Tractor Supply Co. of Texas LP et al. v. TSC Stores LP, 2009 FC 154

• Judge: Russell, J.
• Court: Federal Court (Canada)
• Case Date: December 15, 2008
• Jurisdiction: Canada (Federal)
• Citations: 2009 FC 154;(2009), 341 F.T.R. 157 (FC)

Tractor Supply Co. v. TSC Stores LP (2009), 341 F.T.R. 157 (FC)

MLB headnote and full text

Temp. Cite: [2009] F.T.R. TBEd. FE.055

Tractor Supply Co. of Texas, LP and Tractor Supply Company (plaintiffs) v. TSC Stores LP (defendant)

(T-1804-07; 2009 FC 154)

Indexed As: Tractor Supply Co. of Texas LP et al. v. TSC Stores LP

Federal Court

Russell, J.

February 12, 2009.

Summary:

In the main action, the plaintiffs sought a declaration that they owned certain trademarks in Canada that were wrongfully registered by the defendant. The statement of defence and counterclaim alleged that the action was an abuse of process as its "predominate" purpose was to reduce the value of its business in the context of a takeover bid by the plaintiff. The plaintiffs moved to strike the impugned pleadings on the grounds that the defendant had failed to plead the necessary elements of the tort of abuse of process and that the court did not have jurisdiction over the tort.

A Prothonotary of the Federal Court, in a decision not reported in this series of reports, dismissed the motion. It was not plain and obvious that the defendant could not succeed or that the impugned pleadings were beyond the jurisdiction of the court. There was a sufficient nexus between the trademark matters in issue and the abuse alleged for the court to consider the matter. The plaintiff appealed.

The Federal Court dismissed the appeal. Given the decision in "Levi Strauss & Co." (1997), where the Federal Court of Appeal appeared to consider impugned pleadings from the perspective of both the procedural defence of abuse of process and an actionable tort, the jurisdiction issue was not plain and obvious at this stage. There was nothing in that decision that made it "plain and obvious" that abuse of process could only be used as a shield and not as a sword.

Courts - Topic 2583

Registrars and prothonotaries - Appeals from - Scope of review - The Federal Court stated that "It is well settled that the discretionary order of a Prothonotary should only be reviewed de novo if the questions raised in the motion are vital to the final issue of the case, or the order is clearly wrong, in the sense that the exercise of a discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts" - See paragraph 61.

Courts - Topic 4073

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Striking out pleadings - In the context of trademarks matters in issue, the plaintiffs appealed a prothonotary's decision refusing to strike portions of the statement of defence and counterclaim - The plaintiffs submitted that the decision was based upon a wrong principle of law - The prothonotary did not think it plain and obvious that the defendant could not succeed on its abuse of process claims and defence, or that such claims were beyond the jurisdiction of the court to consider; i.e., there was a sufficient nexus between the matters in issue and the abuse alleged - The Federal Court noted that the defendant appeared to target both a procedural abuse of process, as well as the tort of abuse of process for which it claimed "damages for abuse of process, including exemplary damages" - The court concluded that there was no problem with the decision insofar as it dealt with procedural abuse - Insofar as the defendant was raising procedural abuse, it was merely saying that the plaintiff's claim should be dismissed because it was not really about trademark infringement - There was nothing wrong with such an allegation and it would be examined and resolved as part of the proceedings - See paragraphs 62 to 68.

Courts - Topic 4073

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Striking out pleadings - A prothonotary did not think that the defendant's abuse of process claims were beyond the jurisdiction of the court to consider in the context of trademarks matters, and refused to strike portions of the statement of defence and counterclaim - On appeal, the Federal Court noted that the defendant intended to use abuse of process as a sword as well as a shield, and that the jurisdictional issue did not appear to have concerned the Federal Court of Appeal in the case of "Levi Strauss & Co." (1997), which discussed the impugned pleadings in that case from the perspective of "the principles applicable to an abuse of process of the Court" and then addressed both the tort as well as the procedural defence of abuse of process - "It seems to me that such a discussion by the Federal Court of Appeal at least suggests the Court felt there was jurisdiction to deal with the tort of abuse of process on the facts of that case. Hence, I think I must assume that the Federal Court may have jurisdiction to deal with the tort as part of infringement or passing off proceedings. At the very least, I think I must assume that the jurisdiction issue has yet to be settled" - See paragraphs 69 to 73.

Courts - Topic 4073

Federal Court of Canada - Jurisdiction - Federal Court - Practice - Striking out pleadings -After 20 years of not opposing the defendant's use of its Canadian trademarks, the plaintiffs sued - The defendant alleged that the action was an abuse of process because the predominate purpose was to reduce the value of its business in the context of a takeover bid - A prothonotary concluded that the defendant's abuse of process claims were not beyond the jurisdiction of the court and refused to strike the defendant's impugned pleadings - On appeal, the plaintiff contended that the tort of abuse of process required a "two-element test" that was not satisfied on the facts of this case - The Federal Court concluded that it was not, at this stage, plain and obvious that the defendant could not succeed on its abuse of process allegations - The Federal Court of Appeal decision in "Levi Strauss & Co." (1997), used general wording ("the abuser must have used the legal process for a purpose other than that which it was designed to serve") to describe the tort - See paragraphs 74 to 77.

Practice - Topic 2231

Pleadings - Striking out pleadings - Grounds - False, frivolous, vexatious or scandalous - [See Practice - Topic 2249 ].

Practice - Topic 2241

Pleadings - Striking out pleadings - Grounds - Lack of jurisdiction (incl. alternative remedy) - [See all Courts - Topic 4073 ].

Practice - Topic 2249

Pleadings - Striking out pleadings - Bars - Issues to be tried - The defendant alleged in its statement of defence and counterclaim that the plaintiff started its trademarks action in order to devalue the defendant's business in the context of a takeover bid - The plaintiff moved to strike the impugned pleadings as not disclosing a reasonable cause of action or defence and as "immaterial, scandalous, frivolous, and vexatious" - A prothonotary dismissed the motion where it was not plain and obvious (1) that the tort for abuse of process could not succeed, and (2) that it was not within the jurisdiction of the court to adjudicate the claim for abuse of process - The Federal Court dismissed the plaintiff's appeal - The prothonotary did not base her decision upon a wrong principle or upon a misapprehension of the facts, nor did she misunderstand or misapply the case of "Levi Strauss & Co." (1997) (F.C.A.) - There was sufficient scope for the defendant to use abuse of process as both a shield and a sword - The prothonotary was correct in her conclusion that, from the pleadings and the jurisprudence, it could not be said "that the high standard on such a motion has been met" and that the defendant should be denied the right to raise the issue - The jurisdiction issue was not "plain and obvious" at this stage - See paragraphs 78 to 80.

Torts - Topic 6252

Abuse of legal procedure - Abuse of process - Elements - [See third Courts - Topic 4073 ].

Trademarks, Names and Designs - Topic 4402

Trademarks - Practice - Pleadings - [See Practice - Topic 2249 ].

Cases Noticed:

Levi Strauss & Co. et al. v. Roadrunner Apparel Inc. (1997), 221 N.R. 93; 76 C.P.R.(3d) 129 (F.C.A.), appld. [para. 15].

Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425; 149 N.R. 273 (F.C.A.), refd to. [para. 22].

Merck & Co. et al. v. Apotex Inc., [2004] 2 F.C.R. 459; 315 N.R. 175; 30 C.P.R.(4th) 40; 2003 FCA 488, leave to appeal denied (2004), 331 N.R. 394; 30 C.P.R.(4th) vii, refd to. [para. 22].

Atland Containers Ltd. v. Macs Corp. et al. (1974), 17 C.P.R.(2d) 16 (Gen. Div.), refd to. [para. 26].

Amsted Industries Inc. and Riggs v. Wire Rope Industries Ltd. (1988), 23 C.P.R.(3d) 541 (F.C.T.D.), affd. (1990), 112 N.R. 73; 32 C.P.R.(3d) 334 (F.C.A.), refd to. [para. 27].

Levi Strauss & Co. et al. v. Timberland Co. et al., [1997] F.T.R Uned. 148; 74 C.P.R.(3d) 49; 79 A.C.W.S.(3d) 929 (T.D. Protho.), refd to. [para. 27].

Robin Hood Multifoods Inc. v. Maple Leaf Mills Inc., [1997] F.T.R. Uned. 22; 72 C.P.R.(3d) 234 (T.D.), refd to. [para. 28].

Prior v. Canada (1989), 101 N.R. 401 (F.C.A.), refd to. [para. 28].

Netbored Inc. v. Avery Holdings Inc. et al. (2005), 272 F.T.R. 131 (F.C.), refd to. [para. 34].

Innotech Pty. Ltd. v. Phoenix Rotary Spike Harrow Ltd. et al. (1997), 215 N.R. 397; 74 C.P.R.(3d) 275 (F.C.A.), refd to. [para. 36].

Castlemore Marketing Inc. v. Intercontinental Trade and Finance Corp. et al. (1996), 108 F.T.R. 306; 66 C.P.R.(3d) 147 (T.D.), refd to. [para. 36].

Nike Canada Ltd. v. Jane Doe (2001), 11 C.P.R.(4th) 69 (F.C.T.D.), refd to. [para. 36].

Nintendo of America Inc. et al. v. Battery Technologies Inc. (2001), 206 F.T.R. 71; 13 C.P.R.(4th) 102 (T.D.), refd to. [para. 37].

Lifegear Inc. et al. v. Urus Industrial Corp., [2001] F.T.R. Uned. 711; 15 C.P.R.(4th) 142; 2001 FCT 1104, refd to. [para. 37].

Concept Omega Corp. et al. v. Logiciels KLM ltée et al. (1987), 12 F.T.R. 291; 21 C.P.R.(3d) 77 (T.D.), refd to. [para. 37].

Greens At Tam O'Shanter Inc. v. Canada (1999), 163 F.T.R. 311 (T.D.), refd to. [para. 46].

Wuskwi Sipihk Cree Nation et al. v. Canada (1999), 164 F.T.R. 276; 1999 CanLII 7454 (T.D. Protho.), refd to. [para. 47].

Trans-Pacific Shipping Co. v. Atlantic & Orient Trust Co. et al., [2005] F.T.R. Uned. 805; 2005 FC 311 (Protho.), refd to. [para. 49].

Hunter v. Chief Constable of West Midlands, [1981] 3 All E.R. 727 (H.L.), refd to. [para. 51].

Novartis Pharmaceuticals Canada Inc. et al. v. RhoxalPharma Inc. et al., [2002] F.T.R. Uned. 492; 20 C.P.R.(4th) 485; 2002 FCT 742, refd to. [para. 51].

R. v. Neil (D.L.), [2002] 3 S.C.R. 631; 294 N.R. 201; 317 A.R. 73; 284 W.A.C. 73; 2002 SCC 70, refd to. [para. 51].

Mondel Transport Inc. v. Afram Lines Ltd., [1990] 3 F.C. 684; 36 F.T.R. 187 (T.D.), refd to. [para. 52].

Dimplex North America Ltd. v. CFM Corp. (2006), 292 F.T.R. 38; 54 C.P.R.(4th) 435 (F.C.), refd to. [para. 53].

Teledyne Industries Inc. v. Lido Industrial Products Ltd. (1982), 68 C.P.R.(2d) 204 (F.C.T.D.), refd to. [para. 55].

Merck & Co. et al. v. Apotex Inc., [2004] 2 F.C.R. 459; 315 N.R. 175; 30 C.P.R.(4th) 40; 2003 CarswellNat 4080; 2003 FCA 488, refd to. [para. 61].

MIL Davie Inc. v. Société d'exploitation et de développement d'Hibernia ltée (1998), 226 N.R. 369; 85 C.P.R.(3d) 320; 1998 CarswellNat 814 (F.C.A.), refd to. [para. 79].

Sokolowska v. Minister of National Revenue (2005), 331 N.R. 176; 2005 FCA 29, refd to. [para. 79].

Statutes Noticed:

Federal Courts Rules, rule 221(1) [para. 17].

Counsel:

James Buchan and Selena Kim, for the plaintiffs;

Shawn D. Jacka, for the defendant.

Solicitors of Record:

Gowling Lafleur Henderson, LLP, Toronto, Ontario, for the plaintiffs;

Bereskin & Parr, Intellectual Property Law, Toronto, Ontario, for the defendant.

This appeal was heard at Toronto, Ontario, on December 15, 2008, by Russell, J., of the Federal Court, who delivered the following reasons for order, dated February 12, 2009.