Date: 19990805
Docket: T-2521-97
IN THE MATTER OF ss. 7, 9, 19, 20, 22, 25, 50, 52, 53, 53.1 and 53.2
of the Trade-marks Act, R.S.C. 1985, Ch. T-13
AND IN THE MATTER OF ss. 3, 5, 6, 13, 25, 27 and 34-39 of
the Copyright Act, R.S.C. 1985, Ch. C-42, as amended
BETWEEN:
HAVANA HOUSE CIGAR & TOBACCO MERCHANTS LTD.
and EMPRESSA CUBANA DEL TABACO trading as
CUBATABACO and HABANOS S.A.
Plaintiffs
- and -
JANE DOE and JOHN DOE and
OTHER PERSONS, NAMES UNKNOWN,
WHO OFFER FOR SALE, SELL, IMPORT, MANUFACTURE, DISTRIBUTE,
ADVERTISE, OR DEAL IN UNAUTHORIZED OR COUNTERFEIT
HAVANA HOUSE MERCHANDISE, AND THOSE PERSONS LISTED
IN SCHEDULE "A" HERETO
Defendants
REASONS FOR ORDERS
REED, J.:
[1] On June 7, 1999, in Vancouver, five executions of an Anton Piller order came before me for review. The Anton Piller order had been granted to the plaintiffs on November 24, 1997, and renewed on November 23, 1998.
[2] The five businesses against whom the Anton Piller order was executed are Michelle's Import, Vancouver Souvenirs, Mike Bains, Cigar Market, and 2000 Cigar Inc.1 The first two defendants appeared with their counsel and counsel asked for an adjournment to enable him to prepare. Mr. Lipkus, counsel for the plaintiffs, asked for an adjournment of the motion as it relates to Mr. Bains because settlement negotiations were on-going. Mr. Bains has subsequently filed an affidavit which would indicate that settlement has not been achieved. In any event, the motion as it relates to all three of those defendants was adjourned to June 28, 1998.
[3] These reasons relate then only to the motions for approval of the executions of the Anton Piller order as against Cigar Market (13 Cohiba Esplendidos cigars seized) and 2000 Cigar Inc. (20 Cohiba Esplendidos cigars seized). The individuals responsible for those businesses and who are also named in the plaintiffs' motion as defendants are Messrs. Shoar and Raskiti for Cigar Market, and Mr. Tahaei for 2000 Cigar Inc. They appeared in Court on June 7, 1999.
[4] Mr. Tahaei gave some evidence on oath, about the circumstances of the execution of the Anton Piller order on June 7, 1999. Mr. Lipkus asked for an opportunity to adduce further evidence in the form of an affidavit from Mr. Ovadia, a solicitor from Montreal, to respond to Mr. Tahaei's evidence. Mr. Lipkus also sought permission to file affidavits from Mr. Leswick and Mr. Shoreman to explain how they knew the cigars were not genuine. I gave permission to file an affidavit from Mr. Ovadia. With respect to affidavits from Messrs. Leswick and Shoreman, as well as with respect to the motion as a whole, I indicated that I was not prepared to make a decision at that time but would do so later.
[5] My reticence about making an immediate decision was based, in part, on my knowledge that the plaintiffs had been involved in other litigation in this Court and had been unsuccessful in asserting their alleged trade-mark rights in that context. I wished to review the relevant files and decisions. My reticence was also based on the fact that I had had little time to review the relevant material before the hearing of the motion. As is well known, documentation for these motions is usually not available to the Court until shortly before the hearing; sometimes the material on the relevant Court file is incomplete; the time allotted for review is short. With respect to the motion scheduled for June 7, 1999, the five above-described executions were placed before the Court with over 75 others and counsel for the plaintiffs had advised the Registry, and the Court, that the review of the five executions should be expected to take about 5-10 minutes in total.
[6] I have now had an opportunity to review the Court files. There have been a number of Statements of Claim filed by the plaintiffs in this Court, all seeking to assert trade-mark rights with respect to cigars.
[7] On September 27, 1996, the plaintiffs filed a Statement of Claim against Skyway Cigar Store (T-2144-96) alleging the sale of counterfeit cigars by it and trade-mark infringement. The trade-marks in issue were:
| HOYO DE MONTERREY DE JOSÉ GENER HABANA |
| MONTE CRISTO HABANA & Design |
| MONTECRISTO |
| ROMEO Y JULIETA |
| H. UPMANN HABANA & Design (2 designs, one registered, one unregistered) |
[8] On December 13, 1996, the plaintiffs filed a Statement of Claim against Sally Saxby et al. (T-2740-96) asserting the sale of counterfeit cigars and trade-mark infringement. The trade-marks in issue were:
| HOYO DE MONTERREY DE JOSÉ GENER HABANA |
| MONTE CRISTO HABANA & Design |
| MONTECRISTO |
| ROMEO Y JULIETA |
| PARTAGAS |
| FLOR DE TABACOS DE PARTAGAS & Design |
| H. UPMANN HABANA & Design (2 designs, one registered, one unregistered) |
| COHIBA |
| COHIBA & Design |
[9] On February 17, 20 and 26, 1997, the trade-marks listed above, in paragraph 8, were also asserted in actions commenced against Ken Britton (T-265-97), Emile Lahoud (T-279-97), and Morino Naeini et al. (T-323-97). On May 21, 1997, an action was started against Les Marchands et al. (T-1079-97) and on January 29, 1998, against 9046-5030 Quebec Inc. (T-150-98).
[10] Only two of the above actions have involved any adjudication by the Court of the plaintiffs' claims. In T-2144-96, four of the marks in which the plaintiff Havana House was asserting trade-mark rights were ordered expunged from the Trade-marks Register (Havana House Cigar & Tobacco Merchants Ltd. v. Skyway Cigar Store (1998), 81 C.P.R. (3d) 203). The defendant was successful in obtaining that order by summary judgment against the plaintiffs. The defendant was also successful in having the plaintiffs' summary judgment application for a permanent injunction against it, with respect to the trade-mark that had not been expunged, dismissed. These judgments were rendered by Mr. Justice Teitelbaum on May 19, 1998. They have been appealed and the requisitions for hearings have been filed, but the hearings have not yet taken place.
[11] The summary judgment expungement of the four marks was based on a finding that Havana House's use of those marks was as a distributor of the cigars; there had been no use of the trade-marks of the type required by the Trade-Marks Act:
| ... It is clear that the trade-marks do not convey to the consumer that the distributor is the owner of the trade-marks; rather, they clearly indicate that the source of the marks is the manufacturer. Havana House has distributed these products in Canada for the benefit of the Cuban trade-mark owner. They have not shown that they have used the trade-marks within the meaning of section 4 of the Trade-marks Act. Therefore, Havana House was not entitled to register the trade-marks in issue. [Page 222.] |
[12] The cigars that were seized and that are the subject of the Anton Piller order executions now before me carry the trade-mark COHIBA, which was not in issue in T-2144-96. The registered trade-mark owner of COHIBA is the second defendant, Empressa Cubana del Tabaco, not Havana House. Thus, the extent to which any of the reasoning in T-2144-96 might apply to the COHIBA trade-mark and the allegedly counterfeit cigars sold thereunder has not been determined.
[13] With respect to the plaintiffs' summary judgment motion in T-2144-96 for a permanent injunction against the defendant to prevent it using the trade-mark that had not been expunged, Mr. Justice Teitelbaum commented on the source of the allegedly counterfeit cigars and the fact that they may have come from legitimate outlets in Cuba. He stated at pages 227-8:
| [77] ... The cigars are manufactured in the Cuban factories, marked by the manufacturer and sold to outlets in Cuba. They are purchased by the defendant from these outlets for resale in Canada. The defendant has not placed a mark on these goods but has merely resold the goods without the intervention of Havana House. The plaintiffs' argument is that the allegedly poor quality control of the defendant has violated its rights under the Trade-marks Act. I do not see how they have brought sufficient evidence to allow me to reach that conclusion on summary judgment. The only evidence they have about quality control at the defendant's establishment is the cigars allegedly purchased by Mr. Lanteigne. |
| [78] These cigars were not examined by an independent third party but were examined by Mr. Ortego. The cigars were in Mr. Ortego's or his lawyer's possession for an uncertain period of time until they were filed with the Court. Moreover, Mr. Ortego stated in discovery that even under the plaintiffs' quality control system, cigars can still suffer from insect infestations. I do not believe that this evidence proves that the defendant's quality control system is inappropriate. |
| [79] In addition, the evidence is very unclear about the cigars purchased by the defendant in Cuba. The plaintiffs have provided little evidence which would help one determine whether the defendant bought the cigars from a Habanos S.A. outlet or on the black market. The defendant maintains that the cigars were bought from legitimate outlets and the plaintiffs have provided an insufficient basis upon which to dispute that statement. Mr. Ortego stated on discovery that one can legitimately purchase cigars at legitimate outlets in Cuba and bring them into Canada subject to duties. [Underlining added.] |
[14] The other action in which there has been some Court adjudication of the plaintiffs' rights is that against Morino Naeini et al., T-323-97. In that case the plaintiffs were twice refused interlocutory injunctions against the defendants, once on July 31, 19972, and again on February 12, 1998.3 Both of those decisions, unlike T-2144-96, relate to the COHIBA trade-mark among others.
[15] The first application for an interlocutory injunction was refused because of the weakness of the plaintiffs' evidence and because irreparable harm had not been demonstrated. A major deponent for the plaintiff was Mr. Ortego, General Manager of Havana House. This decision, refusing an interlocutory injunction, was a decision of my own. I prefer therefore to focus on the second refusal.
[16] The second application for an interlocutory injunction was also based on the affidavit evidence of Mr. Ortego. In addition, an affidavit by Mr. Leswick, a private investigator trained by Mr. Ortego to recognize counterfeit cigars, was filed as part of the record. The head note to the Quicklaw report4 of the refusal of the second application for an interlocutory injunction reads, in part:
| Application dismissed. The evidence was insufficient because it was speculative. There was no evidence of any complaint about counterfeit cigars purchased from Naeini because of their poor quality or flavour. Havana was not required to conduct a search of members of the public who smoked Naeini's cigars and were dissatisfied. However, there should have been evidence from retailers who, when they attempted to sell genuine cigars, were faced with complaints about the quality and flavour of the counterfeit cigars. There were other problems with the evidence and irreparable harm was not proven. [Underlining added.] |
[17] Mr. Justice Rothstein in rendering this decision commented not only on the speculative nature of the evidence that had been adduced to support the claim for an interlocutory injunction but also on the plaintiffs' choice of procedure. Mr. Justice Rothstein criticized Havana House and Empressa Cubana Del Tabaco for seeking an interlocutory injunction a second time instead of proceeding to have their rights adjudicated at trial. He wrote, at pages 500-5015:
| [11] After receiving a negative decision on their first interlocutory injunction application, one would think that if the plaintiffs had a serious case to pursue and are suffering harm with the passage of time, whether irreparable or not, they would have attempted to move the case forward to trial with expedition. Plaintiffs' counsel filed a letter detailing the activity on the matter. The information provided by counsel confirms that the case has moved forward at a rather relaxed pace. |
| [12] An interlocutory injunction is an extraordinary remedy. It is not to be viewed as an end in itself (although sometimes the granting of an interlocutory injunction will end a matter). Therefore, when an interlocutory injunction is sought long after an action is commenced, the conduct of the plaintiffs in moving the matter on to trial will be relevant. The Court will take a dim view of a second interlocutory injunction application when a plaintiff has not aggressively been advancing the case toward trial. A party is ill-advised to keep returning to the Court for pre-trial relief in such circumstances. |
| [13] The interlocutory injunction application is dismissed. Costs are awarded to the defendants in the sum of $10,000 inclusive of disbursements in any event of the cause and payable forthwith. [Underlining added.] |
[18] After the refusal of the first application for an interlocutory injunction in T-323-97, on July 31, 1997, but before the refusal of the second, on February 12, 1998, the plaintiffs obtained the Anton Piller order that is the foundation of the executions currently under review. As noted, this occurred on November 24, 1997. The evidence filed with the Court to support the issuance of that order was an affidavit of Mr. Ortego and an affidavit of Mr. Leswick. They are in substance the same as those placed before Mr. Justice Rothstein in T-323-97 and which he found, along with other evidence, insufficient to justify the granting of an interlocutory injunction.
[19] The Anton Piller order was expressed to continue for thirteen months and thus would expire in December 1998. A renewal of the order was sought and granted on November 23, 1998. As noted above, by this time both Mr. Justice Teitelbaum's decision in T-2144-96 (expunging four of the Havana House marks) and Mr. Justice Rothstein's decision in T-323-97 (refusing an interlocutory injunction) had been rendered. The evidence used to support the motion for a renewal of the Anton Piller order was the affidavit of Mr. Ortego and the affidavit of Mr. Leswick that had been filed the previous November as support for the issuance of the original Anton Piller order.
[20] On the renewal of the Anton Piller order on November 23, 1998, counsel called the Court's attention to Mr. Justice Teitelbaum's order of May 19, 1998. He did not, however, call the judge's attention to the fact that the Ortego and Leswick affidavits had been found insufficient by Mr. Justice Rothstein in T-323-97 to support an interlocutory injunction, nor to Mr. Justice Rothstein's criticism of the plaintiffs for not moving to have their rights determined by way of a trial. (The judge who granted the renewal confirmed that these were not brought to her attention). Counsel sought and obtained the renewal of the Anton Piller order that included the marks that had been expunged by Mr. Justice Teitelbaum on an undertaking not to execute the order against those four marks. While the Anton Piller order asserting the plaintiffs' ownership of those marks has been served on many defendants, counsel states, and I have no reason to doubt, that no seizures of cigars carrying those trade-marks have occurred.
[21] The Associate Chief Justice recently described the genesis and principles applicable to Anton Piller orders in Adobe Systems Inc. v. KLJ Computer Solutions Inc. (T-2725-97, April 27, 1999, para. 31ff). Accordingly, it is not necessary to repeat a description here. It suffices, for present purposes, to say that Anton Piller orders are given to allow a plaintiff to seize goods and related material for use as evidence at trial, evidence that the plaintiff fears will be destroyed if it is not taken into the custody of the Court. Despite this fiction, rolling Anton Piller orders are in fact used for a different purpose. I have recently described the use that is made of rolling Anton Piller orders in a decision in another case (T-2027-97 et al, July 27, 1999). If the person from whom the goods are seized does not contest that action, the Anton Piller order effectively operates to secure for a plaintiff the remedy it seeks without trial. On a review of the execution of an Anton Piller order the plaintiff usually obtains the issuance of an interlocutory injunction against the person from whom the goods have been seized. The individuals from whom the seizures take place can, of course, come to Court and object that the seizure was improper, but they may choose not to do so, either because the burden of doing so is more troubling that it is worth, or because they do not completely understand the situation in which they find themselves and that no determination of the right the plaintiff is asserting has yet been made by the Court.
[22] The plaintiffs discontinued the action in T-323-97 on June 15, 1998. The appeals the plaintiffs had commenced, against the refusals to grant them interlocutory injunctions in T-323-97 were discontinued on June 25, 1998. All the litigation referred to in paragraphs 8 and 9 above has also been discontinued by the plaintiffs, or is presently subject to status review. It seems fairly apparent that the reason a concerted effort was not made to bring T-323-97 to trial, the inaction about which Mr. Justice Rothstein commented in his reasons of January 1998 (para. 17, supra), was that by that date the plaintiffs had obtained an Anton Piller order through which they could effect the remedy they sought without a trial. The Anton Piller order has been used on at least 116 occasions to seize cigars from persons and to [presumably] obtain interlocutory injunctions against those persons.
[23] I sought an explanation from counsel as to why Mr. Justice Rothstein's decision had not been brought to the attention of the judge before whom the motion to renew the Anton Piller order had been brought. He answered by noting that he was not counsel of record in the T-323-97 matter, nor was he consulted about it, that his files do not contain a copy of Mr. Justice Rothstein's decision, nor was he provided with a copy of it prior to appearing before the Court in November 1998 for a renewal of the Anton Piller order.
[24] He acknowledged that his clients must have had knowledge of the fact that Mr. Justice Rothstein had not found the evidence on which they were relying for the issuance of an Anton Piller order sufficient to support the issuance of an interlocutory injunction in T-323-97. He noted, however, that: (1) Mr. Justice Rothstein's decision was issued in the context of a contested action, not for the purposes of an Anton Piller order and the judge who rendered the initial Anton Piller order was clearly satisfied that the wider extent of potential infringement identified by Mr. Ortego justified the issuance of the order; (2) the evidence and status of the two proceedings are different; (3) there have been many executions of the Anton Piller (97 before it was renewed) and these have been approved by judges of this Court without objection.
[25] The fact that evidence, essentially the same as that filed in support of an Anton Piller order, when tested in a contested action was found insufficient to support an interlocutory injunction, is very relevant to the renewal or continued operation of an Anton Piller order. The motion for issuance of an Anton Piller is ex parte and often heard in camera. As such, there is a heavy duty on the requesting party to disclose all relevant factors. Mr. Justice Rothstein's decision was a relevant factor. The fact that the proceeding in which it was given was a contested proceeding is not a convincing reason for not having called the judge's attention to that decision.
[26] Indeed, a more extensive evidentiary basis existed before Mr. Justice Rothstein than was put before either the judge that issued, or the judge that renewed, the Anton Piller order. In the contested T-323-97 proceeding, the plaintiff filed evidence additional to that used to obtain the Anton Piller order, and this evidence was still found to be insufficient to support the granting of the type of remedy (an interlocutory injunction) that is granted upon review of the executions of the Anton Piller order. In T-323-97, in addition to the affidavits of Messrs. Ortego and Leswick, there were also affidavits from John Trifoli, John Broen, Frank Shoreman, Bruce McBean, Aaron van Pykstra and two supplementary affidavits by Mr. Ortegp to support the plaintiffs' position.
[27] In my view, the evidence needed to support the issuance of an Anton Piller order should be at least as strong, if not stronger, than that required to support the issuance of an interlocutory injunction. The Associate Chief Justice in the Adobe case noted that in order to obtain an Anton Piller there must be an extremely strong prima facie case. In the case of an interlocutory injunction, as is well known, all that must be shown is a serious issue to be tried. I am not persuaded that a lesser standard of proof is required for an Anton Piller order than for an interlocutory injunction.
[28] Counsel for the plaintiffs argues that the evidence filed to support the issuance of the Anton Piller order described alleged infringement by more than one defendant and this convinced the judge who issued the Anton Piller order that it was appropriate to do so. However, Mr. Ortego's affidavit in both cases alleged irreparable harm in the same words.6 In addition, even if the evidence was different this would not justify the non-disclosure of Mr. Justice Rothstein's decision, particularly when the criticism of the evidence that had been given related not merely to its quantity, but also to its quality. At the very least, the judge who renewed the Anton Piller should have been told about the intervening decision.
[29] Counsel's argument that there have been many approvals of the execution of the Anton Piller order by other judges of the Court without adverse comment is a compelling argument. Judicial comity is important. I am aware, however, that our judicial system is premised on adversarial proceedings, and that the particular circumstances under which Anton Piller orders are granted and their executions reviewed are such that the judges granting and reviewing the orders are at a great disadvantage (see T-2027-97, decision dated July 27, 1999, for a description). Given these circumstances, I am not prepared to assume that another judge or judges, when reviewing the executions of the Anton Piller orders, knew or recalled or addressed their minds to the particular matter that has come to my attention in the absence of written representations on that issue having been filed with the Court and expressly brought to the judge's attention.
[30] For all of the reasons given, I am not prepared to approve the executions of the Anton Piller orders that are before me. I am not prepared to add the parties to the action as defendants or to issue interlocutory injunctions against them. The plaintiffs shall return the cigars that were seized to the respondents and recompense them for any damage they incurred
as a result of the search and seizure. The defendants were not represented by counsel so costs are not awarded.
Judge
OTTAWA, ONTARIO
August 5, 1999
__________________1 Three of the executions occurred on Saturday, May 22, 1999; these were against Manmohan Bains and Mireine Holdings Ltd., at 925 Davie Street, Shahdad I. Shoar and Mahmoud Rashti, carrying on business as Cigar Market, at 555 Dunsmuir, and Mohammad-Hashem Tahaei and 2000 Cigar Inc., at 881 Dunsmuir. Two of the executions occurred on Monday, May 24, 1999; these were against Michelle's Import Plus Ltd., Rajesh Kumar Aggarwal, Paramjit Kaur Gill and Sukhdev Swani, at 57 Water Street, and against Sukhdev Swani, Sunita Swani and Vancouver Souvenirs Ltd. at 175 Water Street.
2 Havana House Cigar & Tobacco Merchants Ltd. v. Naeini (1997), 75 C.P.R. (3d) 306; [1997] F.C.J. No. 1059.
3 Havana House Cigar & Tobacco Merchants Ltd. v. Naeini (1998), 79 C.P.R. (3d) 496; [1998] F.C.J. No. 240.
6 That before Mr. Justice Rothstein in T-323-97 and that before Associate Chief Justice Jerome in T-2521-97 when he issued the Anton Piller order both read:
48. The manufacture, sale and distribution of counterfeit and counterfeit black market cigars cause significant monetary loss to the Plaintiff in that proceeds of the sales of those products are not received by the Plaintiffs. More importantly, the offering for sale of these cigars cause serious and irreparable harm to the Plaintiffs for the following reasons:
(a) Because of the inferior nature of the counterfeit Cuban cigars, members of the public who purchase and/or smoke these cigars may be offended by the flavour and poor quality and never purchase another Cohiba, Montecristo, Partagas or Romeo y Julieta or other Cuban cigar. As we de not know how many of the counterfeit cigars are sold, or to whom, it impossible to calculate the damages that is caused by their continued importation and sale in Canada;
(b) With regard to the counterfeit black market cigars, the problem is different but the result is the same. Because genuine Cuban cigars are perishable goods, counterfeit black market cigars deteriorate once they are taken from the controlled, high quality manufacturing and distribution chain of the Plaintiffs.
contd . . .. . . contd The result is that the consumer again gets a cigar of inferior quality which he or she believes to be of the highest quality, as promised by the Plaintiffs. As with the counterfeit cigars, the Plaintiffs have no way of knowing how many or to what extent the market in Canada is damaged by these inferior cigars. The public believes and is led to believe by the Defendants that its counterfeit and counterfeit black market cigars are just like the genuine Cuban cigars bearing the Plaintiffs' Trade-Mark when, in fact, that is not the case.
The harm caused by such activities in [sic] incalculable.