Date: 20000414
Docket: T-550-99
BETWEEN:
VIACOM HA! HOLDING COMPANY and OTHERS
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT POKÉMON MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Defendants
Docket: T-823-99
BETWEEN:
NINTENDO OF AMERICA INC. and
NINTENDO OF CANADA LTD.
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT POKÉMON MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Defendants
Docket: T-1058-98
BETWEEN:
THE WALT DISNEY COMPANY AND OTHERS
Plaintiffs
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT POKÉMON MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Defendants
Docket: T-1064-98
BETWEEN:
TIME WARNER ENTERTAINMENT COMPANY, L.P.
Plaintiff
- and -
JANE DOE and JOHN DOE and OTHER PERSONS, NAMES
UNKNOWN, WHO OFFER FOR SALE, SELL, IMPORT,
MANUFACTURE, DISTRIBUTE, ADVERTISE, OR DEAL IN
UNAUTHORIZED OR COUNTERFEIT POKÉMON MERCHANDISE,
AND THOSE PERSONS LISTED IN SCHEDULE "A"
TO THE STATEMENT OF CLAIM
Defendants
REASONS FOR ORDER
TREMBLAY-LAMER J.:
[1] On March 24, in Vancouver I heard two related motions, a motion on behalf of the proposed defendant Tejani et al for an order to set aside the Anton Piller order and a motion by the plaintiff to review the Anton Piller order and to add defendants. These reasons relate to both motions.
BACKGROUND
[2] On May 23, 1999, Alnashir Tejani, Ghanwa Merhebi, Global Fashion & Toys, Bathroom City Enterprises and Toys in Motion (the "Proposed Defendants") were served with a Statement of Claim, Notice of Motion returnable June 7, 1999 and the Anton Piller order of Mr. Justice Denault dated November 30, 1998 arising from the sale of counterfeit merchandise bearing Comedy Partners (South Park), Nintendo, Disney and LOONEY TUNES Intellectual Properties from business premises.
[3] In compliance with the terms of the Anton Piller order, the plaintiff"s motion for review of execution of the Order was initially heard on June 7, 1999.
[4] On the return of the review motion, Mr. Tejani and Ms. Merhebi appeared in Court, and Mr. Tejani, on his own behalf and on behalf of the other proposed defendants, sought and obtained an adjournment on consent to June 28, 1999 to allow the proposed defendants to consult with Mr. Tejani"s sister, a solicitor, who was, according to Mr. Tejani, away until June 18, 1999.
[5] On June 28, 1999, Mr. Tejani appeared in Court, again without counsel.
[6] The proposed defendants subsequently retained counsel. The review motion was returned for December 6, 1999 and adjourned to afford the proposed defendants an opportunity to file materials in opposition to the review. In January 2000, the proposed defendants served and filed a cross motion seeking to set aside the Anton Piller order.
[7] Thereafter a timetable was established by Order of this Court and materials filed and cross-examinations conducted further to that Order.
[8] The proposed defendants submit that the Anton Piller orders should be set aside because the plaintiffs failed to adduce sufficient evidence to satisfy the requirements of the interlocutory orders granted.
[9] The proposed defendants further submit that the said Orders are contrary to section 8 of the Canadian Charter of Rights and Freedoms.1 Alternatively, the Orders should be set aside on the grounds that the plaintiffs failed to execute the Orders according to the requirements therein.
ANALYSIS
| 1. The issuance of the Anton Piller order |
[10] It is trite law that to justify the issuance of an Anton Piller order the moving party must demonstrate
| a) an extremely strong prima facie case; |
| b) the damage, potential or actual, must be very serious; and |
| c) there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made.2 |
[11] As stated by Richard A.C.J. (as he then was) in Adobe Systems, the first two conditions are normally satisfied through proof of title to intellectual property rights and clear evidence of infringement. The third condition, likelihood that an infringer will dispose of important evidence, is normally the crucial element of proof required to obtain an Anton Piller order.3
| a) Strong prima facie case |
| i) VIACOM HA! HOLDING COMPANY and OTHERS |
[12] The Patrick affidavit4 clearly established that "South Park" is an animated television series which first aired on Comedy Central on August 13, 1997 and has become one of the most highly rated entertainment series in U.S. basic cable history. Comedy Central, an all-comedy advertiser-supported cable network is currently seen in more than 56 million homes across the United States. "South Park" features four main characters - Kyle, Kenny, Cartman and Stan - who are third-graders in a quiet town in the Colorado Rockies. As of March 1999, Comedy Partners had aired 31 episodes of "South Park", each of which aired five times per week in the U.S. and generally once or twice per week in Canada.
[13] The popularity of "South Park" exploded soon after its introduction - several episodes have been viewed by more than 4 million people in a single airing. The February 4, 1998 episode was viewed by 5.6 million people, the February 18, 1998 episode by 5.4 million people and the April 23, 1998 episode by 6.2 million people, the latter of which received an 8.2HH rating, making it the second highest rated entertainment program on U.S. basic cable and the highest rated entertainment series episode in U.S. basic cable history. The popularity of "South Park" has continued; during the fourth quarter of 1998, premier episodes of "South Park" have averaged 4.1 million viewers each.
[14] Comedy Partners, a joint venture of Time Warner Entertainment Company, L.P. and Viacom HA! Holding Company, is the owner of the trademarks, trade names, characters and other distinctive elements, artwork, in and associated with the names, marks, logos, characters, scenes, likenesses, symbols, symbolic designs and personalities from and associated with the animated characters of South Park along with copyright rights for the individual characters described above, as well as one additional character from South Park - Chef.
[15] Comedy Partners has allocated more than $6.7 million in advertising, or on-air time, promoting the "South Park" series on Comedy Central. In addition, South Park"s enormous popularity has been the subject of countless newspaper and magazine articles in such national periodicals as Rolling Stone, Newsweek, New York Times, Entertainment Weekly, U.S.A. Today, Time Magazine, Spin, Fortune, Forbes, People, Playboy, Penthouse and TV Guide.
[16] A significant aspect of Comedy Partners" business is the merchandising and licensing of the Comedy Partners (South Park) intellectual properties, including the animated South Park Characters. Comedy Partners licenses its South Park Characters to licensees who produce a wide range of consumer products, including apparel, baseball caps, jewellery, watches, toys and other merchandise. All authorized merchandise bearing the Comedy Partners (South Park) intellectual properties also bears the "Comedy Central" logo combined with the South Park logo.
[17] As of March 1999, Comedy Partners had entered into 25 license agreements authorizing licensees in Canada. Pursuant to the terms of its license agreements, each licensee is required to obtain approval from Comedy Partners before manufacturing and/or distributing any product that includes the Comedy Partners (South Park) intellectual properties. Comedy Partners" production approval process is geared towards ensuring that all licensed products that include the South Park Characters and/or the Comedy Partners (South Park) intellectual properties are of high quality and meet the high standards commonly associated with Comedy Partners and Comedy Central.
[18] Since around the summer of 1997, Comedy Partners has sold, world wide, through its licensees, more than US $200 million of authentic merchandise bearing the Comedy Partners (South Park) intellectual properties, and in Canada alone, it has sold at least CDN $15 million of authentic merchandise.
[19] As a result of Comedy Partners" efforts in promoting the series "South Park" and the related merchandise, as well as protecting its intellectual property rights in Comedy Partners (South Park) intellectual properties, the South Park characters and the Comedy Partners (South Park) intellectual properties have enjoyed enormous success and have become associated with Comedy Central and Comedy Partners.
| ii) NINTENDO OF AMERICA INC. and NINTENDO OF CANADA LTD. |
[20] The Penman affidavit5 clearly establishes that in or about February 1996, Nintendo launched in Japan a new video game for its hand-held Game Boy video system. The Game Boy video game cartridge was called Pokémon.
[21] Shortly following its release in Japan, Pokémon became the highest selling video game ever, in Japan. The phenomenal success of Pokémon was soon being experienced in the United States and Canada. Since September of 1998, following Nintendo"s release of the Pokémon video game in North America, more than 2.5 million Pokémon video game cartridges have been sold at approximately $28,00 dollars (U.S.) each, totalling $70 million dollars (U.S.) in sales of Pokémon video game cartridges alone in just seven months. The popularity of the Pokémon video game has spawned numerous ancillary Pokémon products including, without limitation, an animated television series, a comic book series, trading cards, a card game, plastic and plush figures and toys, and a compact disc (all Pokémon products, including the video game, shall be hereinafter collectively referred to as the "Pokémon Products"). The National Post reported on April 27, 1999 that Nintendo"s worldwide sales for Pokémon Products total approximately $5 billion dollars (U.S.).
[22] Although the genesis for Pokémon was a video game, subsequent to the release of the Pokémon video game in Japan came the initial release, also in Japan, of the Pokémon animated television series (the "Series"). The Series first aired in Japan, in 1996, and in the fall of 1998, the Series began airing in North America. The series is now broadcast on approximately 100 stations across the United States and on the YTV cable network in Canada, six days a week. In addition, special Pokemania days carry as many as six consecutive hours of Pokémon programming.
[23] As players mastered the Pokémon video game, watched the Series, and read the comic books, demand for the Pokémon playing/trading cards also exploded. In fact, according to a recent TIME Magazine article dated May 10, 1999, 850,000 Pokémon trading card sets have been sold since January of 1999. The TIME Magazine article states that the popularity of the Pokémon playing/trading cards has escalated to the point where the authorized licensee for the playing/trading cards, Wizards of the Coast, a Renton Washington Company, that sells them under license in North America, has begun rationing its shipments.
[24] As is evident from the above referenced paragraphs, the popularity of Pokémon has exploded and has become particularly popular amongst pre-teen age children. Following its release in North America, Pokémon immediately entered the U.S. and Canadian lexicon as a successful cultural icon. The Pokémon Characters have also transcended the pre-teen audience and have become well known among the general U.S. and Canadian population.
[25] Nintendo of America, Inc. owns all right, title and interest in an to the trade-marks, trade names, logo, artwork, design, characters, configurations and copyrights in the original artistic, literary and musical work (computer programs) and other distinctive elements of or appearing in or associated with or entitled "Pokémon" (collectively referred to as the "Nintendo Intellectual Properties").
[26] A significant aspect of the plaintiffs" business and resulting revenues has been, and continues to be, the merchandising and licensing of distinctive elements associated with the Nintendo intellectual properties. Nintendo America maintains exclusive ownership in the merchandising rights associated with Pokémon.
[27] By contract with Nintendo America, Nintendo Canada has the right in Canada, to reproduce, distribute merchandise bearing or being associated with the Nintendo intellectual properties.
[28] Nintendo America has licensed manufacturers and others in Canada to use representations of the plaintiffs" intellectual properties for merchandise of all kinds, including video game software, trading cards, plush and plastic toys, knapsacks and clothing.
[29] By contract, each of Nintendo"s licensees are required to obtain approval from Nintendo before manufacturing and/or distributing any product that includes the Nintendo intellectual properties. Nintendo"s production approval process is geared towards ensuring that all licensed product that include the Nintendo intellectual properties are of high quality and meet the high standards commonly associated with the plaintiffs.
[30] Further, each of Nintendo"s licensees are also contractually required to ensure that the manufacture, distribution and sale of a licensed product (that is, a product bearing the Nintendo intellectual properties) complies with the laws, statutes, ordinances, rules and regulations of each country, state, municipality or other political entity having jurisdiction thereof. In particular, but without limitation, the licensees are required to ensure that the licensed products comply with all safety standards or codes applicable in the territory to the manufacture, distribution and sale of the licensed product.
[31] Nintendo has sold, in North America, through its licensees, tens of millions of dollars (U.S.) worth of authentic merchandise bearing the Nintendo intellectual properties, of which approximately 7-8% of those sales took place in Canada.
[32] Nintendo and its authorized licensees have expended considerable sums of money in promoting the Nintendo intellectual properties in connection with the Pokémon products in which use of such proprietary elements is authorized. As a result of such authorized activities, both the trade and public at large have come to identify the Nintendo intellectual properties with Nintendo and Nintendo"s businesses and the same have developed a secondary meaning associating them with Pokémon and the Nintendo intellectual properties. Each of the Nintendo intellectual properties is well known in Canada and signifies to the Canadian public merchandise of the highest quality and design. Without a doubt Nintendo enjoys a very valuable reputation and goodwill in Canada in its intellectual properties.
| iii) THE WALT DISNEY COMPANY AND OTHERS |
[33] The Rayburn affidavit6 clearly establishes that Disney Enterprises Inc. formerly The Walt Disney Company ("Disney") is the owner of or has ownership rights in all the trade-marks, trade names and/or copyrighted work, including artwork, in and associated with the names, marks, logos, characteristics, scenes, likeness, symbols, symbolic designs and personalities from, and associated with, the animated characters and motion pictures created by Disney (collectively referred to as the "Disney Intellectual Properties").
[34] In addition to the characters and animated motion pictures themselves, the plaintiffs have, for many years, been associated through licensees, with the manufacture and sale of various products bearing the Disney Intellectual Properties. The licensees, in turn, sell the merchandise, bearing Disney intellectual properties, to thousands of retail establishments across Canada. It has been, and remains, the plaintiffs" policy to ensure that all authorized products sold bearing the Disney intellectual properties are of the highest quality.
[35] The Walt Disney Company (Canada) Limited ("Disney Canada") is Disney"s agent in Canada for the licensing of Disney"s copyright and trademark merchandise.
[36] The Disney intellectual properties are well known through various forms of advertising, including television, radio and print media, and Disney has developed an extremely valuable reputation for high quality merchandise. Disney, in conjunction with its licensees, have invested a great deal of money and effort in properly displaying, promoting, servicing, advertising and merchandising the Disney intellectual properties and the products bearing them.
[37] By virtue of the sustained and co-ordinated effort to properly manufacture, promote, service, advertise and merchandise the Disney intellectual properties and the products bearing them, Disney has developed and extremely valuable reputation for high quality merchandise. The valuable goodwill and consumer recognition of products bearing the Disney intellectual properties is prominent in amongst other places, the United States and Canada.
| iv) TIME WARNER ENTERTAINMENT COMPANY, L.P. |
[38] The Danielson affidavit7 clearly established that Time Warner has licensed the LOONEY TUNES Characters to Warner Communications for the purposes of the creation of cinematographic films, cartoons, animated shorts, publications and other artistic works that incorporate the LOONEY TUNES Characters. One such recent project is the motion picture Space Jam which starred the LOONEY TUNES Characters and the world famous basketball player, Michael Jordan was released in 1996. It was a combination live-action and animation picture which was directed to family entertainment. There have also been numerous animated cartoons and shorts which have featured the LOONEY TUNES Characters and which have been broadcast on television and through cinemas. These characters are seen daily on television in Canada. Such uses of the LOONEY TUNES Characters have enhanced the worldwide reputation and recognition of these characters.
[39] Time Warner has the exclusive right to reproduce, distribute and license the reproduction and distribution of merchandise bearing or being the LOONEY TUNES Characters and has exercised its rights through Warner Canada. Time Warner, and in turn Warner Canada has, since at least as early as 1940 licensed manufacturers and others in Canada to use reproductions and representations of the LOONEY TUNES Characters on merchandise of all kinds, including clothing, ties, headwear, publications, toys, watches and other merchandise. A significant aspect of Time Warner"s and Warner Canada"s business and resulting revenues has been for many years and continues to be, the merchandising and licensing of distinctive elements associated with the LOONEY TUNES Characters.
[40] Pursuant to Time Warner agreements with various licensees, these authorized licensees have manufactured merchandise featuring the LOONEY TUNES Characters and associated artwork to which proper copyright and trade-mark notices have been affixed. Further they have secured Time Warner"s approval on such products and have distributed millions to retail consumers.
[41] From a marketing and promotional standpoint, the LOONEY TUNES Characters and their copyrighted elements and trade-marks are highly successful, distinctive and create instant recognition and association with the plaintiff.
[42] Time Warner and its authorized licensees have expended considerable sums of money in promoting the LOONEY TUNES trade-marks in connection with the "Looney Tunes" television shows and films and ancillary LOONEY TUNES Characters" merchandise on which use of such proprietary elements is authorized. As a result of such authorized activities, both the trade and the public at large have come to identify the LOONEY TUNES trade-marks with Time Warner and Time Warner"s business and the same have developed a secondary meaning associating them with Time Warner.
[43] By reason of the widespread distribution of cinematographic films, television programs, publications and other artistic works of and including the LOONEY TUNES Characters, and the distribution by the licensees of wares and merchandise of all kinds, the representations of the LOONEY TUNES Characters and the trade-marks therefor have become well known to the public in Canada as indicating the plaintiff and none other. Further, Time Warner has attached to its characters and the trade-marks goodwill and the reputation for quality and honest value.
[44] Time Warner"s trade-marks for the LOONEY TUNES Characters have come to have a secondary meaning indicative of relationship, sponsorship, and/or association with Time Warner.
[45] Each of the trade-mark and copyrighted artwork of Time Warner is well known in Canada and signifies to the Canadian public merchandise of high quality and design. Time Warner enjoys a valuable reputation and goodwill therein.
[46] Time Warner has the exclusive right to manufacture or licence the manufacture of merchandise, displaying or incorporating the LOONEY TUNES Characters and the copyrights and trade-marks therein.
[47] Based on the foregoing evidence, I am satisfied that the first condition, an extremely strong prima facie case, was met for the issuance of the original Order.
[48] Further, it is well established that the hearing of a review of an Anton Piller order is an examination de novo and that I am entitled to consider any additional evidence available from both parties.
[49] On this review motion, the evidence obtained through the search discloses a strong prima facie case of infringement against the proposed defendants. On May 23, 1999, Toys in Motion was clearly offering for sale counterfeit merchandise,8 approximately 80% of the store"s contents.
| b) Serious damages |
| i) VIACOM HA! HOLDING COMPANY and OTHERS |
[50] The Patrick affidavit establishes that Comedy Partners maintains high quality standards for authorized licensed merchandise bearing Comedy Partners (South Park) intellectual properties; however, it has no control over the quality or safety of unauthorized and counterfeit merchandise.
[51] Consumers who purchase inferior counterfeit merchandise bearing Comedy Partners (South Park) intellectual properties would likely be disappointed with the quality of the goods and, potentially being unaware that the merchandise which caused their disappointment was counterfeit, would not be inclined to purchase legitimate quality merchandise bearing Comedy Partners (South Park) intellectual properties, to the plaintiffs" detriment. A consumer"s disappointment with a single item of counterfeit merchandise bearing Comedy Partners (South Park) intellectual properties could detrimentally affect the sale of other merchandise bearing Comedy Partners (South Park) intellectual properties.
[52] Thus, the sale of inferior, inexpensive counterfeit or illegal merchandise damages Comedy Partners (South Park)"s reputation for production of quality merchandise, and diminishes the value of the goodwill associated with Comedy Partners (South Park) intellectual properties. As well, it also damages the sales by legitimate retailers who have purchased the authorized merchandise bearing the Comedy Partners (South Park) intellectual properties in good faith, attempting to make an honest profit.
| ii) NINTENDO OF AMERICA INC. and NINTENDO OF CANADA LTD. |
[53] The Penman affidavit establishes that Nintendo has high quality standards for authorized licensed merchandise bearing Nintendo intellectual properties; however, it has no control over the quality or safety of unauthorized and counterfeit merchandise.
[54] Consumers who purchase inferior counterfeit merchandise bearing Nintendo intellectual properties would likely be disappointed with the quality of the goods and potentially being unaware that the merchandise which caused their disappointment was counterfeit, would be inclined not to purchase legitimate quality merchandise bearing Nintendo intellectual properties to the plaintiffs detriment.
[55] In addition, counterfeit or illegal merchandise usually sells for less than legitimate Nintendo merchandise and, consequently, there are some consumers who will be less inclined to purchase legitimate Nintendo merchandise because they believe that they can obtain merchandise which is "identical" in appearance at a lower price.
[56] Thus, the sale of inferior, inexpensive counterfeit or illegal merchandise damages Nintendo"s reputation for production of quality merchandise, and diminishes the value of the goodwill associated with Nintendo intellectual properties. As well, it damages the sales by legitimate retailers who have purchased the authorized merchandise bearing the Nintendo intellectual properties in good faith, attempting to make an honest profit.
| iii) THE WALT DISNEY COMPANY AND OTHERS |
[57] The Rayburn affidavit establishes that Disney has established a high quality standards for authorized licensed merchandise bearing Disney intellectual properties; however, it has no control over the quality of unauthorized and counterfeit merchandise.
[58] Consumers who purchase inferior counterfeit merchandise bearing Disney intellectual properties would likely be disappointed with the quality of the goods and potentially being unaware that the merchandise which caused their disappointment was counterfeit, would be inclined not to purchase legitimate quality merchandise bearing Disney intellectual properties to the plaintiffs detriment.
[59] In addition, counterfeit or illegal merchandise usually sells for less than legitimate Disney merchandise and, consequently, there are some consumers who will be less inclined to purchase legitimate Disney merchandise because they believe that they can obtain merchandise which is "identical" in appearance at a lower price.
[60] Thus, the sale of inferior, inexpensive counterfeit or illegal merchandise damages Disney"s reputation for production of quality merchandise, and diminishes the value of the goodwill associated with Disney intellectual properties. As well, it also damages the sales by legitimate retailers who have purchased the authorized merchandise bearing the Disney intellectual properties in good faith, attempting to make an honest profit.
| iv) TIME WARNER ENTERTAINMENT COMPANY, L.P. |
[61] The Danielson affidavit establishes that the sale of infringing goods causes confusion in the marketplace which operates to the benefit of unauthorized vendors and causes considerable disadvantage to Time Warner and its" licensees. There is lost licensing opportunities, a reduction in the sale of authorized products and therefor a reduction in royalty revenues, damages to the licensees in lost sales, loss of goodwill and reputation.
[62] The infringers" goods are never up to the standards set by Time Warner and its" licensees. They reflect badly on the authorized licensees in the eye of the consumer. The innocent consumer seeing the infringing goods and associates the products with the plaintiffs" and trusts that association to mean that the product is of good quality. The innocent consumer, in particular the children for whom the merchandise is purchased, is therefore suffering.
[63] Allowing the sale of unauthorized merchandise to continue will cause Time Warner and its long-term interests in the merchandising industry in Canada to be adversely affected. The above-mentioned activities constitute serious and irreparable prejudice and harm to Time Warner. Any remedy in damages against the infringers would be extremely difficult to calculate and the potential to fully recover tenuous.
[64] This evidence was before the judge granting the ex parte order and is before me. I am satisfied that it is sufficient to prove serious damages.
| c) Likelihood of destruction |
[65] The proposed defendants submit that there is no clear evidence that there is a real possibility that the evidence be destroyed before any application inter partes can be made. I disagree.
[66] Courts have recognized that it is difficult to prove with tangible evidence that an infringer has a history of destroying evidence. Thus, for example, the court has drawn inferences from a defendant"s dishonest character to conclude that there is in fact a likelihood that the defendant/infringer will dispose of the evidence, the infringed articles. Undoubtedly, on receiving notice of an action for infringement, the infringer will rid himself of the infringing merchandise in order to avoid the penalties resulting from the infringement.
[67] Further, I do not think that a distinction can be drawn from the fact that a vendor operates as a retailer, as opposed to a flea market vendor. Although I recognize that the operation is less temporary in nature, the methodology of the operation is the same. For example, in the present case, transactions are made on a general cash register thereby preventing the itemization of merchandise sold.
[68] Without an Anton Piller order of this type, the defendants would likely continue to operate selling more counterfeit goods. Thus the evidence would vanish rendering the preservation of the evidence for trial impossible.
[69] In fact, in the case at bar, the evidence discloses that the proposed defendants both admit that they intend to send the counterfeit merchandise back to their suppliers in China for credit.9
[70] This admission, in my view, reinforces the point that the evidence would disappear before the plaintiff could bring an action to trial.
[71] On that basis, I am satisfied that there was evidence to satisfy the third condition on the original and on the review of the ex parte order.
| 2. The Charter challenge |
[72] The proposed defendants submit that the Anton Piller orders are contrary to section 8 of the Canadian Charter of Rights and Freedoms. I, however, am of the view that the Charter does not apply. My reasons follow.
[73] Section 8 of the Canadian Charter of Rights and Freedoms provides:
| Everyone has the right to be secure against unreasonable search and seizure. |
Chacun a droit à la protection contre les fouilles, les perquisitions ou les saisies abusives. |
[74] Section 32 provides that the Charter applies to government actions:
| 32(1) This Charter applies: a) to the parliament and government of Canada in respect of all matters within the authority of parliament [...]; and b) to the legislature and government of each Province in respect of all matters within the authority of the legislature of each Province. |
32. (1) La présente charte s'applique : a) au Parlement et au gouvernement du Canada, pour tous les domaines relevant du Parlement, y compris ceux qui concernent le territoire du Yukon et les territoires du Nord-Ouest; b) à la législature et au gouvernement de chaque province, pour tous les domaines relevant de cette législature. |
[75] In Retail Wholesale and Dept. Store Union v. Dolphin Deliveries10 the issue was whether Dolphin Deliveries, a courier company, could obtain an injunction to prevent the union from picketing the business premises of the company. It was argued that the injunction should be set aside on the ground that it infringed the freedom of expression protected by section 2(b) of the Charter. The Court rejected this argument and held that the Charter does not apply to private litigation divorced from any connection with government.
[76] Refusing to consider a court order to be governmental action for the purpose of the Charter application notwithstanding political theory, McIntyre J., speaking for the court, held that the word "government" did not include the judicial branch and therefore the injunction issued by the Supreme Court of British Columbia was not subject to the Charter. He stated:
| While in political science terms it is probably acceptable to treat the courts as one of the three fundamental branches of Government, that is, legislative, executive, and judicial, I cannot equate for the purposes of Charter application the order of a court with an element of governmental action. This is not to say that the courts are not bound by the Charter. The courts are, of course, bound by the Charter as they are bound by all law. It is their duty to apply the law, but in doing so they act as neutral arbiters, not as contending parties involved in a dispute. To regard a court order as an element of governmental intervention necessary to invoke the Charter would, it seems to me, widen the scope of Charter application to virtually all private litigation. All cases must end, if carried to completion, with an enforcement order and if the Charter precludes the making of the order, where a Charter right would be infringed, it would seem that all private litigation would be subject to the Charter. In my view, this approach will not provide the answer to the question. A more direct and a more precisely-defined connection between the element of government action and the claim advanced must be present before the Charter applies.11 [My emphasis] |
[77] However, in British Columbia Government Employees"Union v. B.C. (Attorney General),12 the Court recognized that there can be exceptions to this rule in certain circumstances. For instance, when a judge is acting on its own motion, not at the instance of any private party and that the ruling is entirely public in nature.
[78] It is important to note that the following year in Tremblay v. Daigle13 the court confirmed its earlier ruling in Dolphin Deliveries and held that the Charter could not be invoked when there is no state action and the litigation consists of a civil action between two parties.
[79] In my view, based on the foregoing, it can be said that when a court order is granted to resolve a private litigation based on the common law, it cannot be a government action to which the Charter applies.
[80] It is well established that an Anton Piller order is issued in the context of a pending private dispute between private parties "with the purpose of preserving property as to which there is strong prima facie evidence that it consists of articles infringing the plaintiff"s copyright, trade-mark or other rights".14 Thus, I am of the opinion that the Charter cannot be invoked to set aside an Anton Piller order.
[81] The execution of an Anton Piller order, a process which is civil in nature,15 is not subject to the search and seizure requirement as set out by the Supreme Court of Canada inSoutham, the "prior authorisation based on the existence of reasonable and probable grounds".16
[82] This is not to say that there is no remedy for an invalid order or an order too broadly drafted. In my view, an invalid order can always be challenged as an error of law by means of an appeal to the Federal Court of Appeal.
[83] In any event, cognizant of the intrusive nature of the Anton Piller order, the Federal Court has included procedural and substantive safeguards consistent with Charter values in its "model order".
[84] These safeguards were in fact present in the Orders served on the defendants. Thus I find no merit to the defendants submissions that the issuance of the Anton Piller order offends the Charter.
| 3. The execution of the Anton Piller orders |
| A. Credibility of the witnesses |
[85] In a case like this one where the evidence is based mainly on affidavit material, it is difficult for the Court to assess the credibility of the witnesses. However, after a careful review of the evidence and the cross-examination on affidavit of all witnesses, I have found inconsistencies in the proposed defendants evidence which have a negative impact on their credibility.
[86] I have noted the following:
Mr. Tejani
[87] Firstly, on June 7, 1999, the proposed defendant, Mr. Tejani, was before my colleague Madame Justice Reed. He undertook to provide documents about the supplier and the legitimacy of the goods.
| THE COURT: In a way you should verify from your supplier. |
| MR. TEJANI: We did. You can ask the supplier. I"ll send you a copy of the letter that we have a purchasing agent in Hong Kong and he states these goods are legitimate and this supplier, the wholesaler, he"s a very big company in Hong Kong who has nine locations and we had no reason to doubt " it"s like buying something from Sears and doubting they are involved in illegal activities. So we were relying on Canada Customs. Maybe they know if it"s copy of something and now we find out it"s not the case.17 |
[88] Mr. Tejani never complied.
[89] Secondly, the evidence clearly contradicts allegations that Mr. Lipkus was in attendance in Mr. Tejani"s store after 10:00 p.m.18 Mr. Lipkus who was using a digital camera explained that it was set on eastern standard time, so that pictures stamped 10:30 p.m. would have been taken at 7:30 p.m. given the three hour difference with Vancouver. This assertion by Mr. Lipkus is corroborated by the last picture taken in the store which attests to the fact that the sun had not yet set. Clearly, this is possible at 7:30 p.m., but certainly not at 10:30 p.m.
[90] Further, a Visa receipt from a restaurant confirms that Mr. Lipkus was in the restaurant and paid at 10:08 p.m.
[91] It is not plausible, in my view, that he rushed out of the restaurant to bolt back to the store in order to pursue the execution of the Order.
[92] Finally, the proposed defendant"s recollection of the events relating to the execution of the Anton Piller orders are contradicted by Detective Ellis, a "non-party" witness subpoenaed by the proposed defendants and present on the scene as a peace officer in plain clothes.
Ms. Merhebi
[93] I have also found inconsistencies in the evidence of the proposed defendant"s spouse, Ms. Merhebi.
[94] In her cross-examination on affidavit she stated the following:
| Q.47 Did Mr. Lipkus tell you on several occasions you had to produce some documents? |
| A. No, didn"t tell me. |
| Q.48 Did Mr. Lipkus tell you on several occasions he was allowed to take pictures? |
| A. He didn"t ask me. |
[95] When confronted with her own affidavit sworn in the proceeding, she gives a different answer to the same questions.
| Q.60 You have said in your affidavit that you were told - and I"ll go through it all piece by piece, but you were told on several occasions by Mr. Lipkus that you had to produce identification? |
| A. Yeah. |
| Q. Is that a true statement? |
| A. Yes. I told you. And this is what it was, because I have him the driver licence, he wants mine, and it was paper. It wasn"t card. |
| Q.62 Okay. |
| A. And this is why he repeat asking, and he was very frustrated. |
| Q.63 Were you told by Mr. Lipkus on several occasions to produce documents? |
| A. All of " he said, but he didn"t even bother to listen to my answer. |
| Q.64 So the answer to my question is yes? |
| A. Pardon me? |
| Q.65 The answer to my question is yes, you were told that by Mr. Lipkus? |
| A. All document, I don"t know what document they want either. |
| Q. 78 Yes, and did he tell you on several occasions that he was allowed to take pictures? |
| A. They mentioned they were allowed to take pictures. To take everything.19 |
[96] As a result of these inconsistencies, I have serious doubts as to the credibility of the defendants" evidence.
[97] On the contrary, I found the affidavit of Mr. Lipkus and Mr. Ovadia to be consistent, supported by the exhibits filed and corroborated by Detective Ellis, a non-party witness. I, therefore, have no reason to disbelieve any aspect of their evidence.
| B. The Execution of the Orders |
[98] The proposed defendant, Mr. Tejani, takes issue with the fact that, although he was advised that he could consult with a lawyer, he was not afforded the time, given that his lawyer was out of the country. I do not find that this contradicts the order as it is clearly specified that such advice is sought forthwith.
[99] The proposed defendant also alleges that the number of representatives in the store exceeded the number permitted pursuant to the Order. I am satisfied that the evidence establishes that the number of persons did not exceed four representatives until specific permission was obtained by Mr. Tejani and Ms. Merhebi.20
[100] Further, contrary to the allegations of the proposed defendants, I am satisfied that the evidence establishes that the terms of the Order were fully explained to both proposed defendants and that they were not prevented from leaving the premises. Detective Ellis responded as follows on this point during his cross-examination:
| Q. 393 Did you hear him explain the orders that he was executing? |
| A. Yes, I did. |
| Q. 394 And did he explain that the process he was involved in was a civil process? |
| A. Yes, he did. |
| Q. 395 Did he explain your role as a police officer in keeping the peace? |
| A. Yes, he did. |
| Q. 396 Did the people he was speaking to appear to understand that? |
| A. Yes, they did. |
| Q. 397 Okay. Did he have copies of the order with him or the orders with him? |
| A. Yes, he did. |
| Q. 398 And were those shown to the people, served on them in your presence? |
| A. Yes. |
| Q. 399 Now, when the proprietor, the female proprietor arrived some time later, did you observe anybody explain the terms of the order to her? |
| A. Yes, Mr. Lipkus again explained it to her. |
| Q. 400 Okay. In the same terms as he had done earlier or similar? |
| A. Yes.21 |
[101] And later:
| Q. 413 Did they object in any way? |
| A. No, nor did they ask anybody to leave or " no. |
| Q. 414 Did anybody who was there, either the proprietor or anybody else who was in the store, asked to leave and were they at any time prevented or hindered from leaving? |
| A. They -- nobody from the store was physically barred from leaving. Mr. Lipkus I believe instructed them that if they were to leave, that they weren"t to speak to anybody regarding the order. |
| Q. 415 Okay. As a term of the order? |
| A. Yes.22 |
[102] The evidence given by Detective Ellis clearly refutes the allegation that the defendants were threatened with criminal process if they did not cooperate. It also corroborates the evidence of Mr. Lipkus that he explained that an Anton Piller order was not a criminal matter.
[103] Finally, I am satisfied from the evidence that the merchandise removed from the premises were itemized on an accurate list of goods.
[104] In summary, on the evidence before me, I find that the Orders were properly executed.
[105] For these reasons, the granting and the execution of the Anton Piller Orders of Justice Denault dated 30 November 1998; Justice Lutfy dated 14 May 1999; Justice Lemieux dated 20 March 1999 and Justice Wetston dated 25 May 1998, are upheld and the defendant"s cross-motion is dismissed.
[106] Costs are awarded to the plaintiffs on both the motion to set aside and the motion to review the Anton Piller orders adding the defendants with only one hearing fee.
"Danièle Tremblay-Lamer"
JUDGE
OTTAWA (ONTARIO)
April 14, 2000.
__________________1 Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c.11.
2 Adobe Systems Inc. v. KLJ Computer Solutions Inc. [1999] 3 F.C. 621.
4 Summary from Plaintiffs Supplementary Motion Record at pp. 3-6.
5 Summary from Plaintiffs Supplementary Motion Record at pp. 3-7.
6 Summary from Plaintiffs Supplementary Motion Record at pp. 3-5.
7 Summary from Plaintiffs Supplementary Motion Record at pp. 3-7.
8 Pictures taken by plaintiff"s representative, Exhibit E to Mr. L. Lipkus"s affidavit; Ovadia"s June affidavit; Motion Record, vol. 2, tab 5, para 4; Ellis examination at pages 171-75, 184-87.
9 Lipkus affidavit January Motion Record Vol. 1, Tab 1 para. 36; Ovadia affidavit February para 14; Ellis examination Questions 428-432.
14 Indian Manufacturing Ltd. v. Lo, (1997) 75 C.P.R. (3d) 338 at pp. 341-42.
15 R. v. Potash [1984] 2 S.C.R. 406.
16 Canada (Combines Investigation Act Director of Investigation and Research) v. Southam Inc., [1984] 2 S.C.R. 145.
17 Exhibit B to Mr. Shakta"s affidavit.
18 Exhibit A, B, C, D and E attached to the affidavit of Mr. Lipkus.
19 Cross-examination on affidavit of G. Merhebi.
20 Cross-examination of Paul Ellis.