Declaring Control in Expungement Proceedings

In De Grandpré Chait v. Mead Products LLC, the Trademarks Opposition Board (the “Board”) maintained the registration for YEAR-IN-A-BOX (the “Mark”), which is registered for use in association with calendars. At issue was whether the registrant, MeadWestvaco (the “Registrant”), had demonstrated sufficient control over the entity selling the calendars in Canada in association with the Mark so as to maintain the registration of the Mark on the Canadian Trademarks Register. Importantly, Section 50(1) of the Trade-marks Act  states that if a trademark owner licenses the trademark for use by another entity and the owner has, under the license, direct or indirect control of the character or quality of the wares or services being provided by such entity in association with the licensed trademark, then the use of the trademark has the same effect as if used by the trademark owner itself.

In affidavit evidence accepted by the Board, the calendars associated with the Mark were manufactured in the United States by MWV Consumer & Office Products, a division of the Registrant. The calendars were then sent to Hilroy, a division of MeadWestvaco Canada LP, which sold the calendars to Canadian retailers. The Registrant’s affidavit evidence stated that MWV Consumer & Office Products, Hilroy and MeadWestvaco Canada LP were authorized to use the Mark pursuant to licenses under the terms of which the Registrant controlled the nature and quality of the calendars associated with the Mark. Importantly, the Registrant did not provide evidence detailing those terms of the license agreements which demonstrated control between the licensor and licensee. The party requesting expungement took the position that this evidence needed to be adduced so as to demonstrate sufficient control to satisfy Section 50(1). However, the Board held that it is possible to satisfy Section 50(1) of the Act by way of a declaration in which the owner or license holder simply attests to the fact that the control required by Section 50(1) indeed exists.

This owner-control scenario is a common one that faces many foreign owners of Canadian trademark registrations that are seeking to maintain marks on the Canadian Trademarks Register during an expungement proceeding. This decision highlights the importance of ensuring that control is demonstrated either by way of a declaration to such effect or, better yet, by filing evidence which includes a written license agreement detailing adequate control provisions.

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Injunction for Trademark Infringement: Québec

In Solutions Abilis Inc. v. Groupe Alithis Inc., the Québec Superior Court granted the plaintiff an interlocutory injunction precluding the defendant from using ALITHIS as part of its corporate name or trade name or as a trademark.  The test for an interlocutory injunction in Québec turns on whether the rights which the plaintiff invokes are clear, doubtful or non-existent.  If those rights are clear an injunction should be granted if serious harm would otherwise result.  If those rights are doubtful the court must also consider the balance of convenience.  This test is similar, although not identical, to the test used in the common law provinces where the courts must consider whether there is a serious issue to be tried, irreparable harm and the balance of conclusive irreparable harm. 

After setting out the test the Court then considered the plaintiff’s trademark rights, starting from the premise that trademarks are a guarantee of origin and intended to protect the public by indicating the source of the goods and services.  The Court then focused on whether there was confusion, finding that the plaintiff’s marks,

 abilis it           abilis ti

were inherently distinctive, since the included word, ABILIS, was a coined term with 3 syllables that created a strong sonority – “ab-il-is” and because of the use and position of the “it” and “ti” symbols in the marks.  The defendant’s mark,

alithis

 also used 3 syllables and a symbol.

The length of time also favoured the plaintiff and the nature of the trade was similar, namely computer consulting services.  The Court was not willing to accept the defendants’ argument that persons purchasing computer services would take time to determine the source, noting that initial interest confusion was sufficient and might, among other things, result in the plaintiff not being invited to bid for a potential customer’s work.  The Court was also convinced there was a sufficient degree of resemblance, referencing a number of Québec cases where the degree of resemblance led to a finding of confusion even where the goods or services were different. 

Since the likelihood of confusion was clear, a loss of goodwill and clientele were presumed and therefore the injunction was granted.  A decision regarding the balance of convenience was not necessary, but the Court noted, in the event of an appeal, that it favoured the plaintiff, particularly given the shorter period of time the defendants had been in the market.

Punitive Damages: Trademark and Copyright Infringement

The most recent case from the Federal Court continues the Court’s tough stance with respect to trademark and copyright infringement in Canada. 

In Harley-Davidson Motor Co. Group LLC v. Manoukian, the Court awarded significant compensatory and punitive damages against the Defendant company and its principal.

The Plaintiffs, H-D Michigan, LLC (“MI”), Harley-Davidson Motor Company Group, LLC (“MCG”) and Harley-Davidson Company, Inc. (“MCI”), hired an investigator to conduct an investigation into the alleged manufacture, offering for sale and sale of counterfeit Harley-Davidson clothing by the Defendants.  The investigator attended two separate locations of the Defendants.  While in attendance at both locations, the investigator was shown and purchased a number of counterfeit items including t-shirts, cloth and leather jackets and hooded sweatshirts, all of which contained unauthorised productions of the Harley-Davidson trademarks.

The Court was satisfied the matter could proceed on a motion for summary judgment.  In determining the damage award, the Court noted that where Defendants provide no records to substantiate the manufacture and sale of counterfeit wares, it is difficult to assess damages.  However, in these circumstances, the Court will apply a minimum compensatory damage award on a per infringing activity basis.

Following such cases as Ragdoll Productions (UK) Ltd v. Jane Doe and Oakley Inc. v. Jane Doe, the Court awarded damages for trademark infringement of $3,625 for each of the three occasions on which the Defendant was observed selling counterfeit goods at a flea market and $7,250 for each of the two occasions on which the Defendant was observed selling wares from a fixed retail establishment.  As the Plaintiffs were seeking damages on behalf of the trademark owner, MI, and the licensee/distributor, MCI/Fred Deeley, these amounts were doubled for a total of $65,250, payable jointly and severally by the Defendants.

In addition, although the Defendants’ lack of records made an accurate assessment of profits impossible, the Court found that the Plaintiffs were entitled to punitive damages of $50,000 to sanction the “blatant disregard” of the law by the Defendant.  In awarding the punitive damages, the Court noted that the Defendants had been offering for sale and selling counterfeit Harley-Davidson merchandise since as early as October 2006, and continued to do so despite the cease and desist letter served on the Defendants in 2010.  The Court also noted that there was evidence that the Defendant Manoukian, was well aware of the illegal nature of his trade.

The Court refused to award solicitor-client costs, since the evidence that the Defendants had missed a number of deadlines was not the kind of conduct attracting solicitor-client costs.  Further, the Defendants’ unjustifiable and inexcusable violation of the Plaintiff’s rights was covered by the punitive damages.