Judgments

[1993] 1 F.C. 236

A-370-90

Montres Rolex S.A. and Rolex Watch Company of Canada Limited (Plaintiffs/Appellants)

v.

Brad Balshin, Hilda Balshin, Arthur Christodoulou, Shelly Michaels, Martin Herson, David C. Redman and Robert Pahmer, on behalf of Themselves and on behalf of all Others selling, offering for sale, importing, advertising, manufacturing, or distributing any wares in association with the name Rolex or the Crown Design, being registered Trade marks No. 278,348, No. 208,437, No. 130/33476, and No. 78/19056 under the Trade Marks Act, R.S.C. 1970, as amended, when the same are not of the plaintiffs’ manufacture or merchandise and John Doe and Jane Doe, and all Others unknown to the plaintiffs who sell, import, advertise, manufacture or distribute any wares in association with the name Rolex or the Crown Design being registered Trade marks No. 278,348, No. 208,437, No. 130/33476, and No. 78/19056 under the Trade Marks Act, R.S.C. 1970, as amended, when the same are not of the plaintiffs’ manufacture or merchandise (Defendants/Respondents)

Indexed as: Montres Rolex S.A. v. Balshin (C.A.)

Court of Appeal, Mahoney, Stone and Robertson JJ.A.—Toronto, September 10; Ottawa, October 22, 1992.

Trade marks — Infringement — Appeal from judgment granting permanent injunction against named and unnamed defendants — Imitation watches bearing appellants’ trade marks sold by defendants — Appellants seeking to extend injunction to “potential defendants” — Meaning of “unnamed defendants” — Not proper case for class action with one named defendant representing unknown transgressors — Relief sought summary procedure to curtail trade mark infringement by persons having no real defence — Exceptional circumstances warranting post-trial injunction against unknown defendants.

Injunctions — Infringement of appellants’ trade marks under Trade-marks Act, ss. 19, 20 — Appellants seeking permanent injunction against “potential defendants” — Case law silent — Injunction against unidentified persons of interim nature — Permanent injunction enforceable against unknown defendants only in exceptional circumstances — S. 52(4) order and permanent injunction distinguished — Terms of permanent injunction against “potential defendants” must be in accordance with rules of fundamental justice — Trial Judge’s order amended to apply only to street vendors with no fixed business address.

Practice — Parties — Joinder — Permanent injunction sought against “potential defendants” infringing appellants’ trade marks — Unknown and potential defendants distinguished — Whether permanent injunction enforceable against them — Case law on joinder of parties reviewed — Not proper case for class action with one named defendant representing unknown transgressors — Use of fictitious names restricted to interlocutory and pre-trial proceedings — Relief sought summary procedure designed to curtail trade mark infringement by persons having no real defence — Order amended to apply only to street vendors with no fixed business address.

Practice — Contempt of court — Trade mark infringement — Plaintiffs seeking permanent injunction against “potential defendants” — Relief sought tantamount to summary procedure to curtail trade mark infringement — Procedure derived from Court’s power to hold person in contempt — Contempt proceedings not purely civil in nature as imprisonment method of enforcement — Contempt proceedings subject to fundamental justice rules even if effectiveness thereby reduced — Contempt of court not simple means of enforcing judgments.

This was an appeal by the successful plaintiffs from the judgment of MacKay J. granting a permanent injunction against both named and unnamed defendants found to have sold “imitation watches” bearing the appellants’ trade marks. After numerous interlocutory proceedings against certain named respondents, His Lordship found at trial that the sale and distribution of imitation Rolex watches and other horological wares bearing the trade marks “Rolex” and “Crown Design” constituted infringement of the appellants’ exclusive rights under the Trade-marks Act, sections 19 and 20 and that the importation of those wares was contrary to section 52 of the Act. He was prepared to extend the terms of the injunction to “unknown defendants”, but not to “potential defendants”. The appellants’ argument was that the permanent injunction, as worded, was vague or impractical in application and that it should be amended to embrace “potential defendants” who, after the trial date, infringe the appellants’ trade marks, whether or not they did so previously. The issue was whether a permanent injunction could legally be issued against persons who were not named parties to the action.

Held, the appeal should be dismissed; paragraph 3 of MacKay J.’s order should be amended to apply only to street vendors or others with no fixed business address or premises.

The term “unnamed defendants” includes persons falling into one of two categories. First, there are the unknown defendants, those who had infringed the appellants’ trade marks on or before the trial date, but who remained unidentified as of that date and therefore could not be added as parties to the action; the other category is comprised of “potential defendants”. Although no decisive Canadian, English or American precedents were found in which permanent injunctions had been granted against “potential defendants”, there are established and accepted principles dealing with joinder of parties. In view of those principles, the instant case could not be structured as a class action with one named defendant considered as representing all unknown transgressors. Plaintiffs have, on occasion, been permitted to frame the style of cause by resorting to fictitious names such as “John Doe” and “Jane Doe”. The use of such fictitious names has, however, been sanctioned as a stopgap measure and restricted to interlocutory and pre-trial proceedings; even when fictitious names have not been used, an injunction against unidentified persons is invariably of an interim nature.

The circumstances in the case at bar were sufficiently exceptional to warrant a post-trial injunction against “unknown defendants”. The appellants should not be frustrated in their attempt to redress deliberate breaches of their legal rights because they were unable to identify such defendants prior to trial; that omission was occasioned by the fault of the “unknown defendants”, not the appellants. The reasons underlying the decision to extend the reach of the injunction were predicated on the failure of the existing law to respond adequately to the evasion tactics adopted by street vendors, and also on the appellants’ inability to identify “unknown defendants” prior to the trial date. This problem would not be solved by extending the injunction to “potential defendants”. There is a clear distinction between a subsection 52(4) order prohibiting the future importation of imitation wares bearing the appellants’ registered trade marks and a permanent injunction which extends to “potential defendants”. A subsection 52(4) order, which serves as the basis on which Customs officers derive their authority to stop the flow of banned wares, irrespective of the identity of the importer, does not raise the same kind of issues or concerns which arise in the context of a permanent injunction.

The equitable relief sought by the appellants was tantamount to a summary procedure designed to curtail trade mark infringement by persons who have no “real” defence. That summary procedure is derived from the power of the Court to hold a person in contempt. In the event contempt proceedings are initiated, the onus remains on the appellants to discharge the requisite burden of proof. Moreover, a non-party cannot be held in contempt for breach of an injunction of which he or she had no knowledge. In a recent decision Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., where the legal issue turned on the law of civil contempt under the Quebec Code of Civil Procedure, the Supreme Court of Canada refused to characterize such proceedings as purely civil in nature and concluded that the respondent was not a compellable witness. In light of that decision, the terms of a permanent injunction against “potential defendants” would have to be crafted in accordance with the rules of fundamental justice. Contempt of court proceedings must also be subject to those rules, even if their effectiveness is thereby reduced. Judicial restraint overtook the attempt to tip the scales in an attempt to achieve a balance between the interests of the appellants and those intent on infringing their trade marks.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44].

Code of Civil Procedure, R.S.Q., c. C-25.

Customs Tariff, R.S.C., 1985 (3rd Supp.), c. 41, ss. 110, 114.

Trade-marks Act, R.S.C., 1985, c. T-13, ss. 19, 20, 22, 52(1),(4), 53.

CASES JUDICIALLY CONSIDERED

APPLIED:

Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., [1992] 2 S.C.R. 1065; Matthew v. Guardian Assur. Co. (1919), 58 S.C.R. 47; 45 D.L.R. 32; [1919] 1 W.W.R. 67.

CONSIDERED:

Iveson v. Harris (1802), 32 E.R. 102; 7 Ves. Jun. 251; Brydges v. Brydges, [1909] P. 187 (C.A.); Marengo v. Daily Sketch and Sunday Graphic, Ltd., [1948] 1 All E.R. 406 (H.L.); International Longshoremen’s Association, Locals 273, 1039, 1764 v. Maritime Employers’ Association et al., [1979] 1 S.C.R. 120; (1978), 89 D.L.R. (3d) 289; 44 A.P.R. 458; 23 N.B.R. (2d) 458; 78 C.L.L.C. 14,171; 23 N.R. 386; Jackson v. Bubela et al. (1972), 28 D.L.R. (3d) 500; [1972] 5 W.W.R. 80 (B.C.C.A.); Sask. Power Corp. v. Doe, [1988] 6 W.W.R. 634; (1988), 69 Sask. R. 158; 31 C.P.C. (2d) 283 (C.A.); affg [1988] 6 W.W.R. 27; (1988), 69 Sask. R. 138; 30 C.P.C. (2d) 315 (Q.B.).

REFERRED TO:

Montres Rolex S.A. v. M.N.R., [1988] 2 F.C. 39; (1987), 14 C.E.R. 309; 17 C.P.R. (3d) 507 (T.D.); C.P.R. Co. v. Brady et al. (1960), 26 D.L.R. (2d) 104; 33 W.W.R. 529 (B.C.S.C.); Bassel’s Lunch Ltd. v. Kick et al., [1936] O.R. 445; (1936), 4 D.L.R. 106; 67 C.C.C. 131 (C.A.); Dukoff et al. v. Toronto General Hospital et al. (1986), 54 O.R. (2d) 58; 8 C.P.C. (2d) 93 (H.C.); Golden Eagle Liberia Ltd. et al. v. International Organization of Masters, Mates and Pilots, [1974] 5 W.W.R. 49 (B.C.S.C.); Cartier, Inc. v. John Doe (1987), 13 C.I.P.R. 316 (F.C.T.D.); Attorney-General of British Columbia v. Couillard et al. (1984), 11 D.L.R. (4th) 567; 59 B.C.L.R. 102; 14 C.C.C. (3d) 169; 31 C.C.L.T. 26; 42 C.R. (3d) 273 ( S.C.); Adidas Sportschuhfabriken Adi Dassler K.G. et al. v. Kinney Shoes of Canada Ltd., E’Mar Imports Ltd., Third Party (1971), 19 D.L.R. (3d) 680; 2 C.P.R. 227 (Ex. Ct.); Montres Rolex S.A. v. Lifestyles Imports Inc. (1988), 23 C.P.R. (3d) 436 (F.C.T.D.).

AUTHORS CITED

Richard, H. G., Editor-in-Chief. Canadian Trade-marks Act—Annotated. Revised, Binder 2. Toronto: De Boo.

Sharpe, Robert J. Injunctions and Specific Performance, 2nd ed. Toronto: Canada Law Book Inc., 1992.

APPEAL from a judgment of MacKay J. ([1990] 3 F.C. 353 (abridged); (1990), 29 C.P.R. (3d) 257; 32 F.T.R. 166 (T.D.)) granting a permanent injunction against both named and unnamed defendants found to have infringed the appellants’ trade marks. Appeal dismissed; paragraph 3 of order varied.

COUNSEL:

Simon Schneiderman for plaintiffs/appellants.

No one appearing for defendants/respondents.

SOLICITORS:

Outerbridge & Miller, Toronto, for plaintiffs/appellants.

The following are the reasons for judgment rendered in English by

Robertson J.A.: This is an appeal from a decision[1] of Mr. Justice MacKay in which he granted, inter alia, a permanent injunction enjoining both named and unnamed defendants from infringing the appellants’ trade-marks. The defendants were found to have engaged in sales of “imitation watches”, and other horological wares, bearing the appellants’ registered marks. With respect to unnamed defendants, the injunction extends to those who had engaged in such sales on or before the trial commencement date but who could not be identified within that time frame.

The appellants’ principal argument is that this aspect of the injunction is flawed because it is either vague or impractical in application and that in the circumstances the terms of the injunction should be “amended” to embrace unnamed defendants who engage in the prohibited conduct after the trial date. I shall deal later with the logic employed by counsel for the appellants in support of this particular argument. For the moment, what is of significance is that the appellants are seeking de facto a permanent injunction against “potential defendants”; that is anyone who after the trial date infringes the appellants’ trade-marks, irrespective of whether they had done so previously.

Both at trial and on appeal, the appellants have assumed that the granting of an injunction of this scope is entirely within the discretion of the Trial Judge. On reflection, it should be apparent that the success of this appeal hinges initially on whether, as a matter of principle, a permanent injunction may enjoin persons who were not named parties to the action. As a preliminary matter, and to dispel any notion that the issue as framed is entirely misconceived, it must be acknowledged that the appellants are not arguing that anyone who infringes the appellants’ trade-marks after the trial date is, without more, subject to contempt proceedings. The matter of proper notice or knowledge of the injunction is not denied and is dealt with in these reasons.

To avoid confusion and for the purpose of this appeal, the term “unnamed defendants” shall include persons who fall into one of two categories. First, there are those who had infringed the appellants’ trade-marks on or before the trial commencement date, February 7, 1989, but who remained unidentified as of that date and therefore could not be added as parties to the action. I have labelled such transgressors as the “unknown defendants”. The other category is comprised of “potential defendants” as described above. The question which remains is whether a permanent injunction may legally issue against either or both types of unnamed defendants.

The learned Trial Judge was prepared to extend injunctive relief as against the “unknown defendants” because the circumstances were sufficiently exceptional to warrant such relief. However, it is my understanding that he refused to extend the terms of the injunction to embrace “potential defendants” as such an order would, in effect, be inconsistent with underlying principles of existing practice (at pages 279-280). It can be inferred readily that he was not willing to grant an injunction which on its face would enjoin all the world.

While one can find reported instances in which interlocutory or pre-trial relief has been granted against “unknown defendants”, there appears to be no decisive Canadian, English or American precedent in the context of permanent injunctions. In regard to “potential defendants” it is not surprising to find a jurisprudential void. But that of itself is not sufficient justification for ignoring the appellants’ arguments, not all of which are founded on common law and equitable principles. The Trade-marks Act (R.S.C., 1985, c. T-13 (hereinafter “the Act”)) is also invoked. Accordingly, we are forced to examine the issue afresh.

If the law is to move in the direction advocated by the appellants, it is because the factual context reveals the extent to which existing doctrine is unable to respond adequately to the legitimate interests of litigants such as the appellants. What renders change problematic is that the law must ensure that the interests of a competing group (unnamed defendants) are recognized and dealt with appropriately. Rarely is the task of achieving the so-called “proper balance” an easy one.

The analysis must begin with a recitation of the relevant facts, including a brief outline of the history of the litigation spanning a period of seven years. Against this backdrop we can appreciate the Trial Judge’s comprehensive and thorough analysis of the evidence and issues as presented at trial.

The appellant, Montres Rolex S.A., is a Swiss company and the owner of a number of trade-marks registered under the Trade-marks Act. It manufactures Rolex watches and other horological wares. The appellant, Rolex Watch Company of Canada Limited, is the sole registered user of the other appellant’s registered trade-marks and the exclusive distributor of its products in Canada. The unnamed respondents are (or were) street vendors engaged in the sale of imitation Rolex wares, and in particular watches commonly referred to as “knock-offs”.

On October 28, 1986, the appellants commenced an action and on the same date sought and were granted an interim injunction by Mr. Justice Collier restraining the named defendants from infringing the appellants’ registered trade-marks. The interim injunction included an Anton Piller type order permitting access by the appellants’ representatives to designated premises and the removal of documents and wares bearing the Rolex name or design.

On November 3, 1986, Associate Chief Justice Jerome granted a similar order directed to the named defendants Brad Balshin, Hilda Balshin and Shelly Michaels, who had consented to judgment, and to the named defendants Arthur Christodoulou and Martin Herson who had not appeared in response to the appellants’ notice of motion or entered a defence or consented to judgment.

On December 1, 1986, another interlocutory injunction was granted by order of Mr. Justice Collier [Montres Rolex S.A. et al. v. Herson et al. (1986), 15 C.P.R. (3d) 372 (T.D.)] against the named defendants David C. Redman and Robert Pahmer.

On December 30, 1986, show cause orders were issued to the defendants Brad Balshin and Martin Herson alleging violations of the interlocutory orders. Subsequently, both men were found to have knowingly violated the Court orders and held in contempt. A fine was levied. Similar proceedings were initiated against the defendant Pahmer but in July, 1987, they were dismissed in the absence of proof of service of the interlocutory order directed against him.

On January 9, 1987 [as amended January 13, 1987], the Associate Senior Prothonotary approved judgment as sought by the appellants against Brad Balshin, Hilda Balshin, Shelly Michaels, Arthur Christodoulou and Martin Herson, who had consented to judgment, for an order restraining them from: (1) infringing the appellants’ registered trade-marks; (2) using the name Rolex; and (3) selling and importing watches or wares bearing the name Rolex or the Crown Design that were not of the appellants’ manufacture or merchandise. The judgment also included an order under subsection 52(4) of the Trade-marks Act prohibiting importation of imitation wares bearing the name Rolex. That order was subsequently held to be unenforceable by Mr. Justice McNair because of the failure to meet a condition precedent: see Montres Rolex S.A. v. M.N.R., [1988] 2 F.C. 39 (T.D.).

After January 13, 1987, the action continued against the defendants Redman and Pahmer and “all others selling, offering for sale, importing, advertising, manufacturing or distributing any wares in association with the name Rolex or the Crown Design.”

On November 30, 1987, the appellants sought to have the named defendants Redman and Pahmer, who were defending the claims of the appellants, appointed as representatives of all unidentified persons who were engaged in selling imitation Rolex products. On February 11, 1988, that motion was dismissed by the Associate Chief Justice [Montres Rolex S.A. v. Balshin, T-2355-86, not reported]. However, the appellants did not abandon their pursuit of injunctive relief against both types of unnamed defendants.

On January 11, 1988, Mr. Justice Cullen acceded to the appellants’ motion for an order amending the style of cause by adding the following defendants: “John Doe and Jane Doe, and all others unknown to the Plaintiffs who sell, import, advertise, manufacture or distribute any wares in association with the name Rolex or the Crown Design being registered Trademarks …”. At this stage in the litigation, it is apparent that the appellants were determined to lay the procedural groundwork on which a permanent injunction against unnamed defendants could be legally erected.

By the time the trial commenced on February 7, 1989, all but one of the named defendants, Robert Pahmer, had either consented to judgment or were in default of appearance. However, no counsel appeared on behalf of Mr. Pahmer, nor did he appear for the purpose of representing himself. After making every reasonable effort to apprise the defendant Pahmer that the trial would proceed in his absence, the learned Trial Judge ordered the trial to proceed. On the basis of the evidence adduced by the appellants, Mr. Justice MacKay made a number of relevant findings.

Of significance to the appellants’ case, is the manner in which some of the defendants were able to avoid being identified by name. In this regard, the Court found (at pages 271-272):

(8) Sales, advertising and distribution of imitation Rolex products are frequently conducted by street vendors or others with no fixed business address or premises and no continuing business identification, who are often difficult to identify with certainty even when confronted with their unauthorized selling practices. These circumstances create great difficulties for the plaintiffs in seeking to protect their rights or interests through legal proceedings;

In support of that finding, the learned Trial Judge relied on the testimony of two deputy sheriffs which he summarized as follows (at page 269):

David Blackburn and Kenneth Foston, both deputy sheriffs of the Judicial District of York, testified from their experience in assisting the plaintiffs in seizure of imitation Rolex watches after interlocutory orders had issued earlier in this matter. On nine occasions from May to December in 1988 they had seized the imitation Rolex watches from the defendant, Pahmer, and had completed a levy report about each seizure. They testified as to general practices of street vendors of watches, including their tendency to avoid revealing their true identity or address or the source of their supply of watches, their moving from one major traffic area to another and their apparent arrangements for “runners” to alert them when sheriff’s staff appeared, in which event the vendors simply packed up, picked up and moved on, only to return later.

Mr. Justice MacKay found that the sale and distribution of imitation Rolex watches and other horological wares bearing the trade-mark “Rolex” and “Crown Design” constituted infringement of the appellants’ exclusive rights under sections 19 and 20 of the Act. Moreover, it was found that such infringement had the effect of depreciating the value of the goodwill attached to the appellants’ trade-marks contrary to section 22 of the Act and that the importation of the imitation wares was contrary to section 52 of the Act. The significance of the latter determination is relevant to the issue under consideration and is examined more fully below.

In light of the breadth of the injunctive relief being sought by the appellants, it is incumbent to provide an overview of the law dealing with joinder of parties. While the analysis begins with an examination of established and accepted principles, I am mindful that general propositions do not always decide concrete cases.

At the turn of the nineteenth century, it was Lord Eldon, L.C., in Iveson v. Harris (1802), 32 E.R. 102 [at page 104], who stated: “that you cannot have an injunction except against a party to the suit.” In that case, the plaintiffs sought to enforce a writ of prohibition against a non-party to the action, a creditor of the defendant. It is not difficult to accept a rule of law which directs that any person who might be affected by an order of the Court should be made a party. Conversely, persons not a party to the action are not bound by any order that is subsequently made. But it is not in the formulation of the general principle or rule that difficulty is found. Rather it lies in the extent to which the law remains flexible by permitting the development and application of exceptions or the refinement of generalized principles.

The retention of flexibility in regard to the joinder issue is present in a decision of our Supreme Court, Matthew v. Guardian Assur. Co. (1919), 58 S.C.R. 47, where Anglin J. stated (at page 61):

Where the injunction sought will injuriously affect the rights of a person or body not before the court it will not ordinarily, and without special circumstances, be granted.

In that case it was held, inter alia, that an application for an injunction should not be entertained against the agent of an insurance company who was seeking a licence on the company’s behalf. Since the agent’s authority to act on behalf of the company only arose on the granting of the licence, the company should have been a party to the proceedings.

An interesting aspect of Mr. Justice Anglin’s remarks is that they were made in the context of a known and identifiable entity; a defendant who could be named. The extant law, however, reveals that the “special circumstances” envisaged by Anglin J. are limited in scope and purpose and do not extend to parties who with due diligence could have been identified and added as a party to the action. I shall deal only with the more relevant exceptions to the general principle.

It is trite to acknowledge that a corporation can only act through others. Accordingly, the law was quick to recognize that an injunction against a corporation must be obeyed by its officers and ultimately all those in its employ. The legal rationale underscoring the reach of the injunction lies in the belief that non-parties should not be permitted to obstruct the course of justice. In Brydges v. Brydges, [1909] P. 187 (C.A.), Farwell L.J. expounded on this rationale in the following terms (at page 191):

It is true that persons who are not parties to an action, and are therefore not bound by the injunction so as to be committed for a breach of it, may yet be made amenable to the jurisdiction of the Court if the injunction be negative, i.e., forbids something to be done, but it can only be done on the ground of contempt in obstructing the course of justice by acting or aiding and abetting in breach of an injunction of the Court; and this is the ground on which “servants and agents” are rendered liable for contempt whether they are mentioned in the order or not. The practice of mentioning them probably arose in order to give them warning: see Seaward v. Patterson [[1897] 1 Ch. 545].

It is accepted in law that it is not necessary to mention servants or agents in the order being sought or granted. The jurisdiction of the Court to exercise its contempt power remains unaffected by that omission. Indeed, in Marengo v. Daily Sketch and Sunday Graphic, Ltd., [1948] 1 All E.R. 406 (H.L.), the corporate defendant took objection to an injunction which restrained “the defendants, their staff servants and agents” from doing certain prohibited acts.

Lord Uthwatt held that the objection was well-founded to the extent that the reference to “staff servants and agents” had the legal effect of enjoining them. It was held that such a reference “is nothing other than a warning against wrongdoing to those persons who may by reason of their situation be thought easily to fall into the error of implicating themselves in a breach of the injunction by the defendant” (at page 407). His Lordship concluded that while it was unnecessary to make reference to such persons it would be desirable to “mark the amplitude of the order” (at page 407). Accordingly, he suggested an alternative form of wording: “the defendants by themselves, their servants, workmen and agents or otherwise”. The intended effect of the rewording is to dispel the notion that anyone other than the corporate defendant was a party to the action.

Though the term “aiders and abettors” lacks sophistication, it conveys readily why it has come to pass that a non-party may be held in contempt of an injunction including, for example, the stranger who knowingly assists a defendant in breaching the terms of an injunction: see C.P.R. Co. v. Brady et al. (1960), 26 D.L.R. (2d) 104 (B.C.S.C.) and Bassel’s Lunch Ltd. v. Kick et al., [1936] O.R. 445 (C.A.). Against this historical backdrop, it is understandable why Canadian courts have also enforced injunctions against non-parties in the context of labour disputes: see International Longshoremen’s Association, Locals 273, 1039, 1764 v. Maritime Employers’ Association et al., [1979] 1 S.C.R. 120, where the Supreme Court had the opportunity to examine the wording of an interlocutory injunction issued against three trade unions and in the end settled on the approach of the House of Lords in Marengo, supra (per Estey J. at pages 143-144).

Aside from injunctions issued against corporations and trade unions, there are relatively few instances where injunctive relief has had a prohibitory effect on unnamed persons.[2] Not surprisingly, counsel’s intent on circumventing the perceived inflexibility of the substantive law governing joinder of parties has turned to two procedural tactics.

First, they have attempted to structure the proceeding as a class action. In the instant case, the appellants were unable to persuade the Associate Chief Justice to grant an order in which two of the named defendants, who were defending the claims of the appellants, would be appointed representatives of all unidentified persons engaged in selling imitation wares. The reasoning of the Associate Chief Justice is compelling and, as hindsight would prove, prophetic (at page 264):

It is clear … that the respondents to this motion resist it, which alone is almost enough to cause the application to fail. In addition, however, it is far from certain that they intend to satisfactorily prosecute their own defence, much less that of their co-defendants. They do not have any office or title which casts them in a position of responsibility for the others. There is nothing to indicate that their defence will be identical to any put forward by the others.

However, the appellants were not content with this finding and at trial argued before Mr. Justice MacKay that the circumstances had changed such that it would now be proper to structure the action as one against a class of defendants. I think it unnecessary to review the appellants’ arguments or the extensive and persuasive reasoning proffered by Mr. Justice MacKay for rejecting the appellants’ submission [see pages 275-277].

Bluntly put, this is not a proper case to consider one named defendant to be representative of all unknown transgressors. To hold otherwise would be to allow “form” to prevail over “substance”. If the appellants are to succeed on this appeal, it is because the law recognizes the validity of the injunctive relief being sought and not because the appellants have chosen to cast their action in a form which suits their purposes.

The appellants being unable to rely on one procedural avenue pursued yet another; adding to the style of cause “John Doe and Jane Doe and all others unknown”. Case law reveals that on occasion plaintiffs have been permitted to frame the style of cause by resorting to the fictitious names of “John Doe” and “Jane Doe”.

This procedural anomaly has its origin in cases where the name of the defendant was not known to or ascertainable by the plaintiff who could not be expected in the particular circumstance to know the identity of persons involved in the event giving rise to the claim (see Dukoff et al. v. Toronto General Hospital et al. (1986), 54 O.R. (2d) 58 (H.C.)). For example, in Jackson v. Bubela et al. (1972), 28 D.L.R. (3d) 500 (B.C.C.A.), the plaintiff was unable despite diligent effort to identify the driver involved in a collision. The one-year limitation period about to expire, the plaintiff commenced an action in which the driver of the vehicle was named as a defendant as “John Doe”. In time, the style of cause was amended by correcting the name “John Doe” to read “Wallace Bubela”.

A review of the relevant cases leads me to conclude the use of fictitious names has been sanctioned by the courts as a stopgap measure and therefore restricted to interlocutory[3] and pre-trial proceedings: see Golden Eagle Liberia Ltd. et al. v. International Organization of Masters, Mates and Pilots, [1974] 5 W.W.R. 49 (B.C.S.C.); Cartier, Inc. v. John Doe (1987), 13 C.I.P.R. 316 (F.C.T.D.) and the reasons of MacKay J. at pages 277-279.

As noted earlier, the appellants were successful in having the style of cause amended by the addition of “John Doe and Jane Doe and all others unknown” as defendants to the action. In so doing, they are able to analogize the present facts with those present in Jackson, supra. As in Jackson, the appellants have made diligent efforts to identify the defendants and therefore should not be thwarted by the fact that these defendants cannot be identified by name. Of course, the analogy breaks down once it is recognized that the order being sought is to have post-trial effect.

The one “John Doe” case cited by the appellants in support of an injunction against both types of unnamed defendants is, in my view, the one case that might dissuade some courts from acceding to the appellants’ argument. In Sask. Power Corp. v. Doe, [1988] 6 W.W.R. 27 (Sask. Q.B.); affd [1988] 6 W.W.R. 634 (Sask. C.A.), the plaintiffs sought an interim “John Doe” injunction in response to people seeking to thwart a construction project by picketing and intimidating anyone who attempted to enter the construction site. As well, the plaintiffs alleged that property damage had occurred. In the main action the plaintiffs were seeking a permanent injunction on the same terms as sought in the interim order.

The immediate question in Sask. Power Corp., supra, was whether the interim injunction should be granted on the plaintiffs’ terms. The defendants were designated as “John Doe and all persons … who were congregating on or about a roadway located …”. The draft order also extended to (at page 28):

… any person acting on or under their or under any of his or their instructions, or anyone having knowledge or notice of the Order herein requested. …

In these circumstances, the Court held that such an order would be “convenient” from the standpoint of the plaintiffs, but not “just”. The net, cast by the order was deemed too wide and understandably so once it is recognized that anyone having knowledge of the order, including a disinterested observer, would presumably be caught. In my opinion, Sask. Power Corp., supra, stands for the proposition that an interim injunction will not be granted where it could conceivably extend to innocent persons. Nonetheless, it remains to be determined whether, for other cogent reasons, the relief being sought by the appellants has been cast too wide.

With respect to the “unknown defendants”, Mr. Justice MacKay concluded that only in exceptional circumstances could a permanent injunction issue against such persons. He had no difficulty in summarizing the circumstances warranting a permanent injunction as against this class of defendants (at pages 279-280):

These circumstances include the difficulty faced by the plaintiffs, and others in their position, in seeking to protect their exclusive trademark interests through the usual legal remedies under the Trade Marks Act for the remedies are largely frustrated by the activities of those who knowingly infringe upon the plaintiffs’ interests including the importation of imitation wares bearing the plaintiffs’ registered trade marks or facsimiles of them. They do this in the expectation that the nature and mobility of their operations effectively reduces the likelihood that legal remedies will seriously affect them adversely. At the same time, by infringing activities they seriously undercut the exclusive rights of the plaintiffs and for the long term the plaintiffs’ claim to exclusive use under registered trade marks.

I am in agreement that the circumstances are sufficiently exceptional to warrant a post-trial injunction issuing against “unknown defendants”. It is incontrovertible that the itinerate nature of the street vending business enables a few to exploit certain procedural and substantive limitations which the law places on plaintiffs. Consequently, elusive street vendors are able to render themselves immune from the intended effect of legal remedies which otherwise are usually effective in curtailing unlawful conduct.

In as much as the law has seen fit to enjoin those it considers “aiders and abettors”, so too should it restrain those who conduct themselves in accordance with the tenets of “The Artful Dodger”. I do not believe that the appellants should be frustrated in their attempt to redress deliberate breaches of their legal rights because they are unable to identify such defendants prior to trial. In the instant case that omission is occasioned by the fault of the “unknown defendants”, not the appellants.

Although prepared to extend the reach of the injunction to “unknown defendants”, I am of the opinion that the net to be cast remains, in one significant respect, too wide. In my opinion, the injunction should be restricted to curtailing the unlawful activities of our “Artful Dodger”. The reasons underlying the decision to extend the reach of the injunction are predicated on the failure of the existing law to respond adequately to the evasion tactics adopted by street vendors. On the other hand, the appellants are not to be rewarded for failing to take reasonable steps in identifying and joining persons to the action. Accordingly, paragraph 3 of the order under appeal should be amended to apply only to street vendors or others with no fixed business address or premises. I am confident that the panoply of legal remedies available to the appellants, in the case of infringement by “established” merchants, is more than adequate.

It is evident from Mr. Justice MacKay’s reasons that while he was prepared to break new ground in the law of injunctive relief, he was not prepared to do so without extending adequate protection to those who might ultimately be found in violation. Paragraph 3 of his order reveals the protection afforded “unknown defendants” and is worthy of replication (at page 288):

3. The defendants John Doe, Jane Doe and all others unknown to the plaintiffs, who before or at the date of trial in this matter sold, imported, advertised, manufactured or distributed any wares in association with the name Rolex or Crown Design where those goods were not of the plaintiffs’ manufacture or merchandise, are enjoined from all of the same activities from which the defendants Redman and Pahmer are enjoined; provided that any person identified within six years after the date of trial herein as one to whom this clause may apply shall be served, inter alia, with notice that they have opportunity to apply upon motion for a determination that there are lawful reasons why this clause should not apply to him or her.

Of particular significance is the requirement that “unknown defendants” be served with a copy of the judgment and given the opportunity to challenge the applicability of the injunction as it impacts upon them. These conditions, of course, do not detract from the fact that in the event contempt proceedings are initiated, the onus remains on the appellants to discharge the requisite burden of proof. This is true regardless of whether an “unknown defendant” responds to service of the judgment within 30 days. I might add that one need not cite any legal authority for the proposition that a non-party cannot be held in contempt for breach of an injunction of which he or she had no knowledge. Hence, in the present circumstances, it is more likely that the injunction will have a deterrent effect once served, assuming that the injunction is of some practical benefit to the appellants. However, the appellants themselves have cast doubt on the efficacy of an injunction against “unknown defendants”.

Notwithstanding the appellants’ success at trial, they appealed to this Court on the basis that paragraph 3 of the order dealing with injunctive relief against the “unknown defendants” was vague and therefore unenforceable. The relevant portion of that paragraph reads as follows: “The defendants John Doe, Jane Doe and all others unknown to the plaintiffs who before or at [February 7, 1989] the date of trial in this matter sold …”. The appellants argued that as they could not identify anyone who had sold imitation wares prior to the date of trial, paragraph 3 of the order is meaningless.

During oral argument, counsel for the appellants conceded that the order would be effective if a street vendor admitted that he or she had been infringing the registered trade-marks on or before the trial date. I am in agreement with counsel, however, that it is simply naive to assume that such confessions will be commonplace. At the same time, it was acknowledged that the injunction would be “meaningful” in the event a street vendor found to be engaging in the prohibited activities was identified as having sold imitation wares prior to the trial date.

Ultimately, counsel conceded that the true objection to paragraph 3 of the order stemmed from his conviction that the order granted was of no practical consequence. Even if I were to accede to that conclusion, it does not affect the jurisdiction of the Court to grant the injunction. Whether or not any order of a court will produce the intended results is a matter to be speculated on in the circumstances of each case. Notwithstanding the fact that the appellants sought the order in the first instance, they found it problematic in application and thus suggested ways in which this Court could obviate their concerns.

One of the solutions offered by the appellants is to “amend” paragraph 3 to include “potential defendants”. Alternatively, counsel argued that that paragraph should be amended so as to place on street vendors presently selling imitation wares the burden of establishing that they were not selling such prior to the trial date. Needless to say, I find the alternate solution objectionable. The notion of placing the burden on persons, not defendants to an action, to establish their innocence as of a date which is of no significance to them is simply antithetical to legal thinking and wisdom.

While at first blush the notion of injecting efficacy into paragraph 3 of the order by the inclusion of “potential defendants” appears motivated by an overriding concern for the interests of the appellants, the suggested solution does have a legal nexus. In effect, I take the appellants to be arguing that the itinerant street vendors, who could not be identified for the purposes of this action, continue to operate immune from any realistic prospect of being exposed to enforcement proceedings. Therefore, if the injunction is to achieve its intended effect then by necessity it must be over-inclusive to the extent that it will ensnare those guilty of trade-mark infringement after the trial date.

In my opinion, that argument loses its persuasiveness once it is recognized that the reason underlying the decision to extend injunctive relief to “unknown defendants” is based on the appellants’ inability to identify such persons prior to the trial date. This problem is not solved by extending the injunction to “potential defendants”. For the purposes of identification and service of legal documents, our “Artful Dodgers” will remain as elusive after the trial date as they were before. If the appellants are to succeed on this appeal, the rationale must lie elsewhere.

Counsel for the appellants was quick to point out that any concern that this Court might have with respect to the potential breadth of the order being sought should be evaluated in light of, and contrasted with, the order granted by Mr. Justice MacKay pursuant to subsection 52(4) of the Act. That order prohibits the future importation of imitation wares bearing the appellants’ registered trade-marks. As fate would have it, section 52 raises a number of issues not all of which have been addressed or resolved by the courts (see generally Canadian Trade-marks Act—Annotated, H. G. Richard, Editor-in-Chief, Vol. 2, at pages 52-1 et seq). Section 52 reads in part:

52. (1) Where it is made to appear to a court of competent jurisdiction that any registered trade-mark or any trade-name has been applied to any wares that have been imported into Canada or are about to be distributed in Canada in such a manner that the distribution of the wares would be contrary to this Act, or that any indication of a place of origin has been unlawfully applied to any wares, the court may make an order for the interim custody of the wares, pending a final determination of the legality of their importation or distribution in an action commenced within such time as is prescribed by the order.

…

(4) Where in any action under this section the court finds that the importation is or the distribution would be contrary to this Act, it may make an order prohibiting the future importation of wares to which the trade-mark, trade-name or indication of origin has been applied.

The case law surrounding subsection 52(4) has focused on whether a court must actually rule on the legality of the importation before an order can issue under that subsection. In that regard, the law is clear that neither a consent nor default judgment satisfies the requirement of a final determination: see Adidas Sportschuhfabriken Adi Dassler K.G. et al. v. Kinney Shoes of Canada Ltd., E’Mar Imports Ltd., Third Party (1971), 19 D.L.R. (3d) 680 (Ex. Ct.) and Montres Rolex S.A. v. M.N.R., supra. Without such a determination, customs officers have refused to enforce the prohibition against importation of offending wares.

While the appellants satisfied the condition precedent described above, they are faced with yet another legal issue: whether an order under subsection 52(4) must be directed at specific or named defendants. If not, the order is effective as against anyone seeking to import such wares; that is as against all the world.

After canvassing the authorities, Mr. Justice MacKay concluded that an order, not directed to specific defendants, prohibiting importation for “commercial purposes”[4] of imitation wares was warranted. Once again I find the reasoning of the learned Trial Judge unassailable. After noting the ongoing saga in which the appellants had become embroiled; the fact that subsection 52(4) does not require that a defender be named and; that importation from abroad of imitation Rolex wares has seriously affected the appellants’ rights to exclusive use in Canada of their registered trade-marks, he stated his reasons concisely (at page 286):

In the scheme of the Trade Marks Act the purpose of s. 52(4) is to support the efforts of the registered owner or registered user of a trademark registered under the Act to protect their exclusive rights, created by ss. 19 and 50 respectively, in a case like this one where the wares bearing their registered trademarks or facsimiles of them, without authorization, originate abroad and are brought or shipped into Canada for commercial purposes. In these circumstances an order under s. 52(4) not directed to specific defendants but prohibiting the future importation for commercial purposes of imitation watches and wares bearing the trade mark name Rolex or the Crown Design is warranted.

I might add that had the appellants been able to stem the flow of imitation Rolex watches, to the extent that that is administratively possible, much of the litigation which has arisen might have been rendered inconsequential.

The similarity between a subsection 52(4) order and a permanent injunction which extends to “potential defendants” is undoubtedly irresistible in the appellants’ eyes. Their argument is as follows: if the Court may issue an order prohibiting outright the importation of wares infringing one’s trade-marks and without identifying defendants, then surely it can issue a similar order prohibiting sales of the contraband. While any analogy can be found to be flawed, I believe a valid distinction can be drawn between the two orders. A brief explanation is required.

The jurisdiction of the Court to issue an equitable order prohibiting future importation by specified (named) defendants remains unaffected by the provisions of the Trade-marks Act. In the event an injunctive order is breached, the method of enforcement requires the plaintiff to initiate contempt of court proceedings against the named defendants. As discussed earlier, such an order can have no effect on non-parties, such as customs officers, and therefore is ineffective as a means of ensuring that imitation wares do not enter the country.

Recognizing this limitation, Parliament has seen fit to respond. Thus a subsection 52(4) order serves as the basis on which customs officers derive their authority to stop the flow of banned wares, irrespective of the identity of the importer. If need be, that order can be enforced by a plaintiff through mandamus proceedings. Those whose goods are seized pursuant to the Act are free to challenge the legality of the order. But at no time do they run the risk of incarceration because of a failure to abide by a court order issued in an action to which they were not a party.[5] Simply stated, a subsection 52(4) order does not raise the same kind of issues or concerns which arise in the context of a permanent injunction. I hasten to add that the failure to appreciate the distinct purposes served by each order may explain why customs officers have refused to enforce a subsection 52(4) order directed at specified defendants.

Having disposed of the appellants’ argument, the onus is on them to circumscribe the legal rationale which would justify a court in extending the scope of a permanent injunction to embrace “potential defendants”. Certainly, the jurisdiction of this Court to consider the relief being sought is, in my opinion, strengthened by section 53 of the Act:

53. Where it is made to appear to a court of competent jurisdiction that any act has been done contrary to this Act, the court may make any such order as the circumstances require, including provision for relief by way of injunction and the recovery of damages or profits, and may give directions with respect to the disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith. [Emphasis is mine.]

In searching for a rationale, one could argue, for example, that the present law fails to recognize the reality that an inordinate amount of the court’s time and the appellants’ resources will be consumed by the pursuit of myriad legal proceedings, even though it has already been determined that the trade-marks in question are valid and that infringement of such constitutes a breach of the Act. A refusal to extend injunctive relief to “potential defendants” will require the appellants to initiate a series of actions against those they are able to snag in future.

One cannot help but sympathize with the appellants. It has taken them nearly seven years to reach the stage where a final determination is in hand. Moreover, the history of the litigation which I outlined earlier is by no means complete (e.g., Montres Rolex S.A. v. Lifestyles Imports Inc. (1988), 23 C.P.R. (3d) 436 (F.C.T.D.)). Time after time, the appellants have had to pursue costly legal proceedings only to experience delays in an effort to ensure that the legal rights of the infringers are respected. I think it is fair to state that “The Artful Dodger” has scored as many, if not more, legal points than the appellants without having to resort to either legal counsel or argument. An injunction against “potential defendants” may not be the panacea for trade-mark infringement, but its utility cannot be denied.

Sympathy, however, is not of itself sufficient justification for granting the relief sought and, of course, there are always opposing arguments. It could be asserted, for example, that there are more conventional methods for redressing any inadequacies in the law governing civil procedure. Unfortunately, the appellants did not pursue such avenues.

As much as I am prepared to accept a principle of law which recognizes the validity of a permanent injunction against “potential defendants”, I think it unwise for an appellate court to adjudicate on opposing arguments which were neither raised nor addressed at trial or on appeal. In effect, the Court would have to assume the additional role of advocate and adversary. As well, no consideration has been given to the task of ensuring that the interests of such defendants are recognized and dealt with appropriately. As I noted earlier, rarely is the task of achieving the so-called “proper balance” an easy one. I think it only fair that I outline my concerns.

The equitable relief being sought by the appellants is, for all intents and purposes, tantamount to a summary procedure designed to curtail trade-mark infringement by persons who have no “real” defence. That summary procedure is derived from the power of the Court to hold a person in contempt. What is obvious to all is that such persons will not have been parties to the action. Dean Robert Sharpe cautions against holding non-parties in contempt. He writes (R. Sharpe, supra, 6.270, at page 6-15):

… the court must be cautious not to hold in contempt a party who acts independently of the defendant and who may exercise a right distinct from that of the defendant. Such a person has not yet had his or her day in court and should not be bound by an order made in an action to which he or she was not a party.

His concern for “due process” is reflected in a recent decision of our Supreme Court, Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc. ([1992] 2 S.C.R. 1065). In that case the issue was whether the respondent, in a motion for contempt of court based on failure to comply with a permanent injunction, was a compellable witness. While the legal issue turned on the law of civil contempt under the Code of Civil Procedure [R.S.Q., c. C-25], it is evident that the Court was not willing to characterize such proceedings as purely civil in nature. The public law aspect of contempt of court stems from one of the methods of enforcement—imprisonment.

Writing for the majority, Mr. Justice Gonthier held that on the basis of the Code of Civil Procedure the respondent was not a compellable witness. His Lordship also noted that the non-compellability of the respondent is consistent with the Canadian Charter of Rights and Freedoms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, appendix II, No. 44]] which protects against self-incrimination. Chief Justice Lamer was more direct. In concurring reasons he stated [at page 4]:

The fact that it [the legislature] chose to deal with contempt of court in the Code of Civil Procedure does not in any way alter the fact that, having regard to the Canadian Charter of Rights and Freedoms, a person cited for contempt is a person charged with an offence within the meaning of s. 11 of the Charter and enjoys the constitutional guarantee contained in s. 11(c), which specifically provides that a person charged with an offence may not be compelled to testify.

I mention the Supreme Court’s decision in Vidéotron because it forces one to be cognizant of the need to ensure that the terms of a permanent injunction against “potential defendants” are carefully crafted in accordance with the “rules of fundamental justice”. The objective is to eliminate any ground of challenge that one could reasonably anticipate being raised during contempt proceedings and which could have been avoided had the terms of the injunction been subjected to meticulous scrutiny in the first instance. In the case at bar, I am not satisfied that the terms of the Trial Judge’s order (paragraph 3) are either appropriate or adequate when applied to “potential defendants”.

Finally, Mr. Justice Gonthier’s reasons contain one paragraph which may well cause the appellants some concern and, in my opinion, reinforces the need to draft an order which is as detailed as it is wide with respect to the net that it casts [at page 11]:

Furthermore, because of the public law aspects of contempt of court, particularly that of imprisonment, it must be subject to certain rules of fundamental justice, even if its effectiveness might thereby be reduced. I entirely share the opinion of the Court of Appeal that contempt of court cannot be reduced to a simple means of enforcing judgments. If contempt of court (and the attendant possibility of imprisonment) were found to be inadequate in some cases, precisely because it is being used essentially to enforce judgments, it would then be for the legislature to provide for other means of enforcement, if necessary.

For the moment, judicial restraint must overtake any perceived need to tip the scales in an attempt to achieve a legal balance as between the legitimate interests of the appellants and those intent on infringing their trade-marks.

In summary, I would dismiss the appeal and vary paragraph 3 of Mr. Justice MacKay’s order to read as follows:

Street vendors or others with no fixed business address or premises, who before or at the date of trial in this matter sold, imported, advertised, manufactured or distributed any wares in association with the name Rolex or Crown Design where those wares were not of the plaintiffs’ manufacture or merchandise, are enjoined from all of the same activities from which the defendants Redman and Pahmer are enjoined; provided that any person identified within six years after the date of trial herein as one to whom this clause may apply shall be served, inter alia, with notice that they have opportunity to apply upon motion for a determination that there are lawful reasons why this clause should not apply to him or her.

It remains to be seen whether the ban on importation imposed pursuant to the section 52 order, coupled with the injunctive relief granted by the learned Trial Judge, will be effective in curtailing the incidence of trade-mark infringement. While “The Artful Dodger” may have won a partial victory, I suspect that time will prove the appellants to be as persistent as their adversaries.

This is one of those instances in which costs cannot follow the event.

Mahoney J.A.: I agree.

Stone J.A.: I agree.

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