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Industrial design—Infringement—Validity of registration—Author assigning design to nominee of employer—Registration by assignee—Proprietor only person entitled to register—Nunc pro tunc transfer—Industrial Design and Union Label Act, R.S.C. 1952, c. 150, ss. 4, 8, 12, 13, 14, 15.

The author of an industrial design, applied to lawn sprinklers, executed it for Melnor Industries Inc., an American corporation, for good and valuable consideration. The author assigned the design to International, a subsidiary of Melnor. International, on October 18, 1966, applied for registration of the design and it was registered in its name. On January 1, 1967, Melnor conveyed to Beatrice Foods Co. all its business and assets, and, on March 25, 1968, the latter executed a document transferring to International, nunc pro tunc, as of August 9, 1966, all such rights as Melnor may have had in the design. This document was recorded about a month after the taking of the present action. On March 28, 1968, International assigned all its rights in the design to the plaintiffs, which are Canadian corporations. The plaintiffs sought relief against the defendant for infringement of the design. The Exchequer Court dismissed the action and ruled that the registration of the design was invalid as having been obtained in the name of a person other than the proprietor of the design. The plaintiffs appealed to this Court and the defendant cross-appealed.

Held: The appeal and the cross-appeal should be dismissed.

The intention of the Industrial Design and Union Label Act, R.S.C. 1952, c. 150, is to be construed

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as being (1) that it is the proprietor of a design who may apply for registration of it, and (2) that the proprietor, for this purpose, is the author of the design, unless, for valuable consideration, he executed it for another person, in which case the latter is the proprietor, and he alone is entitled to register it. An assignee could only be regarded as a proprietor if he is the recorded assignee of a design registered prior to the recording of such assignment. Consequently, the only person entitled to register the design in the present case was Melnor. The nunc pro tunc assignment did not assist the plaintiffs’ position.

The alternative contention that Melnor’s actions could be taken as agent for International and that, therefore, the latter was properly entitled to register the design under ss. 8 and 12 of the Act, must be rejected. In the circumstances, it could not be said that the design was being executed for International or that payment for the design was being made on behalf of International.

APPEAL and CROSS-APPEAL from a judgment of Noël J. of the Exchequer Court of Canada1, dismissing an action for infringement of industrial design. Appeal and cross-appeal dismissed.

Christopher Robinson, Q.C., and Nicholas Fyfe, for the plaintiffs, appellants.

Weldon F. Green and James Shearn, for the defendant, respondent.

THE CHIEF JUSTICE—I agree with the reasons and conclusion of my brother Martland and consequently find it unnecessary to express a final opinion as to the ground on which, at the conclusion of the argument, it appeared to me that the appeal failed, which was that the design claimed by the appellant was not sufficiently different from the old design, Exhibit C, to warrant a finding that it possessed originality. As the appeal fails the cross-appeal becomes unnecessary.

[1969] 1 Ex. C.R. 76, 39 Fox Pat. C. 167, 56 C.P.R. 212.

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I would dispose of the appeal and cross-appeal as proposed by my brother Martland.

The judgment of Martland, Ritchie, Hall and Spence JJ. was delivered by

MARTLAND, J.—This is an appeal from a judgment of the Exchequer Court1, dismissing the appellants’ action against the respondent which claimed that the latter had infringed the appellants’ industrial design, applied to lawn sprinklers, and registered under No. 226/29037 in the register of industrial designs on January 30, 1967. The appellants sought an injunction restraining the infringement of the design, damages as a result of the infringement, and other relief. The appellants admitted that the author of the design was John D. Beinert, of New York City, who executed the design for Melnor Industries Inc., a New York corporation, hereinafter referred to as “Melnor”, for good and valuable consideration.

Beinert, on August 6, 1966, assigned to International Patent Research Corporation, a New York corporation, hereinafter referred to as “International”, its successors and assigns, the entire and exclusive right, title and interest in and to the said design. International, on October 18, 1966, applied to the Commissioner of Patents for registration of the design, and it was registered in its name. On March 28, 1968, International assigned all its right, title and interest in and to the design to the appellants, which are Canadian corporations.

Melnor was, until 1967, engaged in the business of designing and manufacturing garden equipment and had a number of wholly owned subsidiaries, which included International and the appellants. The function of International was to be the holder of patent and design rights in all countries, including the United States of America and Canada, of the Melnor group of corporations.

[1969] 1 Ex. C.R. 76, 39 Fox Pat. C. 167, 56 C.P.R. 212.

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Pursuant to an agreement and plan of reorganization made on November 1, 1966, between Melnor and Beatrice Foods Co., a Delaware corporation, hereinafter referred to as “Beatrice”, Melnor, on January 1, 1967, conveyed to Beatrice all Melnor’s business and assets, including all the issued and outstanding shares of Melnor’s subsidiaries. Since that date, Beatrice has carried out, under the name “Melnor Industries”, the business formerly carried on by Melnor and Melnor is no longer in existence. On March 25, 1968, Beatrice executed a document transferring to International, nunc pro tunc, as of August 9, 1966, all such rights as Melnor may have had in the design in suit. This document was recorded about a month after the taking of the present action.

After International had been incorporated, in 1961, the practice was that whenever a United States application to register a design, executed for Melnor or one of its subsidiaries, was prepared, there would be sent to the author, along with the application papers, an assignment in favour of International of all rights to the design. As has been previously noted, such an assignment was executed by Beinert to International of his interest in the design in issue here, but, in so far as the application for registration in Canada is concerned, the application for registration was made by International and not by Beinert.

Various defences to the action were raised by the respondent, but it is only necessary, in the view which I take of the meaning of the relevant sections of the Industrial Design and Union Label Act, R.S.C., 1952, c. 150, to deal with one of them. This is the contention, sustained by the learned trial judge, that only the proprietor may apply for registration of a design, and that, in the circumstances of this case, in the light of ss. 8 and 12 of the Act, the proprietor was Melnor.

The relevant sections of the statute are as follows:

4. The proprietor applying for the registration of any design shall deposit with the Minister a drawing

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and description in duplicate of the same, together with a declaration that the same was not in use to his knowledge by any other person than himself at the time of his adoption thereof.

* * *

8. Where the author of any design has, for a good and valuable consideration, executed the same for some other person, such other person is alone entitled to register.

* * *

Proprietorship

12. (1) The author of any design shall be considered the proprietor thereof unless he has executed the design for another person for a good or valuable consideration, in which case such other person shall be considered the proprietor.

(2) The right of such other person to the property shall only be co-extensive with the right that he has acquired.

In the light of these provisions I construe the intention of the Act, in relation to registration, as being:

1. That it is the proprietor of a design who may apply for registration of it; and

2. That the proprietor, for this purpose, is the author of the design, unless, for valuable consideration, he executed it for another person, in which case the latter is the proprietor, and he alone is entitled to register it.

I am not persuaded by the appellants’ submission that ss. 8 and 12 are concerned only with the relative positions of the author and a person for whom he executed a design for valuable consideration, and that, for purposes of registration, the word “proprietor” should be construed as including other persons, e.g., an assignee who acquires rights from the author prior to registration.

The provisions governing assignments are contained in s. 13(1), which provides as follows:

13. (1) Every design is assignable in law, either as to the whole interest or any undivided part thereof, by an instrument in writing, which shall be recorded

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in the office of the Minister on payment of the fees prescribed by this Act in that behalf.

(2) Every proprietor of a design may grant and convey an exclusive right to make, use and vend and to grant to others the right to make, use and vend such design within and throughout Canada or any part thereof for the unexpired term of its duration or any part thereof.

(3) Such exclusive grant and conveyance shall be called a licence, and shall be recorded in like manner and time as assignments.

Under this section it is necessary that an assignment be recorded, and, while the section could be moire specific, it does not, in my opinion, contemplate that an assignment could be recorded before the design itself is registered. To hold otherwise would mean that there could be recorded an assignment of a right to a design which, so far as the register is concerned, does not exist.

The appellants submit that in different sections of the Act the word “proprietor” is used in different senses and that in s. 13(2), cited above, and in ss. 14(1) and 15 the word would include an assignee. The portion of s. 14(1) relevant to this argument reads as follows:

14. (1) In order that any design may be protected, it shall be registered within one year from the publication thereof in Canada, and, after registration, the name of the proprietor shall appear upon the article to which his design applies…

Section 15 provides:

15. If any person applies or imitates any design for the purpose of sale, being aware that the proprietor of such design has not given his consent to such application or imitation, an action may be maintained by the proprietor of such design against such person for the damages such proprietor has sustained by reason of such application or imitation.

While this submission may be true, it is not of material assistance to the appellants’ position because, in my view, an assignee could only be

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regarded as a proprietor, as the word is used in those sections, if he is the recorded assignee of a design registered prior to the recording of such assignment.

In the result, it is my opinion that the word “proprietor”, as used in the Act, includes only a person described in s. 12, who is entitled to register it, and, where the context requires, the holder of an assignment of a registered design, duly recorded as required by s. 13(1).

In these circumstances, the only person entitled to register the design in the present case would be Melnor, for which company the appellants admit that Beinert, whom they allege to be the author of the design, executed it for valuable consideration from Melnor. Melnor did not register the design. It was International which applied for and obtained registration of the design.

The appellants rely upon the assignment by Beatrice in favour of International, executed on March 25, 1968, which purports, nunc pro tunc, as of August 9, 1966, to assign all Melnor’s rights in the design. This document does not assist their position, however, in that, for the reasons already given, even if International had been in possession of such an assignment from Melnor at the time that it applied for registration it would not have been qualified, as proprietor, to register the design, since it was neither the author of it, nor a person for whom, for valuable consideration, the author had executed it.

In the alternative, it is contended by the appellants that, even though the design was executed on Melnor’s instructions and for valuable consideration provided by it, Melnor’s actions in this regard were taken as agent for International, and, in consequence, International was properly entitled to register the design under the provisions of ss. 8 and 12 of the Act. This submission is based upon the evidence that International was incorporated for the purpose of holding all patent and design rights in the United States and

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other countries for Melnor and its subsidiaries. It is contended, on this basis, that any payment made by Melnor to Beinert for the execution of the design must be regarded as having been made as agent for International.

This argument must be considered in the light of the evidence given at trial by Mr. Glick, a vice-president of Melnor Industries Division of Beatrice. On cross-examination he testified as follows:

Q. Now, Mr. Glick, it was true even at the time of the transfer of whatever interests there are in the designs and patents and from the beginning that Melnor Industries, Inc. had to apply the designs to the sprinklers, is that right? In other words they were to use the designs of the application for the sprinklers?

A. It was not meant for anyone else’s use other than Melnor.

Q. No, but it was intended that Melnor Industries Inc. would—

A. Get the benefits of the patents.

Q. Yes.

A. That is right, sir.

Q. They would have the right to apply these designs and use the patents?

A. That is right, sir.

Q. Is it true that all the expenses involved in producing it and so on were paid by Melnor Industries, Inc. as a matter of fact?

A. That is right, sir.

Q. And that intention really persisted despite the fact that there was a transfer of that so called title to International Patent Research Corporation?

A. That is right, sir. International Patent was set up solely as a holding corporation.

The function of International was solely as a holder of patents and designs for the use of Melnor and its subsidiaries. It did not, itself, use any of the patents or designs of which it was the registered owner. The design in issue here was intended to be used by the manufacturer, Melnor, and it was Melnor which arranged for the design to be made and which paid for it.

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In these circumstances, I do not see how it could be said that the design was being executed for International, a that payment for the design was being made on behalf of International. The only intention of Melnor in relation to International was that the latter should become registered proprietor of the design and hold it for the use of Melnor, or of a subsidiary designated by Melnor. That result could have been achieved, had Melnor become registered proprietor of the design, and then assigned it to International. But on the evidence I am not prepared to find that International was the proprietor of the design within the meaning of s. 12 of the Act.

In view of my conclusion with respect to these points in the appeal, it is unnecessary to decide the other issues which were raised on the appeal or the issues raised in the cross‑appeal. I would dismiss the appeal, with costs, and dismiss the cross-appeal, without costs.

Appeal dismissed with costs; cross-appeal dismissed without costs.

Solicitors for the plaintiffs, appellants: Smart & Biggar, Ottawa.

Solicitor for the defendant, respondent: W.F. Green, Toronto.

 

 

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