Boutique Trademark Prosecution & IP Litigation Law Firm

The Importance of Pleading Properly in Trademark and Copyright Cases

The Importance of Pleading Properly in Trademark and Copyright Cases

The Importance of Pleading Properly in Trademark and Copyright Cases

15 Jun 2022
A recent decision of the Federal Court serves as a clear reminder of the importance of pleading, with sufficient detail, all of the necessary facts to sustain or defend a trademark infringement or copyright infringement action. Failing to do so can result in delays, costs consequences, and (in some circumstances) a pleading being struck without leave to amend. For these reasons, litigants should retain experienced trademark lawyers and copyright lawyers when commencing or defending trademark or copyright infringement cases to ensure that they do not become embroiled in unnecessary and costly pleadings motions.
The Decision
On June 6, 2022, the Federal Court issued an Order with respect to two motions brought in writing by the parties in Dermaspark Products Inc v Prestige MD Clinic, et al (Court File No. T-1194-20). On the one hand, was a motion by the defendants to strike the plaintiff’s Statement of Claim for failing to disclose a reasonable cause of action. On the other, was a motion by the plaintiff to further amend the Statement of Claim to, inter alia, add a second plaintiff to the action. Ultimately, the Court allowed the defendants’ motion and struck the allegations of trademark and copyright infringement with leave to amend. And while the Court’s Order permitted the second plaintiff to be added as a party to the action, the Court awarded costs to the defendants payable forthwith from the existing plaintiff and imposed strict requirements on the material facts to be pleaded in the plaintiffs’ amended claim. Shift Law acted for the successful defendants in respect of both motions before the Court.
Background
The underlying action was commenced by way of a Statement of Claim alleging trademark infringement and copyright infringement. At first, both Dermaspark Products Inc. and a foreign entity, Pollogen Ltd., were included as plaintiffs. The claim alleged Dermaspark is the exclusive Canadian distributor of Pollogen and that they own certain copyrights and registered and unregistered trademark rights in Canada. However, the Statement of Claim did not identify the specific works or trademarks or who, between the two entities, was the owner and/or licensor/licensee of the works or trademarks. After the date of issuance, the Statement of Claim became, as the Court described it, a “moving target”. The claim was amended to remove Pollogen as a plaintiff and, subsequently, the defendants notified Dermaspark of their intention to move to strike the claim under Rule 221 of the Federal Courts Rules. Dermaspark then notified the defendants of its intention to amend the claim again, this time to add Pollogen back in as a plaintiff. The defendants were provided with Dermaspark’s proposed draft amended pleading, but when Dermaspark brought its motion to amend, the draft amended pleading was not included with the plaintiff’s Notice of Motion. Then, in response to the defendants’ motion to strike, the plaintiff included within its motion materials another, distinct proposed draft amended claim.
Analysis
Pursuant to Rule 221(1)(a) of the Federal Courts Rules, the Court may strike a Statement of Claim if it discloses no reasonable cause of action. On a motion to strike the facts as pleaded in the Statement of Claim are assumed to be true. A claim may be struck if, assuming the facts pleaded to be true, it is plain and obvious that the claim is certain to fail. As explained by the Court: To disclose a reasonable cause of action, a claim must: (a) allege facts that are capable of giving rise to a cause of action; (b) disclose the nature of the action which is to be founded on those facts; and (c) indicate the relief sought, which must be of a type that the action could produce and the Court has jurisdiction to grant. To avoid its claim being struck, a plaintiff must plead materials facts of all the constituent elements of its cause of action. The plaintiff must “explain the ‘who, when, where, how and what’ giving rise to the defendant’s liability.” Applying the well-established test on a motion to strike, the Court concluded that both Dermaspark’s copyright and trademark claims did not allege sufficient facts to support reasonable causes of action and ought to be struck. The Court found that the plaintiff had failed to particularize the specific copyright-protected works at issue, Dermaspark and/or Pollogen’s chain of title, and how the defendants were alleged to have misused the works. The Court referred in specific to the plaintiff’s failure to identify specific works beyond merely pointing to a website of Pollogen’s, and the plaintiff’s failure to identify the bases on which copyright subsisted in the works. However, the Court was satisfied that the copyright claims did disclose a “scintilla of a cause of action.” The claims were thus struck out with leave to amend to add the copyright owner(s) and to particularize the works at issue, the plaintiffs’ chain of title and any relevant licenses, and the alleged  misconduct of the defendants. Similarly, the Court found that the plaintiff had failed to properly plead its trademark claims, including by removing Pollogen, the registered trademark owner, from the action, by not identifying all the unregistered and registered trademarks at issue, by not pleading particulars of any license(s) between itself and Pollogen, and by not particularizing how, in specific, the defendants were alleged to have contravened each of sections 7(a)-(d), 19, 20, and 22 of the Trademarks Act. The Court noted that the Statement of Claim also included patent defects such as alleging depreciation of goodwill under section 22 with respect to unregistered trademarks and alleging that such unregistered trademarks were distinctive of both Pollogen and Dermaspark. As a result, the trademark claims were also struck with leave to amend to add the trademark owner(s) and provide particulars of the marks at issue, the plaintiffs’ chain of title and any relevant licenses, and the alleged misconduct of the defendants. As a result of the prejudice to the defendants caused by the plaintiff’s delays in getting the action past the pleadings stage, the plaintiff was also ordered to pay costs forthwith to the defendants in the amount of $5,000.
Takeaways
Motions to strike are assessed on a case-by-case basis and the Federal Court’s decision was fact specific. However, the Court’s decision serves as a reminder of the importance of properly pleading allegations of intellectual property rights infringement with specific detail. In many cases, the rights at issue will derive from intellectual property statutes and it is important to ensure all the requisite elements for protection under the applicable statute are pleaded. Retaining experienced trademark lawyers and copyright lawyers