Date: 19990914 Docket: C992649 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: EPOST INNOVATIONS INC. PLAINTIFF AND: CANADA POST CORPORATION DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE J.T EDWARDS Counsel for the Plaintiff: D.L. Munn M. Yang Counsel for the Defendant: M.F. Manson T.P. Lo Place and Dates of Hearing: Vancouver, B.C. August 26 and 27, 1999 [1] This is an application pursuant to Rule 18A of the Rules of Court brought by Epost Innovations Inc. ("Epost Innovations") seeking declaratory relief. [2] The plaintiff, on the opening day of the trial, conceded that subparagraph (e) of the relief sought in the statement of claim should be deleted and during the course of the argument counsel for the plaintiff tabled a draft order seeking the following relief: (a) section 9(1)(n)(iii) of the Trade-marks Act, R.S.C. 1985, c. T-13 (the "Act") is prospective in operation and does not operate retrospectively so as to disturb the rights to the use of a mark that flow from its adoption in connection with a business notwithstanding the subsequent adoption and use by a public authority of an official mark; (b) the adoption and use of trade names and trade marks in connection with a business prior to the public notice by the Registrar of Trade Marks of the adoption and use of an official mark under s. 9 do not contravene s. 11 of the Act; and (c) the public notifications by the Registrar of Trade Marks of the marks CYBERPOSTE and CYBERPOST on November 18, 1998 and December 9, 1998 respectively, do not prohibit under s. 9(1)(n)(iii) of the Act the plaintiff from continuing to use the words EPOST and CYPOST as trade marks and trade names in association with the business it conducted prior to the said dates. [3] Further, during the course of argument, counsel for the defendant conceded the validity of the relief sought in subparagraph (a) and subparagraph (b), both on the basis that the propositions contained in those subparagraphs were trite and, accordingly, did not require decision. Counsel excepted from that concession the use of the words "trade names", a concession which has no practical effect in connection with the issues to be tried here. [4] The result of these deletions and comments is that what is now sought by the plaintiff is as follows: (a) an order that the public notifications by the Registrar of Trade Marks of the marks CYBERPOSTE and CYBERPOST on November 18, 1998 and December 9, 1998 respectively do not prohibit under s. 9(1)(n)(iii) of the Act the plaintiff from continuing to use the words EPOST and CYPOST as trade marks and trade names in association with the business it conducted prior to said dates. FACTS [5] On March 27, 1997 the plaintiff, Epost Innovations, was incorporated in the Province of British Columbia. [6] On September 5, 1997, Epost Corporation was incorporated under the laws of the State of Delaware. [7] On September 16, 1997, Epost Innovations filed a Canadian trade mark application for "CYPOST" in association with: (a) the wares of computer software and hardware by communicating by fax, video, e-mail and voice messages; and (b) the services of providing users the electronic transmission of data and documents via computer terminals from a remote station to personal facts, video, e-mail and voice message systems. [8] On September 17, 1997, Epost Corporation changed its name to Cypost Corporation and Cypost Corporation acquired all issued and outstanding shares of Epost Innovations to become its parent company. [9] On September 17, 1997, Carl Whitehead, a director of the plaintiff, registered the internet domain name "CYPOST.COM". The website was launched and continuously thereafter displayed the trademark CYPOST. [10] Since its incorporation, Epost Innovations had carried on business in British Columbia developing software for business and personal use. [11] Epost Innovations' research and development has focused on three products to date: Navaho Lock, Navaho Viewer and Navaho ZipSafe. Navaho Lock is a software product that facilitates e- mail encryption and file compression. Encryption is the transformation of information by means of a mathematical formula into a form that is unreadable without a decryption "key". Navaho Viewer allows persons who receive encrypted messages using Navaho Lock to decipher the encrypted messages. Navaho ZipSafe uses technology similar to that of Navaho Lock and is used primarily for local computer files. Epost Innovations carries out the research and development in respect of these software products. The products are then licensed to Cypost Corporation. [12] Epost Innovations says that: Since September 17, 1997 and continuously to the present Epost Innovations has developed and commercialized these software products in conjunction with the tradenames and trademarks EPOST and CYPOST. [13] On November 18, 1998, the Registrar of Trademarks gave public notice of the adoption and use of the official mark "CYBERPOSTE" by the defendant Canada Post Corporation (hereinafter "Canada Post"). [14] On November 19, 1998, the Registrar of Trade Marks issued an Approval Notice for the Epost Innovations' trade mark CYPOST to be advertised in the Trade Marks Journal. [15] On December 9, 1998, the Registrar of Trade Marks gave public notice of Canada Post's adoption and use of the official mark "CYBERPOST". [16] On February 23, 1999 Canada Post filed a statement of opposition against Epost Innovations' trademark application for the trademark "CYPOST". Epost Innovations did not contest the statement of opposition and the application was then deemed abandoned by the Trade Marks Office on June 1, 1999. [17] On April 27, 1999, Epost Innovations received a letter from counsel for Canada Post demanding that Epost Innovations immediately cease to use, in connection with its business, the names and trade marks "EPOST" and "CYPOST". [18] Canada Post operates web pages under the domain of several names. [19] Canada Post is the owner of and has adopted and used a large number of trade marks, trade names and official marks which make use of the name "Post" in association with the foregoing wares and services. [20] The defendant says that pursuant to sections 9 and 11 of the Act persons are prohibited from adopting and using as a trade mark or otherwise any mark consisting of or so nearly resembling as likely to be mistaken for each of the aforesaid published official marks adopted and used by Canada Post in Canada and for which public notice has been given of such adoption and use. [21] On cross-examination, Mr. Whitehead admitted that there has been no use of the trade name "EPOST" for commercial activities, including any advertising, marketing, offering for sale or sale of products or services in Canada since inception. [22] On the cross-examination of Carl Whitehead on his affidavit he testified as follows: There is no documentary evidence that the tradename "CYPOST" and "CYPOST CORPORATION" appeared on the said website prior to November 30, 1998. [23] Epost Innovations' primary function is to develop new technology in the computer software industry but it has not provided software development services to any clients or customers in Canada. Epost Innovations' development and research is restricted to its own encryption products namely Navaho Lock, Navaho Viewer and Navaho ZipSafe (the Navaho products). Since March of 1997 Epost Innovations has spent more than two years researching and developing its Navaho products which have been licensed to Epost Innovations' parent company, Cypost Corporation. [24] The first sale of a Navaho product was on December 28, 1998. [25] The Navaho Viewer product was available for sale after December 4, 1998 but prior to December 29, 1998 and the Navaho ZipSafe product was first made available March 5, 1999. [26] The defendant says that there is no evidence that Epost Innovations has used either EPOST or CYPOST as a trademark in association with any wares or services in Canada. RULE 18A ISSUES [27] The defendant opposes the application of section 18A of the Rules on the basis that it would be unjust to grant judgment to Epost Innovations pursuant to Rule 18A because of the following: (a) The exact value of the Canada Post trade marks, official marks and goodwill must be considerable; (b) The case involves a number of trade mark matters as well as questions relating to the jurisdiction of this Honourable Court and the scope of the relief sought; (c) There is no particular urgency which would necessitate denying Canada Post a full trial of this action. [28] Rule 18A(11) states: On the hearing of the application, the court may (a) grant judgment in favour of any party, either on an issue or generally, unless (i) the court is unable, on the whole of the evidence before the court on the application, to find the facts necessary to decide the issues of fact or law, or (ii) the court is of the opinion that it would be unjust to decide the issues on the application. [29] In deciding whether it would be unjust to give judgment the chambers judge is entitled to consider, inter alia, the following factors: (a) the amount involved; (b) the complexity of the matter; (c) its urgency; (d) any prejudice likely to arise by reason of delay; (e) the cost of taking the case forward to a conventional trial in relation to the amount involved; (f) the course of the proceedings; (g) any other matters which arise for consideration. Inspiration Management Ltd. v. McDermid McLawrence Ltd. (1989) 36 B.C.L.R. (2d) 202 at 214 (B.C.C.A.): [30] I am of the view that I can, from all of the evidence before the court, find the facts necessary to decide the issues of fact or law. [31] I am also of the view that it would not be unjust to decide the issues on the application. [32] I agree with what is stated by Tysoe J. in Clearly Canadian Beverage Corp. v. Remic Marketing & Distribution Inc. (1992), 22 C.P.C (3d) 387 (B.C.S.C.) at 393: I share the views of the Court of Appeal expressed above. [Referring to Inspiration Management Ltd. at 213 to 214] The court should grant judgment under R. 18 or R. 18A unless there is a bona fide defence that should be tried. An application for summary judgment should not be dismissed by reason only that the defendant has a related cross-claim. [33] The plaintiff commenced this action on May 25, 1999. The defendant filed an appearance on May 31, 1999 and a statement of defence on June 11, 1999. On that date as well the defendant commenced an action in the Federal Court of Canada even though there was nothing stopping the defendant from bringing its Federal Court action as a counterclaim in this action. [34] If the defendant had sought a stay of application, such a stay would be denied. In Sunshine Village Corp. v. Sun Peaks Corp. (1994), 59 C.P.R. (3d) 539 (B.C.S.C.) leave to appeal refused (1995), 59 C.P.R. (3d) 541, Madam Justice Allan stated at p 540-541: Sunshine Village seeks to have this action stayed on the basis that, where the issues are the same in both actions, the declaratory action ought to be stayed in favour of the action in which substantive relief is sought. Mr. Plant submits that the parties ought not to be exposed to litigation concerning the same issues in two courts at the same time with the risk of inconsistent findings, excessive costs and duplication of effort. He argues that the issues in dispute may be more efficiently litigated in the Federal Court. . . . Here, there is a clear advantage to the plaintiff, a B.C. company, proceeding with its action in British Columbia. The plaintiff's business, which has performed the alleged infringements, is in British Columbia. There is no severe injustice to the defendant which is extra-provincially registered in this province. I note that it is open to Sunshine Village to pursue a counterclaim in the declaratory action for the relief it seeks. I am mindful of Mr. Plant's admonition that the issues should be resolved on the state of the pleadings as they are, and not as they could be. However, where a party seeks a discretionary order in a case such as this, the ability of the defendant to obtain relief in this action, without any prejudice to it, is a factor to be considered when determining whether it will suffer "substantial inconvenience or injustice in the sense of oppression if the stay is not granted" (to quote Madam Justice McLachlin in Avenue Properties) I conclude that there is no basis for staying the plaintiff's action. The defendant's application is dismissed. PLAINTIFF'S RIGHT TO DECLARATORY RELIEF [35] In the case at bar, the plaintiff is entitled to have its claim determined in the Supreme Court of British Columbia. The statement of defence filed in this action denies the allegations made by the plaintiff but does not set forth a defence. [36] This action and this application, as set out in the statement of claim and the notice of motion, deal only with the defendant's official marks CYBERPOSTE and CYBERPOST. [37] An order made pursuant to this Rule 18A application does dispose of this action and an important issue between the parties. [38] The defendants oppose the granting of declaratory relief on the basis that granting such relief is a matter of discretion. A court may refuse to order a declaration even though a case has been made out. Kaiser Resources Ltd. v. Western Canada Beverage Corp. (1992), 71 B.C.L.R. (2d) 236 at 244. [39] The rule that has application to declaratory relief is to be found in Rule 5(22) of the Rules of Court and is as follows: No proceedings shall be open to objection on the ground that only a declaratory order is sought, and the court may make binding declarations of right whether or not consequential relief is or could be claimed. [40] The defendant cites a number of factors which should influence the court's exercise of this discretion as follows: (a) whether the plaintiff has a right which has been infringed by or which needs protection from the defendant; (b) whether the declaration will be useful; (c) whether the declaration will settle the issues between the parties; (d) whether the declaration sought is an end in itself or whether additional consequential relief is sought; (e) whether other remedies are available; and (f) whether a declaration would create difficulties by pre-judging future cases. [41] A litigant seeking declaratory relief must demonstrate that he or she has a right which has been infringed by or requires protection from the other party. If the right cannot be demonstrated the party does not have standing and the court does not have declaratory jurisdiction. Fraser v. Houston, [1996] B.C.J. No. 2096 (Q.L.) (S.C.). [42] The plaintiff has no right which has been infringed by the defendant. A commencement of an action in the Federal Court does not amount to infringement for which the plaintiff requires protection. [43] I probably need not go further but because a commencement of that action may be seen as an infringement,I will go on with my views of the other issues at bar. [44] A declaration such as that sought by the plaintiff would serve no useful purpose and would not settle the real issue between the parties. Heller v. Greater Vancouver Regional District (1992), 71 B.C.L.R. (2d) 100 at 106 (B.C.C.A.). [45] Where a declaration is claimed in its own right and not as incidental to some other consequential relief, the discretion to make a declaration should be exercised with "extreme caution". Such a declaration should not be granted unless there are special circumstances. Williams v. Jackson (1904), 11 B.C.L.R. 133 (B.C.S.C.); Russian Commercial and Industrial Bank v. British Bank for Foreign Trade (1921) All. E.R. 329 (H.L.); McLaughlin and Taylor, British Columbia Practice, 2d ed. (Vancouver: Butterworths, 1999) at pp. 5-141 to 5-142. [46] "The court is justified in refusing to entertain the declaratory action if there is another procedure available in which more effective relief can be obtained or the court decides that the legislature intended that the other procedure should be followed." Kourtessis v. M.N.R. (1993), 78 B.C.L.R. (2d) 257 at 297 (S.C.C.). [47] In the case at bar another remedy is available to Epost Innovations, namely a judgment in its favour in Federal Court. The Federal Court action would certainly provide more "effective relief" since the federal court deals with a large number of Canada Post trade marks and official marks including CYBERPOST and CYBERPOSTE and such a judgment would apply throughout Canada. [48] In my view the declaration now sought by the plaintiff should not preclude the plaintiff from proceeding in Federal Court to determine the rights between the plaintiff and the defendant and that is the court where the substantive action is being carried on and where the rights of the parties should be settled. [49] The defendant puts forth the proposition that a party's right to use a trade mark which was previously adopted and used before the publication of an official mark is restricted to the wares and services in relation to which it had adopted and used the trade mark before the said publication. Canadian Olympic Association v. Konica Canada Inc. (1991), 39 C.P.R. (3d) 400 at 407-408 (F.C.A.). [50] Epost Innovations has the vested rights set out above to continue using EPOST and CYPOST in connection with those wares or services which it had "used" prior to the date of the public notice of each official mark it issued. [51] In conclusion, the appropriate relief to be sought by Epost Innovations in all of the circumstances that have been presented in this case is achieved by proceeding in Federal Court in the existing action. The caution urged on us by Williams v. Jackson is appropriate and when applied here results in a dismissal of the plaintiff's application. The declaration sought by the plaintiff is refused. [52] Costs may be spoken to. "J.T. Edwards J."