06 Déc 2012

American Eagle Outfitters vs. Reitmans – Be Careful not to waive your Right to Professional Secrecy


Sarah
D. Pinsonnault

De Grandpré Joli-coeur
s.e.n.c.r.l./LLP

Some of you may be familiar with these two retail companies. The case American Eagle Outfitters Canada Corp.
c. Reitmans (Canada) Ltd., 2012 QCCS 5941,
involves a trademark dispute existing between these two parties. In the late
90’s, American Eagle Outfitters Canada Corporation (“AEO”) decided to open
stores in Canada and, in doing so, register some of their trademarks, namely
“AEO” and “AE”.

At the same time, Shirmax Retail was already operating in the Canadian
retail industry, notably with the clothing line Addition-Elle (“AE”). They
already owned several trademarks (ex. Addition-Elle AE Design, A/E Sport
Design, A/E Sport & Co.) and applied for the “AE” trademark.

Legal proceedings soon followed that ended with an agreement whereby
Shirmax Retail was deemed the owner of the trademarks in Canada. Shirmax
thereby granted a licence to AEO in exchange for royalties. Furthermore, should
ever Shirmax wish to sell or transfer its rights in the trademarks, AEO would
have a right of first refusal.

Notwithstanding this agreement, Shirmax ultimately sold their shares,
which included the rights to the trademarks, to Reitmans. Consequently, AEO alleged
breach of contractual obligations and instituted proceedings to be named owner
of said trademarks, as well as to claim damages from Reitmans.

Reitmans argued prescription due to the fact that the transfer of shares
occurred in 2003, and that the current proceedings were instituted in September
2011. Reitmans thus examined AEO before filing their defence in order to establish
that AEO had known for a long time of said transfer.

As part of the undertakings arising from this examination, AEO refused to
communicate certain documents under the pretext that they were protected by
professional secrecy. 

Following a brief overview of the principles of professional secrecy,
and the examination of certain documents, Justice Claudine Roy j.c.s., analysed
whether AEO waived their right to professional secrecy. More specifically, in
their motion introducing suit, AEO made references to the time they became
aware of the transfer. Moreover, in support of this, they chose one of their in-house
attorneys for the examination:

« [47] On parle
ici de contrats d’achat d’actions, de fusion d’entreprises et de cession
d’actifs. Il est probable que les membres du service juridique de l’entreprise
soient les personnes les plus susceptibles de connaître ces détails, sinon les
seules.

[48] Tel que déjà
mentionné, les documents visés sont écrits ou reçus par Me Strohm et Me Gibbs,
avocates internes de AEO, travaillant pour Me Bulman. AEO Canada a d’ailleurs
choisi Me Bulman, dirigeant de AEO Canada, vice-président, secrétaire et avocat
général de AEO pour être interrogé au préalable. À l’audience, elle explique
qu’il est la seule personne encore à son emploi qui est au courant des faits en
litige. Cela démontre bien la probabilité que ce soit un membre du service
juridique qui ait la connaissance des détails de transactions juridiques de la
nature de celles en litige ici.

[49] AEO a renoncé au
secret professionnel et les documents 1, 5, 9 à 11, 13 à 21, 23 à 25, 29, 30 et
35, en réponse aux engagements 5 et 6, et ceux relatifs aux objections 17 à 21
doivent être communiqués. »

However, although this waived AEO’s right to professional secrecy, Reitmans
is nevertheless not entitled to engage in a fishing expedition. AEO is therefore
solely allowed to have access to the information that would serve as evidence
to the contrary of Reitmans’ alleged time of awareness of the transfer of the
trademarks :

« [50] Même s’il
y a renonciation, cette renonciation n’autorise pas un accès illimité et
inconditionnel; elle ne porte que sur l’étendue et le moment de la connaissance
par AEO Canada du transfert ou de la vente des Marques à Reitmans. »

To read this decision in its entirety, click here.

 

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