Executive Summary: Key Legal and Evidentiary Issues

• A Protective Order with a Solicitor’s Eyes Only (SEO) designation was sought to safeguard sensitive financial records.

• Central dispute involved trademark rights to the FIVALCO mark amid a breakdown of a closely-held family business.

• Fivalco demonstrated that disclosure of confidential documents to direct competitors posed a real and substantial risk.

• Evidence of acrimony, third-party communications, and competitive tensions supported the need for restricted disclosure.

• Belven objected to the SEO designation, citing prejudice and prior access to the disputed information.

• The Court concluded that unusual circumstances justified a more restrictive protective measure, granting the SEO designation.

Facts and outcome of the case

Background and parties involved

This case arises from a deeply personal and commercial conflict between members of a family formerly engaged in a joint business enterprise. Li Ma, the plaintiff, is married to William (Bill) Euverman, who originally founded Fivalco Industries Corporation. Mr. Euverman later founded a second company, Belven Controls Canada Inc., which he operates with Li Ma. In 2020, Mr. Euverman transferred the FIVALCO trademark registrations to Ms. Ma and sold his shares in Fivalco to his daughter, Kim Luft, and her husband, Darryl Luft. Following this shift, Fivalco and Belven became direct competitors in the valve sales and distribution market.

The plaintiff, Li Ma, alleges that Fivalco infringed the FIVALCO trademarks. In response, Fivalco counterclaimed, challenging the validity of the trademark registrations and alleging copyright infringement, passing off, and false statements under sections 7(a) and 7(b) of the Trademarks Act. What began as a Notice of Application eventually evolved into a full-blown litigation, which was consolidated with the current action.

The motion and legal test applied

Fivalco and the Lufts brought a motion for a Protective Order, seeking to apply a Solicitor’s Eyes Only (SEO) designation to four documents containing Fivalco’s financial records from 2021 to 2023. They argued that disclosure to Belven—its direct competitor—posed a serious risk of competitive harm. Fivalco relied on the legal test from AB Hassle v Canada, which requires showing that the information was always treated as confidential and that its disclosure could reasonably harm proprietary or commercial interests. The party must support the motion with concrete, non-speculative evidence.

Belven conceded that a Protective Order was warranted but opposed the SEO designation, arguing that it would prevent key individuals from properly instructing counsel. Belven also asserted that Mr. Euverman and Ms. Ma already had access to Fivalco’s business strategies from prior involvement.

Court’s analysis and findings

The Court accepted that the litigation, while rooted in a family dispute, had evolved into a substantial intellectual property conflict involving real business risks. It found that the evidentiary record, including correspondence from the opposing parties to Fivalco’s suppliers and customers, substantiated Fivalco’s claim of potential harm. The judge emphasized that while actual harm need not be proven, the risk must be real and grounded in the evidence.

Belven’s argument that the key individuals already had access to the protected information was rejected due to lack of supporting evidence. Furthermore, the judge found that the parties’ direct competition in a niche market increased the likelihood of misuse. Finally, the Court was unpersuaded that the SEO designation would unduly prejudice Belven’s ability to conduct its case, noting both sides were represented by capable intellectual property counsel.

Outcome of the motion

The Court granted the Protective Order with the SEO designation as requested by Fivalco and the Lufts. It concluded that the circumstances met the high threshold required for SEO protection due to the competitive relationship, documented hostility, and potential for misuse. Additionally, the Court awarded fixed costs of $2,500 to Fivalco and the Lufts, as agreed upon by the parties.