Coca-Cola Ltd. et al. v. Pardhan et al., (1999) 240 N.R. 211 (FCA)

• Judge: Strayer, Linden and Robertson, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: March 02, 1999
• Jurisdiction: Canada (Federal)
• Citations: (1999), 240 N.R. 211 (FCA)

Coca-Cola Ltd. v. Pardhan (1999), 240 N.R. 211 (FCA)

MLB headnote and full text

Temp. Cite: [1999] N.R. TBEd. MY.008

Coca-Cola Ltd. and Coca-Cola Bottling Ltd. (appellants/plaintiffs) v. Musaadiq Pardhan c.o.b. as Universal Exporters, 1106972 Ontario Limited c.o.b. as Universal Exporters and John Doe and Jane Doe and other persons unknown to the plaintiffs who offer for sale, sell, export, or deal in transshipped Coca-Cola Products (respondents/defendants)

(A-869-97)

Indexed As: Coca-Cola Ltd. et al. v. Pardhan et al.

Federal Court of Appeal

Strayer, Linden and Robertson, JJ.A.

April 12, 1999.

Summary:

The plaintiff Coca-Cola companies sued the defendants, alleging that they infringed the plaintiffs' trademarks and depreciated the value of their goodwill by selling Coca-Cola, made for sale and consumption only in Canada, abroad. The defendants sought to strike out the statement of claim as dis­closing no reasonable cause of action.

The Federal Court of Canada, Trial Di­vision, in a decision reported at 139 F.T.R. 223, allowed the motion and struck out the entire statement of claim without leave to amend. The plaintiffs appealed.

The Federal Court of Appeal dismissed the appeal.

Practice - Topic 2210

Pleadings - Striking out pleadings - Time for application - The defendants in a trade­mark infringement action moved to strike out certain paragraphs of the plain­tiffs' statement of claim - The plaintiffs asserted that the motion must fail because the de­fendants had delayed in bringing their motion - There was a 15 month delay between the filing of the statement of defence and the motion to strike - The motions judge held that the delay did not bar the motion - In determining whether there had been delay, the period of time was only one consideration - The litiga­tion was complex in the sense that the de­fendants were preoccupied with responding to motions for interlocutory injunctions, Anton Piller orders and to various motions in both the main action and a comple­mentary action in the United States - The Federal Court of Appeal dismissed an appeal - See paragraph 9.

Practice - Topic 2213

Pleadings - Striking out pleadings - With leave to amend - The plaintiff Coca-Cola companies sued the defendants, alleging that they infringed the plaintiffs' trade­marks and depreciated the value of their goodwill by selling Coca-Cola, made for sale and consumption only in Canada, abroad - The defendants sought to strike out the statement of claim as disclosing no reasonable cause of action - The motions judge struck out the entire statement of claim without leave to amend - On appeal, the Federal Court of Appeal stated that a failure to allow the plaintiffs permission to amend their statement was a matter of discretion of the trial judge - See para­graph 29.

Practice - Topic 224 4

Pleadings - Striking out pleadings - Bars - Delay - [See Practice - Topic 2210 ].

Practice - Topic 2245

Pleadings - Striking out pleadings - Bars - Pleading to part to be struck - The de­fendants in a trademark infringement action moved to strike out certain para­graphs of the plaintiffs' statement of claim - The plaintiffs asserted that the motion must fail because the defendants had pleaded over the statement of claim, some 15 months before moving to strike - The motions judge held the defendants had pleaded over the statement of claim and could therefore not rely on grounds enumerated in rules 419(b) to 419(f) of the Federal Court Rules - However, an appli­cation to strike could be brought under rule 419(a) on the basis that the pleading dis­closed no reasonable cause of action - On appeal, the Federal Court of Appeal held that the motions judge correctly limited his consideration to rule 419(a) - See para­graph 8.

Trademarks, Names and Designs - Topic 1804

Trademarks - Infringement - Acts not constituting an infringement - [See first and third Trademarks, Names and Designs - Topic 1807 and Trademarks, Names and Designs - Topic 1808 ].

Trademarks, Names and Designs - Topic 1807

Trademarks - Infringement - Use - Gen­eral - The plaintiff Coca-Cola companies sued the defendants, asserting that they infringed the plaintiffs' trademarks by selling Coca-Cola, made for sale and consumption only in Canada, abroad - The plaintiffs asserted that the defendants' sale-for-export of Coca-Cola was deemed to be a "use" in Canada under s. 4(3) of the Trade-marks Act and that any unauthor­ized export amounted to infringement - The defendants moved to strike out the statement of claim as disclosing no rea­sonable cause of action - The motions judge allowed the motion - The export of trademarked products did not constitute "use" - The Federal Court of Appeal agreed that there was no use within the meaning of the Act - See paragraphs 10 to 21.

Trademarks, Names and Designs - Topic 1807

Trademarks - Infringement - Use - Gen­eral - In determining that the export of trade­marked products by a secondary user did not amount to "use" under s. 4(3) of the Trade-marks Act, the Federal Court of Appeal stated that: "the gravamen of s. 4(3) is, not to deem that any exportation of goods bearing a trademark is a 'use' of that trademark, but rather to provide that where there is actual use such use shall be deemed to have occurred 'in Canada'. ... The purpose of s. 4(3) was to enable Ca­nadian producers who do not make local sales, but simply ship their goods abroad, to show use in Canada for the purposes of obtaining registration of their trademarks in Canada. ... Also, ... s. 4(3) could have importance in allowing actions for in­fringement against someone exporting counterfeit goods from Canada where no sales were made locally. But I do not believe that it had the effect of creating a 'use' within the meaning of the Act where genuine goods of the trademark owner are being shipped from Canada." - See para­graph 22.

Trademarks, Names and Designs - Topic 1807

Trademarks - Infringement - Use - Gen­eral - The plaintiff Coca-Cola companies sued the defendants, asserting that they infringed the plaintiffs' trademark by sell­ing Coca-Cola, made for sale and con­sumption only in Canada, abroad - The plaintiffs asserted that s. 8 of the Trade-marks Act provided the trademark owner with the right to attach binding limitations to the use of a mark where such limita­tions were ex­pressly set out prior to the transfer or the trade-marked wares - Since the defendants were aware of the plaintiffs' policy against exporting Coca-Cola for resale abroad, sales for export amounted to infringement -The defendants moved to strike out the statement of claim as dis­closing no rea­sonable cause of action - The motions judge allowed the motion, holding that a trademark holder was not entitled, under s. 8, to attach limitations on use of products associated with its mark - The Federal Court of Appeal dismissed an appeal - See paragraph 25.

Trademarks, Names and Designs - Topic 1808

Trademarks - Infringement - Use - De­preciation of goodwill - The plaintiff Coca-Cola companies sued the defendants, asserting that they experienced a de­preciation in goodwill as a result of the defendants's sale-for-export of Coca-Cola (Trade-marks Act, s. 22) - The defendants moved to strike out the statement of claim as disclosing no reasonable cause of action - The motions judge allowed the motion - The defendants did not engage in activities which constitute "use" under s. 22 - Fur­thermore, any depreciation of the value of goodwill would have taken place outside Canada and was therefore beyond the court's jurisdiction - The court agreed with the principle that "the nature of goodwill as legal property with no physical exis­tence means that where a business is carried on in more than one country or jurisdiction there must be a separate good­will in each." - The Federal Court of Appeal dismissed an appeal - See para­graph 24.

Cases Noticed:

Imperial Tobacco Co. of India Ltd. v. Bonnan, [1924] A.C. 755 (H.L.), refd to. [para. 18, footnote 2].

Champagne Heidsieck et cie Monopole Societe Anonyme v. Buxton (1930), 47 R.P.C. 28, refd to. [para. 19, footnote 3].

Revlon Inc. v. Cripps & Lee Ltd., [1980] F.S.R. 85 (C.A.), refd to. [para. 19, foot­note 3].

Wella Canada Inc. v. Pearlon Products Ltd. (1984), 4 C.P.R.(3d) 287 (Ont. H.C.), refd to. [para. 19, footnote 3].

Smith & Nephew Inc. et al. v. Glen Oak Inc. et al. (1996), 198 N.R. 302; 68 C.P.R.(3d) 153 (F.C.A.), refd to. [para. 19, footnote 4].

Molson Companies Ltd. v. Moosehead Breweries Ltd. (1990), 36 F.T.R. 241; 32 C.P.R.(3d) 363 (T.D.), folld. [para. 22, footnote 6].

American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504; [1975] A.C. 396 (H.L.), refd to. [para. 30, footnote 7].

Statutes Noticed:

Trade-marks Act, R.S.C. 1985, c. T-13, sect. 2, sect. 4(1), sect. 8, sect. 19, sect. 20(1), sect. 22(1) [para. 11].

Authors and Works Noticed:

Fox, Harold G., The Canadian Law of Trademarks and Unfair Competition (3rd Ed. 1972), p. 1 [para. 15, footnote 1].

Counsel:

Christopher J. Pibus, Scott Jolliffe and James Buchan, for the appellants;

Ronald Dimock, David Reeve and David Seed, for the respondents.

Solicitors of Record:

Gowling, Strathy & Henderson, Toronto, Ontario, for the appellants;

Muir & Seed, Burlington, Ontario, for the respondents.

This appeal was heard in Toronto, Ontario, on March 2, 1999, before Strayer, Linden and Robertson, JJ.A., of the Federal Court of Appeal. Strayer, J.A., delivered the following judgment on April 12, 1999.