Wednesday, September 9, 2020

Default Judgment Requires Evidence

 Tatuyou, LLC v H2Ocean Inc 2020 FC 865 Little J


In this decision, Little J dismissed a motion for default judgment on the basis of insufficient evidence to meet the burden of proof on the balance of probabilities.

It is well established that “On a motion for default judgment in [the Federal] Court, all of the allegations in the statement of claim are to be taken as denied” [9]; Little J noted that “This standard is different from the requirements for default judgment under the rules in some provincial superior courts in Canada” [10], several of which provide that a defendant noted in default is deemed to have admitted the facts alleged in the statement of claim.

Consequently, even if the defendant has not filed a statement of defence, the plaintiff must provide evidence sufficient to establish infringement on the balance of probabilities [12]: “bald assertions” are not sufficient [14]. Little J indicated that the evidence must go to both validity and infringement [16], [17], [19], but presumably in the absence of evidence to the contrary, validity would be adequately established by the presumption of validity under s 43(2). In any event, the reference to validity was merely in passing, as the specific deficiencies noted by Little J went to infringement. In particular, there was no evidence from a skilled person on claim construction [19], but only statements by the plaintiff’s CEO that the defendant’s product is “substantially similar” to the plaintiff’s product and that it “includes all of the elements” of the asserted claims [20]. These statements amounted to little more than bald assertions, particularly given that the CEO “does not profess to be a person ordinarily skilled in the art” and there was no explanation as to how she arrived at these conclusions.

The evidence was also insufficient to establish that the defendant, an American company, had been selling the product in Canada [22]. There was an assertion to that effect, but again, no explanation of the basis for that assertion. A reference on the defendants’ .com website to “where customers in Canada can purchase [the allegedly infringing product],” unsupported by other evidence of actual sales, was not sufficient establish that anyone has actually purchased or attempted to purchase the product from the defendants’ website using a computer in Canada.

The bottom line is that because allegations in the statement of claim are taken to be denied, the mere fact that the defendant did not file a statement of defence after being served is not sufficient to obtain a default judgment in the Federal Court. Bald assertions of infringement are not sufficient to support a default judgment; at the very least, the plaintiff must provide an explanation for the basis for those assertions.

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