The Question of Abusive Conduct and Punitive Damages Appreciated by the Superior Court of Quebec

2011-01-01

THEQUESTIONOFABUSIVECONDUCTANDPUNITIVEDAMAGES
APPRECIATEDBYTHESUPERIORCOURTOFQUEBEC

CATHERINEDAIGLE*
ROBIC,LLP
L
AWYERS,PATENT&TRADEMARKAGENTS

FollowingarecentdecisionrenderedbytheSuperiorCourtofQuebec,Industries
LassondeInc.(hereinafterreferredtoas“Lassonde”)wascondemnedtopay
L’OasisD’OliviaInc.(hereinafterreferredtoas“Olivia”)damagesintheamountof
$125000,whichincludedthepaymentof$25000aspunitivedamagesand
$100000onaccountofOlivia’sextrajudicialfeesandcosts(IndustriesLassonde
Inc.v.L’OasisD’OliviaInc.,2010QCCS3901,Zerbisias,J.,2010-08-26).

LassondefirstinitiatedproceedingsagainstOliviabyseekinganinjunctionto
preventOliviafromusingitstrade-markOLIVIAS’OASIS&DESIGNbasedonthe
claimthattheuseofsaidtrade-markbyOliviawasinfringingLassonde’sOASIS
trade-mark.

Oliviacontestedtheactionandverballyrequestedattheendofthetrialthat
Lassondebecondemnedasan“abusivelitigator”andthereforebeorderedtopay
punitivedamagesinaccordancewithSections54.1to54.6oftheCivilcodeof
procedures(hereinafterreferredtoasthe“C.c.p.”).

Sections54.1to54.6oftheC.c.p.

ThesesectionsdealwiththeCourt’spowertoimposesanctionsforimproperuseof
procedureandcameintoeffectinJune2009.

Moreparticularly,Section54.1readsasfollows:
54.1Acourtmay,atanytime,onrequestorevenonitsowninitiativeafter
havingheardthepartiesonthepoint,declareanactionorother
pleadingimproperandimposeasanctiononthepartyconcerned.

©CIPS,2011.*CatherineDaigleisamemberofROBIC,LLP,amultidisciplinaryfirmoflawyers,patentand
trademarkagents.Publishedat(2010),16:2IntellectualProperty1013.Publication173.024

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Theproceduralimproprietymayconsistinaclaimorpleadingthatis
clearlyunfounded,frivolousordilatoryorinconductthatisvexatiousor
quarrelsome.Itmayalsoconsistinbadfaith,inauseofprocedurethat
isexcessiveorunreasonableorcausesprejudicetoanotherperson,or
inanattempttodefeattheendsofjustice,inparticularifitrestricts
freedomofexpressioninpublicdebate.

Olivia’sclaimandLassonde’sarguments
Atthehearing,OliviaarguedthatLassondehad,bothbyinitiatinganinjunction
proceedingandfilinganoppositionagainsttheregistrationofOlivia’sOLIVIAS’
OASIS&DESIGNbeforetheTrade-marksOppositionBoard,engagedin
“manifestlyunfounded,frivolous,vexatiousproceedingswhichwereexcessiveand
unreasonableinthecircumstances”.Oliviaalsoarguedthattheproceedings
initiatedbyLassondewereanattempttobullyOliviaandtopreventitfromitsrights
touseitstrade-mark.
Ontheotherside,Lassondearguedthattherewas,inbothproceedings,aserious
issuetolitigateandthatsuchproceedingswereconductedingoodfaithandina
reasonablemanner,withouteitherexcessorabuse.
TheCourt’sanalysisofthecase
Inreviewingtheparties’arguments,theCourtcametotheconclusionthattheaction
initiatedbyLassondeinordertoobtainaninjunctionagainstOliviawasnotweighed
downbyunnecessaryorsuperfluousproceedings.Moreover,theCourtnotedthat
Lassondehadnotonlytheright,butalsotheobligationtobevigilantinthe
protectionofitstrade-markrightsinordertomaintainthedistinctivenessofits
OASISmark.
Thisbeingsaid,theCourtquestionedthenecessityofLassonde’sinjunctionaction,
sinceithadalreadyfiledanoppositionproceedingagainsttheregistrationofOlivia’s
trade-markbeforetheTrade-marksOppositionBoard.

InanalysingtheconductofLassonde,theCourtnotedthattheinjunctionproceeding
initiatedbyLassondewasprecededbyathreateningdemandletterrequesting,
amongstothers,thatOliviaceaseusingitsOLIVIAS’OASIS&DESIGNtrade-mark;
disclosethenameofallretailerstowhomitsproductshadbeensold;recallallofits
productsandpromotionalmaterial;paypunitivedamagesof$20000andwithdraw
itstrade-markapplicationwiththeRegistrarofTrade-marks.

AsqualifiedbytheCourt,thesewereintimidatingrequests,whichrepresenteda
seriousthreattoOlivia’sexistenceandbusinessactivities.Onceinitiatedby
Lassonde,Olivia’sdefencetotheinjunctionactionrequirednotonlytimeand

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energy,butalsosubstantialfinancialresourcesandorganisationinorderto
succeed.
Uponreviewoftherecordandavailableevidence,theCourtnotedthatLassonde
eitherkneworshouldhaveknownthatitsactionwouldnotbesuccessful.Indeed,
thesignificantdifferencesbetweenthetrade-marksatissuewereleadingtothe
conclusionthattherewasnolikelihoodofconfusionbetweenthem.Additionally,
Lassondeknewthatitdidnothavetheexclusiverightintheterm“oasis”,since
therewereatthetimemorethan45trade-marksontheregisterincludingthesame
term.
Moreimportantly,theCourtwasoftheviewthatLassondeactedinbadfaithwhen
alleginginitsactionthatothercourtshadrecognizedthefactthattheOASIStrade-
markwasfamousinvariousoccasions.Asevidencewithregardstothisparticular
allegation,Lassondefiledcopiesof3decisions,2ofthemhavingbeensettledby
consentandthelastonepronouncedbydefault.TheCourtnotedthatnotonlythis
allegationwasmisleading,butthatLassondealsofailedtodisclosethesole
contestedjudgmentrelatingtotheOASIStrade-mark,whichitactuallylost.

Inrenderingitsdecision,theCourtconcludedthatLassonde,byusingitseconomic
powerandexperience,useda“shotgunapproach”toattackandintimidateOliviaon
severalfronts.TheCourtfurthermentionedthatLassondeexpectedOliviatoretreat
andsuccumbtoitsdemandsasothershaddoneinthepastandthatsuch
“menacingandabusive”conductisnottobeoverlookedwithimpunity.

AsmentionedinSection54.4oftheC.c.p.,theCourtmay:
“orderaprovisionforcoststobereimbursed,condemnapartyto
pay,inadditiontocosts,damagesinreparationfortheprejudice
sufferedbytheotherparty,and,ifjustifiedbythecircumstances,
awardpunitivedamages”.

Inthepresentcase,theCourtwasoftheopinionthattheabusiveconductof
Lassondejustifiedsuchacondemnation.
LassondehasfiledanappealoftheSuperiorCourt’sdecision,whichtherefore
suspendstheexecutionbyOliviaofthejudgmentrenderedinitsfavour.Itremains
tobeseenwhetherornotpunitivedamagesaswellasextrajudicialfeesandcosts
willindeedbepaidbyLassonde.
Conclusion
Thenotionof“improperuseofprocedure”or“abuseofprocess”hasalsobeen
reviewedinotherCanadianjurisdictions,suchasOntarioandBritishColumbia.The
FederalCourtRulesfurthermoreallowatRule221(1)thatapleadingbestruckout

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onthegroundthatitisscandalous,frivolousorvexatiousorotherwiseifsucha
pleadingisconsideredasbeingabuseofdueprocess.

TheFederalCourtofAppealhasalsostatedthatnothingpreventstheprocedural
defenceofabuseofprocesstobeappliedtoinfringementproceedings(seeLevi
Strauss&Co.v.RoadrunnerApparelInc.(1997),76C.P.R.(3d)129(F.C.A)).

Thisbeingsaid,tohaveapleadingbestruckoutdoesnotappeartobesuchan
easythingtodo.Indeed,thetestgenerallyappliedbytheCourtstodetermine
whetherapleadingshouldbestruckoutisifitisplainandobviousthatsaid
pleadingisinfactfrivolousorscandalous,perexample(seeOperationDismantlev.
TheQueen,74(S.C.C.)[1985]1S.C.R.441,seealsoSportmart,Inc.v.Toronto
HospitalFoundation,1995CanLII7319(ONS.C.)).

Moreover,itisworthnothingthatthetestforstrikingoutpleadingsisveryhigh(see
ApotexInc.v.WellcomeFoundationLtd.Reflex,(1996)68C.P.R.(3d)23(F.C.T.D.)
andthattheonusofproofonthepartyseekingthestrikeisaheavyone(seeApotexInc.v.SyntexPharmaceuticalsInternationalLtd.,(2005)44C.P.R.(4th)23(F.C.),
affirmed47C.P.R.(4th)328(F.C.A.)).

Inviewoftheforegoing,itwillbeinterestingtoseehowtheQuebec’sCourtof
Appealwillapplyorrefertotheaboveprincipleswhenrenderingitsdecisioninthe
Lassondecase.

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