Real and Substantial – Connection to B.C. sufficient for Canadian Olympic Committee to maintain action against North Face

On February 16, 2016, Justice Dillon dismissed an application by VF Outdoor Inc. (“VF USA”) to dismiss or stay the action brought against it by the Canadian Olympic Committee on the grounds that the Court lacked territorial competence or that the Court should decline to exercise its jurisdiction.

The VF Corporation owns various VF Group companies, including VF USA, VF Canada and North Face Apparel Corp., which carry on business under the name “North Face”. The COC has rights in certain Olympic marks that are protected by the Olympic and Paralympic Marks Act and the Trade-marks Act. The COC states that VF USA is not authorized to use its protected Olympic marks and that VF USA designed and sold a product line in Canada which adopted and used certain marks including “Sochi”, “RU/14”, “Olympic”, and “Sochi 2014 Winter Olympic Games” and engaged in advertising and marketing activities in Canada that were deliberately intended to confuse the public.

While the underlying claim was commenced against VF Canada, the COC obtained leave to add VF USA as a party when documentary production was resisted on the grounds that the documents were in the possession of VF USA. VF USA and VF Canada claimed they are separate companies and that while VF USA designs and arranges for the manufacture of all products, the products are manufactured in a foreign factory from which VF Canada places its orders.

The territorial competence of the British Columbia Supreme Court is established by section 3 of the Court Jurisdiction and Proceedings Transfer Act. While the CJPTA does not elaborate on the nature and extent of the real and substantial connection, it is presumed to exist if facts trigger one of the circumstances set out in section 10 of the CJPTA. Including if the proceeding concerns restitutionary obligations that, to a substantial extent arose in British Columbia, concerns a tort committed in British Columbia, concerns a business carried on in British Columbia, or is a claim for an injunction ordering a party to do or refrain from doing anything in British Columbia or in relation to property in British Columbia that is immovable or movable property.

Justice Dillon found that the COC presented an arguable case that VF USA and VF Canada are part of a functional, integrated business group for the joint benefit of the North Face brand:

VF USA and VF Canada share parents and common resources such as legal counsel, technical support, designers, and manufacturers. VF USA designed and developed products and marketing materials for the collection with the intention that the collection would be available at choice for all “North Face” distributing companies, including VF Canada. … VF Canada uses materials and branding strategies developed by VF USA to sell the collection in Canada. VF USA directly sponsored a contest directed at Canadian residents to promote the North Face brand and the collection in Canada.

In dismissing VF USA’s application Justice Dillon concluded that VF USA intended or at least ought to have known that the infringing products and materials would ultimately be sold and distributed in Canada and that the COC’s allegations, if true, establish a real and substantial connection to British Columbia. Justice Dillon also held that the British Columbia Supreme Court is the most appropriate forum to decide the proceeding and refused to exercise the courts discretion to decline jurisdiction.

A copy of Justice Dillon’s reasons for judgment can be found here.