T-1232-84
Apple Computer, Inc. and Apple Canada Inc.
(Plaintiffs)
v.
Mackintosh Computers Ltd., Compagnie d'élec-
tronique Repco Ltée/Repco Electronics Co. Ltd.,
Maison des semiconducteurs Ltée/House of
Semiconductors Ltd., Chico Levy, Joseph Levy,
Nat Levy, Micro Computer Syncotech Systems
Ltd., Roman Melnyk, Gary Grecco, Richard
Wichlacz, Robert Pelland carrying on business
under the firm name and style of Centre du
Hobbie Enr., Eric-Pierre Durez and Serge Pelle-
tier carrying on business under the firm name and
style of Pro-Micro Enr., Claude Denise Bérubé
Villeneuve carrying on business under the firm
name and style of Villeneuve Électronique Enr.,
Daniel Renaud carrying on business under the
firm name and style of Microbit Enr., Hastings
Leasing (Belleville) Limited, William George
Knight, Evelyn Gwendelyn Knight, Glen Martin
Sargent, Mohamed Nathoo Gulamhusein carrying
on business under the firm name and style of
Compu-Sys, Tempo Audivision Incorporated,
Leslie David Graham Newton, Unitron Computer
Corporation, Robert A. Hubbell, Ace Computer
Supplies Inc., George Yin Kit Poon, Simon Yin
On Poon, Mang Chi Ly, Nu Mini Yung, Sabtronic
Systems Ltd., Bernard Allan Sabiston and Made-
leine Irene Sabiston (Defendants)
and
T-1235-84
Apple Computer, Inc. and Apple Canada Inc.
(Plaintiffs)
v.
115778 Canada Inc., carrying on business under
the firm name and style of Microcom and James
Begg (Defendants)
INDEXED AS: APPLE COMPUTER, INC. V. MACKINTOSH COM
PUTERS LTD.
Trial Division, Reed J.—Toronto, January 6, 7
and 8; Ottawa, January 30, 1987.
Practice — Contempt of Court — Defendants enjoined from
selling computers containing copy of literary works Autostart
RoM or Applesoft — Plaintiffs' private detectives purchasing
Apple IIe computer with blank chip from defendant —
Another defendant "burned" plaintiffs' program into blank
chip — Motion for contempt allowed against employee who
copied chip and employer — Although employer instructed
employees not to copy copyrighted programs, employer's con
duct indicating tolerance of discrete disregard of prohibition
— Ready access to chips for copying demonstrating careless
attitude towards compliance with order — Posted notice not
clearly withdrawing authority to copy chips — Federal Court
Rules, C.R.C., c. 663, R. 2500.
Master and servant — Employee "burning" program onto
blank chip contrary to Court order enjoining such activity and
verbal and written instructions to refrain from such activity —
Company's responsibility to ensure order complied with —
Easy availability of chips for copying and imprecise written
instructions indicating employer's careless attitude towards
compliance with order — Employer's conduct indicating
discrete disregard of order tolerated — Employer in contempt.
Practice — Evidence — Defendants enjoined from infringing
plaintiffs' copyright in computer software — Private detec
tives, hired by plaintiffs, posing as customers — Purchasing
computer with blank chips from one defendant — Another
defendant burning copyrighted program into chip -- Not
entrapment — Entrapment applying to police investigations,
not to means used by private citizens to ensure compliance
with injunctions granted in civil proceedings.
This is a motion for a finding of contempt against Michael
Lee, House of Semiconductors, Norman Parent and Microcom.
The defendants, their servants and agents were enjoined from
selling computers containing a copy of the literary works
Autostart ROM or Applesoft, and were required to deliver up all
copies of such literary works. Private detectives, hired by the
plaintiffs, posed as prospective purchasers of a computer. Mr.
Parent at Microcom offered to sell them an Apple Ile computer
with a blank chip and provided the names of two places that
could burn the necessary program into the chip, although he
declined to do so himself. At the House of Semiconductors,
Michael Lee initially refused to burn the chip as the detectives
could not provide the master chip to be copied. However, when
the detective acted as if upset because the computer was to be a
birthday gift for his son, Mr. Lee copied the chip for $5, having
stipulated that the detective not tell anyone where he got it
done. Lee had ready access to the copies of the chips collected
because House of Semiconductors had collected together all
copies of the chips they held containing Autostart ROM or
Applesoft and stored them in a box at the back of the store.
The detectives returned to Microcom where Mr. Parent placed
the burned chip in the computer in order to test it. During this
process, a diskette containing Applesoft found its way into the
possession of the detectives.
Held, the motion should be allowed.
Michael Lee was in contempt of the order when he copied
the chip. His employer argues that he was acting outside the
scope of his authority as there had been an express withdrawal
of authority to copy such chips. He had been told not to copy
Applesoft or Autostart ROM chips, a notice had been posted in
the shop instructing employees not to and Lee rang up the sale
as a "No Sale" and pocketed the $5. The law is clear, however,
that when an order is given against a company, it is the
company's responsibility to ensure that the order is complied
with. Bhatnager v. Canada (Minister of Employment and
Immigration), [1986] 2 F.C. 3; (1985), 24 D.L.R. (4th) 111
(T.D.) did not depart from this principle. The Minister was
held not personally responsible for the torts of employees
because both the Minister and the employee were fellow ser
vants of the Crown, and the Crown alone was vicariously liable.
Although Mr. Lee may have been told not to copy Apple's
copyrighted programs, the conduct of the employer indicated
that discrete disregard of the prohibition would be tolerated.
On the evidence, copying activity was within the employees'
mandate. The easy availability of the master chips demonstrat
ed a careless attitude towards complying with the April 29
order. The posted notice says nothing about not being author
ized to copy Autostart ROM or Applesoft. The authority to act
as he did was not clearly, precisely and firmly withdrawn from
Mr. Lee. The whole work environment invited the opposite.
House of Semiconductors was also in contempt.
Although the detectives used trickery, it was not entrapment.
That term referred to police-instigated crime when the police
have gone beyond mere solicitation. The play adopted by these
investigators was not behaviour of a nature that would justify
staying the contempt proceedings or the imposition of a merely
nominal fine.
The plaintiffs argue that the sale of the computer by Micro-
com with the blank chip was an express invitation to have
Apple's works copied, and was a breach of the Court order.
Indemnification and a systematic business arrangement are
merely examples of inducement. Their absence does not mean
that inducement would not otherwise exist. The computer, as
sold by the defendants, could be used for one purpose only—as
an Apple computer after someone had burned the relevant chip
and inserted it in the motherboard. This case falls within the
American Arch, Proctor & Gamble-Bristol Myers and Wind
surfing cases. While the facts can be characterized as constitut
ing inducement, a preferable characterization is that the detec
tive, through the actions of Parent and Microcom, was acting
on their behalf. The defendants invited the purchaser to act on
their behalf, to do what they were enjoined by the order from
doing. The detective was invited to find someone who would
copy the chip and the benefit of so doing accrued to Parent and
Microcom. The computer was obviously sold on the under
standing that an infringing chip would have to be obtained.
Parent and Microcom breached the April 29 order.
To accept the defendants' argument, that it was a stranger
who had, on his own and independently of any activity of the
defendants, copied the plaintiffs' copyrighted programs, would
be to concede that it was open to them to engage in conduct
which would completely defeat and subvert the injunction.
Compliance with a Court order is not a battle of wits: Dubiner
v. Cheerio Toys and Games Ltd., [1965] 2 Ex.C.R. 488.
The defendants attack one of the detectives' affidavits on the
ground that he reviewed a report prepared jointly with the
other detective before signing it. There is, however, no reason to
believe that anything outside the detective's personal knowledge
found its way into his affidavit, unlike in Peake's Limited v.
Higgins (1930), 2 M.P.R. 80 (N.B.S.C.).
CASES JUDICIALLY CONSIDERED
APPLIED:
American Arch Co. v. Canuck Supply Co. Ltd. et al.,
[1924] 3 D.L.R. 567 (Que. S.C.); Proctor & Gamble Co.
v. Bristol-Myers Canada Ltd. (1978), 39 C.P.R. (2d)
145 (F.C.T.D.); affd. (1979), 42 C.P.R. (2d) 33
(F.C.A.); Windsurfing International Inc. et al. v. Trilan-
tic Corporation (Now Bic Sports Inc.) (1985), 8 C.P.R.
(3d) 241 (F.C.A.); Dubiner v. Cheerio Toys and Games
Ltd., [1965] 2 Ex.C.R. 488; Baxter Travenol Laborato
ries of Canada Ltd. et al. v. Cutter (Canada) Ltd., [ 1983]
2 S.C.R. 388; 2 D.L.R. (4th) 621.
DISTINGUISHED:
Bhatnager v. Canada (Minister of Employment and
Immigration), [1986] 2 F.C. 3; (1985), 24 D.L.R. (4th)
111 (T.D.); Peake's Limited v. Higgins (1930), 2 M.P.R.
80 (N.B.S.C.).
CONSIDERED:
Canadian General Electric Co. Ltd. v. Toronto Electric
Supply Co., Ltd., [1935] Ex.C.R. 16; Heaton Transport
(St Helens) Ltd v Transport and General Workers Union,
[1972] 3 All ER 101 (H.L.); Kirzner v. The Queen,
[1978] 2 S.C.R. 487; (1977), 38 C.C.C. (2d) 131; Cope-
land-Chatterson Co. v. Hatton et al. (1906), 10 Ex.C.R.
224; Canada Metal Co. Ltd. et al. v. Canadian Broad
casting Corp. et al. (No. 2) (1974), 4 O.R. (2d) 585
(H.C.).
REFERRED TO:
Amato v. The Queen, [1982] 2 S.C.R. 418; 69 C.C.C.
(2d) 31; R. v. Jewitt, [1985] 2 S.C.R. 128; 21 C.C.C.
(3d) 7; Slater Steel Industries Ltd. et al. v. R. Payer
Co. Ltd. et al. (1968), 38 Fox Pat. C. 139 (Ex. Ct.);
Dyckerhoff & Widmann Aktiengesellschaft et al. v.
Advanced Construction Enterprise Inc. et al., [1986] 1
F.C. 526; (1985), 11 C.P.R. (3d) 371 (T.D.); Reading &
Bates Construction Co. et al. v. Baker Energy Resources
Corp. et al. (1986), 9 C.P.R. (3d) 158 (F.C.T.D.);
Yehuda Ohana et al. v. Yecheskel Zahavy et al., judg
ment dated July 12, 1985, Ontario Supreme Court, No.
21879/84, not reported; Beloit Canada Ltée/Ltd. et al. v.
Valmet Oy (1986), 11 C.P.R. (3d) 470 (F.C.T.D.); Re R.
and Monette (1975), 64 D.L.R. (3d) 470 (Ont. H.C.);
Sandwich West (Twp. of) v. Bubu Estates Ltd. et al.
(1986), 56 O.R. (2d) 147 (C.A.); Preformed Line Prod
ucts Co. et al. v. Payer Electrical Fitting Co. Ltd. et al.,
[1965] 1 Ex.C.R. 371; (1964), 42 C.P.R. 199.
COUNSEL:
Alfred S. Schorr, Ivor M. Hughes and Joseph
I. Etigson for plaintiffs.
Robert H. C. MacFarlane for defendants.
SOLICITORS:
Alfred S. Schorr, Toronto and Ivor M.
Hughes, Concord, Ontario, for plaintiffs.
Fitzsimmons, MacFarlane, Toronto, for
defendants.
The following are the reasons for order ren
dered in English by
REED J.: A motion for a finding of contempt
pursuant to Rule 2500 of the Federal Court Rules
[C.R.C., c. 663] is brought against Michael Lee,
House of Semiconductors, Norman Parent and
131375 Canada Inc. carrying on business as
Microcom. The contempt alleged is breach of
orders given April 29, 1986 in the two actions
described in the style of cause. These orders enjoin
the defendants, their respective servants and
agents from:
... importing, selling or distributing computers or computer
components under the name Mackintosh or otherwise which
contain a copy or substantial copy of either of the literary
works "AUTOSTART ROM" Or "APPLESOFT", Or in any other
way infringing the plaintiffs' copyright in those works.
And require that:
The defendants ... deliver up to the plaintiffs all copies or
substantial copies of the plaintiffs' literary works "AUTOSTART
ROM" and "APPLESOFT" in whatever material form they might
be and which are in the possession, power, custody, or control
of any of the defendants including any contrivances or devices
containing such copies or substantial copies.
The plaintiffs hired two private detectives,
Messrs. Keymer and Nowell to monitor the
defendants' activities with respect to compliance
with the first part of the order quoted above. The
defendants were advised by counsel for the plain
tiffs that monitoring was going to occur. On July
8, 1986 Messrs. Keymer and Nowell went to Mon-
tréal for this purpose. It was decided that Mr.
Keymer would pose as a father who knew little or
nothing about computers but who wanted to buy
one for his son. Both men did in fact know very
little about computers.
FACTS
Messrs. Keymer and Nowell went first to the
Microcrom store located at 2060 Trans Canada
Highway, Dorval, Quebec. Mr. Keymer entered
the store alone and was told by the receptionist
that Apple clones were available and he observed
newspaper ads on display in the sales area which
stated that IBM compatible and Apple compatible
computers as well as Apple clones were available
from the store. Mr. Keymer explained to the sales
man, Mr. Parent, that he wished to purchase a
computer for his son—an Apple computer because
that was the kind his son used at school. Mr.
Parent advised Mr. Keymer that it was likely an
Apple IIe which his son used. He also advised Mr.
Keymer that Microcom had Apple IIe compatible
computers for sale but they were sold with the
main chips blank. I quote from Mr. Keymer's
affidavit:
Mr. Parent added that there were places around that would
"burn" the necessary program into this chip. Mr. Parent then
continued to explain to me that they could not provide
the actual programmed chip because of recent court
proceedings ....
I consider this description of what occurred to be
accurate.
In response to enquiries from Mr. Keymer as to
where he might have a chip burned, Mr. Parent
suggested Active Electronics. Mr. Parent did not
know the phone number of Active, nor the person
there to whom Mr. Keymer should speak. He
merely knew that Active was a large computer
component sales company that had the capacity to
copy chips. Keymer left the Microcom store
indicating he intended to shop around. He subse
quently telephoned back, tried to negotiate a better
deal on the price and asked whether, if he were to
buy the whole package, Parent would burn the
chip for him. Parent declined but in response to
questions from Mr. Keymer informed him that it
was an EPROM #27128 type chip which was
needed to be burned.
Keymer then phoned Active and was told that
the person who looked after this aspect of their
business was away at the time and in any event it
would take some time to do the job because it
would be sent out. Such jobs were sent to a Mr.
Kosira at Future Electronics and it was suggested
to Mr. Keymer that he might contact Kosira
directly. It is my understanding that Active Elec
tronics and Future Electronics are essentially the
same company. A phone call was made to Kosira
who confirmed that he could copy a chip for a fee
of $10.
Mr. Keymer then returned to the Microcom
store accompanied by Mr. Nowell and told Mr.
Parent he had been successful in arranging to have
a chip burned. He purchased the computer from
Mr. Parent. At that time Mr. Parent opened the
carton, in which the computer was packaged;
showed Mr. Keymer where the blank EPROM chip
was taped inside the carton; took the top off the
computer casing and pointed to the spot on the
motherboard where the chip should be placed after
it was burned.
Messrs. Nowell and Keymer then went to
Future Electronics and met with Kosira. Kosira
took the blank EPROM from the computer box and
asked for the chip which he was to use in making
the copy they wanted. Messrs. Nowell and Keymer
obviously did not have one. Kosira explained that
he could not make the chip they wanted because
he did not have an original Apple or compatible
chip from which to copy. He had assumed that
what was wanted was that he make a copy of a
chip the two men would be bringing with them. It
does not escape notice that had Keymer and
Nowell been more sophisticated purchasers (real
purchasers instead of merely posing as such) it
would not have taken much effort on their part to
find a friend or neighbour who had an Apple
computer and who would have willingly lent them
the relevant chip in order to have it copied. It is
this which underlies the plaintiffs' concern—that
the conduct being followed by the defendant,
Microcom, by inviting others to copy the ROM
chip, is one that results in the same economic
detriment to the plaintiffs as was occurring prior
to the April 29 order. The computers were being
sold by Microcom at the same price as was the
case when they contained the chips which con
tained copied versions of Autostart ROM and
Applesoft, placed therein by Microcom itself. The
computers were being sold with a one year warran
ty being given by Microcom.
In any event, since Keymer and Nowell had not
been successful in getting the chip burned they
returned to the Microcom store. I quote again
from the affidavit of Mr. Keymer because I believe
it to be an accurate description of what transpired:
I indicated to Mr. Parent that I was rather upset with my lack
of success in having the crucial chip burned. Mr. Parent
indicated that he could not burn the chip. I asked Mr. Parent
what he had done in the past with other customers purchasing
the "Microcom Ile" computer to which he replied, "I haven't
sold too many of these computers lately because everyone is
hesitant because of the court case". Mr. Parent then spoke with
a woman whom I had previously observed behind the sales
counter handling the telephone and the cash register. Mr.
Parent then told me that I should, "Try the House of Semicon
ductors on Brunswick". His voice was once again very soft, as if
he did not want anyone else in the store to hear. Mr. Parent
stated, "They are our competitors and I believe they are located
at 84 Brunswick Boulevard, just around the corner from here".
I asked Mr. Parent if I could return once I had the chip burned
for him to insert it in the machine and to test the machine, to
which he replied, "Yes"... .
The two detectives then went to House of Semi
conductors on Brunswick Boulevard. Keymer
explained to the salesman that he wanted the
EPROM programmed so that the (Ile) computer
would work. The salesman went to the rear of the
store and returned with a technician, Michael Lee.
Keymer explained what he wanted. Lee asked for
the chip which he was to use in making the copy.
Keymer did not have one. Lee's response was that
he could not, then, burn the blank EPROM. Keymer
explained that he had been referred to House of
Semiconductors by Microcom; that he had been
having trouble getting the chip burned; that he
wanted the computer and wanted it working
because it was a gift for his son's birthday.
I quote again from Mr. Keymer's affidavit:
Mr. Lee then stated, "I can do it for you, it will cost you $5.00
and you will have to forget that you were ever in here". I then
handed Mr. Lee the blank EPROM chip and Mr. Lee left the
room. Approximately 5-10 minutes later Mr. Lee re-appeared
at the front of the store and returned the EPROM chip to me. I
noted that Mr. Lee had written in black ink "Ile" on a Silver
Mitsubishi sticker which he had applied covering the round
window on the top of the EPROM. Mr. Lee immediately stated,
"1 want you to forget you ever saw me and you have to promise
that you will not tell anyone where you got this done". I then
handed Mr. Lee $5.00 for his services. Mr. Lee took the money,
rang up a zero amount on the cash register and placed the bill
inside the drawer. I then requested a receipt to which Mr. Lee
replied, "I can't give you a receipt for this".
I note that there is conflicting evidence with
respect to this series of events. The salesman, Mr.
Del Greco, and the technician Michael Lee both
filed affidavits attesting that when Keymer
approached the salesman Del Greco, seeking to
have a copy of the chip made, Del Greco's immedi
ate response was a negative one. They assert that
Del Greco did not go to the back to get Lee but
went towards the back for other reasons: they
assert that Lee came out to the front independent
ly and that the detectives then approached Lee;
and, Keymer played on Lee's sympathies by acting
very upset and saying how disappointed his son
would be if he did not get a computer that worked
on his birthday.
I accept the detectives' version of these events
for the following reasons: if Del Greco had really
given a negative response, immediately, there
would have been no reason for the two detectives
to have stayed in the store; also if they played so
poignantly on Lee's sympathies by emphasizing
the story of the son's birthday, why had they not
done this to Del Greco as well. Del Greco says that
after giving a negative response he told the detec-
tives that "If they did want to browse around the
store and buy diskettes or what have you for their
Apple, they were welcome to, but about the ROM,
there was nothing I could do". It is simply not
credible that Del Greco would speak in this
manner to the detectives—inviting them to browse.
They had come into the store for one particular
purpose. They were not browsers and "diskettes or
what have you for their Apple" would not be any
use to them without the ROM. The Keymer-Nowell
version of the events in question is much more
credible. Nowell's description, which I accept as
accurate, is as follows:
After Mr. Lee said "Can 1 help you", we proceeded to tell him
the same story that we had told the previous gentleman about
the purchase of the Microcom computer, the referral by Micro-
com to Active, the referral from Active to Future, the return to
Microcom and the referral to House of Semiconductors. At
that point, Lee asked whether or not we had an original chip or
chip to copy to which Niven said "if I had an original chip 1
wouldn't be coming here". At that point, Lee said "I can't do
it". I do not recall him saying anything about a Court Order. I
do recall Niven at this point acting as if upset and explaining to
Mr. Lee how this was to be a birthday present for his son and
he couldn't wait for two weeks or thereabouts to be accom
modated by "Active". There was no "on and on about it" and
although there was some persuasion on the part of Niven, there
was not very much persuasion. There was little reluctance on
the part of Lee although I do concede that his initial statement
after being advised that we did not have a master chip for
copying was that "I cannot do it".
In any event, Lee then went into the back of the
shop, retrieved a copy of the relevant chip, burned
the blank EPROM and gave it to Keymer.
The reason Lee found it so easy to find a copy of
the relevant chip should be noted. Instead of insist
ing on the delivery up of all copies of Autostart
ROM and Applesoft (be they in chip form, floppy
disk or in written form) as required by the April
29 order the plaintiffs had agreed that the defen
dants might collect together all such copies and
hold them in safekeeping, at least temporarily.
This was done because the defendants had indicat
ed that they would be seeking a stay of the April
29 orders pending outcome of the appeal of those
orders to the Federal Court of Appeal. The
defendants House of Semiconductors had collected
together all copies of the chips they held contain
ing Autostart ROM or Applesoft and placed them
in tubes. These had been handed, in the Brunswick
Street store, to the technician Styrczula. Unclear
instructions were obviously given to him—either
purposely or as a consequence of negligence. In
any event, instead of keeping the chips in safekeep
ing for eventual delivery up in compliance with the
April 29 order (if a stay was not granted) Mr.
Styrczula kept the chips in a box in the back of the
shop and used them from time to time, albeit
according to his testimony only after he had erased
the Autostart and Applesoft programs. In any
event, chips containing the relevant programs were
easily accessible to Michael Lee; their contents
and location were readily known by him.
I would make some general comments on the
conflicting version of the facts and the reasons why
I have accepted the version set out in this judg
ment. Counsel for the defendants argued that the
detectives' memory is not reliable because there
are certain aspects which they frankly do not
remember and there are others with respect to
which they differ. I do not find these discrepancies
convincing evidence of either dissimulation or poor
memory. There are some aspects which it is highly
probably the detectives will remember with a fair
degree of accuracy. Their attention would be
focussed on these. There are other aspects, such as
the exact circumstances under which they received
instructions concerning the investigation, to which
they would not be so attentive. Conflicts in some
areas, particularly those which to the detectives at
the time might seem inconsequential are more
likely to be evidence that they are both attempting
to recount accurately what happened rather than
the contrary. It is the pat identical story which is
more likely to be a fabrication. In addition, the
detectives' version of the events of July 8, 1986
was recorded in a report prepared by them the day
after. For the defendants' Parent and Lee, how
ever, their evidence is an after-the-fact construc-
tion of what would have been casual events for
them when they occurred.
After obtaining the copy of the burned chip
Keymer and Nowell returned to Microcom with
the computer and the chip. Mr. Parent unpack-
aged the computer, placed the burned EPROM into
the relevant socket on the motherboard and com
menced testing the computer. He hooked the com
puter up to the disk drive the detectives had
bought, wanting to test it at the same time. To do
so it was necessary to insert a floppy disk into the
disk drive. Mr. Parent retrieved one from behind
the counter, it was a DOS 3.3, it contained
Applesoft. This diskette carried the label R & R
SOFTWARE CLUB. Microcom carries on within its
store a so-called "software evaluation" service and
thus the label on the floppy disk identified it as
belonging to that part of the business.
There is conflicting evidence surrounding what
happened next. Messrs. Nowell and Keymer's evi
dence is that when Mr. Parent pulled this diskette
out from behind the counter he stated that it was
part of the package that had been sold to them and
should have been included earlier. He did likewise
with respect to an 80 column card. Mr. Parent
agrees with the evidence of the detectives in so far
as it relates to the 80 column card but he contends
he did not make any such representations with
respect to the floppy disk. He asserts that he was
merely using that diskette to test the computer and
disk drive but he did not say it was part of the
package.
It is not entirely clear what happened next. Mr.
Keymer asserts that the diskette together with the
owners' manual was handed to him and he carried
these out of the store independently of the comput
er. Mr. Nowell is of the view that the diskette was
packaged in the computer box by Mr. Parent when
he repacked the box. Nowell admits that he is not
really sure whether the diskette was put in the box
with the computer by Parent or handed to
Keymer. Neither detective was aware that there
was any particular importance or significance to
the diskette. In any event when the purchases were
eventually unpacked for testing by the plaintiffs'
technician the floppy disk was amongst them. The
detectives then became aware, for the first time,
that it was important. If the diskette was indeed
sold with the package then an obvious and direct
breach of the April 29 order occurred with that
act.
It seems to me there are two possible alternative
conclusions which might be drawn from the evi
dence respecting the DOS 3.3 disk. Mr. Parent
asserts that the detectives stole the disk. I reject
that argument. One possibility is that the disk was
included as part of the package sold, as the detec
tives believed Mr. Parent to have indicated. The
other possibility is that the disk accidently found
its way into the detectives' possession, in that it
was either inadvertently packaged in the computer
box by Parent or picked up by Keymer together
with the owners' manual on the assumption that it
belonged as part of the package. I find that I have
a reasonable doubt that the disk was sold by
Parent as part of the package: it is clearly marked
with the R & R SOFTWARE CLUB label; after
Parent had been so careful and insistent that he
would not himself copy the ROM chip it is hard to
believe that he would have purposely and openly
taken an action which would have the same effect.
As noted above the detectives were not knowledge
able about the computers. They did not know that
the diskette was of any importance. It is entirely
credible that they thought Parent's remarks with
respect to the 80 column card related to the dis
kette. Indeed they may have thought that the disk
was the 80 column card. I conclude that the
diskette accidentally found its way into the posses
sion of the detectives by one of the two methods
mentioned above and that it was not sold by
Parent with the computer package.
CONTEMPT: MICHAEL LEE and HOUSE OF SEMI
CONDUCTORS
It is clear that Michael Lee was in contempt of
the order when he copied the EPROM. He has
admitted such. His employer, House of Semicon
ductors (Chico Levy) takes the position that in
copying the chip Lee was acting outside the scope
of his authority—that there had been an express
withdrawal of authority to copy such chips.
The law is clear that when an order is given
against a company or corporation it is the respon
sibility of that company (those in charge) to
ensure that the order is complied with by all
servants, agents or persons acting for that com
pany. It is no defence for a company to show that
its officers or agents were unaware of the terms of
the order, or that they failed to realize that the
terms were being broken by their actions, or that
they acted out of carelessness, neglect or in derel
iction of their duty.
Reference was made to Canadian General Elec
tric Co. Ltd. v. Toronto Electric Supply Co., Ltd.,
[1935] Ex.C.R. 16, at page 17:
In the case of a corporation, breach of an injunction cannot
be done by the corporation itself, as the corporation can only
act by its officers, agents or servants, but if the act is in fact
done, it is no answer to say that, done, as it must be, by an
officer or servant of the corporation, the corporation is not
liable for it, even though it may have been done by the servant
through carelessness, neglect, or even in dereliction of duty. See
Stancomb v. Trowbridge Urban Council (1): Halsbury (Hail-
sham Edition) Vol. 7 p. 31. If an injunction is granted against a
corporation which afterwards does or permits an act in breach
of the injunction, in or upon its usual place of business, the onus
rests, I think, upon the corporation to show any facts which
would relieve it of the act of disobedience to the order of the
Court....
Reference was also made to Heaton Transport
(St Helens) Ltd y Transport and General Workers
Union, [ 1972] 3 All ER 101 (H.L.) for the propo
sition that if a company, an employer, a principal,
specifically withdraws authority from the
employee or agent to do the prohibited act and the
employee does it anyway, then, the act will be
treated as that of the employee only. In the Hea-
ton case, while there was some evidence that the
principals (union officers) advised the shop stew
ards to cease the prohibited activity, that activity
did not cease. The Court held the union liable. The
union had taken no more definite action, apart
from the notice given, to ensure that the enjoined
acts would not occur and the Court held the shop
stewards were acting within their general authority
to defend and improve the rates of pay and work
ing conditions of the members.
I do not consider the recent decision of my
colleague Mr. Justice Strayer in Bhatnager v.
Canada (Minister of Employment and Immigra
tion), [1986] 2 F.C. 3; (1985), 24 D.L.R. (4th)
111 (T.D.) as in any way departing from the rules
of law which govern the responsibilities of corpora
tions, or principals, for the acts of their servants or
agents acting in breach of a Court order. Mr.
Justice Strayer was dealing with the particular
situation of a Minister of a government depart
ment. A Minister who in the circumstances of that
case did not have knowledge of the Court order in
question. Despite the general principle that a Min
ister is accountable to Parliament for all the
actions of employees in his department he or she is
not personally responsible, on the basis of vicarious
liability, for torts committed by such employees.
The government, the Crown, may be responsible
but a Minister, in his personal capacity is not. As
Mr. Justice Strayer points out, at pages 23 F.C.;
125 D.L.R., "The rationale for this is that both the
minister and the officer are fellow servants of the
Crown and it is the Crown alone which is vicari
ously liable." Thus it is clear that this decision
does not purport to cast doubt on the general
principles of vicarious liability which operate in
the case of a corporation or other principals with
respect to their servants and agents.
In the present case the employer, House of
Semiconductors (Chico Levy), argues that in copy
ing the chip, Lee was acting entirely on his own
and outside his authority as an employee of House
of Semiconductors. The contention in this regard is
based on the following: (1) Chico Levy as well as
four employees (Lee, Del Greco, Stryczula and
Alex Levy) all state that Lee was specifically told
not to do what he did (i.e. make copies of Autos-
tart ROM or Applesoft); (2) a notice was posted in
the shop instructing employees not to; (3) Lee rang
up the sale as a no sale and later pocketed the $5
himself.
It was demonstrated in evidence that Mr. Chico
Levy is completely lacking in credibility. His evi
dence must be given zero weight. As to the evi-
dence of the four employees it may be true that
Lee was told not to copy Apple's copyrighted
programs but such statements can be accompanied
by conduct on the part of the employer which
makes it clear that such direction is pro forma, at
best, and that discrete disregard of the prohibition
will be tolerated. Such a context exists here. It is
clear from Del Greco's actions in going to get Lee,
when the detectives asked to have the chip burned,
that copying activity was generally within both Del
Greco's and Lee's mandate as employees of House
of Semiconductors. This conclusion is also obvious
from the fact that Lee asked the two detectives for
the chip which they wished copied. Had they
produced a chip containing Autostart or Applesoft,
Lee would have copied it, without further question
regardless of the fact that such would constitute a
breach of the April 29 order. The easy availability
of the ROM chips from which to copy and the
treatment of them by Stryczula demonstrate the
careless and casual attitude of Chico Levy towards
complying with the April 29 order. The notice,
posted in the store, to which reference is made says
absolutely nothing about employees not being
authorized to copy Autostart or Applesoft. It
merely says:
UNDER NO CIRCUMSTANCES ARE EMPLOYEES TO SELL ROM'S
WITH ANY APPLE SOFTWARE, SPECIFICALLY AUTOSTART AND
APPLESOFT. HOWEVER, YOU MAY CONTINUE SELLING ALL
HARDWARE AND PERIPHERALS AS USUAL. SHOULD YOU
REQUIRE FURTHER CLARIFICATION DO NOT HESITATE TO
CALL ME.
In my view the attitude of Chico Levy exudes
disrespect for the rights of those who have copy
right in computer programs. This climate of disre
gard for the rights of others manifested itself in a
careless and casual attitude towards compliance
with the Court order of April 29. I can quite
believe that the reason Lee copied the chips for
Keymer is because of the environment in which he
found himself working. I can in no way find that
authority to act as he did, was clearly, precisely
and firmly withdrawn from Lee. I think the whole
work environment in which he found himself invit
ed exactly the opposite. Accordingly, House of
Semiconductors is also in contempt of the April 29
order.
Counsel for the defendants, Lee and House of
Semiconductors, argued that even if there was a
technical breach of the order the conduct of the
detectives amounted to something similar to
entrapment and therefore the motion for contempt
should be adjourned or stayed or the penalty
imposed should be nominal. I do not accept this
argument. There is no doubt that trickery was
used but that is not entrapment.
As counsel for the plaintiffs points out entrap
ment is a concept that applies in the context of
police investigations and the police have many
legitimate investigative tools such as search war
rants, the ability to demand and review company
books, authority to interrogate and apprehend per
sons for investigation. Such tools are not open to
private citizens when they try to ensure that
injunction orders given in their favour, as a result
of a civil proceeding, are obeyed; they have no
privileged investigative tools at their disposal. I
note particularly that the activities of the detec
tives would not in any event fall into a classifica
tion of entrapment.
In Kirzner v. The Queen, [1978] 2 S.C.R. 487;
(1977), 38 C.C.C. (2d) 131, Chief Justice Laskin
wrote, at pages 489 S.C.R.; 133 C.C.C.:
The trial judge's charge to the jury shows that he took a
broad view of entrapment, taking it to embrace the use of an
agent provocateur or the use of an informer as well as inveigle-
ment by the police.
And at pages 492-493 S.C.R.; 135 C.C.C.:
There is, of course, a balance to be struck between giving
reasonable latitude to the police in the employment of strata-
ems to control the spread of crime, ... and controlling behavi
our that goes beyond any reasonable latitude.
When "consensual" crimes are committed involving willing
persons, as is the case in prostitution, illegal gambling and drug
offences, ordinary methods of detection will not generally do.
[Underlining added.]
And at pages 494 S.C.R.; 136 C.C.C.:
The problem which has caused judicial concern is the one
which arises from the police-instigated crime, where the police
have gone beyond mere solicitation or mere decoy work and
have actively organized a scheme of ensnarement, .... [ Under-
lining added.]
I could not find that the detectives went beyond,
what is referred to in the cases cited to me' as,
"mere solicitation or mere decoy work". They
played the role of two individuals who knew noth
ing about computers, one of whom wished to buy a
computer as a birthday present for his son. I do
not find this to be entrapment or behaviour of a
nature to justify staying the contempt proceedings
or to justify the imposing of only a nominal fine.
CONTEMPT: NORMAN PARENT and MICROCOM
The plaintiffs argue that the sale of the comput
er by Microcom, with the blank chip taped inside
the box was made with the expectation and on an
express invitation to the purchaser to have Apple's
works copied and inserted into the computer and
that it was a breach of the April 29 order. It is
argued that Microcom's activity (1) is a breach of
the spirit of the April 29 order; (2) constitutes an
inducement to breach the order; (3) constitutes an
aiding and abetting of the breaching of the order.
I am not convinced that the concepts of aiding
and abetting are relevant here. These rules apply
to hold a third party, a stranger to an order,
responsible for the breaches of that order if they
assist in its breach (and if they have knowledge of
the order). In this case it is the very persons
against whom the order was granted (Microcom
and its employee Parent) who are alleged to have
committed the contempt. That leaves for consider
ation the rules respecting inducement and those
which refer to the necessity of complying with the
spirit of an order as well as its strict letter.
I accept that in contempt proceedings one must
construe strictly the order allegedly violated since
a question of guilt or innocence is involved. Equal-
Kirzner v. The Queen, [1978] 2 S.C.R. 487; (1977), 38
C.C.C. (2d) 131; Amato v. The Queen, [1982] 2 S.C.R. 418; 69
C.C.C. (2d) 31; R. v. Jewitt, [1985] 2 S.C.R. 128; 21 C.C.C.
(3d) 7.
ly, it is clear that a breach must be proved beyond
a reasonable doubt and that third parties to an
order will not be in contempt if independently of
the person enjoined, they commit the same act.
Counsel for the plaintiffs relies on the law respect
ing inducement, specifically that relating to the
infringement of patents: Copeland-Chatterson Co.
v. Hatton et al. (1906), 10 Ex.C.R. 224; American
Arch Co. v. Canuck Supply Co. Ltd. et al., [ 1924]
3 D.L.R. 567 (Que. S.C.); Slater Steel Industries
Ltd. et al. v. R. Payer Co. Ltd. et al. (1968), 38
Fox Pat. C. 139 (Ex. Ct.); Procter & Gamble Co.
v. Bristol-Myers Canada Ltd. (1978), 39 C.P.R.
(2d) 145 (F.C.T.D.); affirmed (1979), 42 C.P.R.
(2d) 33 (F.C.A.); Dyckerhoff & Widmann
Aktiengesellschaft et al. v. Advanced Construction
Enterprise Inc. et al., [1986] 1 F.C. 526; (1985),
11 C.P.R. (3d) 371 (T.D.); Windsurfing Interna
tional Inc. et al. v. Trilantic Corporation (Now Bic
Sports Inc.) (1985), 8 C.P.R. (3d) 241 (F.C.A.);
Reading & Bates Construction Co. et al. v. Baker
Energy Resources Corp. et al. (1986), 9 C.P.R.
(3d) 158 (F.C.T.D.).
Counsel for the defendants argues that the facts
do not disclose that Microcom induced a breach of
the plaintiffs' copyright because: (1) there was no
offer of indemnification made to Keymer or
anyone else, as existed in the Copeland-Chatter-
son case; (2) there was no evidence of a systematic
business arrangement whereby Microcom acted in
concert with others to accomplish infringement;
(3) there is no evidence to satisfy the test of
inducement, regardless of whether one applies a
subjective or an objective test.
With respect to the first two points they are
easily answered. Indemnification and a systematic
business arrangement of acting in concert with
another are merely examples of what will be seen
as constituting evidence of inducement. This
absence does not mean that inducement will not
otherwise exist. With respect to the third point
listed above, counsel for the defendants argues that
in order to prove inducement by Microcom more
than knowledge that the plaintiffs' copyright
would be infringed is required. It is argued that
while Parent and Microcom knew Keymer intend
ed to go out and have a copy of the chip made
there is nothing in the evidence that shows that
they induced him to do it. It is argued that while
Microcom was enjoined by the order from breach
ing Apple's copyright but that would-be-purchas
ers of the computer and blank chip would not be
covered by that order. It is argued that knowledge
by Microcom of the use the purchasers would
make of the computer and chip, once bought, does
not constitute inducement and that there can be no
inducement (subjectively) in this case because
Keymer was the plaintiff's agent and actually
purchased the computer on instructions from coun
sel for the plaintiff, not as a result of an induce
ment by Microcom or Parent to do so.
In the Copeland-Chatterson case, at page 247,
the Court held that a person who knowingly and
for his own ends and benefit and to the damage of
the patentee induces or procures another to
infringe a patent is himself liable for infringement
of the patent. The American Arch case dealt with
a patented design for the use of fire bricks in a
locomotive fire box. The Court held that a person
who manufactured bricks with the intention that
they be used by someone else in breach of the
plaintiff's patent was an infringer. At page 576:
It is no answer to say that the Security Sectional Arch brick
is not covered by a patent and that, therefore, the defendants
are free to manufacture and sell the same.
There is in this case a knowing and purposeful manufacture
of these bricks, because such bricks can serve one purpose and
one purpose only, namely; to become a part of the plaintiffs
combination in the practice of the invention. The defendants
acting in concert, one as a manufacturer and the other as sale
agent, have adopted, to the smallest detail, the method
employed by the plaintiff in installing its fire arch; ... It was a
knowing, wilful and premeditated scheme to infringe the plain
tiffs said patent and to deprive it of its just reward. [Underlin-
ing added.]
In the Procter & Gamble—Bristol-Myers case
the Court had under consideration a patent
respecting a fabric softener used by members of
the public (the purchasers) in clothes dryers to
avoid wrinkles and "static-cling". It was argued
that the defendant's manufacture did not infringe
the method claims of the patent. In response to
that argument, at pages 166-167, Mr. Justice
Addy stated:
The law is clear, in my view, that the mere making, using or
vending of elements which afterwards enter into a combination
is not prohibited where the patent is limited to the combination
itself as in the Slater Steel case above referred to and also in
the leading case of Dunlop Pneumatic Tyre Co. Ltd. v. David
Moseley & Sons Ltd. (1904) 21 R.P.C. 272, a decision of the
English Court of Appeal from which Jackett, P., quoted at
some length. It also seems to be fairly clear that the mere
selling, without more, of articles to be used for the purpose of
infringing a patent is not an infringement of patent. However,
there can be an infringement where the person who actually
commits the act of infringement is the defendant's agent
(Sykes v. Haworth (1879), 12 Ch. D. 826), or where some sort
of continuing a systematic business arrangement exists between
the vendor and the infringer purchaser (Incandescent Gas Light
Co. Ltd. v. New Incandescent Mantle Co. et al. (1898), 15
R.P.C. 83), or where there has been not only a sale but also an
invitation or request by the defendant to the purchaser of the
article, to use it in order to infringe the plaintiff's patent (Innes
v. Short & Beal (1898), 15 R.P.C. 449).
In the case at bar, not only by its instructions and directions on
the packages of Fleecy as to the method of using it but by its
advertising on television, the defendant invites and induces the
public to infringe the method claims of the patent.
It is difficult to conceive how the present defendant should
not be considered as systematically engaging for its own profit
in aiding and abetting any infringement by the public of the
plaintiff's method claims and should not be considered as
constituting itself a party to each infringement committed by
such users. Where the defendant has induced or procured an
infringement, I do not feel that it is at all necessary in such
cases for the supplier to have had any personal contact with the
infringing consumer, to even know his or her identity or to have
sold the article directly to that person. It is sufficient in such
cases, if it is also established, that the article in fact has been
sold by the defendant for the purpose of putting it on the
market for sale to the ultimate infringer....
In the Windsurfing case it was alleged that the
sale of a kit containing the parts required in order
to make a sailboard did not constitute infringe
ment of the patent. The Court, at pages 265-266,
stated:
The respondent clearly is not selling parts. It is selling parts for
the purpose of making a sailboard. Without assembly there can
be no sailboard. Without assembly there can be no purpose in a
purchaser buying the unassembled parts since, unassembled,
they cannot be used for the purpose for which they are pur
chased, that is, to sail. To suggest that a patent infringement
suit can be successfully avoided by selling parts as components
of a kit in contradistinction to their sale assembled is, in my
view, errant nonsense.
The second branch of the argument flows from the first. It is
dependent upon the theory that there can be no infringement
by the manufacturer selling the unassembled parts. According
ly, there can be no infringement until the sailboard has been
completely assembled because the patented invention is a com
plete, assembled sailboard, i.e., the patent is for the sum of the
parts of the invention not for its parts separately.
That argument to me can only be termed specious. To
suggest that a person purchasing components, the only known
use for which is assembling to provide the purchaser with what
he obviously desires—a sailboard—has not been persuaded to
do so by the holding out of the desired result by both the
manufacturer and the vendor thereof, stretches credulity to its
limits. That, in my view, is inducement even where the printed
instructions are limited to the extent disclosed in the evidence
in this case. I think it beyond dispute that the only inference to
be drawn from the voluminous evidence in this case is that the
respondent knew and intended that the ultimate purchaser
would utilize the sailboard parts for the assembly of a usable
sailboard which, upon assembly, would infringe the appellants'
patent. It thereby became a party to such infringement, in my
view.
While these cases deal with patent infringement,
the plaintiffs argue that they are equally appli
cable to the copyright field.
I note that there is no doubt that the computer
as sold by the defendants could be used for one
purpose only: as an Apple computer—after some
one had burned the relevant chip and inserted it in
the motherboard. The defendant, Microcom,
asserts that the computers were sold by it in their
assembled form with a blank EPROM because they
could be bought in that form by individuals wish
ing a special purpose computer. It is argued that
the computers would then be programmed by
those individuals with a special purpose program.
It was alleged that such sales had been made in
the past. There is no evidence of any such sales.
The past sales to which the defendants refer were
of component parts of the computer, not of the
assembled whole. The computers could have been
stripped down by Microcom and the component
parts sold as such. But this was not done. The
computers as sold could be used for one purpose
and one purpose only.
In my view the facts in this case fall within the
jurisprudence cited above in the American Arch,
Procter & Gamble—Bristol-Myers and Wind
surfing cases. While I think the facts can be
categorized as constituting inducement within the
terms of those cases, an alternate and perhaps
preferable characterization is that Keymer,
through the actions of Parent and Microcom, was
placed in the situation of acting on their behalf.
That is, I characterize the facts of this case as
constituting a situation in which the defendants,
Parent and Microcom, invited the purchaser to act
on their behalf, to do what they were enjoined by
the order from doing. Keymer was not their agent
in the traditional legal sense of agency law but he
was nevertheless invited and encouraged to find
someone who would copy the chip, and the benefit
of so doing accrued to Parent and Microcom. The
computer was obviously sold on the understanding
that an infringing chip would have to be obtained.
The computer could have been sold on no other
basis.
In my view the action taken by Parent and
Microcom constitutes a breach of the April 29
order. In drawing this conclusion I have in mind
the following facts: (1) the computer was sold with
a blank EPROM taped inside the box; (2) the
computer was sold at the same price as had earlier
been the case when Microcom itself supplied the
infringing EPROM; (3) the computer was sold with
a one-year warranty; (4) the computer is useless in
the form in which it was sold without an infringing
EPROM; (5) Parent informed Keymer that there
were places around that would burn the chip for
him and eventually directed him to a place which
did so; (6) Parent assembled, at the request of
Keymer, the infringing chip in the computer. This
is not a case where a complete stranger, on his own
and independently of any activity by the defen
dants copied the plaintiffs' copyrighted pro-
grams—which is how counsel for the defendants
would have me characterize the situation. It is a
case where the defendants encouraged, invited and
enabled the plaintiffs to do what they could not
themselves do.
Counsel for the plaintiffs also cited Dubiner v.
Cheerio Toys and Games Ltd., [1965] 2 Ex.C.R.
488; Canada Metal Co. Ltd. et al. v. Canadian
Broadcasting Corp. et al. (No. 2) (1974), 4 O.R.
(2d) 585 (H.C.); Yehuda Ohana et al. v. Yeches-
kel Zahavy et al. (Ontario Supreme Court, file
No. 21879/84, July 12, 1985); the recent decision
of Mr. Justice Teitelbaum in Beloit Canada Ltée/
Ltd. et al. v. Valmet Oy (1986), 11 C.P.R. (3d)
470 (F.C.T.D.); and Baxter Travenol Laboratories
of Canada Ltd. et al. v. Cutter (Canada), Ltd.,
[1983] 2 S.C.R. 388; 2 D.L.R. (4th) 621. These
cases are cited for the proposition that Court
orders must be obeyed both in their spirit and in
their letter. Stated in that way the principle
claimed is obviously too broad. That principle has
to be read in the light of the requirement that
findings of contempt, being of a quasi-criminal
nature, will not be lightly found: Re R. and
Monette (1975), 64 D.L.R. (3d) 470 (Ont. H.C.);
Sandwich West (Twp. of) v. Bubu Estates Ltd. et
al. (1986), 56 O.R. (2d) 147 (C.A.); Preformed
Line Products Co. et al. v. Payer Electrical Fitting
Co. Ltd. et al., [1965] 1 Ex.C.R. 371; (1964), 42
C.P.R. 199.
At the same time, the cases cited are relevant.
In the Dubiner case, Mr. Justice Noël, at pages
498-499, said of the defendant in that case:
His conduct has left me with a feeling, to say the least, that
he has chosen to discharge his duties in this regard with a
casualness, a carelessness, a neglectfulness, which borders on
dereliction and which, in my view, in itself, (apart from the
outright breach of the injunction) contains some measure of
contumacy.
... compliance with an order of a Court is not a battle of wits
but ... such an order must always be complied with in spirit as
well as in letter. Cf Kerr on Injunctions, 6th ed., p. 688:
An order for an injunction must be implicitly observed and
every diligence must be exercised to obey it to the letter.
In Canada Metal Co. Ltd. et al. v. Canadian
Broadcasting Corp. et al. (No. 2) (1974), 4 O.R.
(2d) 585 (H.C.), at page 603, O'Leary J. wrote:
The following general principles relating to injunctions must
be kept in mind:
(I) "An order for an injunction must be implicitly observed
and every diligence must be exercised to observe it to the
letter": Halsbury's Laws of England, 3rd ed., vol. 21, p.
433, para. 915.
(2) The respondents were obliged to obey not only the letter,
but also the spirit of the injunction: Grand Junction Canal
Co. v. Dimes (1849), 17 Sim. 38, 60 E.R. 1041; Halsbury's
Laws of England, ibid., p. 434, para. 919; Attorney-
General v. Great Northern R. Co. (1850), 4 De G. & Sm.
75, 64 E.R. 741.
Comments of a similar nature can be found in the
Yehuda Ohana and Beloit decisions mentioned
above.
Most significant however, in my view, is the
decision in Baxter Travenol Laboratories of
Canada Ltd. et al. v. Cutter (Canada), Ltd.,
[1983] 2 S.C.R. 388; 2 D.L.R. (4th) 621. In that
case the Trial Judge gave reasons for his judgment
but asked counsel to submit a draft order. Between
the time of the issue of the reasons and the settling
of the order the defendants continued to sell the
infringing product. The Supreme Court found con
tempt. At pages 396-397 S.C.R.; 627 D.L.R. the
Court said:
... Cutter and the Federal Court were in error in assuming the
effective date of the injunction is decisive in a contempt pro
ceeding. The inquiry does not end with a consideration of
whether the injunction as such has been breached.
The general purpose of the court's contempt power is to
ensure the smooth functioning of the judicial process.
Contempt in relation to injunctions has always been broader
than actual breaches of injunctions. Cattanach J. recognized
this in the present case. Thomas Maxwell is named in the show
cause order as having committed contempt in his personal
capacity although he is not a party to the action. He is not
personally bound by the injunction and therefore could not
personally be guilty of a breach. Nevertheless, Cattanach J.
acknowledged he could still be found in contempt if he, with
knowledge of its existence, contravened its terms. Although
technically not a breach of an injunction, such an action would
constitute contempt because it would tend to obstruct the
course of justice; Kerr on Injunctions, 6th ed. 1927, at p. 675;
Poje v. Attorney General for British Columbia, [1953] 1
S.C.R. 516.
The same kind of analysis applies to the period between
reasons for decision and the pronouncement of judgment.
Cutter argues, in effect, that this constitutes a period of grace
in which the defendant can contravene the prohibitions set out
in the reasons for decision with impunity. To accept that
argument would be to accede to the proposition that it is open
to a party completely to defeat an injunction. That would
subvert the whole process of going to court to settle disputes.
That is precisely what the contempt power is designed to
prevent. [Underlining added.]
Similarly in this case to accept the defendants'
argument would be to accept that it was open to
them to engage in conduct to completely defeat
and subvert the injunction. I reiterate the words of
Mr. Justice Noël in the Dubiner case, compliance
with an order of the Court is not a battle of wits.
Two remaining issues must be addressed. The
defendant, Microcom, asserts that it expressly
withdrew authority from Parent to act in breach of
the Court order. The defendant supports this con
tention by referring to the fact that verbal instruc
tions were given to all employees and that all
employees signed a notice dated June 25, 1986
which management circulated instructing that no
employee was "to provide in any way Apple IIe or
II Plus ROMs or any related software". It is pass
ing strange that this notice, dated June 25, 1986
composed two months after the Court order but
almost contemporaneous with the visit to the store
by the detectives Nowell and Keymer on July 8,
1986. A more likely interpretation of the events is
that the notice was backdated but circulated to
employees after Microcom became aware of the
Keymer—Nowell visit. In any event Parent was
clearly operating within the scope of his authority.
The second point that must be addressed is the
challenge counsel for the defendants makes to the
validity of the detectives' affidavits. This attack is
based on the decision in Peake's Limited v. Hig-
gins (1930), 2 M.P.R. 80 (N.B.S.C.), especially at
page 92. In that case a witness who was giving an
estimate of the damage caused by an explosion
could not do so without referring to a memoran
dum. That memorandum had been prepared by
the witness on the basis of information he obtained
from two other persons as well as on the basis of
information which he himself knew personally.
The Court held that to the extent the witness was
relying on information he had obtained from two
other individuals such evidence would be hearsay.
In the present case Messrs. Nowell and Keymer
prepared a report the day after their investigations
of July 8. They prepared it jointly. That report was
subsequently used to prepare the affidavits signed
by the detectives (particularly that of Keymer).
Keymer referred to the file to refresh his memory
before signing his affidavit. The attack on the
validity of the affidavit is without merit. There is
no reason to think that anything stated therein is
other than within Mr. Keymer's personal knowl-
edge. The report may have contained information
obtained from Mr. Nowell and outside Keymer's
personal knowledge but there is no reason to think
that such information found its way into Keymer's
affidavit.
CONCLUSIONS
For the reasons given, it is my view that Michael
Lee, House of Semiconductors, Norman Parent
and Microcom acted in contempt of the Court
order of April 29, 1986. In determining the penal
ties with respect thereto I have kept in mind the
jurisprudence cited to me by counsel for the
defendants. Jurisprudence which indicates that the
primary purpose of sanctions imposed in a situa
tion such as the present is to ensure compliance
with orders of the Court and not the visiting of
punishment on the parties. I also have kept in
mind the submissions of counsel for the plaintiffs
who had during the course of cross-examination on
the affidavits, much greater opportunity than I to
observe the demeanour and character of Messrs.
Lee and Parent. I would indicate that prior to
those representations I was disposed to impose a
much higher fine on those two individuals than is
now the case. Thirdly, in determining what sanc
tions are appropriate I have kept in mind the
particular circumstances of this case and the role
played by the detectives.
An order will issue imposing a $500 fine on
Michael Lee to be paid from his own resources,
without reimbursement directly or indirectly by his
employer; a $500 fine on Norman Parent to be
paid from his own resources, without reimburse
ment directly or indirectly by his employer. The
House of Semiconductors and Microcom will be
ordered to pay into Court $100,000 each, either by
way of cash or bond, as security against any future
infringement. The defendants Microcom and
House of Semiconductors shall pay the plaintiffs'
taxed costs including all disbursements engendered
by the investigation undertaken by Messrs.
Keymer and Nowell. Counsel for the plaintiffs is
asked to submit a draft order for signature, in
accordance with the terms set out above, approved
as to form by counsel for the defendants.
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.