Iris, Le Groupe Visuel (1990) Inc v. Trustus International Trading Inc.

Iris, Le Groupe Visuel (1990) Inc v. Trustus International Trading Inc. Court (s) Database Federal Court of Appeal Decisions Date 2004-04-22 Neutral citation 2004 FCA 167 File numbers A-501-03 Decision Content Date: 20040422 Docket: A-501-03 Citation: 2004 FCA 167 CORAM: DESJARDINS J.A. NOËL J.A. NADON J.A. BETWEEN: IRIS, LE GROUPE VISUEL (1990) INC. Appellant and TRUSTUS INTERNATIONAL TRADING INC. Respondent Hearing held at Montréal, Quebec, on April 20 and 22, 2004. Judgment from the bench at Montréal, Quebec, on April 22, 2004. REASONS FOR JUDGMENT OF THE COURT: NADON J.A. Date: 20040422 Docket: A-501-03 Citation: 2004 FCA 167 CORAM: DESJARDINS J.A. NOËL J.A. NADON J.A. BETWEEN: IRIS, LE GROUPE VISUEL (1990) INC. Appellant and TRUSTUS INTERNATIONAL TRADING INC. Respondent REASONS FOR JUDGMENT OF THE COURT (Delivered from the bench at Montréal, Quebec, on April 22, 2004) NADON J.A. [1] This is an appeal from a decision made by Rouleau J. of the Federal Court on October 15, 2003, dismissing the appellant's appeal from a decision by Prothonotary Richard Morneau on May 15, 2003. [2] By his decision the prothonotary refused to allow the appellant, who had brought proceedings against the respondent in the Federal Court alleging an infringement of its trade-marks and unfair competition, to amend its statement of claim to implead certain individuals, including Jack Wang, Devun Walsh and Rob Dow, jointly and severally with the respondent, and to seek against those individuals a joint and several order to pay punitive damages and costs and out-of-court fees incurred by the appellant. [3] Rouleau J. and the prothonotary considered that there was no basis for allowing these amendments, since in view of the insufficiency of the facts alleged in the amended statement of claim they could not lead to an order against Messrs. Wang, Walsh and Dow. At paragraph 12 of his reasons, the prothonotary indicated his thinking as follows: [12] When all is said and done, I think that even for an amendment the plaintiff does not advance sufficient physical facts in the proposed amendments to support the proposition that Messrs. Wang, Walsh and Dow had knowledge of the plaintiff's trade-marks and had adopted a line of conduct that would appropriate the plaintiff's rights. Similarly, in terms of punitive damages, there is no sufficient allegation to the effect that Messrs. Wang, Walsh and Dow deliberately and intentionally infringed the plaintiff's rights. [4] Rouleau J. expressed similar views to those of the prothonotary at paragraph 22 of his reasons: [22] The facts of the case at bar are similar to those in Painblanc, as nothing in the plaintiff's pleadings, any more than in the affidavit in support of the said pleadings, appears to suggest the personal participation by Messrs. Wang, Walsh and Dow in the wrongful acts the defendant is alleged to have committed. [5] We consider that Rouleau J. erred in dismissing the appellant's appeal. [6] In view of the allegations made by the appellant in its amended statement of claim, and in particular paragraphs 6 and 38 to 50 thereof, the conclusions arrived by the prothonotary and Rouleau J. appear to this Court to be untenable. [7] A careful reading of the allegations made by the appellant in its amended statement of claim discloses the following: 1. paragraph 6 states that Messrs. Wang, Walsh and Dow are the respondent's managers; 2. paragraphs 38 and 39 indicate the degree of control exercised by Messrs. Wang, Walsh and Dow over the respondent; 3. paragraphs 40 to 44 describe the circumstances surrounding the adoption of a scheme by Messrs. Wang, Walsh and Dow, reflecting complete indifference to the risks of infringing the appellant's trade-marks; 4. paragraphs 38 to 44 set out the circumstances surrounding the personal liability of Messrs. Wang, Walsh and Dow; 5. paragraphs 38 to 50 allege active and deliberate participation by Messrs. Wang, Walsh and Dow in the acts alleged against the respondent, and allege that they were indifferent to the appellant's rights. [8] The Court is satisfied that paragraphs 6 and 38 to 50 of the amended statement of claim, when read together, and if not contradicted, are such as to enable the appellant to meet the test laid down by this Court in Mentmore Manufacturing Co. Ltd. v. National Merchandise Manufacturing Co. (1978), 40 C.P.R. (2d) 164, in order to establish the personal liability of the directors or managers of a business. In that case Le Dain J.A., speaking for the Court, discussed the difficulty of formulating a specific test on this point. At page 174 of his reasons, he said the following: I do not think we should go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement. That would be to impose a condition of liability that does not exist for patent infringement generally. I note such knowledge had been held in the United States not to be material where the question is the personal liability of directors or officers: see Deller's Walker on Patents, 2nd ed. (1972), vol. 7, pp. 117-8. But in my opinion there must be circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his relationship to it but the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it. The precise formulation of the appropriate test is obviously a difficult one. Room must be left for a broad appreciation of the circumstances of each case to determine whether as a matter of policy they call for personal liability. [9] It should be noted that neither the prothonotary nor Rouleau J. referred in their reasons to the paragraphs of the amended statement of claim which to this Court appear to be clearly relevant. [10] Further, it appeared that the prothonotary and Rouleau J. misunderstood the scope of this Court's decision in Painblanc v. Kastner (1994), 58 C.P.R. (3d) 502. With respect, we cannot see the relevance of that judgment in the case at bar, in view of the wording of paragraph 3 of the statement of claim in that case, which read as follows: 3. The individual Defendant Fernald Painblanc (hereinafter referred to as "Painblanc") is a businessman residing at Villa L'Amandior, En Senaugin, 1162 Saint-Prex, Switzerland. Plainblanc is the Chief Executive Officer and majority and controlling shareholder of the Defendant Lacroix. [11] In view of this paragraph and the obvious insufficiency of the facts alleged therein against Mr. Painblanc, the decision this Court gave in that case, and in particular the statements made by Hugessen J.A. at paragraph 3 of his reasons, which were adopted by Rouleau J. at paragraph 21 of his reasons, are readily understandable. [12] Consequently, we can only conclude that Rouleau J. erred in law, as did the prothonotary, in failing to consider, as he should have done, the relevant allegations put forward by the appellant in its amended statement of claim. In our view, if he had considered those allegations he could only have concluded that the amendments were in no way devoid of any chance of success. [13] For these reasons, the appeal will be allowed with costs in this Court and in the Federal Court and the judgment by Rouleau J. on October 15, 2003, set aside. Rendering the judgment which should have been rendered, we will vary the decision by Prothonotary Morneau on May 15, 2003, to authorize the appellant to file an amended statement of claim to: (a) implead Jack Wang, Devun Walsh and Rob Dow, jointly and severally with the respondent; (b) seek against the respondent and against the said Jack Wang, Devun Walsh and Rob Dow, jointly and severally, an order for punitive damages amounting to $1 million each plus a joint and several order to pay costs and out-of-court fees incurred by the applicant; (c) declare that the respondent is making an unlawful use of the IRIS trade-mark. [14] The appellant will have 15 days from the judgment to serve and file its amended statement of claim. "M. Nadon" J.A. Certified true translation Suzanne M. Gauthier, C Tr, LLL FEDERAL COURT OF APPEAL SOLICITORS OF RECORD DOCKET: A-501-03 STYLE OF CAUSE: IRIS, LE GROUPE VISUEL (1990) INC. v. TRUSTUS INTERNATIONAL TRADING INC. PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: April 20 and 22, 2004 REASONS FOR JUDGMENT OF THE COURT: DESJARDINS J.A. NOËL J.A. NADON J.A. DELIVERED FROM THE BENCH BY: NADON J.A. DATE OF REASONS: April 22, 2004 APPEARANCES: Hélène d'Iorio FOR THE APPELLANT Paul-André Mathieu FOR THE RESPONDENT Fabienne Candéago SOLICITORS OF RECORD: Mathieu et Associés FOR THE APPELLANT Montréal, Quebec Gowling, Lafleur, Henderson, s.r.l. FOR THE RESPONDENT Montréal, Quebec