Hyperlawhypertext legal database S. & S. Industries Inc. v. Rowell [1966] SCR 419

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S. & S. Industries Inc. v. Rowell

[1966] SCR 419 Court SCC Decision date 1966-03-07 English

Contents
"continuing to deal with the customer in the way of its business as a bank" must involve some bona fide fresh HooN transaction between the bank and the customer, and that if O the bank did no more than keep the account open by merely receiving payment from time to time, the considera- Judson J. tion was not satisfied. It is no authority for any principle that a binding agreement to extend time for payment is not within the consideration.
The above grounds are those on which the learned trial judge founded his judgment. I am in full agreement with them and I would dismiss the appeal with costs.
S. & S. INDUSTRIES INC. (Defend- AN ant) ...............................
A P
L N AND
*Dec. 7,8 ROSS FREDERICK ROWELL, pursuing his busines under the firm name and
Mar. 7 an RESPONDENT. style of Hops-Koch Products Reg'd.
R

- (P laintiff) .........................

ON APPEAL FROM THE EXCHEQUER Patents-Validity-Action for impeachment-Declaration of invalidity- Claim by plaintiff for damages based upon threats of legal proceedings -Malice-Patent Act, R.S.C. c. ss. 8(l)(b), 46-Trade Marks Act, 195R-53 (Can.), c. 49, ss. 7(a), (e), 62.
The plaintiff, a manufacturer of wire, sued for a declaration that a patent of which the defendant was the assignee was invalid. The patent related to the construction of frames of flat wire to be used in the manufacture of brassikres. The trial judge declared the patent invalid. In his action for impeachment, the plaintiff had also claimed damages on the ground that certain steps taken by the defendant had caused him to suffer serious losses in his trade and commercial goodwill. These steps included the institution in Ontario of an infringement action Fauteux, Abbott, Martland, Hall and Spence JJ.
COUR SUPRtME DU CANADA against a large department store; the settlement of that action by an agreement to which a manufacturer of brassikres using wire supplied by the present plaintiff was made a party, with provision that both those companies were debarred from contesting the patent or assisting anyone else to do so; the publication in a trade paper of a warning notice based upon the above-mentioned infringement action; and a warning letter to another manufacturer of brassisres. The trial judge awarded to the plaintiff damages in an amount to be determined by the registrar of that Court.
The defendant company appealed to this Court. At the conclusion of the argument on behalf of the appellant, the appeal in so far as it declared the patent invalid was dismissed, and, after hearing counsel on the question as to whether the plaintiff had established a claim for an award of damages, judgment on that question was reserved.
Held: The appeal should be dismissed.
Per Fauteux, Abbott, Martland and Hall JJ.: The plaintiff's claim for damages can properly be founded upon s. 7(a) of the Trade Marks Act, 1952-53 (Can.), c. 49. The combined effect of that section and of s. 52 of that Act is to create a statutory cause of action for which damages may be awarded if a person is damaged by false or misleading statements by a competitor tending to discredit the claimant's business, wares or service. There is no express requirement that the false or misleading statements be made with knowledge of their falsity or that they be made maliciously. The natural meaning of s. 7(a) is to give a cause of action in respect of statements which are, in fact, false, and the presence or absence of malice would only have relevance in relation to the assessment of damages. The circumstances of this case bring the plaintiff within the provisions of s. 7(a).
Per Spence J.: In an action based on s. 7 of the Trade Marks Act, the plaintiff needs only prove the action of which he complains and the damages which he incurred as a result thereof, and need not prove malice or lack of reasonable cause on the part of the defendant. However, in the present case, it was not necessary to rely upon the principle that the plaintiff is not required to prove the defendant's malice. A consideration of the circumstances in this case demonstrates that there was evidence to show that what the defendant stated was so stated without reasonable and probable cause. There was, therefore, evidence of malice upon which the trial judge could have found for the plaintiff even if such were a necessary element of the proof. His judgment should not be interfered with.
Brevets-Validit-Action pour invalidation-Diclaration d'invaliditg-R&clamations par le demandeur pour dommages basis sur des menaces de poursuites judiciaires-Malice-Loi sur les Brevets, S.R.C. 1952, c. 203, arts. 28(1)(b), 46-Loi sur les Marques de commerce, 1952-53 (Can.), c. 49, arts. 7(a), (e),
Le demandeur, un fabricant de fils m6talliques, institua une action pour obtenir une d6claration A l'effet qu'un brevet dont la compagnie d6fenderesse 6tait la cessionnaire, 4tait invalide. Le brevet se rapportait h la construction de montures en fil m6tallique plat devant 6tre employ6es dans la fabrication de soutiens-gorge. Le juge au procis a d&clard le brevet invalide.
42()
Dans son action pour invalidation, le demandeur a aussi r~clam6 des dommages pour le motif que certaines mesures prises par la d6fen- & S. deresse lui avaient caus6 de s6rieuses pertes dans son achalandage commercial. Ces mesures comprenaient l'institution en Ontario d'une action pour contrefagon contre un grand magasin A rayons; le riglement hors de cour de cette action par une entente A laquelle un hauL fabricant de soutiens-gorge se servant de fils m6talliques fournis par le pr6sent demandeur est devenu partie, avec la condition qu'il 6tait interdit A ces deux compagnies de contester le brevet ou d'aider qui que ce soit h le faire; la publication dans un journal commercial d'une mise en garde bas6e sur cette action pour contrefagon; et une lettre de mise en garde adresse A un autre manufacturier de soutiens-gorge. Le juge au procis a accord6 des dommages au demandeur pour un montant h 6tre d6termin6 par le registraire de cette Cour. La compagnie d6fenderesse en appela devant cette Cour. Advenant la fin de la pr6sentation de 1'expos6 en faveur de l'appelante, l'appel a 6t0 rejet6 quant A l'invalidit6 du brevet, et, apris avoir entendu les procureurs sur la question de savoir si le demandeur avait 6tabli une r6clamation pour dommages, le jugement sur cette question fut pris en d6lib6rd.
Arrat: L'appel doit 6tre rejet6.
Les Juges Fauteux, Abbott, Martland et Hall: La r6clamation du demandeur pour dommages peut proprement 6tre basbe sur 'art. 7(a) de la Loi sur les Marques de commerce, 1952-53 (Can.), c. 49. L'effet combin6 de cet article et de l'art. 52 de cette Loi est de crier une cause d'action statutaire en vertu de laquelle des dommages peuvent 9tre accord6s si une personne a subi des dommages par suite de d6clarations fausses ou trompeuses de la part d'un concurrent tendant A discr6diter l'entreprise, les marchandises ou les services du r6clamant. Il n'est pas requis express6ment que les d6clarations fausses ou trompeuses soient faites avec connaissance de leur fausset6 ou qu'elles soient faites malicieusement. L'article 7(a), dans son sens naturel, donne une cause d'action relativement A des d6clarations qui sont, en fait, fausses, et la prdsence ou l'absence de malice n'aurait de pertinence que relativement A l'6valuation des dommages. Les circonstances, en 1'espice, font tomber le demandeur sous les dispositions de I'art. 7(a).
Le Juge Spence: Dans une action bas6e sur 1'art. 7 de la Loi sur les Marques de commerce, le demandeur n'a besoin que de prouver l'acte dont il se plaint et les dommages qu'il a encourus comme r6sultat, il n'a pas besoin de prouver la malice ou le manque de cause raisonnable de la part du d6fendeur. Cependant, dans la cause pr6sente, il n'4tait pas n6cessaire de s'appuyer sur le principe que le demandeur n'est pas requis de prouver la malice du d6fendeur. Une consid6ration des circonstances, en 1'espice, d~montre qu'il y avait une preuve A l'effet que ce que la d6fenderesse avait d~clar6 avait 6t6 d6clar6 sans cause raisonnable et probable. Il y avait, en cons6quence, une preuve de malice sur laquelle le juge au procks pouvait se prononcer en faveur du demandeur mime si la malice 6tait un 616ment nicessaire de la preuve. Il n'y avait pas lieu d'intervenir.
APPEL d'un jugement du Juge Dumoulin de la Cour de 1'ichiquier du Canada,' d6clarant un brevet invalide et accordant des dommages dans une action d'invalidation. Appel rejet6.
1 [19651 1 Ex. C.R. 118, 28 Fox Pat.
chequer Court of Canada,' declaring a patent invalid and awarding damages in action for impeachment. Appeal dismissed.
Christopher Robinson, Q.C., and Russell S. Smart, for the defendant, appellant.
David Watson and Jean D. Richard, for the plaintiff, respondent.
J.:-At the conclusion of the argument in this appeal, only one issue remained to be determined. That was as to whether, even though the appellant's patent was invalid, the respondent had succeeded in establishing a claim for an award of damages. The position taken by the appellant was that a patent had, in fact, been granted to it; that by virtue of s. 46 of the Patent Act, R.S.C. 1952, c. 203, such patent was, at all times material to the respondent's claim for damages, prima facie valid; and that the steps taken by the appellant to protect its position were taken with a view to protecting what the appellant conceived to be its own property rights.
The steps which were taken by the appellant are described in the judgment of my brother Spence. In summary, they included the institution in the Province of Ontario of an infringement action against Robert Simpson Company Limited; the settlement of that action by an agreement to which Peter Pan Foundations Inc. was made a party, with provision that both those companies were debarred from contesting the patent or assisting anyone else to do so; the publication, in "Women's Wear Daily", published in New York and circulated in Canada, of a warning notice based upon the abovementioned infringement action; and a warning letter to Exquisite Form Brassiere Canada Ltd. of Toronto.
The appellant's submission was that the respondent, in order to recover damages, must bring his claim within the requirements of the common law action, which has been described as "injurious falsehood", "slander of goods", and "trade libel". This assumes, probably correctly, that the respondent's cause of action, if one existed, arose in the Province of Ontario and would be governed by the laws of INDTRIES that Province. I will deal with the appellant's argument -. upon that basis, although, as will appear later, my opinion is that the respondent's claim for damages in this case can Martland J. properly be founded upon a federal statute, and, accordingly, it is not necessary to decide that point in this case. That a claim could be made at common law, provided the necessary conditions of liability were established, for damages resulting from the threat of legal proceedings in respect of alleged infringement of an invalid patent or trade mark has been established by English authorities. The first, in respect of a patent, was Wren v. Weild'. This was followed by Halsey v. Brotherhood . The necessary requirements for the success of an action of this kind were summarized by Lord Davey in a case dealing with a trade mark, The Royal Baking Powder Company v. Wright, Crossley & Co.', as follows:
To support such an action it is necessary for the Plaintiffs to prove (1) that the statements complained of were untrue;
(2) that they were made maliciously-i.e., without just cause or excuse;
(3) that the Plaintiffs have suffered special damage thereby.
It was the submission of the appellant that the second element abovementioned did not exist in the present case, and he relied upon the statement of Blackburn J. in Wren v. Weild, supra, at p. 737:
The advisers of the plaintiffs seem to have thought it was enough to maintain this action to show that the defendant could not really have maintained any action, and that if well advised he would have been told so, so as in this action indirectly to try the question whether an action for the infringement of the patent could have been maintained; whereas, as we think, the action could not lie, unless the plaintiffs affirmatively proved that the defendant's claim was not a bona fide claim in support of a right which, with or without cause, he fancied he had; but a mala fide and malicious attempt to injure the plaintiffs by asserting a claim of right against his own knowledge that it was without any foundation.
To the same effect is the statement of Jessel M.R. in Halsey v. Brotherhood, supra, at p. 517:
It is said that he (the defendant) is not entitled to tell persons buying the plaintiff's engines that they are infringements and that those persons 1 (1869), L.R. 4 Q.B. 730, 20 L.T. 1007.
(1880), 15 Ch.
3 (1900), 18 R.P.C. 95 at 99.
are liable to an action; and that he is not entitled even to give a notice that these engines are infringements of his patent rights unless he follows up that notice by some legal proceeding. I must entirely dissent from that proposition. There is, as far as I am aware, no law in this country compelling a man to assert his legal right by action. He may, if he thinks fit, give notice to persons, the notices being given bona fide, that they are Martland J. infringing his legal rights.
In England the matter of threats of proceedings for alleged patent infringement was dealt with by statute, in s. 32 of the Patents Act of 1883, but no similar provision is included in the Canadian Act. The respondent, however, relies upon the provisions of s. 7(a) of the Trade Marks Act, c. 49, Statutes of Canada 1952-53, as creating a statutory cause of action, similar in nature to the action for injurious falsehood, limited to claims in respect of statements made by a competitor, but in which malice is no longer an ingredient. That section provides as follows: 7. No person shall
(a) make a false or misleading statement tending to discredit the business, wares or services of a competitor;
The Act imposes no penalty by way of fine or imprisonment for a breach of this provision, but s. 52 provides as follows:

52. Where it is made to appear to a court of competent jurisdiction that any act has been done contrary to the provisions of this Act, the court may make any such order as the circumstances require including provision for relief by way of injunction and the recovery of damages or profits, and may give directions with respect to the disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith.

Section 7 of the Trade Marks Act replaced s. 11 of The Unfair Competition Act, c. 38, Statutes of Canada 1932. So far as s. 7(a) is concerned, the scope of the subsection was extended beyond s. 11(a) by making it applicable to a "misleading statement" as well as to a false statement. The combined effect of ss. 7(a) and 52 of the Trade Marks Act is to create a statutory cause of action for which damages may be awarded if a person is damaged by false or misleading statements by a competitor tending to discredit the claimant's business, wares or services. The essential elements of such an action are:

1. A false or misleading statement;

2. Tending to discredit the business, wares or services of a competitor; and

3. Resulting damage.

There is no express requirement that the false or misleading statements be made with knowledge of their falsity, or that they be made maliciously. To interpret these provisions as though such elements were implied would be to construe them as merely restating rules of law which already existed. I do not think this approach is a proper one. The Unfair Competition Act was a statutory code to provide for fair dealing in trade. Section 11 was based upon
Article bis of the International Convention for the
Protection of Industrial Property, made at the Hague,
November 6, 1925, to which Canada was a party. When interpreting the provisions of a code, the correct course is that stated by Lord Herschell in Bank of England v.
Vagliano Brothers'. He was there discussing the approach taken by the Court of Appeal in construing a provision of the Bills of Exchange Act, in relation to the state of the law before the Act was passed, and he said:
In my opinion, the natural meaning of s. 7(a) is to give a cause of action, in the specified circumstances, in respect of statements which are, in fact, false, and the presence or absence of malice would only have relevance in relation to the assessment of damages.
The circumstances of this case bring the respondent within the provisions of s. 7(a) and accordingly, in my opinion, the appeal should be dismissed with costs.
J.:-This is an appeal from the judgment of
Dumoulin J. in the Exchequer Court of Canada pronounced on the 9th of September 1964. That judgment granted a declaration that the appellant's Canadian Letters
Patent No. 525962 dated the 5th of June 1956 were invalid and awarded to the respondent damages in an amount to be determined by the Registrar of that Court.
After hearing the submissions made on behalf of the S. & S. appellant, this Court dismissed the appeal in so far as it declared the said Letters Patent invalid and reserved judgment upon the issue of whether the respondent was entitled to recover damages.
J.
The said Canadian Patent No. 525962 was one which was concerned with the construction of arcuate frames of flat wire to be used in the manufacture of brassibres.
It is the appellant's submission that even if the patent upon which it relied be found to be invalid no action lay for damages. It is the appellant's contention that by s. 46 of the Patent Act, 1.S.C. 1952, c. 203, the patent was prima facie valid and so long as it acted honestly to protect the patent no legal wrong was committed even if in subsequent proceedings the patent were found to be invalid.
The respondent bases his claim for damages on s. 7 of the Trade Marks Act, 1952-53 Statutes of Canada, c. 49, and particularly paras. (a) and (e) thereof which provide: The respondent pointing out the specific right to damages granted by s. 52 of the same statute and the jurisdiction entrusted to the Exchequer Court by s. 54 thereof, makes an alternative submission: firstly, that the respondent is entitled to recover damages under the provisions of the paragraphs of s. 7 of the Trade Marks Act which I have cited whether or not the respondent proves mala fides and, secondly, in the alternative, that even if mala fides is necessary then the circumstances in the present case have revealed such mala fides.
A review of the English authorities cited and others convinces me that certainly under the common law action of slander of title mala fides was a necessary element. The matter was put concisely by Baggallay L.J. in Halsey v. Brotherhood':
cause, and this rule applies not only to actions for slander of title strictly and properly so-called with reference to real estate, but also to cases relating to personality, or personal rights or privileges.
INDUSTRES INC.TRE Baggallay L.J. continued at p. 390:
Therefore, what we have to consider is whether there is any thing to ROwEL shew that what the Defendant has stated was stated without reasonable and probable cause, even assuming it to be untrue, a question upon which at the present moment we have no means of forming an opinion.
It must be remembered that in Halsey v. Brotherhood the Court of Appeal was considering an appeal from the judgment of Jessel M.R., reported in (1880), 15 Ch. D. 514, by which at the commencement of the trial and before any evidence was heard the action was dismissed. The pleadings alone were considered and indeed the dismissal was without prejudice to the bringing of a fresh action.
Bowen L.J. in Skinner v. Perry', speaking of the common law and equity rights apart from subsequent statutory provisions, said:
At common law there is a cause of action whenever one person did damage to another wilfully and intentionally, and without just cause or excuse. Under that class of action came the action of slander of title, whether the subject of the slander was real or personal property. If a man falsely and maliciously-because the malice would show there was no just cause-made a statement about the property of another which was calculated to do, and which did do, damage to the other in the management of that property, an action wculd lie at Common Law, and the damages would be recoverable; and at Chancery, I suppose, that even if you could not prove actual damage had occurred, the Court might, if actual damage was likely to occur, prevent the wrongful act by injunction. This view was held by the courts in England despite the recognition of the difficulty in proving malice on the part of the defendant.
Lord Coleridge L.C.J. said in Halsey v. Brotherhood, supra, at p. 389:
I feel strongly that there is great force in what Mr. Ince has said about the difficulty in which a plaintiff may be placed by the conduct of a person in the position of the Defendant. I do not pretend to be able to answer his observations on that head, but unless there is mala fides, it is one of those instances in which the law, in the interests of society, permits an injury to be done without any remedy commensurate with it.
Section 7 of the Trade Marks Act replaced s. 11 of the Unfair Competition Act, Statutes of Canada 1932, c. 38. There are variations in that the words "or misleading" now in para. (a) of s. 7 did not appear in s. 11 of the Unfair Competition Act nor did the words "do any act or" and "in 1 (1893), 10 R.P.C. 1 at 6.
Canada" now in para. (e) of s. 7 appear in para. (c) of s. 11 of the Unfair Competition Act. In my view, additional te owhhr words do not assist in the determination of whether or not mala fides is a necessary element of proof.
It was the opinion of Dr. Harold G. Fox, Q.C., as stated s in his authoritative work, Canadian Patent Law and Practice, 3rd ed., vol. II, that s. 11 of the Unfair Competition Act was statutory authority for the common law action of slander of title or trade libel and on pp. 963-4 the learned author states:
This view was repeated in the same author's work, Canadian Patent Law of Trade Marks, 2nd ed., vol. II, at p. 717, where he continued:
Authority in Canada is very sparse indeed. In Reliable Plastics Ltd. v. Louis Marx & Co. Inc.', the plaintiff brought an action for impeachment of the defendant's patent and also claimed damages for threats. The latter claim was based on three grounds: (1) s. 11(a) of the Unfair Competition Act, (2) the common law action, and (3) an action under the Statute of Monopolies. Thorson P. found that the statement complained of was not false and therefore, of course, no action lay under s. of the Unfair Competition Act or under common law. The issue, therefore, of whether or not malice were required did not arise. The editorial note to the case made by the same learned author, Dr. Fox, reads, in part:
There is much force to the argument that by the enactment of these sections, firstly, in the Unfair Competition Act and then, in the Trade Marks Act, Parliament has intended to give a right of action whether or not the plaintiff may prove mala fides. As I have said, the necessity for that proof at common law has been clearly established in decisions including those of the House of Lords. If Parliament had intended that the ingredient should be a necessary one for the statutory cause of action which it granted in the aforesaid sections, surely it would have made such a reservation in the legislation. It must be remembered that the provision is in no sense criminal law and that mala fides or malice, or lack of reasonable cause, no matter what term is used, is, therefore, not a necessary ingredient. It should also be remembered that in ordinary libel law, apart from cases of qualified privilege, malice need not be proved and there is no valid distinction between the harm wrought to a plaintiff's reputation in business and the harm wrought to the wares he sells.
Moreover, the person seeking to defend his patent has a choice of immediately commencing an action for infringement and applying for an injunction to restrain the continuance of such prejudice to his patent rights, or of bringing action for damages against those who use, in their business, the wares manufactured by the alleged infringer. If he chooses the first alternative, he may join as parties defendants all who purchase from the alleged infringer to use in their business. The injunction having been granted only upon his undertaking to pay the damages incurred thereby should he fail, he proceeds at his own risk. There would seem to be no valid reason why rather than choosing that forthright course he should be permitted to proceed by threats against the purchasers from the alleged infringer without rendering himself liable for damages unless his mala fides could be proved.
For these reasons, I am of the opinion that in an action based on s. 7 of the Trade Marks Act the plaintiff need only prove the action of which he complains and the damage which he incurred as a result thereof and need not prove mala fides or lack of reasonable cause on the part of the defendant. However, in the particular case, it is not necessary to rely upon the principle that the plaintiff is not required to prove the defendant's mala fides.
The proof of malice need not be by admission of the defendant in the course of litigation or otherwise. In Manitoba Free Press Co. v. Nagy', Davies J. dealing with the necessity of proving malice in an action for slander of & title, said at p. 348:
(The italics are my own.)
In determining whether there was evidence of malice, the task of this Court is, as was that of the Court of Appeal in Halsey v. Brotherhood, supra, to consider "whether there is anything to show that what the defendant has stated was stated without reasonable and probable cause". In so doing, we have the advantage of considering the sworn evidence given at the trial on behalf of the plaintiff, here respondent. The only witnesses who gave evidence on behalf of the defendant, here appellant, were a brassiere designer employed by it and two expert witnesses.
The plaintiff testified that he had known of the defendant's U.S. Patent as early as 1955 having received information as to it when dealing with an unconnected matter, but had not manufactured flat wire for use in brassieres until 1958. In that year he did so after a customer had produced to him drawings requesting him to duplicate the product there illustrated. He testified that he does not yet know whether these drawings were in fact the defendant's as they appeared to be the customer's drawings. The plaintiff continued to manufacture flat wire for brassibre frames supplying customers in both Canada and the U.S. On August 13, 1959, the defendant caused to be forwarded to the plaintiff a letter which read:
You are hereby advised that unless you inform us within the week that you will immediately cease and desist from the manufacture, sale and use of S such flat arcuate wires for use in brassieres, you will leave us with no other alternative but to forward the matter to my Canadian associates for institution of legal proceedings for infringement of the aforesaid patent. Your reply is awaited.
Very Truly Yours, "IRVING SEIDMAN" The defendant, however, instituted no such "legal proceedings for infringement of the aforesaid patent" as it had threatened. One cannot but note that such an action would have been the forthright method which the defendant might have utilized to protect its patent if it honestly believed the patent were valid, and that in such an action by virtue of s. 59 of the Patent Act, the defendant could have obtained an injunction completely protecting its alleged rights. The defendant, however, turned to other methods of "protecting its patent".
On December 7, 1959, it delivered to the Robert Simpson Co. Ltd. a statement of claim in an action in the Supreme Court of Ontario, No. 7587 for 1959. In that action, the said Robert Simpson Company had been named the sole defendant. In the statement of claim, damages were claimed for the infringement of the patent held by the defendant in this action by the sale of brassieres manufactured by Peter Pan Foundations using wire supplied by the plaintiff in this action. On December 14, 1959, the defendant wrote to Exquisite Form Brassibre Canada Ltd., of Toronto, a very large manufacturer. In attempting to force that manufacturer to purchase its flat wire from the defendant, it said in part:
We have been informed by our Attorneys that retailers who sell garments containing Flat Wire that do not emanate from us, or any of our licensees, may be subjected to suit. Our point to Mr. Reiner was that in order that we may best protect our interests, we would be forced to go to the stores and involve them in law suits. This brings with it the extreme loss of time on the part of all executives in the store who become involved in lengthy pre-trial examinations as well as expense involved. It is evident that such stores would be reluctant to handle a line which can implicate them in these circumstances.
Three days later, on December 17, 1959, the defendant inserted an advertisement in the widely circulated trade paper known as "Women's Wear Daily" showing a torn clipping reporting the action against the Robert Simpson Co. Ltd. to which I have referred and with the warning COUR SUPRkME DU CANADA
"Please protect yourself--See S. & S. reprint enclosed", inscribed thereon. The words of Bowen L.J. in Skinner v. Perry, supra, are relevant:
Now, every person of common sense knows what is involved in patent actions, and what the expense of them is, and everybody knows that to be Spence J. threatened with a patent action is about as disagreeable a thing as can happen to a man in business, and the thing most calculated to paralyse a man in his business, even if he be innocent of any infringement of patent law.
The plaintiff gave evidence as to the effect of these actions by the defendant:
Ma. Q. Mr. Rowell, I asked you if you would identify Exhibit as the page in Women's Wear that you saw. Would you tell the Court what happened after the publication of that page in Women's Wear? A. The same day that it was published I received phone calls from various customers of mine wanting to know what it is all about.
Q. What was the effect in terms of your customers; the effect on your business? A. I lost the American market.
Q. Did you lose any particular customer in Canada? A. I lost Peter Pan round wires, flat wire, sorry, and the Robert Simpson.
His You say you lost the American market: did that represent an important proportion of your clients or your clientele. THE At that time, yes, my Lord, and at the present. Q. Did you ever hear of a company called Exquisite Form? A. Yes.
Q. What happened there. A. Well, Exquisite Form, New York City, never sent any more orders after-I had just started with the Exquisite Form Inc. and I lost them as a customer in the States and in Canada. These very actions by the defendant, who had however, refrained from instituting any infringement action, caused the plaintiff in turn to take the action outlined in para. 17 of the statement of claim of this action:
The Plaintiff through its Patent Attorney, Mr. E. N. Fetherstonhaugh, did notify the Defendant Company on January 25, 1960, that the Defendant Company had caused the Plaintiff great harm and damages and that the Plaintiff would be forced to institute legal proceedings to recover the damages so suffered.
The defendant neither specifically admitted nor denied receipt of that letter, nor was the letter produced. It is, of course, quite plain that the defendant, upon receipt of that letter, would have had the clearest possible notice that the plaintiff strenuously denied any infringement of a valid patent. Despite that notice, it would appear that the defendant hastened to conclude its litigation with the Robert Simpson Co. Ltd. On February 2, 1960, it executed Minutes of Settlement of the action whereby both the defendant therein, the Robert Simpson Company Ltd., and its supplier, Peter Pan Foundations Inc., acknowledged the validity of Canadian Patent No. 525962 and undertook not to directly or indirectly contest the validity thereof nor aid or assist others in any such proceeding in order to make, use or sell arcuate wire frames embodying the invention unless the same were manufactured by the present defendant. J. It should be noted that neither the named defendant in that action, the Robert Simpson Company Ltd., nor its supplier, Peter Pan Foundations Inc., were required to pay any sum as damages or royalties to the defendant in this action and that both were permitted to dispose of their inventories on hand.
It would appear, therefore, that the defendant, after it had received express notice that the plaintiff denied he was guilty of infringement and intended to claim damages for such actions on the part of the defendant as are the subject of the claim in this action, proceeded with the most significant expedition to settle an action avoiding any test therein of the validity of its patent, and also effectively removing any contest thereof or assistance in the contest by a large manufacturer and a very large distributor. In addition, the defendant deprived the plaintiff of an opportunity to sell his wares in a very considerable market.
Therefore, in my view, this consideration of the circumstances demonstrates that there was evidence to show that what the defendant stated was so stated without reasonable and probable cause. There was, therefore, evidence of malice upon which the learned Exchequer Court Judge could have found for the plaintiff even if such were a necessary element of the proof and his judgment should not be interfered with.
I would, therefore, dismiss the appeal with costs.
Appeal dismissed with costs.

Cases cited

  • Wren v. Weild Wren v. Weild, supra, at p. 737 p. 737
  • Halsey v. Brotherhood Halsey v. Brotherhood, supra, at p. 517 p. 517
  • Halsey v. Brotherhood Halsey v. Brotherhood, supra, at p. 389 p. 389
  • Halsey v. Brotherhood Halsey v. Brotherhood, supra
  • Skinner v. Perry Skinner v. Perry, supra

Statutes and regulations cited