),(b) and (c) of section 7.
The second motion was an application by plain tiff for an order that an officer of each of the defendant companies attend to be examined for discovery by plaintiff and that service of the appointment may be effected on the solicitors for the defendants as provided by Rule 465(8).
The action seeks a declaration that the defend ants have passed off their wares for those of the plaintiff within the meaning of section 7 of the Trade Marks Act, but also asks for a declaration that trade mark registration No. 216,708 for the trade mark NORSE SILDA owned by the defendant Gibbs is invalid and void and that it be expunged
from the register. In addition an injunction is sought restraining the defendants from using the words NORSE SILDA or words confusingly similar to the trade mark STINGSILDA, an unregistered trade mark used by plaintiff associated with fish ing lures in Canada, and from using packaging confusingly similar to that employed by plaintiff in association with the said fishing lures sold or dis tributed by them in Canada, as well as delivery up for destruction of packaging, labelling, invoices, advertisements and so forth and damages or an accounting of profits.
Proceedings were initiated in September 1980 and there have been a number of preliminary motions, the statement of defence being finally filed on April 21, 1981, to which plaintiff has joined issue. The issues of law raised by defendants are serious and a final determination of them by the Supreme Court of Canada would be welcomed both by the Judges of this Court and by lawyers practising in the trade mark field since at present it can be said that the state of the law with respect to the other paragraphs of section 7 of the Trade Marks Act (with the exception of paragraph (e) found to be ultra vires by the Supreme Court in the leading case of MacDonald v. Vapor Canada Limited [1977] 2 S.C.R. 134) is still unsettled. One school of thought holds that although that action was concerned only with paragraph (e) the same reasoning adopted in that judgment is appli cable so that all the other paragraphs of section 7 are also ultra vires. The other school of thought holds that it is still arguable that there is appli cable federal law to support some of the other paragraphs. Extensive jurisprudence was examined very thoroughly by my brother Addy J. in Motel 6, Inc. v. No. 6 Motel Limited, supra page 638, a judgment dated April 3, 1981, in which he con cludes that section 7(b) of the Trade Marks Act is ultra vires the federal legislative authority and that the Court is without jurisdiction to try the issue either on the basis of that section or the common law action of passing off.
It is not necessary here to review the jurispru dence save to state that the cases referred to by him on the matter are Aluminum Co. of Canada Ltd. v. Tisco Home Building Products (Ontario)
Ltd.', Adidas (Canada) Ltd. v. Colins Inc. 2 , Imperial Dax Co., Inc. v. Mascoll Corp. Ltd.', McCain Foods Ltd. v. C. M. McLean Ltd. 4 , Balinte v. DeCloet Bros. Ltd.' and the appeal of that case in [1980] 2 F.C. 384, Weider v. Beco Industries Ltd. 6 , S. C. Johnson & Son, Ltd. v. Marketing International Ltd.' and the appeal of that case in [ 1979] 1 F.C. 65, Seiko Time Canada Ltd. v. Consumers Distributing Co. Ltd.'
Desirable as it may be that an early and final determination be made of the question of whether some of the paragraphs of section 7 of the Trade Marks Act are infra vires the federal authority and whether this Court has jurisdiction to hear any action based on them or on the basis of the common law action of passing off, it is doubtful whether these questions should be set down for determination on a question of law pursuant to Rule 474 in this case, since the action is also an action for expungement of defendants' trade mark. In the Motel 6 case referred to, Addy J. states at pages 675-676:
The three main grounds on which a mark may be attacked were discussed in the earlier portions of these reasons. They are quite different from those on which an action of passing off under section 7(b) or at common law can be maintained. Similarly, even though a passing off action should fail on the merits, the mark could still be found to be invalid on any one or all of the three main grounds of attack provided for in the Act, and the registration ordered to be vacated.
In his judgment he ordered that the defendant's trade mark be struck from the register of trade marks and states [at page 679]:
All other claims of the plaintiff will be dismissed, with the claim under section 7(b) of the Trade Marks Act, however, being dismissed solely on the grounds of lack of jurisdiction.
Rule 474 leaves it to the discretion of the Court to determine whether it deems it expedient to set down a question of law for determination. The leading jurisprudence appears to indicate that it
1 (1978) 33 C.P.R. (2d) 145.
2 (1979) 38 C.P.R. (2d) 145.
3 (1979) 42 C.P.R. (2d) 62.
4 (1980) 45 C.P.R. (2d) 150.
5 (1979) 40 C.P.R. (2d) 157.
6 [1976] 2 F.C. 739.
' (1978) 32 C.P.R. (2d) 15.
8 (1981) 29 O.R. (2d) 221.
should only be done if the decision of the Court on the question of law will determine the entire issue before the Court. In the case of Cardinal v. The Queen 9 Mahoney J. refused to set down prelim inary questions of law for determination merely because they could conveniently be dealt with in a preliminary proceeding as their disposition would not dispose of the action. In the case of The Clarkson Company Limited v. The Queen 10 Mahoney J. at page 483 stated:
The situation contemplated by Rule 474 is one where, while there are a number of issues in an action, the disposition of one of them will likely have the effect of putting an end to the action. The directions which the Court may give under subsec tion (2) of that Rule must be aimed at that sort of disposition.
In Canadian Pacific Air Lines, Limited v. The Queen" Cattanach J. after finding that a trial of the matter was inevitable stated at page 498:
That being so, I am not satisfied that setting down questions of law for preliminary determination will materially facilitate the determination of the matter, or result in a saving of time and expense which I conceive to be the purpose of Rule 474. The costs of a trial will not be avoided ... .
Defendants' counsel contends that a decision on the question of law to the effect that this Court does not have jurisdiction over the portion of the claim based on section 7 of the Trade Marks Act will have the effect of finally determining all the issues in the action, relying on section 58 of the Trade Marks Act which reads as follows:
58. An application under section 57 shall be made either by the filing of an originating notice of motion, by counterclaim in an action for the infringement of the trade mark, or by statement of claim in an action claiming additional relief under this Act.
Since the application pursuant to section 57 to expunge a trade mark from the register has neither been made by the filing of an originating notice of motion nor by way of counterclaim in an action for infringement, but rather by the statement of claim in the present proceedings which also claim pass ing off under section 7 it is his contention that if the Court is found not to have jurisdiction under that section or that section is found to be ultra vires the federal authority then the entire action
9 [1977] 2 F.C. 698.
10 [1978] 1 F.C. 481.
11 [1976] 1 F.C. 494.
must fail. Plaintiff for its part contends that a Trial Judge could nevertheless in the present pro ceedings order the expungement of the trade mark even if the Court had no jurisdiction over the other relief sought, and in fact this was done by Addy J. in the Motel 6 case (supra), procedural obstacles not having apparently been raised before him. Plaintiff will not be satisfied with the mere expungement of defendants' trade mark from the register and is unwilling to withdraw that portion of its claim from the present proceedings and proceed by way of originating notice of motion seeking the said expungement, leaving the rest of the proceedings to rely entirely on the application of section 7 of the Trade Marks Act on which a final determination of the question of law which it sought to raise would dispose of the entire proceed ings. I am not prepared to conclude at this stage of the proceedings that if a decision of the question of law was adverse to plaintiff then the action seeking expungement of the trade mark from the register would therefore of necessity fail on a question of procedure.
Plaintiff points out, not without justification, that it is somewhat belated for defendants to seek the determination of the question of law after the pleadings have been completed and an application has been made for discovery of an officer of defendant companies. These discoveries as well as any discoveries of an officer of plaintiff which plaintiffs counsel states can be done at any time at the convenience of defendants, could take place during the summer recess and there is no reason why the action should not be set down for hearing on the merits at an early date in the autumn, whereas if a question of law is raised it is unlikely that a hearing of same could be set down during the summer recess, and in any event, in the present state of the law on the question, whatever judg ment was rendered would almost certainly be appealed most likely eventually to the Supreme Court, so there would be a very extensive delay during which plaintiff would not have its action heard, and defendants could continue to use the registered trade mark to the detriment of plaintiff.
It is necessary therefore to weigh the costs and inconvenience of somewhat more lengthy examina tions for discovery, parts of which may eventually prove to have been wasted if it is eventually found that the Court does not have jurisdiction over the section 7 claims in the action, and possibly, as a procedural consequence over the expungement of defendants' trade mark, against the prejudice which plaintiff will suffer as a result of the exten sive delay in reaching a final decision on the question of law if a preliminary determination is allowed.
I have reached the conclusion therefore that the present action, because of its dual nature is not an appropriate one in which to set down as a prelim inary issue a determination of a question of law under Rule 474. It follows that defendants' motion will be dismissed, but under the circumstances, without costs. Plaintiff's motion for an order that an officer of each of the defendant companies attend to be examined for discovery by plaintiff and that service of the appointment may be effect ed on the solicitors for the defendants as provided by Rule 465(8) does not need to be dealt with at this time in view of the foregoing decision as it appears probable that counsel for the parties can agree on the officers to be examined, the date and place for such examination and the conduct money to be provided. That motion will therefore be adjourned sine die.
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