Federal Court Decisions

Date: 19971217

File: T-1398-97

BETWEEN :

COMPULIFE SOFTWARE INC.

Applicant

- and -

COMPUOFFICE SOFTWARE INC.

Respondent

     REASONS FOR ORDER

WETSTON J.

[1]      The applicant Compuoffice requests a stay of proceedings under s. 50(1) of the Federal Court Act, concerning an application by Compulife for expungement of the registered trade-marks "COMPUOFFICE" (TMA 457,165) and "ACROSS THE BOARD" (TMA 445,444), under s. 57 of the Trade-marks Act. Compuoffice alternatively requests that an order be made striking out claims relating to the "ACROSS THE BOARD" mark in Compulife's application for expungement; or that the application for expungement be joined to the infringement action under Rule 1714 of the Federal Court Rules. In the event that the aforementioned remedies are not granted, Compulife requests an additional 30 days to prepare its reply and affidavit evidence, in respect of the expungement application.

[2]      Compulife filed its application for expungement, by way of originating notice of motion, on 27 July 1997. The trade-marks at issue were granted to Compuoffice on 21 July 1995 (TMA 445,444) and 3 May 1996 (TMA 457,165). An earlier application for registration of the trade-mark "COMPUOFFICE", by Compuoffice, had been opposed by Compulife, and was abandoned.

[3]      Compuoffice's use of the "COMPUOFFICE" mark, in addition to other marks, is also the subject of an action for infringement, passing-off and depreciation of goodwill, filed in the Federal Court, on 17 May 1995, by Compulife. On 17 July 1995, Compuoffice filed a statement of defence and counterclaim, denying infringement and alleging infringement of the "ACROSS THE BOARD" mark by Compulife. On 28 August 1995, Compulife filed a reply and defence to the counterclaim, alleging that the "ACROSS THE BOARD" mark was invalid.

[4]      In addition to the action for infringement, and the later application for expungement, Compulife has also instituted administrative proceedings before the Ontario Ministry of Consumer and Commercial Relations, requesting that the Director amend the articles of incorporation of "Compuoffice Software Inc." to change the name of the corporation to a name that does not include the term "COMPUOFFICE". The Ontario Ministry of Consumer and Commercial Relations has chosen to stay its administrative proceedings, pending resolution of the proceedings in this Court.

[5]      Compulife has also opposed another trade-mark application by Compuoffice, for the mark "MULTI-LIFE"; and has instituted proceedings against Compuoffice, and some of its officers, for defamation.

[6]      The principle issue in this motion is whether Compulife's application for expungement, under s. 57 of the Trade-marks Act, should be stayed, pending its existing action for infringement, under s. 55 of the Trade-marks Act, concerning use of the same marks which are at issue in the expungement proceeding.

[7]      Compuoffice argues that, in instituting both an action for infringement, and an application for expungement, Compulife is seeking identical relief (i.e. curtailment of Compuoffice's use of the marks at issue), on identical legal grounds (primarily confusion with Compulife's earlier registered marks). Moreover it is submitted that, should both proceedings be permitted to continue, the evidence adduced in each would be identical. It is argued that since Compuoffice has pleaded its registration of the mark "COMPUOFFICE" as a defence to the infringement action, Compulife should simply amend its statement of claim to address the issue of the validity of that registration, rather than proceed with a duplicitous application for expungement.

[8]      Compuoffice submits that the infringement action is wider in scope than the expungement proceeding, so as to completely address, among other things, the issue of the validity of the registration of the marks in question. Moreover, Compulife's infringement proceedings preceded the expungement proceeding. Accordingly, Compuoffice argues that the Court should exercise its discretion to grant a stay since these multiple proceedings launched by Compulife are vexatious and an abuse of process, and therefore, not in the interests of justice.

[9]      Finally, Compuoffice argues that, if no stay is granted, in the interest of judicial economy, the two proceedings should be joined, under Rule 1714 of the Federal Court Rules, since to do so would not prejudice the parties: Gund Inc. v. Ganz Bros. Toys Ltd. (1990), 29 C.P.R. (3d) 55 (F.C.T.D.) at 57.

[10]      Compulife argues that a stay should not be granted since the applicant has not established that the continuation of the s. 57 proceeding would prejudice or cause injustice to the defendant; or that a stay would not prejudice the plaintiff. It is submitted that the Court should exercise its discretion to stay sparingly, and only where there is a risk of imminent adjudication in two different forums. Therefore, Compulife submits that Compuoffice has failed to demonstrate that the expungement proceedings are prejudicial or would cause them an injustice. Compulife also submits that this same test applies to the motion for joinder: Mon-Oil Ltd. v. Canada (1989), 27 F.T.R. 50 at 51.

[11]      Compulife further argues that Parliament intended that a process be available whereby the issue of registrability could be determined on a summary basis, in addition to any remedy which may be sought for infringement. It did so by way of s. 57 of the Act. Moreover, the Federal Court Rules provide for a more expedited proceeding, involving the exchange of affidavit evidence and examinations. Compulife argues that it should not be denied its statutory right to proceed under s. 57, at this time. To do so would also prevent it from moving forward the proceedings before the Ontario Ministry of Consumer and Commercial Relations.

[12]      Compulife submits that the expungement application should proceed, in order to resolve the issue of registrability of the marks in question , thereby simplifying the infringement action. While it would not completely resolve the action, because issues of causation and damages, as well as satisfaction of the requirements for an injunction, would nonetheless need to be determined, a s. 57 determination would expedite the trial issues.

[13]      Compulife submits that it will also discontinue its claim, in its defence to the Compuoffice counter-claim, that the "ACROSS THE BOARD" mark is invalid, if a stay is not granted in respect of the expungement application. It will do so in the interest of avoiding unnecessary duplication in adjudication.

[14]      I could find no authority in this court that has considered whether to grant a stay proceedings where both the action for infringement and the application for expungement are in the Federal Court. However, a stay of an expungement proceeding in the Federal Court was not granted, notwithstanding that an infringement proceeding, based on identical marks, and also containing a claim of invalidity, was underway in a provincial superior court: Association of Parents Support Groups v. York (1987), 14 C.P.R. (3d) 263 (F.C.T.D.).

[15]      It is well established that a stay of proceedings should not be granted unless it can be shown that (1) the continuation of the action would cause prejudice or injustice, not merely inconvenience or additional expense, to the defendant, and (2) that the stay would not be unjust to the plaintiff. The onus is on the party requesting the stay to prove that these conditions exist: Discreet Logic Inc. v. Canada (Registrar of Copyrights) (1993), 51 C.P.R. (3d) 191 (F.C.T.D.) at 191. In this case, Compuoffice has failed to demonstrate that continuation of the expungement proceeding would result in such prejudice or injustice. I am of this opinion despite the very thorough and able arguments of Compuoffice's counsel.

[16]      The Court will exercise its discretion to grant a stay, under s. 50(1) of the Federal Court Act, only in the clearest of cases. In consideration of whether granting a stay would be unjust to the plaintiff or applicant, this Court will be reluctant to interfere with any right of access, unless there is a risk of imminent adjudication in two different forums: Canadian Olympic Association v. Olympic Life Publishing Ltd. (1986), 8 C.P.R. (3d) 405 (F.C.T.D.) at 407-408; Discreet Logic, supra; York, supra.

[17]      In the case before me, the parties are still in the process of exchanging amended pleadings, having not even proceeded to the discovery stage in the infringement action. As such, the expungement proceeding is likely to be heard and disposed of before the infringement action goes to trial. The expungement proceeding will result in a decision in rem concerning the validity of the registered marks, which should, to some extent, narrow the issues in the infringement proceeding: Keramchemie GMBH v. Keramchemie (Canada) Ltd. (1993), 50 C.P.R. (3d) 289 (Proth.).

[18]      The expungement proceeding involves a decision in rem concerning the registrability of the marks in question, while the infringement proceeding involves a decision in personam concerning the use of such marks, and the damages, if any, that result: Gainers Inc. v. Robin Hood Multifoods Inc. (1996), 67 C.P.R. (3d) 349 (F.C.T.D.) at 355; Canadian Olympic, supra. Moreover, an expungement proceeding is summary in nature, whereas an action is not.

[19]      It is clear that in enacting s. 57 of the Trade-marks Act, Parliament intended to provide a separate right of access to this court, to dispute the registration of trade-marks under the Act. To grant a stay of such proceedings is to limit access to this Court that is provided by statute. In order to justify a stay, the party seeking the stay must not merely demonstrate that the stay is required on a balance of convenience, but that it is in the interest of justice that one should be granted: Dominion Mail Order Products Corp. v. Weider (1976), 28 C.P.R. (2d) 27 (F.C.T.D.) at 30.

[20]      It would appear that recent jurisprudence has not favoured use of a balance of convenience test in considering the issuance of a stay: Sanwa Tekki Corporation v. Pacific Scientific Co. (1984), 3 C.I.P.R. 154 (F.C.T.D.) at 155; Jordan & Ste-Michelle Cellars Ltd. v. Anders Wines Ltd. (1979), 45 C.P.R. (2d) 189 (F.C.T.D) at 193; Inline Fiberglass Ltd. v. Omniglass Ltd. (1993), 48 C.P.R. (3d) 214 at 215 (A.S.P.). The current approach, with which I agree, suggests that a stay should be granted to avoid the risk of conflicting adjudications, not overlapping proceedings: 94272 v. Moffatt, [1990] F.C.J. No. 1013 (Q.L.)(F.C.T.D.).

[21]      Compuoffice has requested, in the alternative, that two paragraphs contained within the originating notice of motion be struck under Rule 419 of the Federal Court Rules. This Court does not have authority under Rule 419 to strike out any portion of an originating notice of motion: David Bull Laboratories v. Pharmacia Inc., [1995] 1 F.C. 588 (F.C.A.) at 594.

[22]      Compuoffice has also requested, in the alternative, that the application for expungement be joined with the action for infringement. However, the same standard that applies to a motion for a stay of proceedings applies to a motion for joinder: Mon-Oil, supra. As Compuoffice has failed to demonstrate that it would suffer any injustice or prejudice, should the application be allowed to proceed, joinder with the action is not appropriate. In my opinion, Gund, supra, is distinguishable because it involved the joinder of two actions, one for infringement of industrial design registration, and the other for copyright infringement and statutory passing-off, not joinder of an action for infringement and an application for expungement.

[23]      The motion shall therefore be denied, except that Compuoffice shall be granted an additional 40 days from the date of this Order, in order to file its reply and affidavit evidence concerning Compulife's application for expungement under section 57 of the Trade-marks Act. I have allowed ten (10) days longer than requested since the date of this Order is approaching the holiday season.

[24]      With respect to the costs of this motion, they should be considered by the judge hearing the application for expungement.

                                     Howard I. Wetston

    

                                     Judge

Ottawa, Ontario

December 17, 1997