T-9535-82
Canadian Red Cross Society (Plaintiff)
v.
Simpsons Limited (Defendant)
Trial Division, Mahoney J.—Toronto, March 1
and 7, 1983.
Practice — Joinder of parties — Trade marks — Plaintiff
suing defendant retailer with respect to sales of towels com
bining red cross and trade marks "M*A*S*H" and "4077th"
on green background — Application by owner of trade marks
"M*A*S*H" and "4077th" to be joined as defendant or
intervenor — Application allowed; owner added as defendant
— No rule of Court providing for intervenor to be added as
party — Tests in R. 1716(2)(6) met: applicant's rights or
pecuniary interests directly affected by determination of issue
and risk that rights inadequately represented if party not
added as defendant - Federal Court Rules, C.R.C., c. 663,
RR. 5, 1716(2)(b),(3),(4) — Trade Marks Act, R.S.C. 1970, c.
T-10, ss. 6, 9(1)(j).
Trade marks — Equitable remedies — Injunctions —
Defendant retailer selling towels with design combining red
cross and trade marks "M*A*S*H" and "4077th" on green
background — Plaintiff seeking interlocutory injunction pre
venting use by defendant of heraldic emblem of Red Cross —
Principles in American Cyanamid case applied — Serious
issue to be tried, but balance of convenience against issue of
interlocutory injunction — Right to limit damages subject to
equity requiring consideration of consequences of granting
application on M*A*S*H line in Canada — Loss of support,
confidence and goodwill speculative, not factual — Trade
Marks Act, R.S.C. 1970, c. T-10, ss. 6, 9(1)(f).
Twentieth Century-Fox Film Corporation ("Fox"), owner of
the trade marks "M*A*S*H" and "4077th", seeks to be joined
as defendant or, alternatively, as intervenor in this action
instituted by plaintiff ("Red Cross") against defendant retailer
for the selling, by the latter, of towels which bear a design
combining a red cross and Fox's trade marks on a green
background. In a second motion before the Court, the plaintiff
applies for an interlocutory injunction to prevent defendant
from using the heraldic emblem of the Red Cross. There is no
contractual relationship between Fox and defendant: the latter
bought the wares in issue from a Canadian licensee of Fox. Fox
relies on Rule 1716(2)(b) which provides that the Court may
order any person who ought to have been joined as a party or
whose presence before the Court is necessary, to be added as a
party.
Held, the owner of the trade marks is directed to be joined as
defendant and the application for interlocutory injunction is
dismissed.
There is no rule of this Court (except Rule 1010—an admi
ralty rule) which permits a party to be added as an intervenor
in an action. Rule 5, the "gap rule", is of no assistance: the
pertinent Ontario rules are identical to the Federal Court
Rules. Fox may be added as a defendant only if it meets the
two tests in Rule 1716(2)(b). Those tests are as stated by the
Ontario Divisional Court in Re Starr and Township of Pus-
linch et al. (1976), 12 O.R. (2d) 40 (Div. Ct.) in its consider
ation of the identical Ontario rule: the determination of the
issue must directly affect the applicant's rights or pecuniary
interests and, in the affirmative, there must be a risk that
applicant's rights will not be adequately represented. Fox has a
direct interest in the issue to be determined and to require it to
defend its rights vicariously would entail a risk that its rights
not be adequately represented.
With respect to the application for interlocutory injunction,
the principles set forth by Lord Diplock in the American
Cyanamid case are to be applied. There is a serious issue to be
tried: whether the prescription of paragraph 9(1)(J) of the
Trade Marks Act applies to "the heraldic emblem of the Red
Cross" or to "the heraldic emblem of the Red Cross on a white
ground"; and the balance of convenience falls clearly against
the issue of an interlocutory injunction. Plaintiff has the right
to limit its exposure to damages; however, equity demands that
the impact of granting an interlocutory injunction on the entire
M*A*S*H line in Canada and particularly the line employing
the design in issue, be taken into account. Plaintiffs apprehen
sion of loss of public support, of confidence and of goodwill is
difficult to compensate in damages, and it is, on the evidence,
an apprehension based on speculation rather than facts.
CASES JUDICIALLY CONSIDERED
APPLIED:
Re Starr and Township of Puslinch et al. (1976), 12
O.R. (2d) 40 (Div. Ct.); American Cyanamid v. Ethicon,
[1975] 1 All ER 504 (H.L.).
COUNSEL:
J. Banfill, Q.C. and S. Dans for plaintiff.
R. S. Jolliffe and G. W. Wall for defendant.
SOLICITORS:
Tilley, Carson & Findlay, Toronto, for
plaintiff.
Gowling & Henderson, Toronto, for defend
ant.
The following are the reasons for order ren
dered in English by
MAHONEY J.: Three motions were heard in this
matter, whereof two remain to be disposed of,
although it will be necessary to refer to the third.
The remaining applications are:
1. the application of Twentieth Century-Fox
Film Corporation, hereinafter "Fox", owner of
the trade marks "M*A*S*H" and "4077th", to
be joined as a defendant or, alternatively, an
intervenor in this action;
2. the plaintiff's application for an interlocutory
injunction to prevent the defendant from using
the heraldic emblem of the Red Cross.
Paragraph 9(1)(f) of the Trade Marks Act'
provides:
9. (1) No person shall adopt in connection with a business, as
a trade mark or otherwise, any mark consisting of, or so nearly
resembling as to be likely to be mistaken for
(/) the heraldic emblem of the Red Cross on a white ground,
formed by reversing the federal colours of Switzerland and
retained by the Geneva Convention for the Protection of War
Victims of 1949, as the emblem and distinctive sign of the
Medical Service of armed forces and used by the Canadian
Red Cross Society; or the expression "Red Cross" or "Gene-
va Cross";
The wares specifically in issue are green towels,
advertised at page 40 of the defendant's Christmas
1982 catalogue bearing a design consisting of a
combination of a red cross and Fox's trade marks,
thus:
The cross is red, the letters and numerals black
and the background green.
' R.S.C. 1970, c. T-10.
The design was created for and is owned by Fox.
Its use is licensed to some 27 licensees in Canada
who have the right to apply it to their wares. The
defendant bought the towels from such a licensee;
there is no contractual relationship between Fox
and the defendant. Fox has a clear and immediate
interest in the outcome of the action. The plaintiff,
with the obvious intent of limiting its exposure to
damages in the event it obtains the interlocutory
injunction but fails at trial, has elected to sue one
merchandiser in respect of one item of merchan
dise.
The Rule of Court in play on Fox's application
is Rule 1716(2)(b) [Federal Court Rules, C.R.C.,
c. 663]:
Rule 1716. ...
(2) At any stage of an action the Court may, on such terms
as it thinks just and either of its own motion or on application,
(b) order any person who ought to have been joined as a
party or 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,
I know of no rule of this Court, other than Rule
1010, which is an admiralty rule, which permits a
party to be added as an intervenor in an action. It
is futile to look to Rule 5, the "gap rule", because
the pertinent Ontario rules are, to all intents and
purposes, identical to the Rules of this Court. The
cases in which the gap rule has been invoked to
permit the joinder of intervenors appear all to have
arisen in Quebec, where the Code of Civil Proce
dure does contemplate such a step. Fox must be
added as a defendant or not at all. It is to be added
only if it meets one or the other of the tests of Rule
1716(2)(b).
Considering the identical Ontario rule, the Divi
sional Court 2 reviewed the English and Ontario
authorities in an application for judicial review in
which the immediate issue was the conduct of a
municipal council in adopting an official plan. The
applicants to be added as respondents have "a
considerable commercial interest" in the result
2 Re Starr and Township of Pus/inch et al. (1976), 12 O.R.
(2d) 40 (Div. Ct.).
although they were not said to be parties to the
alleged fraud and procedural defaults of the mu
nicipality and its officials. The conclusion was: it is
not necessary that the applicant have an interest in
the immediate issue; it is sufficient that determina
tion of that issue will directly affect his rights or
his pocket-book. However, even then, the Court
has the discretion to refuse the application if it
considers his interests are already adequately
represented.
Fox has here a direct interest in the very issue to
be determined. The decision here, if the plaintiff
succeeds, will directly affect Fox's rights and pock-
et-book. While I accept that the present defendant
will defend the action, its interest in doing so is
obviously not to be compared to Fox's. Fox ought
not be in the position of defending its rights vicari
ously. To require it to do so would entail a risk
that its interests would not be adequately
represented.
In ordering that Fox be added as a defendant
and that the statement of claim be amended
accordingly, I am not ordering that the plaintiff
expand the scope of its action beyond the single
item of merchandise sold by the single retailer
which it has already selected. I understand that
Fox is in circumstances which, if it were suing as a
plaintiff, it would be liable to post security for
costs. Fox ought, in these circumstances, to post
security for the plaintiff's costs if applied for. I call
the parties' attention to Rule 1716(3) and (4).
Should further directions be required any of them
may apply.
Turning to the plaintiff's application for an
interlocutory injunction, the third motion men
tioned was a motion by the plaintiff to exclude the
affidavit of Chris Yaneff, filed in opposition.
Yaneff is a professional graphic designer. The
affidavit expressed certain opinions tending to sup
port the defendant's argument that it has a fairly
arguable case. That is, in my view, an entirely
proper point to be made by a defendant and, in
appropriate circumstances, expert evidence is ad
missible. It is neither necessary nor desirable that I
deal, at this stage, with the distinction properly to
be drawn between "confusing with", as used in
section 6 and "so nearly resembling as ... likely to
be mistaken for", as used in section 9. Suffice it to
say, quite independent of Yaneff's opinion, which
may or may not deal with the "ultimate issue", I
am satisfied that both the plaintiff and the defend
ant have arguable cases.
There is a serious issue to be tried: does the
prescription of paragraph 9(1)(f) apply to "the
heraldic emblem of the Red Cross" or does it
apply to "the heraldic emblem of the Red Cross on
a white ground"? That is plain without Yaneff s
evidence. Only if the "white ground" is an integral
part of what is protected does the question of
resemblance arise. Yaneff's evidence was given no
weight because I did not find it necessary to
consider it.
Paccept that the principles to be applied here
are as stated by Lord Diplock in American Cyana-
mid v. Ethicon. 3 There being a serious issue to be
tried, one must consider the balance of conve
nience. Here I think it entirely proper to consider
not only the defendant's position with respect to
the towels but the positions of all: Fox, its licensees
and other merchandisers. While I consider it
within the plaintiffs rights to limit its exposure to
damages, equity demands that account be taken of
the impact of the issue of an interlocutory injunc
tion on the entire M*A*S*H line in Canada and
particularly that employing the design in issue.
Having considered the affidavits of Muriel E.
Craig, filed on behalf of the plaintiff, and Robert
W. Mulcahy, filed on behalf of the defendant, and
the transcripts of the cross-examinations thereon, I
am satisfied that the balance of convenience falls
clearly against the issue of an interlocutory injunc
tion. While the damage the plaintiff apprehends:
loss of public support, confidence and goodwill
would be difficult to compensate in damages, it is,
on the evidence, an apprehension with speculative
rather than factual foundations.
3 [1975] 1 All ER 504 (H.L.).
ORDER
1. The application for an interlocutory injunc
tion is dismissed with costs to the defendant, Simp-
sons, in any event.
2. There will be no costs in respect of the Yaneff
affidavit motion.
3. Twentieth Century-Fox Film Corporation is
directed to be joined as a defendant. Should the
parties require further directions consequent upon
this order, any may apply. Costs of this application
will be in the cause between the plaintiff and
Twentieth Century-Fox Film Corporation.
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