T-2540-86
Culinar Foods Inc. (Plaintiff)
v.
Mario's Food Products Ltée, D. & H. Surplus Inc.
and M.S. Halpern & Son Salvage Merchandise
Limited (Defendants)
INDEXED AS: CULINAR FOODS INC. v. MARIO'S FOOD PROD
UCTS LTÉE
Trial Division, Muldoon J.—Ottawa, November
21 and 24, 1986.
Trade marks — Practice — Interim injunction, preservation
order and Anton Piller order — Circumstances entitling appli
cant to proceed before commencement of action — Proposed
defendant selling defective coffee in packages bearing appli
cant's trade mark — Strong prima facie case of wilful
infringement of mark — Orders granted — Federal Court
Rules, C.R.C., c. 663, RR. 469, 470, 471 — Trade Marks Act,
R.S.C. 1970, c. T-10, ss. 19, 20, 22(1).
This was an ex parte motion for an interim injunction, a
preservation order and authorization akin to an Anton Piller
order. The applicant sought these orders to protect the reputa
tion of its registered trade marks: "Unico" and "Unico" and
design.
Applicant's coffee had to be removed from retailers' shelves
as it had an evil odour and taste. This was verified by consumer
complaints and by laboratory tests. Furthermore, two coffee
experts thought that the coffee ought to be destroyed. The
Vice-President of applicant's Unico division had directed
Mario's, one of the proposed defendants, to remove the Unico
packaging before disposing of the defective coffee.
Despite being aware of the poor quality of the coffee, pro
posed defendant M.S. Halpern & Son sold some of it in
packages bearing applicant's trade mark.
Held, orders granted.
The circumstances related in applicant's affidavit were suffi
cient to invoke Rules 469(3) and 470(3), permitting it to
proceed before commencement of the action. The affidavit
presented a strong prima facie case of wilful infringement of
applicant's registered trade mark. There was no doubt that it
would suffer serious harm from the sale of the defective coffee.
In such circumstances, the case law will support the granting of
an interim injunction.
The applicant had met all of the essential preconditions
enumerated in Anton Piller KG v. Manufacturing Processes
Ltd. and is therefore entitled to search for and discover how
many cases of coffee bearing its mark are to be sold by Halpern
and to whom it intends to sell them.
CASES JUDICIALLY CONSIDERED
APPLIED:
Universal City Studios, Inc. v. Zellers Inc., [1984] 1 F.C.
49; (1983), 73 C.P.R. (2d) 1 (F.C.T.D.); Nebula Hold
ings Ltd. v. Metrin Laboratories Ltd. (1985), 7 C.P.R.
(3d) 562 (B.C.C.A.); Tele-Direct (Publications) Inc. v.
Telcor Canada Directories Inc. (1986), 11 C.P.R. (3d)
102 (F.C.T.D.); Nintendo of America, Inc. v. Coinex
Video Games Inc., [1983] 2 F.C. 189; (1982), 69 C.P.R.
(2d) 122 (F.C.A.); Anton Piller KG v. Manufacturing
Processes Ltd., [1976] 1 Ch. 55.
COUNSEL:
David A. Aylen for plaintiff.
No one appearing for defendants.
SOLICITORS:
Scott & Aylen, Ottawa, for plaintiff.
The following are the reasons for order ren
dered in English by
MULDOON J.: The proposed plaintiff, the appli
cant herein, moves ex parte for an interim injunc
tion, a preservation order and authorization akin
to an Anton Piller order, pursuant respectively to
Rules 469, 470 and 471 [Federal Court Rules,
C.R.C., c. 663]. It does so to prevent further
infringement, and to protect the reputation of its
registered trade marks: "Unico"—No. 117,229;
and "Unico" and design—No. 140,600.
Jean-François Douville, Vice-President and
General Manager of Unico, a division of the appli
cant corporation swore and subscribed his affidavit
which was filed on the day of the hearing. The
circumstances related therein are amply adequate
to invoke Rules 469(3) and 470(3), permitting the
applicant to proceed before commencement of the
action.
According to Mr. Douville, the applicant's
espresso coffee product, bearing the Unico trade
mark on its packages and tin can containers has
been obtained from the proposed defendant,
Mario's Food Products Ltée, of Montréal (herein-
after: Mario's). Coffee meeting the applicant's
standards has been imported by Mario's, roasted,
ground and packed by Mario's into packages or
tins supplied by the applicant (or its predecessor).
A sample package is annexed as Exhibit "D" to
the deponent's affidavit. Such packages carry the
Unico trade mark which appears identically the
same on the coffee tins. Coffee was bought from
Mario's in 1,000 to 2,000 case lots, each case
containing 24 tins or bags of coffee, bearing the
Unico trade mark.
Coffee so produced and packed last summer
turned out to be rancid, evincing an evil odour and
taste. This state is verified by customer, or con
sumer, complaints, exemplified in Exhibit "E" and
by laboratory tests, exemplified in Exhibit "F".
The test results indicated the presence of coliform,
yeast and mold, with the following note:
All samples exhibited a burnt off odor, similar to an 'olive oil
aroma. This would indicate that the product had absorbed this
odour at some point during storage.
Two independent coffee experts, named in Mr.
Douville's affidavit, were consulted later and each
opined that the coffee was unreclaimable and
should be destroyed.
Some 1,581 cases were returned to Mario's in
about August, 1986, according to the deponent,
who then personally directed Mario's to remove
the Unico packaging prior to disposing of the
defective coffee.
Late in August, some of the defective coffee,
still bearing the applicant's mark, was found on
retailers' shelves in Montréal and Toronto. The
applicant's sales force then went out to buy up the
product from the retailers, who were told the
reasons for so doing. It was determined that the
defective coffee had been supplied by the second
prospective defendant, D. & H. Surplus Inc. of
Montréal.
Mr. Douville's affidavit completes the narrative,
thus:
24. THAT confident that our supplier, Mario's, would reac-
quire the 579 cases from D. & H. Surplus Inc. and being aware
through the monitoring activities of our sales force that such
product was no longer being offered to Canadian consumers,
the matter was allowed to rest through the balance of Septem-
ber and the first week of October, and I thereafter left on a
three-week business trip to return to my Toronto office on the
5th of November, 1986. I am informed by my company's
national sales manager, Cessare Sisti, and do verily believe that
on October 30th Mr. Fred Halpern of M.S. Halpern & Son,
which is listed in the Toronto telephone directory as M.S.
Halpern & Son Salvage Merchandise, of 1199 Queen Street
West, contacted Mr. John Porco, one of our key account
managers, wishing to discuss a matter relating to coffee. In my
absence, Mr. Porco passed the matter to Mr. Sisti. A call was
made to Mr. Halpern on October 31st and we were informed
that Halpern had some 525 cases of Unico Gold coffee which
they wished to sell to us at $46.10 per case. Attached to this my
Affidavit and marked as Exhibit "G" is a copy of the telephone
message taken by Mr. John Porco and the notes of the tele
phone conversation with Mr. Halpern of October 31st, 1986,
which notes awaited me upon my return to the office on
November 5, 1986. I did not have an opportunity to review my
mail immediately upon my return and thus was unaware of the
Sisti note until the following weekend. Upon reading such note
I then called Mario's on Monday, November 10th, 1986, and
was assured that he had informed D. & H. Surplus Inc. to
advise M.S. Halpern & Son not to sell the product. I then
relied upon Mario's to themselves reacquire the defective
product.
25. THAT Mr. Halpern attempted to contact me during the
morning of Tuesday, November 18th, and I was able to return
his call at about noon on such date. He informed me that he
had buyers for the coffee of which he had more than 500 cases
at $46.10 per case and implicitly invited a bid from my
company. I informed Mr. Halpern that this was poor quality
coffee not fit for human consumption and he replied that
notwithstanding its smell and taste he had people who had tried
such coffee and were willing to purchase it from him for
subsequent retail sale. We agreed that I had 24 hours to get
back to him.
26. THAT I immediately contacted [sic] my company's corpo
rate solicitor, .... When he returned my call on Thursday
morning, November 20th, I was out of the office and I contact
ed such law firm upon my return just before noon .... I was
then referred to our present Toronto counsel, ... , whom I first
contacted at 4:00 p.m. on Thursday, November 20th, 1986. On
my counsel's advice, I contacted Mr. Halpern at 5:00 p.m. on
such date and he informed me that he had sold some of the
subject coffee since we had last talked. He refused to indicate
the exact quantity remaining in his possession and when I
suggested that it might be in the 500-case range he indicated
that such could be possible but he didn't have the time to go
back in his plant and count. On this note our conversation
ended.
27. THAT it is of critical importance to my company and its
exemplary Canadian reputation for superior quality UNICO
products that this defective coffee contained in my company's
own packaging, and for which packaging it retains ownership,
not reach the consumer, entailing a preservation and detention
order for those cases of coffee remaining in the possession of
M.S. Halpern & Son and the right to inspect their records to
determine the identity of third parties who may have purchased
such product from them since October 31st, 1986, for the
purpose of repurchasing as much of the defective lot as
possible.
Prima facie, there appears here to be wilful
infringement of the applicant's registered trade
mark contrary at least to sections 19 and 20 of the
Trade Marks Act [R.S.C. 1970, c. T-10]. Para
graphs 25 and 26 of the affidavit present a strong
prima facie case of the wilful flouting of subsec
tion 22(1) of the Act, or else, what is known in the
vernacular as a "shake-down", on the part of the
third prospective defendant, M.S. Halpern & Son
Salvage Merchandise Limited.
Counsel for the applicant cited in support of his
client's urgent request only four quite cogent juris-
prudential precedents. They are:
i) Universal City Studios, Inc. v. Zellers Inc., [1984] 1 F.C. 49;
(1983) 73 C.P.R. (2d) 1, a decision by Walsh J. of this Court,
in which he held that the defendant's refusal to stop selling
goods of a strongly prima facie infringing nature, where there
was no doubt that the plaintiff would suffer serious harm
supported an interlocutory injunction;
ii) Nebula Holdings Ltd. v. Metrin Laboratories Ltd. (1985), 7
C.P.R. (3d) 562, a unanimous decision of the British Columbia
Court of Appeal, upholding a chambers judge's decision in
which an interlocutory injunction was granted where a licencee
unable to complete an order, threatened itself to sell the
products it had made.
iii) Tele-Direct (Publications) Inc. v. Telcor Canada Directo
ries Inc. (1986), 11 C.P.R. (3d) 102, a decision by Denault J.
of this Court in which he held that the damage which could be
caused by a new entrant into the market to the plaintiffs long
standing mark, business and reputation by confusion of marks
could be substantial, and justified granting an interlocutory
injunction.
Those factors, and the reasoning in the three above
cited decisions, which are present here, will surely
support an interim injunction if they support inter
locutory injunctions, as they did.
iv) Nintendo of America, Inc. v. Coinex Video Games Inc.,
[1983] 2 F.C. 189; (1982), 69 C.P.R. (2d) 122, a unanimous
decision of the Appeal Division of this Court in which it
granted an "Anton Piller" type of order having found extraor
dinary circumstances of the need to preserve documents and
materials in circumstances of a strong prima facie case.
Heald J. for the Court is reported at page [198 F.C.] 129
C.P.R. where he reviewed the three essential pre-conditions
enumerated by Ormrod L.J. in support of the order granted in
Anton Piller KG v. Manufacturing Processes Ltd., [1976] 1
Ch. 55, thus:
First, there must be an extremely strong prima facie case.
Secondly, the damage, potential or actual, must be very
serious for the applicant. Thirdly, there must be clear evi
dence that the defendants have in their possession incriminat
ing documents or things, and that there is a real possibility
that they may destroy such material before any application
inter partes can be made.
In the Court's opinion, in that case, the plaintiff had met all
three of these conditions.
In the case at bar, the applicant has likewise
met all three of those conditions. According to the
affidavit, Mr. F. Halpern said he had "more than
500 cases" of Unico Gold coffee for sale to the
applicant at $46.10 per case, but refused to say
exactly how many he had. He also said certain
unnamed people who had tried such rancid coffee,
were willing to buy it from him for retail sale. The
applicant is reasonably entitled to search for and
discover how many cases bearing its mark are to
be sold by Halpern and to whom he intends to sell
them, as it appears, during the afternoon of
November 21, 1986. The circumstances narrated
here are surely exceptional.
The defendant will be enjoined for 10 days, and
thereafter until disposition of the applicant's
motion for an interlocutory injunction, if the appli
cant launches its motion before the expiry of 10
days from November 21, 1986. The conditions for
granting such interim injunction were accepted by
the applicant's counsel orally before the Court.
They are: the applicant shall file, and serve on all
prospective defendants, with alacrity, its statement
of claim; and, in the event that the applicant's case
should fail, it is hereby bound to pay to the
prospective third defendant (and the other two, as
well) such monetary damages as the Court proper
ly assesses they will have suffered as a conse
quence of the interim injunction.
The orders are granted, in the following forms
proposed by the applicant's solicitors:
(a) the defendant, M.S. Halpern & Son, be enjoined until
November 30th, 1986 or until the disposition of an
application for an interlocutory injunction by the plain
tiff, whichever comes first, from selling, moving or
otherwise disposing of any coffee in its possession or
control having marked thereon or in association there
with the registered trade mark UNICO (Registration
No. 140,600);
(b) the defendant, M.S. Halpern & Son preserve and detain
at its own expense, on its premises at 1199 Queen Street
West, Toronto, Ontario, or wherever else may be found
in the possession or control of the defendant, any and all
coffee having marked thereon or in association therewith
the registered trade mark UNICO;
(c) the said preservation and detention referred to in para
graph (b) herein be until November 30th, 1986 or until
the disposition of an application for an interlocutory
injunction by the plaintiff, whichever comes first;
(d) a representative of the plaintiff together with a bonded
and licensed bailiff nominated by the plaintiff may
forthwith, between the hours of 8:00 a.m. and 5:00 p.m.,
enter upon the premises of the defendant M.S. Halpern
& Son, for the purposes of:
(i) taking inventory of all coffee products having marked
thereon or in association therewith the registered
trade mark UNICO; and
(ii) inspecting the said defendant's books and records for
the purposes of determining the names and addresses
of purchasers, from the said defendant, of coffee
marked with the trade mark UNICO thereon;
(e) that the plaintiff undertake to be bound by any order of
this Court as to damages;
(f) that the subject order together with copies of all sup
porting material be served forthwith and with all due
dispatch upon all of the defendants; and
(g) costs in the cause.
As noted above, the proper interpretation of the
orders is that if the applicant makes further
application for an interlocutory injunction prior to
the expiry of 10 days after November 21, 1986,
the interim injunction and other orders which have
been granted herein will endure until disposition of
the applicant's motion for the interlocutory
injunction.
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