T-1779-82
Monarch Marking Systems, Inc. and Monarch
Marking Systems, Ltd. (Plaintiffs)
v.
Esselte Meto Limited and Primark Marking Lim
ited (Defendants)
Trial Division, Mahoney J.—Toronto, July 13;
Ottawa, July 26, 1983.
Patents — Practice — Motion to compel reattendance of
defendants' officer on discovery to answer questions — Alle
gations of infringement by specified models and "other similar
or related" ones unknown to plaintiffs — Motion to delete
wording would likely have been successful — Questions aimed
at identifying other infringing models disallowed as fishing
expedition, though permissible under R. 465(15) on present
pleadings — Questions seeking information held by defend
ants' foreign corporate relatives must be answered — Corpo
rate veil should not exempt multinational enterprises from full
compliance with Canadian law in respect of Canadian opera
tions — Canadian companies should be held responsible for
failure to provide discovery answers — Questions concerning
function or assembly of defendants' apparatus not requiring
patent interpretation or anticipation of expert opinion —
Plaintiffs need not resort to dismantling and figuring out
specimens provided — Bald allegation that no infringement
simply traverse which adds nothing to plaintiffs onus and
calls for no particulars — Motion granted in part — Federal
Court Rules, C.R.C., c. 663, R. 465(15).
Corporations — Motion in patent-infringement action to
compel reattendance of defendants' officer on discovery to
answer questions — Questions seeking information held by
foreign corporations related to defendants must be answered
— Corporate veil should not exempt multinationals from
compliance with Canadian law in respect of Canadian opera
tions — Canadian companies should be held responsible for
failure to provide discovery answers — Motion granted in part
— Federal Court Rules, C.R.C., c. 663, R. 465.
The action concerned the alleged infringement of patents
relating to hand labellers. The plaintiffs applied for an order
requiring the defendants' officer to reattend on examination for
discovery, for the purpose of replying to questions which he had
previously refused to answer.
Held, the motion is granted in part and dismissed in part.
(1) In their statement of claim, the plaintiffs set forth
allegations and particulars of infringement by certain specified
models of the defendants' product. However, there are also
references to "other similar or related models", and to infringe
ments thereby, the details of which "are unknown to the
Plaintiffs" but in respect of which relief is sought. Some of the
questions at issue are directed at ascertaining which of the
defendants' models, other than those specifically identified in
the pleading, possess construction features similar to those
claimed in the patents.
It appears from the authorities that if the defendants had
moved to strike the references to "other similar or related
models", they would likely have been successful. On the other
hand, no such deletions have been applied for, and given the
pleadings as presently constituted, Rule 465(15)—taken liter-
ally—is broad enough to permit this group of questions.
Nonetheless, these questions amount to a fishing expedition (as
defined in Hennessy v. Wright), and need not be answered.
(2) The questions which seek information held by the defend
ants' foreign corporate relatives should be answered (except
where particular objections dictate otherwise). International
enterprises, doing business through associated companies in
many countries, are a feature of today's commercial reality.
Recognizing this, the courts should not allow the corporate veil
to inhibit the administration of justice in Canada. They should
not permit international enterprises to avoid full compliance
with Canadian law in respect of the business that they transact
here—whether such avoidance be an objective of the corpora
tions' organizational set-ups or simply an incident thereof.
Examination for discovery is an important tool in the adminis
tration of civil justice. Under proper sanctions of the Court, a
Canadian company can readily and economically obtain from
its foreign relatives answers to proper discovery questions. An
attempt to procure such answers should be required, and the
Canadian company should have to pay the consequences of its
failure or its associate's recalcitrance.
(3) Those questions which concern the function or assembly
of the defendants' apparatus do not require an interpretation of
the patents. Factual answers, which are what they call for,
would not improperly anticipate the opinions of expert wit
nesses. Nor is there any merit in the argument that the
plaintiffs can obtain their answers just as easily by taking
apart, and figuring out the workings of, the specimens already
given to them. Accordingly, the questions in this category also
should be answered—but only in respect of the models specified
in the statement of claim.
(4) In certain of their questions, the plaintiffs are asking for
particulars of the allegation, pleaded baldly by the defendants,
that the defendants' devices do not infringe the patents. It is
true that the avoidance of surprise and the narrowing of issues
are legitimate aims of discovery. However, a plea such as the
one at issue is simply a traverse—a denial of the allegation of
infringement. It adds nothing to a plaintiff's burden, and does
not call for particulars.
CASES JUDICIALLY CONSIDERED
FOLLOWED:
Hennessy v. Wright No. 2 (1888), 24 Q.B.D. 445 (Eng.
C.A.).
CONSIDERED:
GAF Corp. v. Hanimex (Canada) Ltd. (1972), 4 C.P.R.
(2d) 110 (F.C.T.D.); Dow Chemical Co. v. Kayson Plas
tics & Chemicals Ltd., [1967] 1 Ex.C.R. 71; 47 C.P.R. 1;
Vapor Canada Limited v. MacDonald, et al. [No. 1],
[1971] F.C. 452; 3 C.P.R. (2d) 212 (T.D.).
REFERRED TO:
W.H. Brady Co. v. Letraset Canada Ltd. (1981), 60
C.P.R. (2d) 144 (F.C.A.), affirming (1981), 58 C.P.R.
(2d) 167 (F.C.T.D.); Leesona Corp. v. Snia Viscosa
Canada Ltd. (1975), 26 C.P.R. (2d) 136 (F.C.T.D.).
COUNSEL:
D. F. Sim, Q.C. for plaintiffs.
P. E. J. Wells for defendants.
SOLICITORS:
Sim, Hughes, Toronto, for plaintiffs.
Lang, Michener, Cranston, Farquharson &
Wright, Toronto, for defendants.
The following are the reasons for order ren
dered in English by
MAHONEY J.: Examinations for discovery in
this action and actions nos. T-6540-82 and T-112-
83 are being conducted together. The actions
involve the identical parties in the same capacities
and are for infringement of patents relative to
hand labellers of the sort used to affix price labels
to merchandise in grocery stores. This is an
application on behalf of the plaintiffs pursuant to
Rule 465 [Federal Court Rules, C.R.C., c. 663] to
require the reattendance of the defendants' officer
to answer questions refused to be answered. Only a
few of the questions set forth in the notice of
motion remained in issue when the motion was
heard. They fall into four categories.
1. Questions concerning models of labellers not
specifically pleaded by the plaintiffs to infringe.
It is convenient to refer to the statement of
claim in T-6540-82, whereof paragraph 11 pleads,
in part, and paragraph 12 pleads, as follows:
11. The Defendants' hand-held labellers, models METO 2200/2
and METO 3133 and other similar or related models at present
unknown to the Plaintiffs, but known to the Defendants, incor
porate in their construction, inter alia;
12. The Defendants' hand-held labellers Models METO 2200/2
and METO 3133 and other similar or related models thereby
infringe claims 16-18, 20-22 and 26-30 of Canadian Letters
Patent No. 1,124,133.
Paragraphs 13 and 14 make similar allegations
and paragraph 18 pleads:
18. The precise model designations, construction, number,
amounts and dates of the infringements of the patents aforesaid
by the Defendants are unknown to the Plaintiffs but are known
to the Defendants, but the Plaintiffs claim relief in respect of
all acts of infringement of the Defendants.
All questions in Category 1 seek to ascertain what
models, other than those named, models 2200/2
and 3133 in the case of T-6540-82, have construc
tion features similar to those claimed in the pat
ents in issue.
The defendants characterize the line of ques
tioning as a fishing expedition. The authorities
cited to support rejection of the application as to
Category 1 were concerned with applications to
strike out pleadings. In GAF Corp. v. Hanimex
(Canada) Ltd.,' the plaintiff had followed the old
practice of filing a statement of claim and, with it,
a separate "Particulars of Breaches". Heald J.,
then sitting in the Trial Division, held:
In the case at bar, para. 4 of the statement of claim says that
defendant has infringed plaintiffs patent by selling La Ronde
projectors which projectors exhibit the features of construction
set out in para. 3 of the statement of claim. The only informa
tion added by the particulars of breaches are the model num
bers of said La Ronde projectors known to the plaintiff and a
general statement that plaintiff will claim relief in respect of
any other infringing models that may turn up. I do not consider
these statements to be allegations of "the material facts" which
are necessary in cases of this kind. These allegations contain no
description whatsoever of the instruments alleged to have been
made and sold by the defendant so as to show in fact that they
are within the boundaries of the description contained in para.
3 of the statement of claim.
1 (1972), 4 C.P.R. (2d) 110 (F.C.T.D.), at p. 113.
He held the pleadings could not stand in that form.
Dealing with a similar pleading on a motion for
particulars, Jackett P., as he then was, observed: 2
It would be no answer to an application to strike out in such a
case for the plaintiff to say that, if he is allowed to have
unrestricted discovery of the defendant, he may then be in a
position to plead a cause of action.
Referring to the latter decision, Walsh J., in Vapor
Canada Limited v. MacDonald, et al. [No. J],3
said:
This judgment is also authority for the proposition that a
plaintiff cannot give particulars respecting one particular
breach of which he complains and then add allegations of a
vague nature respecting other breaches which he suspects but
of which he is not definitely aware.
Thus, it appears, had the defendants moved to
strike the references to "other similar or related
models" in the statement of claim, the motions
would likely have succeeded. The plaintiffs, how
ever, argue that the scope of examination for
discovery, as defined by Rule 465(15), requires
answers "as to any fact ... that may prove or tend
to prove ... any unadmitted allegation of fact in
any pleading" and that, on the present state of the
pleadings, the questions are proper.
I accept the definition of a "fishing expedition",
in the context of discovery, as given by Lord Esher
M.R. in Hennessy v. Wright No. 2, 4 a libel action.
... the plaintiff wishes to maintain his questions, and to insist
upon answers to them, in order that he may find out something
of which he knows nothing now, which might enable him to
make a case of which he has no knowledge at present.
I agree with the defendants. Notwithstanding the
present state of the pleadings and that Rule
465(15), taken literally, is broad enough to encom
pass the questions of Category 1, those questions
are, in substance, a fishing expedition. They need
not be answered.
2 Dow Chemical Co. v. Kayson Plastics & Chemicals Ltd.,
[1967] 1 Ex.C.R. 71, at p. 75; 47 C.P.R. 1, at p. 6.
3 [1971] F.C. 452, at p. 455; 3 C.P.R. (2d) 212 (T.D.), at p.
215.
4 (1888), 24 Q.B.D. 445 (Eng. C.A.), at p. 448.
2. Questions concerning matters in the knowledge
of foreign related companies.
A German relative of the defendants supplies
parts, some assembled, which are assembled into
the complete labellers marketed in Canada. A
Swedish relative is the overall parent company.
The defendants rely on W.H. Brady Co. v.
Letraset Canada Ltd., 5 as authority for refusing to
seek the requested answers and say that such is to
be required only in exceptional circumstances.
They distinguish Leesona Corp. v. Snia Viscosa
Canada Ltd. 6 on the basis that the president of the
defendant was also an officer of the pertinent
foreign affiliate, although he was not the individu
al tendered for examination. While the trial deci
sion in Brady is directly on point and it was
upheld, in its result, on appeal,' the Court of
Appeal clearly arrived at the result for different
reasons than the Trial Judge.
Today's commercial reality, with international
corporations, large and small, doing business
through affiliates across much of the world and
treating national boundaries as minor inconve
niences to be coped with by organizational means,
dictates that the corporate veil ought not be per
mitted to inhibit the administration of justice in
Canada. Examination for discovery is an impor
tant tool in the administration of justice on its civil
side. I have no doubt that, under proper sanctions
by the Court, Canadian companies can readily and
economically obtain from their foreign affiliates
answers to proper questions on discovery. I am
convinced that they should be required to try and
to pay the consequences of their failure or their
affiliates' recalcitrance. International businesses
ought not be permitted, either as an incident or
object of their organizational set-ups, to avoid full
compliance with the law of Canada in respect of
the business they do here.
5 (1981), 58 C.P.R. (2d) 167 (F.C.T.D.).
6 (1975), 26 C.P.R. (2d) 136 (F.C.T.D.).
' W.H. Brady Co. v. Letraset Canada Ltd. (1981), 60 C.P.R.
(2d) 144 (F.C.A.).
The Category 2 questions should be answered
subject to other objections taken by the defendants
to particular questions.
Q. 243. This seeks to learn where and when a
particular device has been marketed. The device
appears not to have been made or marketed in
Canada (Q. 239). That is as far as its relevance
can take the question. No further answer is
required.
Q. 303. This deals with the assembly of parts
incorporated in Canada into the models specifical
ly pleaded. It should be answered.
Q. 318. This seeks worldwide sales figures for
the allegedly infringing models. They are said to
be relevant to proof of commercial success. Sales
figures for Canada have been given and are a
sufficient answer.
Q. 354. This seeks information as to the affili
ates' knowledge of certain prior art pleaded in
defence. It should be answered.
Q. 469. This seeks parts and assembly drawings
of one of the parts assembled in Germany. They
should be provided.
3. Questions concerning the function or assembly
of the defendants' apparatus.
I disagree with the defendants' submission that
to answer these questions would require an inter
pretation of the patents in issue. Likewise, I see no
merit in the objection that factual answers, such as
are required, would somehow improperly antici
pate the opinions to be given by expert witnesses
likely to be called at trial or in the submission that
the plaintiffs, who have been provided with speci
mens, can as easily disassemble them and figure
their workings out.
The questions should be answered, however, in
view of the decision as to Category 1, only in
respect of models specifically pleaded.
4. Questions concerning facts relied on in support
of an allegation contained in the pleadings.
The defendants plead that their devices do not
infringe the patents. The plaintiffs seek to have
them state, on discovery, the particulars in which
they do not infringe. The defendants say that to
answer such questions would necessarily involve
either or both interpretation of the claims of the
patent or conclusions of law.
A plaintiff is required in pleading to express
alleged infringements in "non-claim" language. Is
a defendant entitled simply to plead non-infringe
ment? Must a plaintiff wait until trial to learn in
what respect the defendant says his device differs
from the invention? It is not information which a
plaintiff gets in advance through the filing of
expert evidence; the plaintiff must prove infringe
ment and the defendant is entitled to reserve his
evidence of non-infringement for rebuttal. Avoid
ance of surprise and narrowing of issues are among
the legitimate objects of discovery.
In my view, a bare plea of non-infringement is
neither more nor less than a traverse: a denial of
the allegation of infringement. It adds nothing to a
plaintiff's burden. It merely puts him on his proof.
It does not call for particulars.
Q. 380, although included in Category 4, is
basically different from the others in the category.
Paragraphs 7, 21, 34, 48, 61 and 72 of the particu
lars of objection filed in this action are identical,
pleading as follows in respect of each patent in
issue:
The said patent describes and claims the mere aggregation
and juxtaposition of well-known elements of similar apparatus
used in the art prior to the date of the alleged invention. The
patent describes and claims the mere obtaining of known
results from known elements.
Q. 380 seeks the factual bases for that pleading
and is proper.
Except for Q. 380, the Category 4 questions
need not be answered.
ORDER
IT IS ORDERED THAT:
1. The defendants' officer, John Heeney, shall,
within 30 days of the date hereof, or such further
time as the parties may agree, reattend at his
examination for discovery to answer questions 266
to 269, 271, 274, 303, 354, 380, 465, 466, 469 and
503 and such further questions as may properly
arise out of the answers thereto.
2. Costs of this motion and the reattendance be in
the cause.
3. A copy of these reasons and order be filed in
and form part of the record of actions T-6540-82
and T-112-83.
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.