5 reasons why Canada is an attractive jurisdiction for trademark litigation

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Smart & BiggarBrand owners looking to enforce their rights expeditiously (and inexpensively) need look no further than Canada, which offers brand owners a number of tools to obtain relief against infringers and counterfeiters in a cost-effective manner. As the United States’ largest trading partner, Canada is an attractive forum for trademark litigation for the following reasons.

Reason No. 1: An expert court

The vast majority of trademark litigation is carried out in Canada’s Federal Court, a single, unitary court that is not divided into circuits or districts. An injunction granted by the Federal Court is typically Canada-wide in scope, and is not dependent upon the brand owner’s using its registered trademark in any particular region.

Furthermore, Canada’s Federal Court is extremely familiar with trademark issues and disputes, and several judges were leading intellectual property litigators before joining the Federal Court. Litigants involved in trademark-related proceedings before the Federal Court may ask the Chief Justice to appoint a judge with trademark expertise to hear their matters. In Canada, trademark cases are never heard by a jury.

Reason No. 2: Actions and applications

The Federal Courts Rules permit a brand owner to commence a Court proceeding against an infringer in one of two ways; by action and by application.

An action is a traditional Court proceeding, involving the exchange of pleadings, pre-trial documentary discovery and depositions, as well as a trial of the matter with live (expert and fact) witnesses. An action is advisable where the brand owner may not be in possession of all of the evidence that it wishes to present at trial, and may require pre-trial discovery to obtain documentary evidence or admissions from the infringer. Typically, an action may take several years from the close of pleadings before it is heard by the Court.

An application is a much more straightforward procedure whereby a brand owner may assert and enforce its rights against an infringer in a Court proceeding based entirely on a paper record. Unlike an action, which affords the parties an opportunity for pre-trial documentary discovery and depositions, an application involves only the exchange of pro forma pleadings and affidavit evidence, followed by cross-examinations on the affidavit evidence, the exchange of written briefs and a hearing. By deciding to proceed by way of application, an applicant necessarily chooses to forego any opportunity to collect further information concerning the extent of the respondent’s infringing activities. There is no opportunity for wide-ranging pre-trial discovery, so a brand owner should already have in its possession all of the evidence necessary to support its claim against the infringer before commencing an application.  

Litigation by application thus allows a brand owner’s claim to be determined in a streamlined, expeditious manner. Cases brought by way of application can often be heard relatively quickly and efficiently, resulting in significant savings of more than 50% of the cost of a typical action.

Reason No. 3: Summary judgment and summary trial

As noted above, those brand owners who elect to bring an action may nevertheless take advantage of two mechanisms that are intended to expeditiously dispose of matters before the Federal Court: summary judgment and summary trial.

A motion for either summary judgment or summary trial may be brought in an action on all or some of the issues raised in the parties’ pleadings at any time after the defendant has filed its defence but before the matter has been set down for trial.

Summary judgments promote the efficient disposition of actions by enabling the Federal Court to decide issues summarily, notwithstanding the existence of a genuine issue for trial. In such cases, summary judgment may be granted notwithstanding the existence of a genuine issue for trial if the court is able to find the facts necessary to a decision, even though there might be disputed issues of fact and law. Indeed, the Supreme Court of Canada has reiterated that summary judgment rules must be interpreted broadly, so as to promote affordable, timely and just adjudication of civil claims. Where the court is satisfied that there is no genuine issue for trial, it must grant summary judgment.

Materials filed in support of a motion for summary judgment include affidavits, any cross-examination thereon, documents produced on discovery (if any) and discovery transcripts (if any). Affidavits may be based on information and belief but the court may draw an adverse inference from that fact.

Where summary judgment is refused or granted only in part, the court may nevertheless make various corollary orders to streamline the proceeding going forward, including stating which material facts are not in dispute, defining the issues to be tried, limiting the scope of discovery, prescribing the use of cross-examination transcripts, requiring payment into court of all or part of the claim, or requiring security for costs.

Summary trials likewise promote the efficient disposition of actions through “mini-trials” (which typically last a day or two). The standard of proof at a summary trial is the same as at a regular trial. However, a summary trial is an expedited procedure that is based on a paper record consisting of affidavits, admissions extracted through formal requests to admit, affidavits or statements of expert witnesses and discovery “read-ins” from the discovery transcripts. Additionally, the court may make any order required for the conduct of the summary trial, including an order requiring a deponent or an expert who has sworn an affidavit or given a statement to attend for cross-examination before the court. The court may also draw an adverse inference if a party fails to cross-examine on an affidavit or to file responding or rebuttal evidence.

Summary trials typically avoid the need to present live witnesses, such that the trial is heard much more quickly (and at significantly less cost) than would otherwise be the case, as the length of the trial would be shortened greatly.

Reason No. 4: Streamlined pre-trial discovery

Further expediting matters is the relatively restricted scope of pre-trial discovery in Canada, which is far narrower than it is in the U.S.

Generally speaking, the volume of documents and information exchanged between parties to trademark-related litigation matters is less than that in the U.S., as all documents and information must be relevant (and not merely related) to material facts at issue in the dispute.

Similarly, the depositions themselves are more restricted in Canada. Once the parties have exchanged their non-privileged documents, each party has the right to depose any adverse party. If a party is a body corporate, it will designate a single representative to be examined on its behalf; the examining party may not select the representative to be examined. Other witnesses, such as agents or employees, fact and expert witnesses, are not typically subject to examination before trial.

Reason No. 5: Effective relief and remedies

Regardless of the way in which a brand owner decides to assert and enforce its rights against an infringer, whether by an action or by an application, the relief and remedies available to a successful litigant are the same.

Unlike in the U.S., where attorneys’ fees generally are not recoverable unless specifically permitted by contract or statute, in Canada, a successful litigant may recover a portion (typically 25-40%) of its incurred legal fees, together with all reasonable disbursements (e.g. expert fees, survey fees, etc.), as well as its own damages suffered or an accounting of profits realized by the infringer as a result of the infringer’s activities. Furthermore, an award of legal fees can increase significantly if a party rejects a settlement offer that was more favourable to the party than the judgment rendered at trial.

The Federal Court also has jurisdiction to award punitive damages in those cases in which a party has engaged in high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour. In recent years, the court has demonstrated a willingness to award significant damages awards, including punitive damages, in infringement and, in particular, counterfeiting cases, awarding millions of dollars in damages in certain cases. Furthermore, in cases of blatant infringement in which the infringer fails to negotiate any form of settlement or participate in the court’s process, the court has typically awarded not insignificant “nominal” damages per infringement, together with legal fees.

In addition to costs and damages, the court may order destruction or delivery up of all infringing goods and materials, as well as the transfer of infringing domain names and social media accounts, and interim, interlocutory or permanent injunctive relief, restraining the infringer from further infringing the brand owner’s rights across Canada.

Conclusion

Canada has established itself as an attractive forum for trademark litigation, offering brand owners a number of tools to quickly and cost-effectively enforce their rights against counterfeiters and infringers and obtain permanent injunctive relief from coast to coast.

The speed and relative low cost of commencing a trademark infringement proceeding by way of application, for example, should attract litigants who are eager to prevent infringing activity from developing, ramp up the pressure on a party to extract a North American or international settlement, or test a claim before litigating the matter elsewhere.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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