2011 FCA 151 (May 5, 2011)
Overview
The Federal Court of Appeal held that it is open to trademark owners to bring proceedings for infringement, passing-off and depreciation of goodwill by means of an "application" to the Court, which is heard and resolved summarily and relatively quickly, on the basis of affidavit evidence. This decision may pave the way for trademark owners to resolve trademark infringement matters in Canada in a more expeditious and cost-effective way.
Abstract
The applicant appealed a Federal Court decision determining that the applicant was not entitled to bring a proceeding for trademark infringement, passing-off and depreciation of goodwill by way of the summary Federal Court application process. The Federal Court of Appeal reversed the lower Court's decision, finding that the applicable section of the Trademarks Act ("Act"), which was silent on how such proceedings should be brought, permitted such proceedings to be brought either by action or application, on the basis that such silence ought to be interpreted as facilitating expeditious and proportionate access to justice. The Court of Appeal somewhat tempered its finding by specifically stating that, while trademark owners are able to commence these types of proceedings by way of application, not all such proceedings are appropriately heard through such a mechanism, taking into account the relief sought, credibility issues and discovery needs, and that motions could be brought to convert applications to actions, with potential cost consequences for choosing an inappropriate manner of proceeding.
Case summary
Facts. Proceedings for trademark infringement, passing-off and depreciation of goodwill are within the concurrent jurisdiction of the Federal Court and the superior courts of the provinces of Canada. Such proceedings are typically brought by way of an "action," which in the Federal Court is governed by specific provisions that provide for an exchange of detailed pleadings between the parties, documentary and oral discoveries, various interim motions and ultimately a trial involving oral testimony.
Canada's Federal Court also allows for proceedings to be brought by way of "application," which provides for a more summary and expeditious determination of the proceeding by way of affidavit evidence. "Applications" in the trademark context have traditionally involved appeals from decisions of the Registrar of Trademarks and validity challenges of registered trademark registrations.
In the present case, BBM Canada ("BBM") filed a Notice of Application in the Federal Court, in which it claimed that Research In Motion Limited ("RIM") had infringed certain of BBM's registered trademark rights, seeking damages, declaratory and injunctive relief for infringement, depreciation of goodwill and passing-off.
On motion by RIM that the application be dismissed on jurisdictional grounds, a Federal Court judge ordered the application to proceed as an action (under the Federal Court Rules ("Rules") relating to actions), and that the Notice of Application would serve as a Statement of Claim (as the originating document required for an action). In making this order, the judge reviewed the Rules and related provisions of the Act, and determined that an infringement proceeding must be brought by way of action on the basis that: 1) the Act makes no specific provision that a proceeding alleging infringement can be commenced and conducted by way of an application, and 2) the Rules require a proceeding to be brought by way of action unless there is a specific statutory provision that a proceeding can be commenced otherwise. BBM appealed the finding to the Federal Court of Appeal.
Analysis. In considering the appeal, on a standard of correctness applied to the issue as a question of law, the Court reviewed the applicable Rules and statutory provisions in detail. The Court started with Rule 61, which provides for the three ways that a proceeding may be initiated in the Federal Court, namely by way of action, application or appeal. The Court then turned to the additional Rules referred to in Rule 61, and determined that the scope of proceedings to be brought by way of action is residual, in that matters not properly brought by way of application or appeal must be brought by way of action.
The question then turned to whether the matter was one that the Rules permitted to be brought by way of application: Rule 300 of the Rules allows a matter to be brought by way of application in various circumstances, including the applicable sub-section for "proceedings required or permitted by or under an Act of Parliament to be brought by application, motion, originating notice of motion, originating summons or petition or to be determined in a summary way." The question for the Court then became whether the Act "required or permitted" a proceeding for infringement, passing-off and/or depreciation of goodwill to be brought in such a summary manner, with the specific provision at issue being section 53.2, which provides that "[w]here a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including [inter alia] an order providing for relief by way of injunction and the recovery of damages or profits."
The Court found that the use of "application" in section 53.2 was being used in the sense of a formal request rather than in the sense of a legal proceeding commenced by a Notice of Application, and that therefore section 53.2 was in fact silent on how proceedings are to be brought under this section. In stating that the Court must have regard for the statutory context to determine Parliament's intent for the section, the Court reviewed the various other sections in the Act dealing with legal proceedings (many of which allow for proceedings to be brought by way of action or application). The Court ultimately concluded that the silence in section 53.2 must be interpreted as permitting proceedings to be brought by way of either application or action, to "facilitate expeditious and proportionate access to justice."
The Court of Appeal did somewhat qualify its decision, stating, in obiter, that, notwithstanding the ability of a litigant to bring a proceeding for infringement by way of application, the fact that a litigant may choose to do so does not mean that every case is amenable to adjudication by application. Therefore, having consideration to the relief sought, the extent credibility is an issue and the need for discovery, proceeding by the application may in certain circumstances be inappropriate. The Court concluded that motions may be brought to challenge the appropriateness of proceeding by application, and that "there may be, at the least, cost consequences for choosing an inappropriate originating document."
Conclusion
This Federal Court of Appeal decision has opened the door for trademark owners to use the Federal Court application process to have expeditious and summary determination of matters of trademark infringement, passing-off and depreciation of goodwill. However, care must be taken in selecting matters that may be appropriate for determination under the application process, which does not allow for any discovery of the parties involved and is based wholly on affidavit evidence and cross-examination of the same. For example, where it is important for a party to conduct discoveries and/or obtain admissions to build its case, or where credibility may be too difficult to resolve summarily, proceeding by way of application may not be appropriate and may well be subject to conversion to an action with potential cost consequences. However, it is difficult to know how freely the Court will grant motions to convert applications to actions, as generally the Court is reluctant to supplant a party's chosen manner of the proceeding unless prejudice is clearly demonstrated.
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