COURT FILE NO.: CV-19-615799-0000 DATE: 2019/06/05 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

dead end survival, llc Applicant

• and - GEORGI MARHASIN and MARHASIN WAREHOUSE Respondent

Counsel: Paul V. Lomic and Sabrina Salituro for the Applicant Hugh M. MacKenzie for the Respondent

HEARD: May 27, 2019

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] The Applicant, Dead End Survival, LLC seeks to enforce a judgment of the United States District Court for the Northern District of Georgia Atlanta Division. The judgment granted both an injunction and damages against the Respondent, Georgi Marhasin, who is a sole proprietor operating as Marhasin Warehouse.

B. Preliminary Objection

[2] Mr. Marhasin raises the preliminary objection that Dead End has commenced an application in Ontario to enforce a foreign judgment. He submits that Dead End should have proceeded by action and not application.

[3] I disagree, an application is appropriate since there are no material issues of fact in dispute. The originating process of an application is an appropriate way to recognize and enforce a foreign judgment. [1]

C. Factual Background

[4] Dead End is a Michigan corporation created in 2014 that sells survival gear through various online retailers under the trade name SharpSurvival. It manufacturers, among other products, a tent and a compass. The goods are manufactured in Michigan, warehoused at Amazon.com, which has several distribution centres across the U.S., and sold through online services to consumers across the U.S.

[5] On May 8, 2018, Dead End commenced an action for trademark infringement, unfair competition, fraud, tortious interference with business relationships, unjust enrichment, misappropriation, and conversion against Georgi Marhasin and Marhasin Warehouse in the Georgia District Court by way of a Complaint. The Complaint is a 90-page, 274 paragraph pleading containing numerous photographs and images of documents.

[6] Dead End owns the trademarks “SharpSurvival” and “Survival Spark” and the Survival Watch logo. Dead End alleged that Mr. Marhasin, who is a sole proprietor carrying on business as Marhasin Warehouse in Ontario with an Amazon storefront name “Discount Enterprise”, was selling counterfeit versions of Dead End’s goods through various online retailers, including Amazon. Dead End alleged that Mr. Marhasin had used an image stolen from Amazon, was passing himself off as Dead End, and had filed a trademark application for SharpSurvival, which is Dead End’s trademark for its products.

[7] Although Mr. Marhasin had no stores in Georgia, it is true that he sold counterfeit goods in Georgia. On this application, he admitted that Chinese manufacturers had been hired to manufacture copies of Dead End’s products. The Chinese manufacturer shipped the goods to a warehouse in the U.S. and from the warehouse to Amazon. From Amazon, the products were shipped to purchasers. Mr. Marhasin admitted that he and a business associate, Gary Leung, had purchased and sold 2,000 compasses and 2,000 survival tents, of which 600 compasses and 600 tents were sold by Mr. Marhasin through Amazon. Mr. Marhasin admitted that 38 tents or compasses were sold in Georgia.

[8] The Georgia District Court assumed jurisdiction because Mr. Marhasin had sold, offered to sell, and sold products to residents in Georgia. Further, the Georgia District Court assumed jurisdiction because the state law claims were integrally related to the federal claims for trademark infringement and all the claims arose from a common nucleus of operative facts.

[9] On May 21, 2018, the Georgia District Court granted Dead End’s motion for temporary relief and issued a temporary restraining order prohibiting Mr. Marhasin from advertising, using, offering to sell, selling, distributing, or importing into the United States any goods containing the Survival Watch trademark and any colorable imitation of the same, including, the Partial SW Logo and the Partial SS Logo. Further the court order restrained him from using Dead End’s trademarks or any confusingly similar to or colorable imitation of Survival Watch, including the Partial SW Logo and the Partial SS Logo. The temporary order was to expire on June 4, 2018.

[10] On June 4, 2018, the Georgia District Court extended the restraining order until July 5, 2018.

[11] On June 20, 2018 pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ("Hague Convention") and section 4 (f) and 4 (h) of the U.S. Federal Rules of Civil Procedure, Dead End arranged for Mr. Marhasin to be personally served with the complaint and with the temporary restraining order.

[12] On July 5, 2018, the Georgia District Court further extended the restraining order until July 17, 2018.

[13] Mr. Marhasin did not serve or file a defense or otherwise respond to the Complaint and on July 17, 2018, the Clerk of the District Court entered an Entry of Default.

[14] On August 13, 2018, Dead End Survival brought a motion in the Georgia District Court for a default judgment. The motion for a default judgment was served on Mr. Marhasin but he delivered no response to the motion.

[15] On October 31, 2018, Judge Cohen of the George District Court issued a permanent injunction enjoining Mr. Marhasin from making, advertising, using, offering to sell, selling, distributing, or importing into the United States any goods containing the Survival Watch trademark and any colorable imitation of the same, including, the Partial SW Logo and the Partial SS Logo and from using Dead End Survival's trademarks or any confusingly similar to or colorable imitations of Survival Watch, including the Partial SW Logo and the Partial SS Logo, from filing any intellectual property complaints against Dead End Survival concerning the Survival Watch trademark and any colorable imitation of the same, including, the Partial SW Logo and the Partial SS Logo.

[16] Judge Cohen ordered Mr. Marhasin to pay $2.0 million in statutory damages to Dead End Survival plus attorney's fees of $44,760.00 and costs of $5,389.00.

[17] Mr. Marhasin was served with a copy of the judgment. He did not move to set it aside. He did not appeal. He did not pay the judgment.

[18] On March 1, 2019, Dead End commenced an application in Ontario to enforce the Georgia District Court’s judgment.

D. Discussion and Analysis

[19] At common law, a foreign judgment is, in effect, a debt that can be enforced by a cause of action to claim payment of the debt, and absent evidence of fraud or of a violation of natural justice or of public policy, the enforcing court is not interested in the substantive or procedural law of the foreign court that granted judgment. [2] In an action to enforce the foreign judgment, the Ontario court will not relitigate the underlying litigation that gave rise to the judgment, and if the foreign judgment is proven and is final, the Ontario court will enforce the foreign court’s judgment with a judgment of its own. [3]

[20] Foreign non-monetary judgments, including judgments for equitable relief, such as an specific performance or an injunction are also enforceable. [4] For a foreign non-monetary judgment to be enforceable, it must have been rendered by a court of competent jurisdiction and must be final, and it must be of a nature that the principle of comity requires the domestic court to enforce it. The domestic court retains the discretion that underlies equitable orders and may exercise that discretion in deciding whether to enforce a foreign equitable order.

[21] Subject to the defences, a Canadian court will enforce a foreign judgment if the defendant attorned to the jurisdiction of the foreign court [5] or if the foreign jurisdiction had a “real and substantial connection” to the dispute. [6]

[22] The real and substantial connection is the overriding factor in the determination of the jurisdiction of the foreign court, and once it is determined that a foreign court properly assumed jurisdiction, a foreign judgment is prima facie enforceable. [7] Given that the domestic court will not relitigate the substantive merits of the foreign judgment and although the creation of new defences is possible, [8] there is only a small list of defences to the enforcement of a foreign judgment. [9]

[23] In deciding if the dispute had a real and substantial connection to the foreign jurisdiction, the domestic court must find that a significant connection existed between the plaintiff’s cause of action and the foreign jurisdiction. [10] In determining whether there is a real and substantial connection, the domestic court should consider the connections between the subject matter of the action, the alleged wrongdoing, the place where the damages are suffered, as well as with the transactions of the parties and with the action. [11] The connection must be real and substantial but not necessarily the most real and substantial connection of all possible jurisdictions that might have a connection to the dispute. [12] The real and substantial connection test is not a rigid test, and must ultimately be guided by order and fairness, as opposed to a mechanical counting of contacts and connections. [13]

[24] In Moran v. Pyle National (Canada) Ltd., [14] a product’s liability action, the defendant manufactured its product in Ontario and did not carry on business in Saskatchewan and had no property or assets in Saskatchewan. The plaintiff was injured using the product in Saskatchewan, and in the Supreme Court of Canada, Justice Dickson, as he then was, explained for the Court that “[b]y tendering his products in the market place directly or through normal distributive channels, a manufacturer ought to assume the burden of defending those products wherever they cause harm as long as the forum into which the manufacturer is taken is one that he reasonably ought to have had in his contemplation when he so tendered his goods”.

[25] In the immediate case, in my opinion, the Georgia District Court had a real and substantial connection with the dispute between Dead End and Mr. Marhasin.

[26] Mr. Marhasin’s main defence to having the Georgia District Court’s judgment enforced is that he alleges that the judgment was obtained by fraud. In particular, he alleges that the Complaint, which was used to obtain, the temporary restraining order, contained grossly inaccurate information, was scandalous and was deceptively designed to meet the standard of review to obtain under American law the extraordinary relief of a preliminary injunction. [15]

[27] However, a foreign judgment can be challenged for fraud only where the defendant’s factual allegations are material and new, i.e., not having already been already adjudicated by the foreign court. [16] To raise the defence of fraud, a defendant has the burden of demonstrating that the facts sought to be raised could not have been discovered by the exercise of due diligence before the obtaining of the foreign judgment. [17] While a defendant may seek to impeach a foreign judgment on the basis that it was obtained by fraud, the defendant may not do so by attempting to re-litigate any of the merits of the action that led to the foreign judgment. [18] In the immediate case, there is no evidence that Dead End perpetrated a fraud on the Georgia District Court. It put a fair factual record before the court.

[28] In Beals v. Saldanha, [19] the Supreme Court of Canada stated that where the foreign default proceedings are not inherently unfair, failing to defend the action, by itself, should prohibit the defendant from claiming that any of the evidence adduced or steps taken in the foreign proceedings was evidence of fraud just discovered.

[29] Mr. Marhasin could have put a different legal or factual spin on the facts presented to the Georgia District Court, and perhaps, although it appears doubtful having regard to his admissions made on this application, he might have mounted a defence or reduced his exposure to liability. However, although he was given ample notice of the proceedings in Georgia, he did attorn to the jurisdiction and he did not defend.

[30] Mr. Marhasin’s other defence was a public policy defence based on the alleged excessiveness of the statutory damages awarded in the United States for trademark infringement.

[31] The public policy defence precludes the enforcement of a foreign judgment that is contrary to the Canadian concept of justice. To determine whether enforcement of a foreign judgment would be contrary to public policy, the court must consider the historical and factual context of the proceedings that led to the granting of the judgment, and where there are competing public policy imperatives, whether overall, enforcement would be contrary to public policy. [20]

[32] In my opinion, Mr. Marhasin has not made out a public policy defence. The U.S. law about trademark infringement is not contrary to the Canadian concept of justice or basic morality. The public policy defense is narrowly construed and does not bar enforcement of a foreign judgment because the damages awarded in the foreign proceeding exceed what would have been awarded under Canadian law. [21] In Beals v. Salhana, [22] Justice Major stated at paragraph 76 of his judgment: “The public policy defence is not meant to bar enforcement of a judgment rendered by a foreign court with a real and substantial connection to the cause of action for the sole reason that the claim in that foreign jurisdiction would not yield comparable damages in Canada.”

E. Conclusion

[33] For the above reasons, I grant Dead End’s application to enforce the foreign judgment.

[34] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Dead End’s submissions within twenty days of the release of these Reasons for Decision followed by Mr. Marhasin’s submissions within a further twenty days.

Perell, J.

Released: June 5, 2019

COURT FILE NO.: CV-19-615799 -0000 DATE: 2019/06/05 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

dead end survival, llc Applicant

• and - GEORGI MARHASIN and MARHASIN WAREHOUSE Respondent

REASONS FOR DECISION

PERELL J. Released: June 5, 2019

[1] Metcalfe v. Racer Sportif Inc., [2004] O.J. No. 2756 (S.C.J.); Nuvex Ingredients Inc. v. Snack Crafters Inc. (2005), 74 O.R. (3d) 397 (S.C.J.); Oakwell Engineering Ltd. v. Enernorth Industries Inc. (2005), 76 O.R. (3d) 528 (S.C.J.); Commission de la Construction du Québec v. Access Rigging Services Inc. 2010 ONSC 5897; Hartzog v. McGriskin, 2010 ONSC 5618; Marcus Food Co. v. DiPanfilo, 2012 ONSC 1505; Zashko v. Touchgate and Ahmedi, 2018 ONSC 3734. Contra: Noël et Associés, S.E.N.C.R.L. v. Sincennes, 2012 ONSC 3770.

[2] Yaiguaje v. Chevron Corp., 2015 SCC 42; Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 at para. 12; Beals v. Saldanha, 2003 SCC 72, 2003 SCC. 72.

[3] Collier v. Hatford, [2001] O.J. No. 6101 (S.C.J.).

[4] Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52; Zashko v. Touchgate and Ahmedi, 2018 ONSC 3734; Van Damme v. Gelber 2013 ONCA 388, affg 2012 ONSC 6277, leave to appeal refused [2013] S.C.C.A. No. 342; Hartzog v. McGriskin, 2010 ONSC 5618; Johnson & Johnson v. Butt, [2007] O.J. No. 4655 (S.C.J.).

[5] Monte Cristo Investments v. Hydroslotter Corporation, 2011 ONSC 6011.

[6] Yaiguaje v. Chevron Corp., 2015 SCC 42; Beals v. Saldanha, 2003 SCC 72 at para. 19; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077.

[7] Beals v. Saldanha, 2003 SCC 72, 2003 SCC. 72 at para. 37; Tracy v. Iran (Information and Security), 2017 ONCA 549 at para. 87.

[8] Beals v. Saldanha, 2003 SCC 72 at para. 42; United States of America v. Yemec (2009), 97 O.R. (3d) 409 at paras. 169-179 (S.C.J.), var’d 2010 ONCA 414, [2010] O.J. No. 2411 (C.A.), reconsideration allowed 2010 ONCA 845.

[9] Beals v. Saldanha, 2003 SCC 72; King v. Drabinsky (2008), 2008 ONCA 566, 91 O.R. (3d) 616 (C.A.).

[10] Yaiguaje v. Chevron Corp., 2015 SCC 42.

[11] Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Mill Valley Bamboo Associates, LLC v. D.T.I. Diversified Transportation Inc., [2006] O.J. No. 4686 (S.C.J.).

[12] Lapointe Rosenstein v. Cassels Brock, 2016 SCC 30 at paras. 34-35; Club Resorts Ltd. v. Van Breda), 2012 SCC 17; Tolofson v. Jensen (1994), 120 D.L.R. (4th) 289 (S.C.C.).

[13] Muscutt v. Courcelles 2010 ONCA 84, [2010] O.J. No. 402 (C.A.), affd (sub nom. Club Resorts Ltd. v. Van Breda), 2012 SCC 17.

[14] Moran v. Pyle, [1975] 1 S.C.R. 393.

[15] Ingram v. Ault, 50 F.3d 898 (11th Cir. 1995); Levine v. Camcoa, Ltd. 70 F.3d 1191 (11th Cir. 1995); Reno Air Racing Ass’n. Inc. v. McCord, 452 F.3d 1126 (9th Cir. 2006).

[16] Beals v. Saldanha, 2003 SCC 72 at paras. 50-53; Monte Cristo Investments v. Hydroslotter Corporation, 2011 ONSC 6011; Mill Valley Bamboo Associates, LLC v. D.T.I. Diversified Transportation Inc., [2006] O.J. No. 4686 (S.C.J.).

[17] Beals v. Saldanha, 2003 SCC 72.

[18] Monte Cristo Investments LLC v. Hydroslotter Corp., 2011 ONSC 6011 at para. 21.

[19] 2003 SCC 72 at para. 53.

[20] Great America Leasing Corp. v. Yates (2003), 68 O.R. (3d) 225 (C.A.); Society of Lloyd’s v. Meinzer (2001), 55 O.R. (3d) 688 (C.A.).

[21] Beals v. Saldanha, 2003 SCC 72 at paras. 71, 75-76.

[22] 2003 SCC 72.