T-606-87
Cartier, Incorporated, Les Must de Cartier
Canada Inc. (Plaintiffs)
v.
John Doe and Jane Doe and other Persons
Unknown to the Plaintiffs Who Sell Counterfeit
Watches On the Street in Toronto, Ontario and
Martin Herson (Defendants)
INDEXED AS: CARTIER, INC. V. DOE (T.D.)
Trial Division, Pinard J.—Ottawa, January 11 and
February 6, 1990.
Trade marks — Infringement — Application by M.N.R. to
rescind ex parte order prohibiting importation of counterfeit
watches — Trade Marks Act, s. 52(4) permitting prohibition
of future importation where court finding illegal importation
in action — Final determination, explicitly stated, required
Although trade mark infringement action commenced, no final
determination — Application allowed.
Construction of statutes — Trade Marks Act, s. 52(4)
permitting prohibition of future importation where court find
ing importation illegal in action — Required prior finding
final determination of illegality, and must be explicitly stated
— Such determination adjudication of issue on merits at trial
— Interpretation more consistent with English text referring to
"in such action" than with French text referring to "au cours
d'une pareille action".
Customs and excise — Customs Tariff — Application by
M.N.R. to rescind ex parte order made under Trade Marks
Act, s. 52(4), Tariff, s. 114 and Schedule VII prohibiting
importation of counterfeit watches — Pre-condition of Act, s.
52(4) not met — Application allowed.
This was a motion by the Minister of National Revenue for
an order rescinding an ex parte order prohibiting importation
of counterfeit watches and ordering the immediate detention of
such goods. The statement of claim alleges trade mark infringe
ment. The plaintiffs seek to prevent the importation, distribu
tion and sale of counterfeit Cartier watches. They assert that it
is nearly impossible to obtain final judgment on the merits in
such cases. The order was made pursuant to subsection 52(4) of
the Trade Marks Act, which empowers the court to prohibit
the future importation of wares where it finds illegal importa
tion in an action, and to the Customs Tariff, section 114 and
Schedule VII.
Held, the motion should be allowed.
Before an order prohibiting future importation under subsec
tion 52(4) can be made, an action involving the determination
of the legality of the importation or distribution of the wares
must have been commenced, and the Court must have found
that the importation is, or the distribution would be, contrary to
the Trade Marks Act. Although an action had been com
menced, no such finding had yet been made. The required prior
finding must be a final determination of the subject-matter
complained of and it must be explicitly stated. Such determina
tion can only mean an adjudication of the merits at trial. Such
an interpretation is more consistent with the English text of
subsection 52(4), which refers to "in such action", than with
the French text which refers to "au cours d'une pareille
action". In the context of the entire section, however, the
English version best reflects the legislator's intent. While it
may be extremely difficult for the plaintiffs to obtain the
specific remedy referred to in subsection 52(4) against
unknown defendants, the Court cannot rewrite the law.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Customs Tariff, R.S.C., 1985 (3rd Supp.), c. 41, s. 114,
Schedule VII, Code 9967.
Customs Tariff, R.S.C. 1970.
Federal Court Rules, C.R.C., c. 663, R. 330(a).
Trade-marks Act, R.S.C., 1985, c. T-13, s. 52.
Trade Marks Act, R.S.C. 1970, c. T-10, s. 52.
CASES JUDICIALLY CONSIDERED
APPLIED:
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. (2d)
227 (Ex. Ct.); Montres Rolex S.A. v. M.N.R., [1988] 2
F.C. 39; (1987), C.E.R. 309; 17 C.P.R. (3d) 507 (T.D.).
REFERRED TO:
May and Baker (Canada) Ltd. v. The Oak, [1979] 1 F.C.
401; (1978), 89 D.L.R. (3d) 692; 22 N.R. 214 (C.A.);
Bunker Ramo Corp. v. TRW Inc., [ 1980] 2 F.C. 488;
(1980), 17 C.P.C. 55; 47 C.P.R. (2d) 159 (T.D.); Par-
nassis Shipping Co. v. The Mary K, T-4151-80, Jerome
A.C.J., judgment dated 17/12/80, F.C.T.D., not reported;
Montres Rolex S.A. v. Lifestyles Imports Inc. (1988), 23
C.P.R. (3d) 436 (F.C.T.D.); Guccio Gucci S.p.A. v.
Cebuchier (1988), 22 C.I.P.R. 254; 23 C.P.R. (3d) 427;
25 F.T.R. 235 (F.C.T.D.).
COUNSEL:
Christopher J. Kvas for plaintiffs.
No one appearing for defendants.
Alain Préfontaine for Minister of National
Revenue.
SOLICITORS:
Rogers, Bereskin & Parr, Toronto, for
plaintiffs.
Deputy Attorney General of Canada for Min
ister of National Revenue.
The following are the reasons for order ren
dered in English by
PINARD J.: This is a motion by the Minister of
National Revenue for an order rescinding an ex
parte order of this Court made on July 13, 1987.
On March 20, 1987, the plaintiffs filed a state
ment of claim against the defendants alleging
infringements of their trade mark. The plaintiffs
seek to prevent the importation, distribution, sale,
etc., of counterfeit Cartier watches. Several inter
locutory orders which prohibit such activities have
been issued and renewed by the Court. On July 13,
1987, Mr. Justice Teitelbaum issued an ex parte
order, which prohibited importation of counterfeit
watches and ordered employees of the Department
of National Revenue to immediately detain such
goods. The order reads:
ORDER
UPON the ex parte application of counsel for the Plaintiffs
for an Order extending the Orders previously granted in this
action to include further relief against importation;
UPON hearing the submissions of counsel for the Plaintiffs,
and reading the affidavits filed in this action;
The Plaintiffs having undertaken to abide by any Order this
court should make for damages arising from the enforcement of
this Order, and
a) the Plaintiffs having paid into Court $20,000 in the form
of a bond as security for any such damages suffered by the
defendants as a result of the Orders previously granted in
this action, and
b) the Plaintiffs having undertaken to pay into Court, and
which payment must be made within 10 days of the date of
this Order, an additional $30,000 in cash or in the form of a
bond or in the form of a rider on the bond previously filed
with the Court as security for any damages suffered by the
Defendants as a result of this Order;
THIS COURT ORDERS THAT:
1. The importation by anyone of more than ten watches bear
ing any of the Trade Marks CARTIER, MUST, MUST DE CAR-
TIER or LES MUST DE CARTIER and declared to be replica,
copy, imitation or counterfeit watches is hereby prohibited
pursuant to Section 52 of the Trade Marks Act.
2. Any officer or inspector of the Department of National
Revenue, Customs & Excise, before whom the watches referred
to in paragraph 1 of this Order are declared for importation
into Canada, shall immediately detain the watches pursuant to
the Customs Tariff Act, Section 14, Section C.
3. At any time that this Order is enforced, the person from
whom the watches are seized shall be told that he or she may
appeal the detention of the watches under Sections 58-63 of
The Customs Act or apply to this Court for the return of any
watches seized.
4. Any individual who legitimately imports into Canada any
watches and whose watches are detained pursuant to this Order
may, on twenty four hours notice to the solicitors for the
Plaintiffs, together with service on the solicitors for the Plain
tiffs of any supporting material, apply to this Court for the
return of any watches detained.
5. There shall be no costs of this motion.
[signed by Teitelbaum J.]
A clerical error in the order was noted and a
revised draft of the order was made: the words
"Customs Tariff Act, Section 14, Section C" in
paragraph 2 of the Order now reads: "Customs
Tariff Act, Section 14, Schedule C". At the hear
ing before me, however, counsel agreed that the
order, at the time it was made, ought to have
referred to "Customs Tariff, Section 37, Schedule
IV".
Considering the new Revised Statutes that were
enacted in 1988, in which the relevant provisions
have not been changed, the proper citations are
now: Customs Tariff, R.S.C., 1985 (3rd Supp.), c.
41, s. 114; and the Schedule is Customs Tariff
S.C. 1987, c. 49, Schedule VII, Code 9967.
The Minister of National Revenue seeks now to
rescind the order above, based mainly on Federal
Court Rule 330(a) [Federal Court Rules, C.R.C.,
c. 663]; Trade-marks Act, R.S.C., 1985, c. T-13,
s. 52; Customs Tariff and Schedule, cited above.
The plaintiffs have supplied the affidavit of Ivor
R. Elrifi in reply to the Minister's motion. In it,
the deponent discusses similar cases, involving
Montres Rolex S.A. v. Lifestyles Imports Inc.
(1988), 23 C.P.R. (3d) 436 (F.C.T.D.); Guccio
Gucci S.p.A. v. Cebuchier (1988), 22 C.I.P.R. 254
(F.C.T.D.). The main point contained in the
affidavit is that it is nearly impossible to get a final
judgment on the merits in cases such as this. At
the hearing before me, counsel for the plaintiffs
submitted that in any event a prior finding such as
that required by subsection 52(4) of the Trade
Marks Act needs not be a final judgment on the
merits in the plaintiffs' action. Counsel added that
even though such a prior finding here is not explic
it, it must be inferred from the order of Teitel-
baum J. itself and also from all the other previous
interlocutory orders in this case.
At this stage, it is appropriate to recall some of
the main principles that are involved in the con
sideration of an application to rescind an ex parte
order of the Court:
— Ex parte orders are extraordinary in nature and
should have a limited life, sufficient only to protect
those evidently about to suffer irreversible harm,
until such time as the parties can be brought to
Court (see Parnassis Shipping Co. v. The Mary K,
T-4151-80, December 17, 1980).
— The Court has inherent jurisdiction, when an ex
parte order is involved, to set it aside as of the time
the order to rescind is sought. The Court may also
grant ancillary relief, to restore the person affected
to the position he was in before the ex parte order
was issued (see May and Baker (Canada) Ltd. v.
The Oak, [1979] 1 F.C. 401 (C.A.)).
— The power under Rule 330 to rescind an ex
parte order is discretionary. The onus is on the
party seeking to rescind to establish it is proper to
rescind the order (see Bunker Ramo Corp. v.
TRW Inc., [1980] 2 F.C. 488 (T.D.)).
In the present case, section 52 of the Trade
Marks Act is crucial. At the time the disputed
order was made [R.S.C. 1970, c. T-10], the section
stated:
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 determina
tion of the legality of their importation or distribution in an
action commenced within such time as is prescribed by the
order.
(2) Before an order is made under subsection (1), the plain
tiff or petitioner shall be required to furnish security, in such
amount as the court may fix, to answer any damages that may
by reason of the order be sustained by the owner or consignee
of the wares and for any amount that may become chargeable
against the wares while they remain in custody under the order.
(3) Where, by the judgment in any such action finally
determining the legality of the importation or distribution of
the wares, their importation or distribution is forbidden, either
absolutely or on condition, any lien for charges against them
that arose prior to the date of an order made under this section
has effect only so far as may be consistent with the due
execution of the judgment.
(4) Where in such action the court finds that such importa
tion is or such distribution would be contrary to this Act, it may
make an order prohibiting the future importation of wares to
which such trade mark, trade name or indication of origin has
been applied.
(5) Any order under subsection (1) may be made on the
application of any person interested either in an action or
otherwise and either on notice or ex parte.
The key in the Customs Tariff is in section 114
and Schedule VII, (formerly section 37 and
Schedule IV) which prohibit under Code 9967 the
importation of goods "the importation of which is
prohibited by an order under section 52 of the
Trade Marks Act". These are set out below:
PROHIBITED GOODS
114. The importation into Canada of any goods enumerated
or referred to in Schedule VII is prohibited.
SCHEDULE VI I—concluded
Code Prohibited goods
9967 Any goods, in association with which there is used any
description that is false in a material respect as to the
geographical origin of the goods or the importation of
which is prohibited by an order under section 52 of
the Trade Marks Act.
The order dated July 13, 1987 was made pursu
ant to section 52 of the Trade Marks Act and to
the Customs Tariff, section 37, Schedule IV (now
section 114, Schedule VII), and prohibits importa
tion of certain wares. The order, therefore, must
have been made pursuant to subsection 52(4) of
the Trade Marks Act.
Indeed, section 52 of the Trade Marks Act
empowers a Court of competent jurisdiction to
make two types of order: an order for the interim
custody of offending wares under subsection (1) or
an order prohibiting future importation of the
wares under subsection (4). Here, the order cannot
have been made pursuant to subsection 52(1),
which deals merely with wares that have been
imported into Canada or that are already in
Canada. Furthermore, there is no mention of
"interim custody of the wares" in the order which,
in addition, does not include any provision requir
ing the plaintiff to furnish security to answer any
damages that may by reason of the order be
sustained by the "consignee of the wares and for
any amount that may become chargeable against
the wares while they remain in custody under the
order" pursuant to subsection 52(2).
Now, before an order prohibiting future impor
tation under subsection 52(4) can be made, an
action involving the determination of the legality
of the importation or distribution of the wares
must have been commenced, and the Court must
have found that the importation is or the distribu
tion would be contrary to the Trade Marks Act. In
the case at bar, such an action has been com
menced by the plaintiffs; however, no such finding
appears to have yet been made by the Court in the
plaintiffs' action. In my view, for an order pursu
ant to subsection 52(4) to be valid, such an order
being effective against the world, the required
prior finding by the Court must be a final determi
nation of the subject-matter complained of and it
must be explicitly stated. Mere inference, in such a
matter, cannot be acceptable.
I consider this view to be consistent with that
expressed by Jackett P., in Adidas Sportschuhfab-
riken 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.). In that case,
Jackett P., in dealing with the section of the Trade
Marks Act comparable to the relevant section 52,
first expressed the following comments, at page
688:
(Subject to the express authority in s. 51(5) to make an order
for interim custody under s. 51(1) ex parte, my assumption
would have been that none of the relief authorized by these
provisions could be granted except as against a person who was
a party to the proceedings in which the relief was sought and
who had, as such, had an opportunity of meeting the case put to
the Court in support of the claim for a judgment against him.
That question as to whether ss. 51 and 52 are so limited does
not have to be decided, in my view of the matter, at this time,
but the existence of that question is relevant in appreciating the
plaintiff's position on the present matter and in particular the
effect that is sought to be given by the plaintiffs to an order
that they have put forward to the customs authorities as having
been made under s. 51(4).)
Then, at pages 690-691, the learned President of
the Exchequer Court of Canada stated:
In my view, no Court would grant an application for a
judgment based on the consent of one person and effective as
against the world without being persuaded that there was some
extraordinary power and duty, to grant such a judgment, and,
in that unlikely event the situation would be spelled out in
detail on the face of the judgment. To use Lord Macnaghten's
language, it is hardly "decent" to attribute to the Court any
other manner of dealing with such an extraordinary
application.
Thus, as far as this particular matter is concerned, it is quite
clear in my mind that if, when the application was made for
this consent judgment, I had been asked to make an order
under s. 51(4) effective as against all the world, I should have
indicated that the applicant would have to convince me that the
Court had, under s. 51(4), power to make an order against any
person who had not been made a party to the proceeding and,
thus, given an opportunity to defend himself. On at least one
earlier occasion, I was told that such an application was
contemplated and that was my immediate reaction. In addition,
had the matter been pursued, I have no doubt that I would have
required to be shown,
(a) that the action falls within the words "such action" in s.
51(4), and
(b) that the condition precedent to an order under s. 51(4) that
the Court has found "that such importation is or such distribu
tion would be contrary to this Act" had been satisfied.
In another case, Montres Rolex S.A. v. M.N.R.,
[1988] 2 F.C. 39 (T.D.), my colleague Mr. Justice
McNair, dealing with subsection 52(4), expressed
his agreement with the opinion stated by Jackett
P. in Adidas (supra), and went further to decide
how and in what manner the Court must make
such final determination. At page 49, he stated the
following:
I am wholly in agreement with the opinion stated by the
learned President of the Exchequer Court in Adidas to the
effect that it is a necessary condition precedent to any discre
tionary order under subsection 52(4) that the Court find that
the importation and distribution of the offending wares was
contrary to the Trade Marks Act. There must be a final
determination of the legality of the subject-matter complained
of before there can be any subsection 52(4) order. As I see it, I
am obliged in the circumstances of this case to take the matter
one step further than Adidas and decide how and in what
manner the Court must make such final determination.
And, at page 53:
In the result, 1 am of the opinion that the plain and natural
meaning of the words employed in section 52 of the Trade
Marks Act in context of its statutory scheme clearly import the
mandatory requirement of a final determination of the legality
of the importation and distribution of the offending wares as a
necessary precondition for any discretionary order under sub
section 52(4) prohibiting their future importation. In my judg
ment, such determination can only mean an adjudication of the
issue on the merits at trial. I find therefore that neither the
consent judgment nor the judgment obtained in default of
defence have the necessary sanction to mandate a subsection
52(4) order.
Such an interpretation appears to be more con
sistent with the English text of subsection 52(4),
which refers to "in such action", than with the
French text which refers to "au cours d'une
pareille action". But in the context of the entire
section, I consider it is the English text that
reflects best the legislator's intent.
Unfortunately for the plaintiffs, it may be
extremely difficult indeed for them, in their action
against unknown defendants, to obtain the specific
remedy provided by subsection 52(4). However,
the Court cannot re-write the law.
As no finding has ever been made by the Court,
in the plaintiffs' action, that the importation of the
relevant wares is or the distribution of such wares
would be contrary to the Trade Marks Act, I must
therefore conclude that the plaintiffs have failed to
meet an essential prerequisite for the issuance of
the order pursuant to subsection 52(4) of the
Trade Marks Act.
Consequently, the ex parte order issued in this
case by Mr. Justice Teitelbaum (who had only the
benefit of unilateral submissions) on July 13, 1987,
must be rescinded. Considering the long delay
between the order in question and the filing of this
notice of motion, there will be no order as to costs.
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.