Shoe Company Walks Away From Contempt Show Cause Hearing

In ASICS v 9153-2267 Quebec, Chief Justice Crampton of the Federal Court held that the Defendant in a trade-mark infringement case and its officers had shown cause why they should not be held in contempt of Court.

Both ASICS  and the Defendant sell shoes in Canada. In November 2013, ASICS obtained a default judgment enjoining the Defendant and its officers from using or infringing certain marks and awarding damages.

In late 2016, ASICS  sought and obtained an order requiring the Defendant and its officers to show cause why they should not be held in contempt of Court regarding the default judgment. ASICS alleged that the Defendant breached the default judgment by continuing to sell shoes bearing the ASICS’ marks and by failing to pay the damages award.

Chief Justice Crampton applied the test for civil contempt set out by the Supreme Court of Canada in Carey. Because there was no evidence showing the Defendant’s use of the marks after the date of the default judgment, Chief Justice Crampton held that the evidence did not establish that the Defendant or its officers had breached the default judgment.

Chief Justice Crampton noted that a finding of contempt in respect to a monetary award requires more than just a failure to pay the amount:

[54] As discussed at paragraph 34 above, an alleged contemnor cannot be found to be in contempt of court in respect of a failure to pay a monetary award in favour of another party unless it has been demonstrated beyond a reasonable doubt that the alleged contemnor intended to evade that obligation. Such an intention to evade can be inferred from a refusal to pay and to provide a legitimate explanation for such failure, despite opportunities to do so, or to demonstrate an inability to pay. The onus is not on the plaintiff to proactively demonstrate an ability to pay, but rather on the alleged contemnor to raise this as a defence.

ASICS’ evidence showed that it had served the default judgment on the Defendant in May 2014, but that it had taken no other steps to collect on the award until 2016, at which time it commenced a process that was continuing at the time of the show cause hearing. Chief Justice Crampton therefore concluded that the Defendant and its officers had shown cause why they should not be held in contempt of Court.

A copy of the decision may be found here.