2016 QCCQ 278, 2016 QCCQ 278

Oyster World

(1994) Inc. c. Lambretta, s.r.l. 2016 QCCQ 278 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF montreal Civil Division No: 500-22-220632-155 DATE: January 28, 2016 ______________________________________________________________________ PRESIDED BY THE HONOURABLE VINCENZO PIAZZA, J.C.Q. ______________________________________________________________________ OYSTER WORLD

(1994) INC. Plaintiff v. LAMBRETTA S.R.L. Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Oyster World (1994) inc. (“ Oyster World ”) avers that a transaction intervened with Lambretta S.R.L. (“ Lambretta ”) and asks that it be homologated by the Court. [ 2 ] Lambretta asserts that there was no transaction as the parties never executed, nor agreed to the final terms of a written contract, which was an essential consideration.

All documents exchanged by the parties were strictly for discussion purposes and could become binding only when approved by Lambretta’s board of directors and signed by both parties. This never occurred. CONTEXT [ 3 ] Oyster World was the registered owner of the Lambretta trademark and related domain names in Canada and the United States. Lambretta commenced proceedings to cancel this trademark in both countries. These proceedings are still pending in Canada but are terminated in the United States. [ 4 ] Counsel for Oyster World were the firms Robic in Canada and Davis & Gilbert in the United States.

Lambretta was represented by Mr. Curt Handley, Esq., attorney at law in the United States. [ 5 ] Oyster World’s attorneys received their instructions from its president, Mr. Joseph Pearl. Mr. Handley received his instructions from Mr. Walter Scheffran. [ 6 ] On August 6, 2014, Ms. Joy Wildes, from the firm Davis & Gilbert, wrote an email [1] to Mr. Handley, to convey Oyster World’s offer to sell the Lambretta trademarks to Lambretta for US$50,000.00. Lambretta countered with an offer at US$15,000.00 [2] . A series of email exchanges ensued between Ms. Wildes and Mr.

Handley. [ 7 ] By September, the settlement discussions between Ms. Wildes and Mr. Handley had crystallized around the midway figure of US$32,500.00. [ 8 ] On September 29, 2014, Ms. Wildes advised Mr. Handley that Oyster World was willing to enter into an agreement with Lambretta for US$32,500.00 [3] . Shortly thereafter, Mr. Handley sent these emails to Ms. Wildes [4] : From: Curt Handley, Esq. [ mailto: […] ] Sent: Thursday, October 02, 2014 5:43 PM To: Wildes, Joy Cc : Muller, Celia Subject : Re: LAMBRETTA Joy, Thanks!

Great news! We have agreement! I am waiting for a document from him that finalizes settlement demands, but we are good to proceed with the $32.5. He also wants to know what the status of any third party suits either instituted by Joe Pearl and/or Oyster World or against them with regards to the Lambretta mark. Can you please find out? He would like the cessation of any suits related to the Lambretta mark to prevent/understand any future interference from other parties. Thanks, Curt From: Curt Handley, Esq.

Sent: Monday, October 06, 2014 10:11 AM To: Wildes, Joy Cc: Muller, Celia Subject: Re: LAMBRETTA Joy, Hope you are well! I have heard back from my client. He would like: 1) Both the US and CA TMs 2) Their related Lambretta domains transferred 3) A cessation of all lawsuits brought by both Joe Pearl personally and OysterWorld with regard to Lambretta 4) Notice on any lawsuits against Joe Pearl and/or OysterWorld with regards to Lambretta We are good with the $32.5k. Let me know. Thanks! Curt [ 9 ] On October 10, 2014, Mr. Handley advised Ms.

Wildes that the settlement agreement that he had drafted was with his client for final review. On October 18, 2014, Mr. Handley sent the document to Ms. Wildes for her perusal. This draft agreement is appended

herewith as

Schedule A [5] . [ 10 ] Ms. Wildes then sent the following email [6] : From: “Wildes, Joy” […] Sent: Tuesday, November 04, 2014 2:54 PM To: “Curt Handley, Esq.’’ […] Cc: “Muller, Celia” […] Attach: Trademark Settlement Agreement – DG comments 11.4.14.doc Subject: Draft Settlement Agreement - LAMBRETTA We have reviewed the draft settlement agreement you provided with our client, and are attaching a redline. You will notice that we made some substantive edits to

Section 4, regarding settlement payment procedures; we are sharing our thoughts on these changes, as follows, to move this along: • Oyster World should not bear the costs for assignment and transfer of the LAMBRETTA trademark registrations and lambrettaclothing.com domain name. This transfer is being undertaken at the request of Lambretta SRL, and payment for disbursement costs associated with it should be part of the settlement of this matter. • We do not feel an escrow account is necessary for this type of transaction.

Oyster World will be agreeing in a properly executed contract to assign the relevant LAMBRETTA trademark registrations and transfer the lambrettaclothing.com domain name, and your client will have ample legal recourse if this transfer is not effected.

If your client insists that this transfer be undertaken using an escrow account, this can be set up at Lambretta SRL’s expense. • The simplest and most effective and cost-efficient way to handle this is to agree on a set timeline with respect to transfer and payment: payment of the $32,500 settlement amount and of costs for the assignment of the trademarks and the transfer of domain name should be made by Lambretta SRL to Oyster World upon signature by Oyster World of the Settlement Agreement.

If your client wishes to secure further confirmation of assignment prior to issuing payment, Oyster World is willing to sign a short form assignment at the same time. As specified at

Section 4, all payments should be wired ‘’in trust’’ to the legal counsel of the parties (to you for Lambretta SRL, and to Canadian counsel for Oyster World). We look forward to hearing your client’s thoughts and look forward to a final resolution of this matter. Please note that the draft agreement is for settlement purposes only and is not binding unless and until it has been executed by both parties. Kind regards, Joy [ 11 ] The redline draft agreement in question is annexed hereto as

Schedule B. [ 12 ] The parties have made no proof of any follow-up to this last email until January 30, 2015. It is only then that M tre Bob H. Sotiriadis, Robic’s partner in charge of the file, initiated the following exchange of correspondence with Mr. Handley [7] : From: SOTIRIADIS, Bob Sent: Friday, January 30, 2015 2:07 PM To: Curt Handley, Esq. Cc: ISMERT, Sarah Subject: 2015-01-30 to C Handley re Lambretta settlement - R#14855-1 Dear Colleague:

We are canadian counsel to Oyster in this file. As you know, this settlement has dragged on for some time and we think it is because of the relative complexity of the Settlement Agreement that has been drawn up for such a small matter. Perhaps we could simplify things by agreeing on the following and then having the requisite assignment documents filed in Canada and in the United States. 1. Oyster World (1994) inc. represents and warrants that it owns US trademark registration 1,853,423 (hereinafter ‘423) and Canadian trademark registration 419,017 (hereinafter ‘017); 2. Oyster World

(1994) Inc. assigns all ownership in ‘423 and ‘017 to Lambretta SRL; 3. Oyster World

(1994) Inc. assigns the internet domain lambrettaclothing.com to Lambretta SRL and shall arrange for the transfer at its own expense upon receipt of the settlement funds set out below; 4. Oyster World

(1994) Inc. represents and warrants that it owns the trademarks and the domain being assigned, there is no litigation or other dispute except that between the parties to this Agreement in respect to the trademarks and the domain name being assigned and it has all power and authority to enter into this Agreement; 5. In consideration of the assignments above, Lambretta SRL shall pay Oyster World

(1994) Inc. the sum of $US32,500.00 payable to ROBIC, LLP in trust upon acceptance of this Agreement; 6. This Agreement and the assignments shall be governed by and interpreted in accordance with the laws of the State of New York and the parties submit to the exclusive jurisdiction and venue of Courts located within the City and Country of New York as to State Court actions, and the Southern District of New York as to Federal Court actions. You will note that your client becomes owner of the trademarks and the domain name upon payment to us in trust.

You will also note that our client will take care of the transfer of the domain name but that we have not put in an escrow clause or anything of that sort for the obligation of the assignor to take care of the actual filing of assignment documents or paying for them. We have never seen an agreement where the assignor handles the formalities relating to the assignment or the fees for that matter. Amongst other reasons, assignees want to make sure that the assignment is properly carried out and also that they do not have to rely on the other party, even if it means holding back part of the assignment fee.

With this Settlement Agreement, your client will be fully capable of having the formality of the assignments registered in Canada and in the United States and will not require the input of Mr Pearl. The parties have already agreed on all of this so perhaps if your client could give you instructions to accept the terms above, we will simply transpose them onto a document without our letterhead and not in letter form and have it sent for signature by the clients. We would like to wrap this up by Wednesday. Thanks! Bob Bob H. Sotiriadis, Lawyer / ROBIC , LLP / LAWYERS, PATENT AND TRADEMARK AGENTS

De: Curt Handley, Esq. [ mailto:[…] ] Envoyé: 30 janvier 2015 16:29 À: SOTIRIADIS, Bob Cc: ISMERT, Sarah Objet: Re: 2015-01-30 to C Handley re Lambretta settlement - R#14855-1 Importance: Haute Bob, Hope you are well! I am sorry this has dragged on. Unfortunately, the complexity (as you suggest), as well as the cost, have created the delays. My client has to answer to a board of directors, and he had went with the $32.5k on his own, assuming they would approve. They will not approve the $32.5k and are in discussions currently as to what they will authorize.

I am awaiting a response from him after their board meeting next week. We can then see if that number will work for your client. I appreciate your patience. I do not anticipate that we can resolve by next Wednesday, Feb 4, 2015, given the current state of things. However, I believe we are close. I will reach out to you next week once I have heard back from my client. Thanks, Curt From: SOTRIADIS, Bob Sent: Friday, January 30, 2015 3:28 PM To: Curt Handley,Esq. Subject: RE: 2015-01-30 to C Handley re Lambretta settlement - R#14855-1 Ok thanks for the quick reply. Have a nice weekend Bob

From: Curt Handley, Esq. Sent: Friday, January 30, 2015 3:36 PM To: SOTIRIADIS, Bob Subject: Re: 2015-01-30 to C Handley re Lambretta settlement - R#14855-1 Bob, You as well! I am sure we can bring this matter to a happy conclusion for all involved Have a great weekend! Curt From: Curt Handley, Esq. Sent: Tuesday, February 10, 2015 3:43 PM To: SOTIRIADIS, Bob Subject: Re: 2015-01-30 to C Handley re Lambretta settlement R#14855-1 Bob, Hope you are well! Thanks for your patience in this matter. My client has spoken with is board and after much heated discussion, the most they will authorize is $10,000 USD.

The original offer was for $10,000 CAD, but they are willing to move to USD to settle in the matter. In this case with the current exchange rates, it would be $12,500 CAD, which is an increase of $2,500 CAD over the original offer made to your client. I can share that my client will not be able to move far, if at all, from this number due to the constraints his board has placed upon him. Please share that with your client. I will await word back from you as to whether your client will accept. Sincerely, Curt [8]

De: Curt Handley, Esq. [ mailto:[…] ] Envoyé: 25 février 2015 10:44 À: SOTIRIADIS, Bob Objet: Re: 2015-01-30 to C Handley re Lambretta settlement R#14855-1 Bob, Hope you are well! It’s been several weeks since I sent the email below to you and I haven’t heard anything back. Could you please let me know where we are at with this? If I don’t hear back form you by March 1, 2015, we will proceed with the case against your client’s mark.

Thanks, Curt De: SOTIRIADIS, Bob Envoyé: 3 mars 2015 17:36 À: ‘Curt Handley, Esq.’ Cc: GABOURY, Melanie Objet: RE: 2015-01-30 to C Handley re Lambretta settlement – R#14855-1 Let’s wait until the end of this week. The original offer was 32,500 so its hard to justify this drop. Thanks Bob From: ISMERT, Sarah Sent: Friday, March 06, 2015 4:31 PM To: curt@[...]

Cc: SOTIRIADIS, Bob Subject: RE: 2015-01-30 to C Handley re Lambretta settlement – R#14855-1 Hello Mr. Handley, We are meeting with the client on Monday and should revert to you with an answer then.

Have a good week-end, Sarah Sarah Ismert, Lawyer / ROBIC , LLP / LAWYERS, PATENT AND TRADEMARK AGENTS From: SOTIRIADIS, Bob Sent: Monday, March 09, 2015 3:27 PM To: mailto: curt@[...] Subject: 2015-03-09 to C Handley re Lambretta – Agreement between parties – R#14855-1 Curt, We have reviewed this matter with our client and we are still at a loss to explain the unilateral change in the settlement sum proposed by your client. Your email of January 30, 2015 below makes reference to approval from a Board of Directors. This is unacceptable to our client. There was clearly a $32,500 offer that has been made.

It was even the object of the written settlement agreement that you proposed to us. Both parties clearly accepted that this was the settlement figure. Furthermore, this figure had been agreed on and correspondence was exchanged with this figure in mind back in October. My email of January 30, 2015 to you provided for a very simply basis for the transaction. There has been a meeting of the minds on the key substantive element of the transaction. An agreement is in place.

Our client has even ceased instructing US counsel and is going to allow the trademark to lapse over the next week or so as a result of the original settlement. To offer $10,000 now is not acceptable and has no rational basis. We therefore reiterate our client’s offer to transfer ownership in the trademarks upon receipt of $32,500USD made payable to our firm in trust by Monday, March 16, 2015. Our client has instructed counsel to file a proceeding before the Courts in Quebec for the homologation of the Agreement and an Order to pay the agreed-upon sum if this matter is not settled by then.

Kindly immediately bring this matter to the attention of your client and advise. Thanks, Bob H. Sotiriadis, Lawyer / ROBIC, LLP / LAWYERS, PATENT AND TRADEMARK AGENTS

From: Curt Handley, Esq. Sent: Monday, March 09, 2015 6:55 PM To: SOTIRIADIS, Bob Subject: Re: 2015-03-09 to C Handley re Lambretta – Agreement between parties – R314855-1 Bob, Hope you are well! You are welcome to raise any valid argument…but none exists here. There was a never a written or oral offer, just settlement negotiations. Offers during settlement negotiations are not enforceable when there are material terms still undefined as there is no « meeting of the minds ».

In the current case, we have never settled the material terms of disbursement and who was paying for the assignments of the trademarks and domains. As such, there is no enforceable agreement, oral or written, on which you can base your claim. If you insist on proceeding down this route, my client will most likely seek counter claims for malicious prosecution…can your client really afford to go down this path? I will convey your message to my client to see whether they wish to respond to it. In the meantime, I will take it from your email that your client has rejected the $10k USD offer.

Thanks again, Curt [ 13 ] Meanwhile, on February 24, 2015, Davis & Gilbert had filed a notice of withdrawal as counsel for Oyster World before the Trademark Trial and Appeal Board of the United States Patent and Trademark Office [9] .

In this notice, Davis & Gilbert writes that “local counsel in Canada has assumed responsibility and the undersigned firm has been discharged.” On March 2, 2015, the United States Patent and Trademark Office advised Oyster World that it had 30 days to appoint new counsel, failing which an order by default could be issued [10] . [ 14 ] M tre Sotiriadis testified at trial that in order to limit costs, it had been decided to terminate Davis & Gilbert’s mandate and to discontinue Oyster World’s contestation of the cancellation procedures by Lambretta of the Lambretta trademark in the United States, as it had become moot for Oyster World to pursue said proceedings given the transaction with Lambretta. [ 15 ] On May 19, 2015, Lambretta’s petition to cancel the trademark in the United States was granted by default, following Oyster World’s failure to appoint a new counsel of record [11] .

ANALYSIS AND DECISION [ 16 ] The Civil Code of Québec (“ CCQ ”) gives this definition of a transaction: 2631. Transaction is a contract by which the parties prevent a future contestation, put an end to a lawsuit or settle difficulties arising in the execution of a judgment, by way of mutual concessions or reservations. A transaction is indivisible as to its subject.

[ 17 ] The following articles of the Code pertain to the formation of contracts: 1385. A contract is formed by the sole exchange of consents between persons having capacity to contract, unless, in addition, the law requires a particular form to be respected as a necessary condition of its formation, or unless the parties subject the formation of the contract to a solemn form. It is also of the essence of a contract that it have a cause and an object. 1386.

The exchange of consents is accomplished by the express or tacit manifestation of the will of a person to accept an offer to contract made to him by another person. 1387. A contract is formed when and where acceptance is received by the offeror, regardless of the method of communication used, and even though the parties have agreed to reserve agreement as to secondary elements. 1388. An offer to contract is a proposal which contains all the essential elements of the proposed contract and in which the offeror signifies his willingness to be bound if it is accepted. 1389.

An offer to contract derives from the person who initiates the contract or the person who determines its content or even, in certain cases, the person who presents the last essential element of the proposed contract. 1390. An offer to contract may be made to a determinate or an indeterminate person, and a term for acceptance may or may not be attached to it.

Where a term is attached, the offer may not be revoked before the term expires; if none is attached, the offer may be revoked at any time before acceptance is received by the offeror. [ 18 ] It was Oyster World’s burden to prove [12] , on a balance of probabilities [13] , that:

(1) Mr. Handley’s emails of October 2 and 6, 2014, constituted an offer within the meaning of

article 1388 CCQ, and;

(2) Oyster World manifested its will to accept that offer, as provided for by

article 1386 CCQ. [ 19 ] In the Court’s opinion, Oyster World failed to discharge this burden. [ 20 ] Oyster World invites the Court to conclude that Ms. Wildes’ comments of November 4, 2014 and the changes she proposed to Mr. Handley’s draft settlement agreement pertained only to secondary elements. [ 21 ] In light of the energy that the parties have dedicated to the question of who should pay for the transfer of the trademarks and how payment should be made, the Court does not believe that it constitutes a “secondary element” within the meaning of

article 1387 CCQ. [ 22 ] It is evident that Lambretta did not trust Mr. Pearl, as appears, inter alia , from electronic correspondence he exchanged with Mr. Scheffran in July and August 2014 [14] . Payment modalities were already at the core of their discussions. In this context, setting up protections such as the escrow mechanism devised in the agreement drafted by Mr. Handley seems to have been an important, if not essential, consideration for Lambretta. [ 23 ] Also, Ms.

Wildes specifically stated in her email of November 4, 2014, that there would be no binding agreement before a formal contractual document was executed by both parties. This is an unequivocal manifestation of Oyster World’s unwillingness to be bound by anything short of its president’s signature on a written contract. [ 24 ] As provided for by

article 1385 CCQ, the parties have thus subjected the formation of the transaction to the execution of a written instrument [15] . [ 25 ] Finally, Oyster World placed itself in a position where it has become impossible to tender its interest and title in the Lambretta trademark formerly registered in the United States.

When it appeared that Lambretta would no longer entertain a settlement at US$32,500.00, it would have still been possible for Oyster World to prevent the cancellation of the Lambretta trademark by appointing new counsel before the United States Patent and Trademark Office. [ 26 ] Considering that a transaction is indivisible as to its subject, the cancellation of the trademark in the United States constitutes a material impediment to the homologation sought by Oyster World. [ 27 ] The Court appreciates that Lambretta did not intend to purchase the registered trademark as a going concern, but this does not entail that Oyster World can therefore claim to have performed its end of the transaction despite not being able to deliver said trademark.

FOR THESE REASONS, THE COURT: DISMISSES Plaintiff’s Motion; WITH COSTS. __________________________________ VINCENZO PIAZZA, j.c.q.

M tre Reevin Pearl Pearl & Associates Attorney for the Plaintiff M tre Claudette Dagenais DJB Avocats Attorney for the Defendant Hearing date: December 17, 2015

SCHEDULE A

SCHEDULE B