Case Law

Actual Infringement Required for an Injunction

By In Case Law, Protection & Enforcement

Two recent Canadian cases may be of interest to our readers.

In the first, because the Defendant had not yet used the alleged infringing trademark and because the Registrar of Trade-marks had not yet made a decision regarding the Defendant’s applications to register the mark at issue and expunge certain of the Plaintiffs’ marks, the British Columbia Supreme Court refused the Plaintiffs’ summary trial application – Price Costco International, Inc. et al. v. Welcome Warehouse Ltd.. Costco, the international “big box” retailer, alleged that the Defendant, a local British Columbia company, would be passing off and infringing the Plaintiffs’ registered trademarks (which included PRICE CLUB PRICE COSTCO, PRICE COSTCO & Design, COSTCO Design and COSTCO WHOLESALE & Design) if the Defendant proceeded to use PRICECO WAREHOUSE. The Defendant had applied to register its mark on the basis of proposed use, which the Plaintiff opposed. The Defendant also brought proceedings to expunge PRICE CLUB, PRICE COSTCO and PRICE COSTCO & Design.

Notwithstanding the Plaintiffs’ survey evidence demonstrating confusion, the court declined to grant declaratory or injunctive relief since there was no evidence of any actual infringement or damage by the Defendant.

With regard to the second case, we earlier reported the decision in Sun World International Inc. v. Parmalat Dairy and Bakery Inc. in which the prothonotary agreed with the Registrar of Trade-marks that the statement filed in opposition to the registration of a trademark could not be amended after the Registrar had decided the merits of the registration. This decision was appealed further, to a Federal Court judge, who handed down a decision in late August, agreeing with the prothonotary.

Sharing a Trademark: The Legal Problems

By In Case Law, Protection & Enforcement

For many years, CHAPMANS has been a well-known trademark in the Vancouver clothing trade. However, the mark has been used by two companies, a situation that can lead to problems, as evidenced by a recent decision of the British Columbia Court of Appeal.

In Edward Chapman Ladies’ Shop Limited v. Edward Chapman Limited the Court of Appeal upheld the trial judge’s decision in favour of Edward Chapman Ladies’ Shop Limited, permanently restraining Edward Chapman Limited from selling ladies’ clothing and accessories in association with the names Edward Chapman, Chapman’s, Edward Chapman’s Limited or similar names, except where at least equal prominence is given to the additional name, Chapy’s.

In 1959, the Edward Chapman retailing clothing business in Vancouver was divided between two corporate entities: Edward Chapman Limited to continue with the sale of men’s clothing and Edward Chapman Ladies’ Shop Limited to carry on the sale of women’s clothing. The two companies cooperated in their marketing, jointly buying advertising space and clothing labels bearing the EDWARD CHAPMAN name and a crown logo until relations soured in 1982.  

In 1982, Edward Chapman Limited opened up a women’s wear division under the name CHAPY’S. Edward Chapman Ladies’ Shop Limited objected that this was contrary to the spirit of the 1959 contract that divided the two companies, but ultimately, did not pursue legal action as it understood that Edward Chapman Limited’s women’s wear business would operate under the trade name CHAPY’S. An uneasy co-existence continued until, in 2002, Edward Chapman Limited opened a new shop which sold both men’s and women’s clothing under the name EDWARD CHAPMAN LIMITED and did not use the name CHAPY’S.

In response, Edward Chapman Ladies’ Shop Limited commenced an action in April 2003 alleging that by Edward Chapman Limited using the CHAPMAN names and crown logo in association with the sale of ladies’ wear it was passing off its products and services as those of Edward Chapman Ladies’ Shop Limited in violation of section 7(b) of the Trademarks Act.

The trial judge held that Edward Chapman Ladies’ Shop Limited established the elements of its passing off action since it had developed a distinctive reputation for fine women’s clothing under its corporate name, as well as the names CHAPMAN’S and EDWARD CHAPMAN’S. Edward Chapman Limited’s decision to drop the name CHAPY’S and market women’s clothing under the name EDWARD CHAPMAN had been made primarily to take advantage of the plaintiff’s established goodwill. The plaintiff suffered damage due to the risk of harm to, and loss of control over, its goodwill or reputation.

In upholding the decision of the trial judge, the Court of Appeal held that the parties in 1959 intended Edward Chapman Ladies’ Shop Limited to receive the exclusive right to sell ladies’ wear and accessories using the EDWARD CHAPMAN and CHAPMAN’S names and Edward Chapman Limited’s dropping of the CHAPY’S name had the effect of “elbowing out” Edward Chapman Ladies’ Shop Limited or increasing the risk of confusion in the market.  Therefore, the Court of Appeal held that Edward Chapman Ladies’ Shop Limited could properly sue for passing off and the permanent injunction was the appropriate remedy. The Court of Appeal also held that having jointly used and jointly benefited from the use of the crown logo and the notation, “Established 1890”, neither party could exclude the other from using them in association with their respective businesses.  

No New Grounds of Opposition on Appeals from the Registrar of Trademarks

By In Case Law, Trademark Oppositions

Sun World International Inc. v. Parmalat Dairy & Bakery Inc. concerned a procedural issue, namely a “novel application” to amend a Statement of Opposition to add section 22 of the Trademarks Act (depreciation of goodwill).

The respondent, Parmalat, had successfully opposed the applicant’s (Sun World’s) trademark BLACK DIAMOND for use in association with fresh fruit and vegetables, narrowed to plums. The Registrar of Trademarks concluded that use of the mark at the relevant date had not been established and that the applicant had not demonstrated there would be no reasonable likelihood of confusion. The applicant then appealed to the Federal Court pursuant to section 56 of the Trademarks Act.

Section 56(5) allows for the introduction of new evidence. On the appeal the applicant filed new evidence and the respondent in turn sought to amend the Statement of Opposition and file new evidence.

The Prothonotary hearing the matter concluded that section 56 of the Trademarks Act allowed fresh evidence on issues that were before the Registrar, but the de novo jurisdiction of the Court under section 56 was otherwise restrained. Thus, the Statement of Opposition could not be amended on appeal.

Establishing a Trademark’s Distinctiveness: Recent Case Law

By In Case Law, Protection & Enforcement, Registration

In Cross-Canada Auto Body Supply (Windsor) Limited v. Hyundai Motor America, the Applicant (the reseller of automotive parts and accessories and the Defendant in an ongoing trademark action brought by the Respondent) sought to expunge five of the Respondent’s trademark registrations: HD Design, HD & HYUNDAI Design, HMC Design, HYUNDAI and SONATA. In 1985 the Respondent’s parent company had assigned three of the marks to the Respondent’s predecessor, which in turn assigned the marks to the Respondents, in 1996, but the assignment was only registered in August 2004. The other two marks were assigned to the Respondent in September 2004.

The Applicant argued that the marks were not distinctive of the Respondent, the relevant date for determining distinctiveness in this case being the date the expungement action was commenced, because the the consuming public was not advised during the 1985 -2004 period of the change in ownership.

The Court noted that distinctiveness is the cardinal requirement of a trademark and it is a question of fact whether a clear message has been given to the public that the wares associated with the mark are those of the trademark owner and not those of another party. Relying on survey evidence, the Court concluded that the purchasing public was not confused about the source of the wares and always understood the Respondent to be the source of the vehicles, even though they were sold through dealers.

Moreover, since 1985 the Respondent and its predecessor, although they had not officially registered the assignment, had built up goodwill through extensive advertising.

The Court distinguished the Respondent’s situation from the earlier cases (Wilkinson Sword (Canada) Ltd. v. Juda and Breck’s Sporting Goods Co. v. Magder ) where a transfer of marks by a foreign parent company to its Canadian subsidiary and sales in Canada by a third party of wares purchased from the parent company resulted in a loss of distinctiveness. In the earlier cases there was no evidence that the source of the goods had become identified with the Canadian subsidiary. In this case, however, the Court was convinced by the expert evidence that the consuming public identified the source of the goods as the Canadian subsidiary.

There was delay in the registration of the assignment, but no reliable evidence of any public confusion that the source of the goods was other than the Respondent.

The Court was, however, convinced that one of the marks had been abandoned, not having been used in Canada for a long time and there being no justifiable excuse for non-use. The other four marks had not been abandoned and thus the Respondent was successful and awarded costs.

DIRT SHIRT Airs Dirty Laundry

By In Case Law, Trademark Oppositions

In Coastal Culture Inc. v. Wood Wheeler Inc., Coastal appealed a decision of the Registrar rejecting its opposition to the registration of the trademark DIRT SHIRT by Wheeler.  Wheeler applied to register the trademark DIRT SHIRT based upon use in association with its wares and services since May 1997.  Coastal opposed on the basis that Wheeler’s alleged use of the DIRT SHIRT mark was based on prior use of the marks P.E.I. DIRT SHIRT and THE ORIGINAL P.E.I. DIRT SHIRT.Coastal submitted that Wheeler should not be able to remove components of its trade-mark in order to rely on the date of claimed first use.  Coastal further submitted that the words “THE ORIGINAL P.E.I.” and “P.E.I.” formed the first part of the trademarks and were a dominant part of those marks.  Wheeler submitted that the DIRT SHIRT mark was the dominant feature on its wares, in spite of the addition of the words “P.E.I.” and “THE ORIGINAL” and submitted that this minor deviation did not constitute non-use of the mark, and should not disentitle it to registration. 

The Federal Court agreed with Coastal, granted the appeal and refused Wheeler’s application to register the trade-mark DIRT SHIRT.  Although the Federal Court accepted that the words THE ORIGINAL may be a minor variation of the alleged mark, it held that there was no evidence that Wheeler ever sold wares with the DIRT SHIRT mark, absent P.E.I.  The Federal Court concluded that the word P.E.I. had always been an element of the alleged mark, and thus the use of the trade-mark DIRT SHIRT, as a standalone mark, was not established.

Recent Trademark Court Decisions

By In Case Law, Protection & Enforcement

There were three recent trademark decisions from the Canadian courts that readers may find of interest:

Expungement Allowed – In Candrug Health Solutions Inc. v. Thorkelson, Candrug and Pharmawest commenced identical applications and sought expungement of the respondent’s trade-marks in Federal Court. The proceedings were consolidated and Candrug discontinued its application. Therefore, Pharmawest was the sole applicant.

The respondent had applied and been issued registration in May 2003 for the trade-marks CANADA DRUGS and CANADADRUGS.COM. The respondent had disclaimed the exclusive right to use the words “Canada” and “Drugs” apart from the trade-marks. The Federal Court agreed with the applicant and expunged the trade-marks CANADA DRUGS and CANADADRUGS.COM on the basis that they were both clearly descriptive and deceptively misdescriptive under section 12(1)(b) of the Act. The respondent was unable to discharge his onus under section 12(2) to show the marks had acquired distinctiveness as of the date the application was filed. Therefore, the marks were not registrable and were ordered expunged.

Damages Reduced on Appeal – In 2703203 Manitoba Inc. v. Parks, the Nova Scotia Court of Appeal allowed an appeal in part and reduced the quantum of damages for copyright infringement, passing-off and interference with contractual relations awarded by the trial judge. The Court of Appeal upheld the trial judge’s finding that the appellants infringed the respondent’s copyright in the publication, Coffee News, by producing and distributing the publication, Flying Cow, in the form they did.

Witnesses at trial testified that the first several issues of the Flying Cow were published by the same printer as Coffee News and were identical in every respect including design, format, and quality and colour of the paper. Only the editorial content and the mast-head were different. The Court of Appeal also paid considerable deference to the trial judge’s advantage of seeing and hearing the witnesses and upheld the trial judge’s conclusion that the respondent was entitled to damages from the appellants for passing-off.

Referring specifically to the testimony of several witnesses, the trial judge concluded that the appellants had devised a strategy of lies and deceit in producing Flying Cow as practically identical to Coffee News, with the objective being to cause confusion so that advertisers, distributors and readers may be persuaded that the two publications were sister editions rather than competitors.

The Court of Appeal did, however, take issue with the trial judge’s calculation of damages as there was limited explanation or justification of how the amounts were arrived at. The Court of Appeal reviewed each amount and reduced the trial judge’s order of general damages from $139,000 to $70,500 and punitive damages from $100,000 to $40,000.

Challenging Official Marks – In See You In? Canadian Athletes Fund Corporation v. Canadian Olympic Committee the Applicant sought judicial review of the Registrar’s decision to grant the COC two official marks, SEE YOU IN BEIJING and SEE YOU IN VANCOUVER. The Applicant was incorporated in 1997 to raise money for Canadian athletes and had used marks such as SEE YOU IN ATHENS in the past and had applied to register the two marks at issue. The Federal Court agreed with the Registrar that the COC was a public authority since there was a significant degree of public control over it’s ongoing activities and the organization existed for the public benefit.

However, the Federal Court also concluded that a mere statement by the public authority that it had adopted and used a mark was not sufficient to prove that such adoption and use had actually occurred. A negative inference could be drawn from a failure to provide details regarding alleged adoption and use. Moreover, any such evidence must show an element of public display. Since the COC had not established adoption and use at the relevant time, the Registrar’s decision to publish notice of the adoption and use by COC of the marks as official marks was quashed. We understand that the COC is considering an appeal of this decision.

March 2007 Case Law

By In Case Law, Trademark Oppositions

There were four decisions from the Canadian courts in March that readers may find of interest.

Expungement Allowed – In Emall.ca Inc. et al. v. Cheap Tickets and Travel Inc. the applicant sought expungement of the respondent’s trademarks in Federal Court after the respondent commenced an action in the British Columbia Supreme Court for infringement. The Federal Court agreed with the applicant and expunged the trademarks CHEAP TICKETS and CHEAP TICKETS AND TRAVEL & Design on the basis that they were clearly descriptive, noting that in effect the respondent, by registering the trademarks had “withdrawn the combination of words from use in the commercial world in Canada”.

Passing Off Claim Allowed (In Part) – In BMW Canada Inc. v. Nissan Canada Inc. BMW claimed that Nissan’s advertising of its Infiniti vehicles in association with the letter M alone and the advertising and sale of its M6 vehicle infringed BMW’s M3, M5 and M & Design marks. The Federal Court concluded that BMW’s claim of infringement under section 20 of the Trade-marks Act was not established given that there was no likelihood of confusion as to the sources of the wares or as to the wares themselves among the relevant group of prospective purchasers. Likewise, the claim for depreciation of the value of the goodwill attaching to BMW’s registered marks failed since Nissan’s use of the letter M was not a use of a registered trademark. Moreover, the evidence of loss of goodwill came from individual witnesses and there was no evidence of sales lost or a price reduction. However, BMW’s claim of passing-off contrary to section 7(b), was successful. Nissan’s use in 2005 of the letter M and of the descriptor M6 as trademarks, both similar in form to BMW’s trade-marks for similar wares, in essentially the same trade or business, created a likelihood of confusion, whether intentional or not. Nissan has applied for a stay of the order pending appeal (Nissan Canada Inc. v. BMW Canada Inc.).

Section 45 Expungement Set Aside  – Guido Berlucchi & C.S.r.l. v. Brouilette Kosie Prince was from a decision of the Registrar under section 45 of the Trade-marks Act to expunge the applicant’s trademark (a label for sparkling wines), registered in 1983. The Registrar concluded there was evidence of a sale during the relevant three-year period, but the evidence was ambiguous as to whether a registered trademark had been used. On appeal, the applicant filed a new affidavit attaching a label that was affixed to bottles sold to a distribution company during the relevant period. The Court acknowledged the evidence of a single sale, whether wholesale or retail, in the normal course of trade was sufficient to establish “use” so long as the evidence cannot be seen to be manufactured, although it was also noted that if an owner only produces evidence of a single sale, “he is playing with fire”. The Court also commented on the standard of review for an appeal of a decision under section 45, explaining that where new evidence is produced, the issue is to be decided de novo, but otherwise, for matters considered by the Registrar, the standard is one of reasonableness. After considering the new evidence of use and concluding the differences between the trademark as registered and the label actually used were not significant, the Court set aside the expungement order. The Court also concluded that the Registrar had correctly concluded that the sale to an exclusive agent was a genuine commercial transaction.

Severing Liability and Damages – Osmose-Pentox Inc. v. Société Laurentide Inc. (March 1, 2007) involved a procedural issue. The defendant applied for a second time in 4 years to sever the issues of validity and infringement from those relating to remedy. The Federal Court agreed that the circumstances had changed and the Court could revisit the severance issue. Given that discoveries had become bogged down in matters relating to the defendant’s profits, that Court concluded it was proper to sever the issue of damages and profits and first decide the issues of validity and infringement, particularly when a decision contrary to the plaintiff on these issues would render the question of damages and profits unnecessary.