Date: 20010212
Docket: T-1761-89
Neutral reference: 2001 FCT 57
BETWEEN:
DYNAFLAIR CORPORATION CANADA INC.
Plaintiff-respondent
- and -
MOBILFLEX INC.
- and -
PRODUITS D'ARCHITECTURE DE QUÉBEC 1979 INC.
Defendants-applicants
REASONS FOR ORDER AND ORDER
BLAIS J.
[1] This is a motion for an order of confidentiality pursuant to Rules 151 and 152, directing that the financial documents listed in Appendix 2 of the defendants' amended affidavit of documents of September 28, 2000 shall be treated as confidential documents to be protected and that their disclosure shall be limited to the counsel of record or counsel participating in the trial, or alternatively, to the counsel of record and counsel participating in the trial and the plaintiff's accounting expert.
[2] On August 22, 1999 the plaintiff brought an action against the defendants. In that action, the plaintiff alleged, first, that the defendants had committed an infringement of a patent to which it claimed to hold the rights, and second, that they had also marketed products which were deliberately misleading when compared with its own.
[3] On May 25, 2000 the plaintiff filed an amended action. In that pleading the plaintiff included a request for return of the profits made by the defendants from 1987 to date, a period of fourteen years.
[4] On September 25, 2000 the prothonotary Morneau made an order regarding the filing of a supplementary affidavit of documents and the filing of two motions, one under Rule 107 and the other under Rule 152, by the defendants.
[5] The motion under Rule 107 was the subject of another order.
[6] On September 28, 2000 the defendants filed an amended affidavit of documents listing the financial documents of Mobilflex Inc. pursuant to the order made by the prothonotary Morneau on September 25, 2000.
[7] The defendants maintained that the said financial documents contained information of a highly confidential nature concerning the defendants' business activities, in particular information on its cost and pricing structure.
[8] It appeared that the plaintiff and the defendants are operating in a very limited market which is highly competitive and in which there are only three other manufacturers in addition to the plaintiff and the defendants.
[9] According to the transcripts of an examination of Gerald Pasternak, president of the plaintiff Dynaflair, he maintained that because of his experience with the day-to-day operation of his business and his knowledge of the manufacturers in the area, he was the only one who was in a position to assess and understand the calculation of profits appearing in the documents for which an order of confidentiality is sought.
[10] The defendants maintained that according to information received the plaintiff has used the services of the same external accountant for twenty years and the latter is completely capable, with counsel of record, of making an accurate assessment of the profits made and the financial operations from which those profits were made.
[11] The defendants further argued that the disclosure of financial information on their business activities would cause incalculable and irreparable harm to them even before the Court had ruled on their liability.
[12] It should first be borne in mind that the plaintiff, in addition to seeking to establish that there was an infringement of its patent, is also claiming as damages the return of profits made by the defendants.
[13] So that a calculation of the profits made can be arrived at as accurately as possible in the circumstances, if necessary, it is crucial for the plaintiff to have access to the defendants' financial documents.
[14] I understood from the submissions of both parties that both the plaintiff and the defendants are operating in a highly competitive and relatively circumscribed situation, in which the number of participants is limited to five.
[15] Although I am sensitive to the argument that giving unnecessary access to the defendants' figures, especially those for the current year or the two previous years, could constitute a business risk, I have difficulty accepting this argument for the years before that.
[16] The action began in 1989, that is nearly twelve years ago, and I have no problem with authorizing access to certain financial documents listed in Appendix 2 of Marc Fugère's affidavit of documents, dated September 28, 2000. In this regard the annual financial statements of Mobilflex Inc. (AMobilflex@) for 1988 to 1998 will not be covered by any non-disclosure privilege. Mobilflex's monthly financial statements for all the years 1988 to December 1998 will not be covered by any privilege of non-disclosure.
[17] In item 4, Mobilflex's customer data bank No. 4003, dated December 1, 1998, will not be covered by any privilege of non-disclosure. Mobilflex's incomplete customer data bank Nos. 700 to 4003 will not be covered by any privilege of non-disclosure. A sample of twenty-five Mobilflex invoices for 1988 to December 31, 1998 will not be covered by any privilege of non-disclosure.
[18] With respect to Mobilflex's annual financial statements for 1999 and subsequent years, and Mobilflex's monthly financial statements for all the months in 1999 and subsequent years, as well as Mobilflex's customer data bank Nos. 4003 et seq. to date, and a sample of three Mobilflex invoices for 1999 and 2000, an order of confidentiality is made to authorize only the counsel of record and counsel participating herein, but not a party to the case, and the accounting expert who is not associated with the plaintiff, and only those two persons, to have access to the said financial documents for the period after January 1, 1999.
[19] As to deadlines, the documents must be delivered by the defendants within twenty-five days of signature of the order of confidentiality, the examinations on the said documents shall be held within ninety days of the 25-day deadline for delivery of the documents, and motions, if any, pursuant to the examination shall be made within twenty days of the end of the ninety-day deadline.
[20] Counsel for the defendants shall submit to the Court within ten days of the instant order a draft order of confidentiality to be signed by the two parties. If the parties do not agree on the draft order, they will be required to participate in a teleconferencing call to the judge to finalize the order, after a further period of ten days.
[21] The matter shall remain before the judge until the said order of confidentiality is issued.
[22] The whole with costs to the defendants.
|
Pierre Blais Judge |
OTTAWA, ONTARIO
February 12, 2001
Certified true translation
Suzanne M. Gauthier, LL.L. Trad. a.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT No.: T-1761-89
STYLE OF CAUSE: DYNAFLAIR CORP. CANADA INC. v. MOBILFLEX INC. ET AL.
PLACE OF HEARING: QUÉBEC, QUEBEC
DATE OF HEARING: JANUARY 10, 2001
REASONS FOR ORDER AND ORDER BY: BLAIS J.
DATED: FEBRUARY 12, 2001
APPEARANCES:
FRANÇOIS ARSENAULT FOR THE PLAINTIFF
FRANÇOIS VALLIÈRES FOR THE DEFENDANT
SOLICITORS OF RECORD:
OBILVY, RENAULT FOR THE PLAINTIFF
MONTRÉAL, QUEBEC
LAVERY, DE BILLY FOR THE DEFENDANT
QUÉBEC, QUEBEC