Federal Court Allows Addition of Director of a Company as a Personal Defendant

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FEDERALCOURTALLOWSADDITIONOFDIRECTOROFACOMPANYASA
PERSONALDEFENDANT

AlexandraSteele*
LEGERROBICRICHARD,LLP
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TheFederalCourtofCanadarecentlymaintainedadecisionbya
ProthonotaryoftheCourttoallowthePlaintifftoaddthedirectorofa
companyasapersonaldefendanttoatrade-markinfringementaction.[Krav
MagaEnterprises,LLCv.EdgeCombatFitnessInc.,2006FC112(Teitelbaum
J.,February1,2006)].
TheFacts
ThePlaintiffistheowneroftheregisteredtrade-markKRAVMAGAusedin
associationwithmartialartstrainingservices.InSeptember2005,Plaintiffsued
EdgeCombatFitnessInc.forinfringementofthetrade-markKRAVMAGA.
InDecember2005,PlaintiffmadeamotiontotheCourttoaddasecond
company,CombatSurvivalInc.,aswellasitsdirector,Mr.MoniAizik,as
defendantstotheaction.Plaintiffclaimedthatitdiscoveredadditional
instancesofinfringementbythesedefendantsonlyaftertheinitialactionwas
introduced.TheProthonotaryseizedofthemotionconsideredthenew
evidenceanddecidedshewassatisfiedthattherewassufficientevidence
linkingbothCombatSurvivalInc.andMr.Aizikpersonallytotheallegedly
infringingactivities.Bothpersonswerethereforemadedefendantstothe
action.Thepersonaldefendant,Mr.Aizikappealedthedecisionofthe
ProthonotarytoaJudgeoftheCourt.
StandardofReview

©CIPS,2006*Lawyer,theauthorisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrademarkagents.Publishedat(May2006)20-5WIPR3-4.
Publication142.188.

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OnappealtoaJudgeofanorderofaProthonotary,unlessthequestions
raisedinthemotionarevitaltothefinalissueofthecase,oriftheorder
appealedfromisbasedonaincorrectprincipleoronamisapprehensionof
thefacts,thusclearlywrong,thentheorderoftheProthonotaryoughtnotbe
disturbed.Ifthisthresholdtestismet,thentheJudgecanconsidertheappeal
denovo.
TheFederalCourtJudgment
JusticeTeitelbaumwasseizedoftheappealbyMr.AizikoftheProthonotary’s
orderthathebeaddedasapersonaldefendanttothetrade-mark
infringementaction.ThelearnedJudgefoundthatthedecisiontoadda
defendantisonethatisvitaltothefinaloutcomeofthecaseandtherefore,
hewastoconsidertheappealdenovo.
Mr.Aizikclaimedonappealthattheamendmentstotheallegationsofthe
actionandconclusionssoughtwereunsupportedbymaterialfactandthat
thePlaintiff’sactionasamendeddisclosesnoreasonablecauseofaction.Mr.
AizikalsoallegedthatthePlaintiffhadnotadducedsufficientevidenceto
showthathisactionsweredependantorundistinguishablefromthoseofthe
corporatedefendants.RelyingonthedecisionofMentmorev.National
MerchandiseMfg.(1978),40C.P.R.(2d)164(F.C.A.),hearguedthatsufficient
materialfactsmustbepleadedintheStatementofClaimtoenableaJudge
toconclude,attrial,thatasadirectorofthedefendantcompanyCombat
SurvivalInc.,heengagedin“deliberate,willfulandknowingpursuitofa
courseofconductthatislikelytoconstituteinfringementorreflectsan
indifferencetotheriskofit”.
UnderMentmoreabove,andtheextensivecaselawthatfollowedthis
decision,anassertionthatapersonisadirectororanofficerofacompanyis
notsufficienttoallowthispersontobejoinedasadefendanttoan
infringementaction.Rather,itmustbeshownthatthedirectororofficer
orderedorauthorizedtheactsofinfringement.Personalliabilityattachesto
thispersonbecausehisorherbehaviouristortuous,orthecorporationisused
asacloakforthepersonalactivitiesofthisperson.InMr.Aizik’sview,nosuch
factswerepleadedbythePlaintifftosupportaconclusionofpersonal
liability.
Ofcourse,thePlaintiffdisagreedwithMr.Aizik’sposition:itarguedthatthe
StatementofClaimdisclosedagenuineissuefortrialandfurtherthatthe
causeofactionagainstCombatSurvivalInc.andMr.Aizikandaroseoutof
substantiallythesamefactsasthecauseofactionpreviouslypleaded
againstEdgeCombatFitnessInc.Thesematerialfactswere,forexample,that

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Mr.Aizikhadsentoutemailmessagesandelectronicflyerstoadvertisepublic
trainingseminarstaughtbyhimunderthetrade-markKRAVMAGA,thathe
wasalsothelistedadministrativecontactforthewebsiteadvertisingthe
services,thattheaddresswasbelievedtobethehomeofMr.Aizikandthata
corporationprofilereportforCombatSurvivalInc.wasalsothehomeaddress
ofMr.Aizik.
Afterconsideringtheargumentsofbothparties,JusticeTeitelbaumreiterated
anactioninlawisnota“fishingexpedition”:aPlaintiffcannottakeanaction
inthehopesthatitwilleventuallyfindoutenoughfactstosupportitscase.An
individualcanonlybeaddedasapersonaldefendantifitisshownthatthis
individualcommittedtheactsofinfringementonhisown.Thedegreeof
personalinvolvementofapersonrequiredtoliftthecorporateveil,andthus
attachpersonalliability,willdependonthecircumstancesofeachcase.
FromthefactualevidenceadducedbythePlaintiff,JusticeTeitelbaum
retainedthatMr.Aizikallegedlycarriedoutinfringingactivitieshimself:he
wouldnotmerelyhaveconveyedinformationregardingtheservicesoffered
underthetrade-markKRAVMAGA,buthewouldhaveproactivelysent
emails,beentheinstructorofthemartialartsseminars,andmoregenerally
beentheonewhocarriedouttheactivitiesthatleadtotheinfringementof
thetrade-markKRAVMAGA.TheJudgealsoconsideredthe“flipside”of
thesesamefacts,i.e.thatitmayverywellbethatMr.Aizikwassimplycarrying
outtheactivitiesasanemployeeofCombatSurvivalInc.andtherefore
wouldhavecrossedthelineintodeliberateandwillfulinfringementofthe
Plaintiff’strade-mark.
Bearinginmindthematerialfactspleadedinthiscase,aswellasthe
applicablelegalprinciples,JusticeTeitelbaumcouldnotconcludethatthe
ProthonotarybeforehimwasclearlywronginherfindingthatthePlaintiffhad
disclosedsufficientmaterialfactstogiverisetoapossiblefindingofpersonal
liabilityofMr.Aizik.AccordingtoJusticeTeitelbaum,itwillbeuptotheTrial
Judgetodecidewhetherthiscaseisanappropriateoneforliftingthe
corporateveil.TheissueofpersonalliabilityofMr.Aizikwasthereforedeferred
totheTrialJudgeandtheappealwasdismissedwithcosts.
Conclusion
Incontrasttoothercountrieswherethejoinderofpersonaldefendantsis
commonplace,theFederalCourtofCanadaisquitereticenttomaintainan
individualasapersonaldefendant,ortoaddsuchapersonasanew
defendanttoanintellectualpropertyinfringementaction.TheMentmore
decision(supra)setsaveryhighthresholdforaPlaintiffseekinga

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condemnationagainstdirectorsandofficersofcompanies.Itisthereforenot
unusualforapersonaldefendanttomakeamotionattheveryoutsetofthe
caseinanattempttohaveitdismissed.
Anactionmustcontainallofthematerialfactsnecessarytosupportboththe
claimforinfringementandforpersonalliability.Counselandtheirclients
shouldthereforegatherasmanymaterialfactsaspossiblebeforethe
initiationoftheactiontoensurethatthecaseisnotsummarilydismissed
againstapersonaldefendant.Justasindividualscannothidebehindtheir
corporationsiftheycommitactsofinfringement,Plaintiffscannothidebehind
baldassertionsofpersonalliabilitywhenprosecutinganintellectualproperty
infringementcase.

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