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Saturday, 18 November 2006

PRO SWING PUTS CANADA ON THE FOREIGN ENFORCEMENT MAP


Pro Swing puts Canada on the foreign enforcement map

The IPKat has now discovered what happened in the The Supreme Court of Canada ruling in Pro Swing Inc. v Elta Golf Inc., a decision that has had lots of foreign litigants waiting with impatience to find out what happens to non-Canadian judgments when someone tries to enforce them in Canada.

The IPKat's source of information is an excellent note by John Koch (Blake Cassels & Graydon), "Supreme Court of Canada Takes a Mulligan on Enforcing Non-Monetary Orders of Foreign Courts", published in the November issue of the Blakes Bulletin on Intellectual Property and Litigation.

In essence, the Court has abandoned the position that a foreign judgment may only be enforced in a domestic court to the extent that the judgment requires the payment of a fixed sum of money. Now there are many circumstances in which a Canadian court can and should give effect to non-monetary orders of foreign courts. The Court also stressed the equitable considerations that a court faces in awarding relief such as injunctions and mandatory orders. The court was however split 4-3 as to the degree to which a Canadian court need review the foreign order before agreeing to enforce it, wiht the result that significant uncertainty still exists for foreign litigants.

The original dispute in 1998 arose as a trade mark infringement case. Pro Swing was the proprietor of a US trade mark registration for the word mark TRIDENT for golf clubs and golf club heads. Elta, an Ontario corporation, sold RIDENT golf clubs from its website. Pro Swing sued Elta in Ohio, US, invoking various trade mark-related causes of action. The Ohio litigation settled, Elta agreeing to a consent decree that prohibited it from selling golf clubs or club heads bearing TRIDENT, RIDENT or any other confusingly similar mark; infringing inventory was to be delivered up to Pro Swing. In 2002 Pro Swing commenced further proceedings in Ohio to have Elta held in contempt for violation of the consent decree, complaining that Elta had sold two infringing club heads through its website. Elta did not respond. In 2003 a fresh court order declared Elta to be in contempt of the earlier order reiterated the prohibition on selling infringing clubs. The contempt order also required Elta to produce accounting records including names of suppliers and customers, so Pro Swing could quantify a damages claim and sue other infringers. The order also required Elta to recall all infringing products and deliver them up to Pro Swing’s counsel. No monetary payments were ordered.

When Elta failed to comply with the order, Pro Swing sought relief in Ontario, seeking recognition and enforcement of the terms of the consent decree and the contempt order. Elta's defence was that neither order was capable of enforcement in Ontario: they were not for a fixed amount of money and because the contempt order was in the nature of a penalty levied by a foreign court. Pro Swing moved for summary judgment. The proceedings from this point till the case reached the Supreme Court are well summarised by John Koch and need no repetition here.

The Supreme Court of Canada held unanimously that the common law rule preventing courts from enforcing non-monetary terms of foreign judgments no longer applied in Canada. The Court split, however, over whether Pro Swing’s orders should be enforced. The majority held that recognizing and enforcing equitable orders from foreign courts requires a Canadian court to assess matters that are not necessary to consider when dealing with purely monetary orders. Those additional considerations include whether the terms of the order are sufficiently clear and specific to ensure that the defendant will know what is expected of it; whether the order is appropriately limited in scope; whether the foreign court retained the power to issue further orders; whether enforcement is the least burdensome remedy for the Canadian justice system; whether the defendant would be exposed to unforeseen obligations; whether the order would have an affect on third parties and whether the use of judicial resources would be consistent with what would be allowed for domestic litigants. In general, non-monetary orders should be enforced where the order is issued by a court of competent jurisdiction, that order is final, rather than interlocutory and is of a nature that the principle of comity requires the domestic court to enforce it. The minority would have merely severed unclear or objectionable provisions from the orders rather than declaring the orders unenforceable.

The IPKat welcomes any step that makes it easier for legitimate and honest traders to enforce court orders against rogues whose activities - unlike enforcement litigation - take no account of the niceties of international borders. Merpel says, there is however a significant issue relating to clarity of orders: you can't enforce an order unless it's clear to you what's being enforced. This can be a particular problem with consent orders, where the form of words, being a compromise negotiated by the parties rather than imposed by a trial judge, may be understood by each side to have a different meaning.

Incidentally the IPKat, who is not a golfer, had not the faintest clue what "take a mulligan" means and had to resort to wikipedia for clarification. The Kat, who would never dream of using legal jargon when writing for sportmen, is equally reluctant to employ sports jargon when writing for lawyers. He hopes that others are in support.

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