T-2244-73
Consolidated Textiles Limited (Plaintiff)
v.
Central Dynamics Limited, Bruck Mills Ltd.,
Sidney Bornstein and J. René Cornellier
(Defendants)
Trial Division, Addy J.—Montreal, May 6-10,
13 and 14; Ottawa, December 18, 1974.
Constitutional law—Trade and commerce—Jurisdiction—
Trade secrets—Confidential information—Company de
veloping new type of loom—Making of vital parts by second
company—Confidence violated by employee of second com-
pany—Trade Marks Act, R.S.C. 1970, c. T-10, ss. 7, 55—
Federal Court Act, ss. 26, 64(2)—B.N.A. Act, s. 92(13).
The plaintiff company, a textile manufacturer on a large
scale, was alone in successfully developing a commercially
viable conversion kit or system for converting fly-shuttle
looms to water-jet looms. The company entrusted to the
defendant, Central Dynamics Limited, the instructions and
materials necessary for a contract with Central Dynamics
for producing parts of the conversion assembly. Subse
quently, the plaintiff sought an injunction restraining the use
of trade secrets and confidential information gained by the
defendants. Of the latter, Central Dynamics Limited and
two competitors of the plaintiff (Bruck Mills Limited and
Sidney Bornstein) consented to the issue of restraining
orders against them. The trial proceeded against the defend
ant Cornellier, the key man in charge of the operation at
Central Dynamics.
Held, granting an injunction against the defendant, the
action of the plaintiff was based on section 7(e) of the Trade
Marks Act, proscribing acts "or other business practices
contrary to honest industrial or commercial usage in Cana-
da". This provision was validly enacted by Parliament and
lay within the jurisdiction of the Federal Court. It was
applicable to a man in the position of the defendant. Until he
was approached by the plaintiff, this defendant had no
knowledge of looms and had never been connected with the
textile industry. He was repeatedly advised of the fact that
the plaintiff considered the whole project confidential. A
person who had received information in confidence pertain
ing to a trade secret could not use it to the prejudice of the
person who gave it to him. The evidence showed that the
defendant was attempting to use the photographs, drawings
and specific detailed knowledge, which he had acquired
from the plaintiff, to the benefit of the plaintiff's competi
tors. Apart from this, where confidential drawings were
used for an unauthorized purpose, there was established a
prima facie case of misuse of confidential information. The
defendant had completely failed to rebut this prima facie
case.
MacDonald v. Vapor Canada Ltd. [1972] F.C. 1156,
followed. Suhner & Co. A.G. v. Transradio Ltd. [1967]
R.P.C. 329; International Tools Ltd. v. Kollar [1968] 1
O.R. 669; Allen Manufacturing Co. v. Murphy (1911)
23 O.L.R. 467; Maguire v. Northland Drug Co. Ltd.
[1935] S.C.R. 412, and Saltman Engineering Coy. Ld. v.
Campbell Engineering Coy., Ld. (1948) 65 R.P.C. 203,
referred to.
ACTION.
COUNSEL:
M. G. Freiheit and P. R. O'Brien for
plaintiff.
A. L. Stein, Q.C., and N. Stein for defend
ant Cornellier.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for plaintiff.
Stein & Stein, Montreal, for defendant
Cornellier.
The following are the reasons for judgment
delivered in English by
ADDY J.: This is an action concerning an
alleged violation of trade secrets and breach of
confidential information imparted by the plain
tiff to the defendants and for conspiracy relat
ing thereto.
The plaintiff is claiming an injunction
restraining the use of any such confidential
information gained by the defendants and
enjoining them to deliver up all documents,
plans and other relevant written matter and also
to divulge the names of all parties to which any
such information has been communicated.
At the opening of trial, minutes of settlement
were filed and motions were made for judgment
pursuant thereto settling the claims against all of
the defendants except the defendant J. René
Cornellier (hereinafter referred to as "Cornel-
lier"). The motions for judgment were granted
and the trial proceeded against the last-men
tioned defendant.
The plaintiff company, originally established
in the United States in 1905, has been in
Canada since 1930 and operates a very large
textile manufacturing business. In its business
and in its various mills it operates some 800
looms. For many centuries and until a very few
years ago, all looms operated on the principle of
a shuttle which carried the weft yarn across the
warp. The weft yarn consists of a continuous
thread which the fly shuttle lays over and
through the vertical threads forming the warp.
In the mid-1960's, three firms in the world
commenced experimenting with and manufac
turing, at least experimentally, certain water-jet
looms, the basic principle of which consisted of
replacing the fly shuttle with a water jet which
would propel or shoot individual threads
through the warp.
In 1964, the plaintiff company became inter
ested in the possibility of using water-jet looms
which were being produced, experimentally at
that time in Japan by Prince Motor Company.
This company was later purchased by Nissan,
also of Japan, and I shall hereinafter refer to
Prince Motor Company and to Nissan as "Nis-
san." The plaintiff company obtained from
Nissan the latter's first water-jet loom imported
into North America and, as a result, had the
first water-jet loom in Canada and the first
operating water-jet loom in North America. As
a result of its operation of the Nissan water-jet
loom, the plaintiff conceived of the possibility
of converting standard fly-shuttle looms to
water-jet looms by using some of the parts of
the Nissan water-jet looms and also improvising
other brackets, etc., required for the conversion.
The plaintiff company was in an uniquely
favourable position in so far as its technical
weaving staff and research personnel were con
cerned, in that it had been using some water-jet
looms for considerable time, both in Canada and
in the United States, at the time when it began
experimenting on conversion of fly-shuttle
looms; it had been operating a school for train
ing employees in the operation of water-jet
looms; it had also engaged in furthering an
operation in the United States to weave fabric
for the manufacturing of sandbags and, finally,
it had obtained the exclusive service contract
for all Nissan water-jet looms in North Ameri-
ca. It enjoyed this latter right until May 1971.
The first Nissan loom arrived in 1965 when
water-jet looms first made their appearance on
the market. About that time also, water-jet
looms were first being manufactured experi
mentally in Europe by a Czechoslovakian
company.
The total parts employed in the conversion kit
of the plaintiff amounted to approximately one
hundred parts including a total of approximately
twenty Nissan water-jet loom parts.
Although conversion had probably been
thought of as a possibility, all evidence points
clearly to the fact that, until the plaintiff had
commenced developing its own version of a
converted water-jet loom in 1971 and also until
it had reached the final stages of developing a
production loom, which could operate commer
cially, no other loom-manufacturing company
and no other member of the textile industry had
done anything or attempted to do anything to
overcome the numerous technical difficulties
involved in turning out an operational converted
loom. The evidence also points clearly to the
fact that the idea itself was not at that time
believed to be practically feasible. Certainly, no
other textile manufacturer in North America,
and most probably none elsewhere, had taken
effective steps to convert standard fly-shuttle
looms to water-jet looms.
I was most impressed by the evidence of one
Maurice Rabinovitch, who had been employed
by the plaintiff until September 1972 as the
head of its research and development branch.
It appears that even at the present time, no
other company has successfully developed a
commercially viable conversion kit or system
for converting fly-shuttle to water-jet looms.
The plaintiff first started its original develop
ment lated in the year 1969. In nine weeks it
had succeeded in developing a machine that
could weave but it took some eighteen months
more of experimenting to develop a machine
effective enough to weave on a commercial
basis.
The defendant Cornellier, as the key man in
charge of the Aero-space Division of the
defendant Central Dynamics Limited, was in
charge of its department which manufactured
component parts for various types of ma
chinery. He was in this capacity responsible for
quoting on the manufacturing of certain vital
parts and was required to produce other parts of
the conversion assembly and, for such purpose,
received from the plaintiff parts of the water-jet
assembly of Nissan and other hand-built brack
ets and parts, as well as pictures of same, and
was provided with photographs of certain com
ponents and parts and was advised of their
intended purpose. He was also provided with
brochures on water-jet looms and was shown
looms in the plaintiff's mills, which looms were
the subject of experiments and trials, in an
attempt to attain a commercially viable convert
ed loom.
Cornellier objected to the jurisdiction of this
Court on the grounds that the matter was prop
erly one of property and civil rights, and exclu
sively within the jurisdiction of the provinces
from a legislative standpoint and of the provin
cial courts from a judicial standpoint.
Although not specifically pleaded in the state
ment of claim the plaintiff insists that the action
was instituted pursuant to section 7(e) of the
Trade Marks Act' which reads as follows:
7. No person shall
(e) do any other act or adopt any other business practice
contrary to honest industrial or commercial usage in
Canada.
' R.S.C. 1970, c. T-10.
Altogether apart from the question that it is
not, generally speaking, necessary to plead law,
counsel for the defendant Cornellier was, at all
relevant times, aware that the action was
instituted on the basis of that subsection, exten
sive argument was addressed to the Court con
cerning its validity and its application to the
present case and no specific objection was
taken to the fact that it was not pleaded. Had
any such objection been taken, I would forth
with have ordered the claim amended had I
deemed it necessary.
The question of the right of Parliament to
legislate in this area and also the question of
whether jurisdiction over the matter has actual
ly been granted to the Federal Court of Canada,
were both decided by the Appeal Division of
this Court in the recent case of MacDonald v.
Vapor Canada 2 .
Jackett C.J. in delivering the unanimous deci
sion of that Court, after an extensive review of
the authorities, dealt with the first question, that
is, the right of Parliament to enact the section at
page 1171 of the above report as follows:
Against the background of these authorities, my conclu
sion is that a law laying down a set of general rules as to the
conduct of business men in their competitive activities in
Canada is a law enacting "regulations of trade as a whole or
regulations of general trade and commerce within the sense
of the judgment in Parsons case". From this point of view, I
can see no difference between the regulation of commodity
standards and a law regulating standards of business con
duct; and, in my view, if there is anything that can be
general regulation of trade as a whole it must include a law
of general application that regulates either commodity stand
ards or standards of business conduct.
It appears to me that section 7(e) merely
prohibits in a very general manner any improper
business conduct and that neither there nor in
any other part of the Act is any attempt made to
define any standard of business conduct or to
"[lay] down a set of general rules as to the
conduct of business men" or to regulate any
specifically defined conduct, except of course
conduct and acts which are specifically prohib-
2 [1972] F.C. 1156.
ited by other provisions of the Act and which
are specifically defined therein. In other words,
the subsection would appear to me to be merely
prohibitory in a very general way, without being
supported either in the subsection itself or in
any other part of the Act, by any regulatory
provisions. However, there is no doubt that the
Court of Appeal has found that it does regulate
trade and commerce and is constitutional on
those grounds. I am, of course, bound thereby.
As to the second question, that is, whether
actual jurisdiction to determine the question has
been granted to the Federal Court of Canada,
the learned Chief Justice has this to say at page
1160 of the above report:
The Trial Division has jurisdiction to entertain an action
for breach of section 7 by virtue of section 55 of the Trade
Marks Act as amended by section 64(2) of the Federal Court
Act, read with section 26(1) of the latter Act. Those provi
sions read as follows:
55. The Federal Court of Canada has jurisdiction to
entertain any action or proceeding for the enforcement of
any of the provisions of this Act or of any right or remedy
conferred or defined thereby.
26. (1) The Trial Division has original jurisdiction in
respect of any matter, not allocated specifically to the
Court of Appeal, in respect of which jurisdiction has been
conferred by any Act of the Parliament of Canada on the
Federal Court, whether referred to by its new name or its
former name.
This decision was arrived at notwithstanding
the fact that the case clearly and unequivocally
dealt with a wrong which altogether apart from
any statutory enactment has been recognized
for many years as actionable at law, both civil
and common, with legal and equitable remedies
which could and apparently still can be enforced
by action taken before provincial courts. This is
all the more evident because in the case itself
the fact that a course of conduct was also
actionable at common law was used as a test to
determine whether that course of conduct con
stituted a breach of "honest industrial or com
mercial usage in Canada" as mentioned in sec
tion 7(e) of the Trade Marks Act. On this
subject, the learned Chief Justice stated at page
1161 of the report as follows:
It has been common ground on this appeal that a business
man, in Quebec as well as in the common law provinces, is,
quite apart from statute, liable to damages and an injuction
if he embarks on a course of using in his business informa
tion that has been obtained for him from a competitor by an
employee of that competitor in contravention of the
employee's contract of employment with that competitor.
(See authorities cited in Chapter XIII of Fox, The Canadian
Law of Trade Marks and Unfair Competition, 3rd edition, at
pages 652 et seq.) That being so, in my view it must be
"contrary to honest industrial or commercial usage in Cana-
da", in the absence of evidence to the contrary, to use
information so obtained in that way and it is, therefore,
contrary to section 7(e) of the Trade Marks Act to do so.
The above statements of the law constitute
essential and integral parts of the ratio decidendi
of the Court of Appeal in the Vapor Canada
case (supra) and are therefore clearly binding
upon me. The case is presently under appeal
before the Supreme Court of Canada and,
because of this fact and by reason also of the
extent to which the decision recognizes a feder
al jurisdiction over matters formerly dealt with
exclusively by provincial courts and which, until
the federal enactment, were apparently con
sidered to be within the exclusive jurisdiction of
the provinces under section 92(13), I was
inclined to defer my decision until the matter
had been conclusively settled by that Court.
However, since it will apparently be several
months before the appeal is heard and, in view
of the fact that the plaintiff is seeking an injunc
tion and was unsuccessful in an attempt to
obtain an interlocutory injunction, I concluded
that the parties to this action should not be
delayed further before receiving a decision in
the case at bar.
The only possible factual distinctions between
the Vapor Canada case (supra) and the case
before me are the following:
1. The person whose actions led to the litiga
tion in the former case had obtained his infor
mation as an actual employee of the plaintiff
while, in the present case, it is alleged that he
obtained it as an independent contractor
doing confidential work. I can see no grounds
for distinguishing the two cases and of hold
ing that, although section 7(e) applied to the
former situation, it would not apply to the
present case;
2. In the Vapor Canada case, the company
set up by the person who obtained the infor
mation was a direct competitor of the plaintiff
on the market while, in the case before me,
the defendant Cornellier is not a direct com
petitor but intends to use the information to
favour direct competitors of the plaintiff,
some of whom were also originally sued as
parties to the action but who, by reason of the
settlement of the claim against them, as above
stated, are no longer parties to the action. The
plaintiff alleges conspiracy between the
defendant Cornellier and two of the other
defendants who are actual competitors. They,
in the settlement, consented to restraining
orders being issued against them.
This would appear to link the defendant Cor-
nellier irrevocably with those defendants should
I find that he did contravene section 7(e). How
ever, in any event, I cannot subscribe to the
argument that section 7(e) is to be limited to
cases where the defendant is an actual business
competitor of the plaintiff. There is nothing in
the wording of that subsection which might
imply that the existence of a competitor is
required, nor can the ejusdem generis rule be
applied to the words "do any other act or adopt
any other business practice ... " in paragraph
7(e), since the paragraphs preceding it are not
confined to cases where competitors are
involved. (For the full text of section 7 refer
note infra*.)
*7. No person shall
(a) make a false or misleading statement tending to dis
credit the business, wares or services of a competitor;
(b) direct public attention to his wares, services or busi
ness in such a way as to cause or be likely to cause
confusion in Canada, at the time he commenced so to
direct attention to them, between his wares, services or
business and the wares, services or business of another;
The only paragraphs of section 7 which
specifically provide for or necessarily imply the
existence of a competitor are paragraphs (a) and
(b). In paragraphs (c) and (d) the existence of a
competitor cannot, by any stretch of the imagi
nation, be considered as a necessary subject or
object of the acts or omissions mentioned
therein.
I am cognizant of the fact that in a footnote to
the Vapor Canada case (supra) the learned
Chief Justice at note 7 on page 1175 of the
report stated as follows:
If, therefore, an employee divulged confidential information
to a competitor of his employer but took no part in the
competitor's business operations, section 7(e) could not, as I
see it, be invoked by the employer against such employee.
Section 7(e), like the rest of section 7, is restricted to acts of
unfair competition and does not govern employer-employee
relations.
This statement was, of course, not part of the
ratio decidendi of the case and, as above stated,
section 7 cannot be held to be limited to cases
where a competitor is involved. Furthermore, in
the present case, the defendant Cornellier was
never an employee of the plaintiff but on the
contrary was always an independent contractor,
although not a competitor.
Since there can be no logical distinction on
the facts between the Vapor Canada case and
the case before me, which would have a bearing
on the question of jurisdiction, I must conclude
(c) pass off other wares or services as and for those
ordered or requested;
(d) make use, in association with wares or services, of
any description that is false in a material respect and
likely to mislead the public as to
(i) the character, quality, quantity or composition,
(ii) the geographical origin, or
(iii) the mode of the manufacture, production or
performance
of such wares or services; or
(e) do any other act or adopt any other business practice
contrary to honest industrial or commercial usage in
Canada.
that I am bound by that case and I, therefore,
hold that I do indeed have jurisdiction.
I will now deal with the merits of the case on
the basis of the findings of fact already made
and of those to which I will hereinafter refer.
The law is settled that where no patent rights
have been acquired, although a plaintiff might
have no title to protect as against the world, he
may have a good title to protect against a par
ticular defendant on the principle of unjust
enrichment. See Ackermans v. General Motors
Corporation 3 ; Fox, Canadian Law of. Trade
Marks 4 ; and Morison v. Moats.
However, the general rule is that it is in the
public interest to allow freedom of trade and to
protect the individual's right to practice his
profession or trade in a free and unhindered
fashion. See Trego v. Hunt'. Unless there is an
overriding reason justifying it, such as the pro
tection of an interest in specific trade secrets,
even where there is a contract any covenant
express or implied in restraint of trade will be
considered null and void and unenforceable as
being against public policy. Any such covenant
if wider than required for the protection of the
former employer or client will be unenforceable.
A duty to refrain from using or divulging trade
secrets does not prevent a person from using
general skill and knowledge acquired whilst in
the employ of another. Both he and the general
public are entitled to the benefit of this acquired
general skill and knowledge. Objective knowl
edge such as trade secrets and the names of
customers are to be distinguished from subjec
tive or general knowledge, such as the method
of organizing a business, or of doing business of
managing a plant, or of carrying out a process or
procedure generally known to persons in the
trade or occupation or readily ascertainable by
(1952) 95 USPQ 214.
4 2nd Ed. (1956) Vol. II, 944.
s (1851) 9 Hare 241 at 258; 20 L.J. Ch. 513, affirmed 21
L.J. Ch. 248.
a [1896] A.C. 7 at 24.
them. See Herbert Morris Limited v. Saxelby';
R. L. Crain Ltd. v. Ashton$; Attwood v.
Lamont 9 ; United Indigo Chemical Company
Limited v. Robinson 10 ; Bowler v. Lovegrove";
Lange Canadian Inc. v. Platt 12 ; and Sir W. C.
Leng & Co., Limited v. Andrews 13
Finally, where a person has, by fair means
and without being in breach of any duty to the
owner, become acquainted with an unpatented
trade secret, he may use the knowledge for
himself and also manufacture and sell the
results of same. See Morison v. Moat 14 ;
Progress Laundry Co. v. Hamilton 1 s; and Her-
bert Morris Limited v. Saxelby (supra).
Notwithstanding the defendant Cornellier's
evidence to the contrary, I find that he was
repeatedly advised of the fact that the plaintiff
considered the whole project, including the very
concept of replacing a fly shuttle by a water-jet
attachment, as being confidential, he was also
advised of the fact that one of the main reasons
was to gain and maintain as long as possible a
competitive production advantage over the
other textile manufacturers. The defendant Cor-
nellier himself in fact advised the witness
Rabinovitch that he was aware of the confiden
tiality of the information which was being and
had been imparted to him.
A person who has received information in
confidence pertaining to a trade secret shall not
' [1916] 1 A.C. 688 at 699,702 to 705 and 714.
s (1949) 9 C.P.R. 143, affirmed (1950) 11 C.P.R. 53.
9 [1920] 3 K.B. 571.
10 (1932) 49 R.P.C. 178 at 187.
11 [1921] 1 Ch. 642 at 650.
12 (1972) 9 C.P.R. (2d) 231, reversed [1973] C.A. 1068.
1 3 [1909] 1 Ch. 763 at 773.
14 20 L.J. Ch. 513; affirmed in 21 L.J. Ch. 248.
15 (1925) 270 S.W. 834.
take advantage of it and use it to the prejudice
of the person who gave it to him in confidence.
The protection afforded by this principle does
not depend on any contract, express or implied,
but on a broad principle of equity which pre
vents a person from making improper use with
impunity of such information so acquired by
him. See Fox, Canadian Law of Trade Marks
(supra); Seager v. Copydex Limited 16 ; Saltman
Engineering Coy. Ld. v. Campbell Engineering
Coy., Ld. 17 ; Printers & Finishers Ltd. v.
Holloway 18 ; and Breeze Corporations v. Hamil-
ton Clamp & Stampings Ltd. 19 . The duty to
respect that confidence persists after the rela
tionship which created it has terminated. See
Terrapin Limited v. Builders' Supply Company
(Hayes) Limited 20 ; Peter Pan Manufacturing
Corporation v. Corsets Silhouette Limited 21 ;
Seager v. Copydex Limited (supra); Reid and
Sigrist Ltd. v. Moss & Mechanism Ld. 22 ; and
Brian D. Collins (Engineers) Limited v. Charles
Roberts & Company Limited 23 .
The onus rests on plaintiff to establish the
confidential nature of the information and the
fact that the products sold (or intended to be
sold) are the same. See Gibbons v. Drew Chemi
cal Ltd. 24 and Robin-Nodwell Mfg. Ltd. v. Fore
most Developments Limited 25 . This onus
includes that of establishing that devices or
improvements were not known to the trade gen
erally. See R.L. Crain Ltd. v. Ashton 26 .
Where there is some doubt as to whether
information is in fact confidential the plaintiff is
16 [1967] R.P.C. 349 at 368.
17 (1948) 65 R.P.C. 203 at 213.
18 [1965] R.P.C. 239 at 255-6.
19 [1962] O.R. 29; 30 D.L.R. (2d) 685.
20 [1967] R.P.C. 375.
21 [1963] R.P.C. 45 at 55.
22 (1932) 49 R.P.C. 461.
23 [1965] R.P.C. 429.
24 (1972) 8 C.P.R. (2d) 105.
25 (1968) 52 C.P.R. 244.
26 (1950) 11 C.P.R. 53 at 62.
obviously in a better position when the defend
ant had been advised that it was confidential.
See United Indigo Chemical Company Limited
v. Robinson 27 and International Tools Ltd. v.
Kollar 28 .
In the present case, one must therefore
determine:
(a) Whether the subject-matter of the alleged
secret is objective or specific enough, as dis
tinguished from purely subjective or general
knowledge, to be capable of being afforded
protection at law as a trade secret;
(b) Whether the information sought to be pro
tected is in fact secret now, or was so at the
time Cornellier acquired it, in the sense that it
was not generally known to people knowl
edgeable in the art at the time;
(c) Whether the keeping of the secret would
be of sufficient benefit to the plaintiff to
warrant protection being given it, in view of
the general principle that every individual
should enjoy the freedom of practising his
trade or profession in a free and unhindered
fashion; and finally,
(d) Whether the person whom the plaintiff is
seeking to restrain from using the knowledge,
acquired it by fair means or whether, on the
contrary, he acquired it confidentially and
would be under a duty not to divulge it by
reason of the relationship which existed at the
time between himself and the plaintiff.
The evidence adduced in this case was
voluminous and, to a considerable extent,
repetitious. In addition to the testimony at the
trial, the lengthy examinations for discovery
27 (1932) 49 R.P.C. 178.
28 [1968] 1 O.R. 669; 67 D.L.R. (2d) 386.
were, at the request of counsel for both parties,
made part of the record.
The plaintiff has firmly established the fact
that it wished to conceal from its competitors in
the textile industry for as long as possible not
only the method of converting a fly-shuttle loom
to a water-jet loom by means of a kit but also, at
the outset, the fact that it was experimenting in
this area and, later on, the fact that it had
succeeded and had some converted looms in
actual operation in a mill.
It is clear that the longer these matters could
be concealed from its competitors the longer the
plaintiff might expect to enjoy the competitive
advantage afforded by the increased efficiency
of the converted loom over the standard shuttle
loom, without having to disburse the very large
amount of capital required to re-equip its mills
with regular water-jet looms such as those pro
duced by Nissan.
I also find as a fact that at the outset, while in
the early stages of experimentation, the project
was carried out in strict secrecy in a special part
of one of the plaintiff's mills where only key
personnel engaged in the actual experimentation
were allowed. During this stage, personnel on
the project, except for senior key personnel,
were not told how what they were doing related
to the proposed finished project. These first
experiments were carried out at the Alexandria
mill of the plaintiff in a special room with "No
admittance" signs. Visitors had to sign in and
staff working on the project were warned that
they were not to discuss it with anybody. Later
on, when it became necessary to test the ma
chinery under normal mill operating conditions,
the converted looms were installed in one
corner of the plaintiff's Joliette mill. To avoid
attaching too_ much importance to the machine
by attempting to conceal the machine from the
many employees working in the mill, the mill
employees were not barred from the area. How
ever, the plaintiff changed from an open mill
policy where the public, including competitors,
were generally admitted, to a closed mill policy
where, except for employees, only persons
approved by senior officers and managers of the
owner were allowed access.
In the case of limited purchase orders for
experimental parts I find that the suppliers and
designers were all advised orally of the need for
secrecy. Subsequently, when production orders
were placed for component parts, the purchase
orders were all marked as being confidential.
The plaintiff's invention constituted, and on a
balance of probabilities, still constitutes a
unique piece of machinery in the industry.
In my view, the fact that the conversion kit
contained certain patented parts produced by
Nissan and used in their regular water-jet looms
is irrelevant. The evidence in any event estab
lishes as a fact that the plaintiff had permission
from Nissan to use these parts providing the
kits were employed solely by the plaintiff in its
own mills and not sold or distributed to the
public or to other members of the textile indus
try. The patented parts formed a very important
and essential element of the conversion kit and
indeed constituted the very core of the contrap
tion, but the method of adapting them to a
standard loom to create an efficiently operating
production water-jet loom was not known
except to the plaintiff.
The line between subjective knowledge,
which cannot be the subject-matter of an action
and objective knowledge which may, is often
difficult to draw. See International Tools Ltd.
v. Kollar (supra). However, the specific knowl
edge, skill and invention of the plaintiff to
which I have referred above is the type of
objective knowledge which may constitute a
trade secret and is not knowledge of a general
or subjective type which cannot be afforded any
protection.
The plaintiff was better equipped than any
other organization in North America, to carry
out the experiments and to succeed in develop
ing the water-jet conversion. Cornellier on the
other hand, until he was approached by the
plaintiff, had no knowledge of looms of any
kind and had never been associated with the
textile industry. The only knowledge or experi
ence he had was obtained as a result of the
work which was commissioned of him by the
plaintiff .
There is an abundance of evidence to estab
lish, and I so find as a fact, that the defendant
Cornellier was attempting to use the photo
graphs, drawings and specific detailed knowl
edge, which he had acquired confidentially from
the plaintiff, to the benefit of the plaintiff's
competitors and to the consequent detriment of
the plaintiff. Altogether apart from this, where
confidential drawings are used for a purpose
other than that for which they were handed over
to the defendant, that is, where they are used by
the defendant for manufacturing other drawings
or pieces of machinery, which were not author
ized, this establishes a prima facie case of
misuse of confidential information. See Suhner
& Company A. G. v. Transradio Ltd. 29 . The
defendant Cornellier has completely failed to
rebut this prima facie case.
Where the Court cannot distinguish on the
evidence, between what is confidential, and
what is not, an injunction will not be granted.
See Suhner & Company A. G. v. Transradio
Ltd. (supra). In the present case, however, the
plaintiff has established positively that all of the
information imparted to the defendant Cornel-
lier was imparted in strict confidence. I find that
Cornellier was clearly advised from the very
beginning by one Blueth on behalf of the plain
tiff that the project, as well as the details of the
conversion kit, had to be kept confidential and
must not be divulged. I do not accept the
defendant Cornellier's testimony to the contrary
nor do I accept his testimony where it conflicts
that that of the witnesses Blueth or Rabinovitch.
29 [1967] R.P.C. 329.
The present case is, in my view, one where an
injunction can properly be granted pursuant to
the principle enunciated in: International Tools
Ltd. v. Kollar (supra); Allen Manufacturing Co.
v. Murphy 30 ; Maguire v. Northland Drug Com
pany Limited 31 ; and Saltman Engineering v.
Campbell (supra).
The plaintiff is therefore entitled to a restrain
ing order plus costs of the action throughout
payable forthwith after taxation.
Judgment will issue accordingly.
J0 (1911) 23 O.L.R. 467 at 473.
3' [1935] 3 D.L.R. 521 at 524; [1935] S.C.R. 412 to 416.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.