Boston pizza international Inc. v. Boston market Corp., 2003 FC 892

Date: 20030717

Docket: T-1319-02

Citation: 2003 FC 892

Ottawa, Ontario, July 17, 2003

Present:    The Honourable Madam Justice Tremblay-Lamer

BETWEEN:                                                 

                  BOSTON PIZZA INTERNATIONAL INC. and

             BOSTON PIZZA ROYALTIES LIMITED PARTNERSHIP

                                                               Plaintiffs

                                   and

           BOSTON MARKET CORPORATION, McDONALD'S RESTAURANTS

         OF CANADA LIMITED, BOSTON MARKET CANADA COMPANY and

           GLOBAL RESTAURANT OPERATIONS OF IRELAND LIMITED

                                                               Defendants

                         REASONS FOR ORDER AND ORDER

[1]                 This is a motion brought by the plaintiffs for an order that the counterclaim filed by the defendants be dismissed.

FACTS

[2]                 The plaintiff, Boston Pizza International Inc. (hereinafter "BPI") franchises Boston Pizza restaurants in Canada. It also owns and operates two Boston Pizza restaurants. BPI and its predecessors have been carrying on the business of operating and franchising restaurants under the name Boston Pizza since 1964.

[3]                 BPI and its predecessors have used various trade-marks in the operation of the Boston Pizza business, including the following: (the "Boston Pizza trade-marks")

[4]                 In July 2002, BPI participated in the establishment of the Boston Pizza Royalties Income Fund. All of the company's ownership rights in the Boston Pizza trade-marks were transferred to the Boston Pizza Royalties Limited Partnership (the "Limited Partnership").

[5]                 The defendants, Boston Market Corporation, McDonald's Restaurants of Canada Limited, Global Restaurant Operations of Ireland Limited, and Boston Market Canada Company, (hereinafter "BMC") operate restaurants under the name of Boston Market.

[6]                 On August 15, 2002, BPI commenced an action against BMC for trade-mark infringement under section 20 of the Trade-marks Act, R.S. 1985, c. T-13, (the "Act"), for depreciation of goodwill attaching to its registered trade-marks under section 22 of the Act, and for passing-off under subsection 7(b) of the Act.

[7]                 On October 7, 2002, BMC filed a statement of defence and counterclaim. In the counterclaim, BMC seek an order expunging the registrations of the Boston Pizza trade-marks on the grounds that the marks are not distinctive of BPI by reason of use by third parties of trade-marks containing the word "Boston", and that the trade-marks BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA, and BOSTON PIZZA QUICK EXPRESS were not registrable as they were, and continue to be, clearly descriptive of a style of pizza that is associated with the city of Boston, Massachusetts.

ANALYSIS

[8]                 Subsection 57(1) of the Act gives the Court exclusive jurisdiction to order that any entry in the register be struck out or amended:

[9]                 In their counterclaim, BMC seek to expunge the Boston Pizza trade-marks on the ground that the marks are not distinctive of BPI, pursuant to paragraph 18(1)(b) of the Act:

[10]            BMC also seek to expunge the trade-marks BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA and BOSTON PIZZA QUICK EXPRESS on the ground that the marks were not registrable as they were, and continue to be, clearly descriptive of the wares with which they are used, pursuant to paragraphs 18(1)(a) and 12(1)(b) of the Act:

[11]            BPI and the Limited Partnership bring a motion for an order that the counterclaim filed by BMC be dismissed.

[12]            Rule 216 of the Federal Court Rules, 1998, SOR/98-106, empowers the Court to grant summary judgment when there is no genuine issue for trial with respect to a claim or defence.

[13]            In Granville Shipping v. Pegasus Lines Ltd. (T.D.), [1996] 2 F.C. 853, I summarized the general principles to be applied in considering a motion for summary judgment:

1.    the purpose of the provisions is to allow the Court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried (Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al);

2.    there is no determinative test (Feoso Oil Ltd. v. Sarla (The)) but Stone J.A. seems to have adopted the reasons of Henry J. in Pizza Pizza Ltd. v. Gillespie. It is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial;

3.    each case should be interpreted in reference to its own contextual framework (Blyth and Feoso);

4.    provincial practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, [R.R.O. 1990, Reg. 194]) can aid in interpretation (Feoso and Collie);

5.    this Court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the Court (this is broader than Rule 20 of the Ontario Rules of Civil Procedure) (Patrick);

6.    on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so (Pallman and Sears);

7.    in the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge (Forde and Sears). The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a "hard look" at the merits and decide if there are issues of credibility to be resolved (Stokes). [References omitted].

[14]            BPI first submits that the counterclaim should be dismissed as the Boston Pizza trade-marks are distinctive.

[15]            Distinctiveness of a trade-mark deals with whether or not the mark when used in association with the wares, distinguishes for the consumer the source of those wares. The Court must ask itself whether or not the ordinary consumer in the market for that type of product would likely be deceived as to the source of that product (Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc. (T.D.), [2001] 2 F.C. 536).

[16]            Distinctiveness requires that a mark and a product or service be associated; that the owner uses this association between the mark and the product or service and is selling the product or service; and that this association enables the owner of the mark to distinguish its product from that of others (Phillip Morris Incorporated v. Imperial Tobacco Ltd. (1985), 7 C.P.R. (3d) 254).

[17]            The relevant date for determining whether a trade-mark is distinctive is the date in which the challenge was made; in this case, October 7, 2002.

[18]            In their counterclaim, BMC argue that numerous third party trade-marks and trade names used in Canada which include the word "Boston" have rendered the Boston Pizza trade-marks non-distinctive.

[19]            Conversely, BPI submits that all of its Boston Pizza trade-marks have been used extensively in the operation of Boston Pizza restaurants in Canada. The trade-marks have been advertised and promoted, and are very well known by the public as being associated with the wares and services provided by BPI. The sporadic use of the word "Boston" by third parties operating restaurants in Canada does not impact the distinctiveness of the Boston Pizza trade-marks.

[20]            BPI relies on Roger Barnes' affidavit, which describes the results of a telephone survey that was conducted by Thompson Lightstone & Company between March 14, 2002 and March 20, 2002. In response to the question, "Have you heard of restaurants named Boston Pizza", 55% of Canadians answered that they had heard of Boston Pizza restaurants, including over 95% of respondents in Western Canada. This is evidence that the Boston Pizza trade-marks are distinctive.

[21]            Furthermore, BPI points out that two of its trade-marks being challenged are design trade-marks, which are inherently distinctive, and that its trade-marks BP'S LOUNGE and BP'S BISTRO do not use the word "Boston" and therefore, are unaffected by third party trade-marks which include the word "Boston".

[22]            I am satisfied that the BP & Design trade-marks (TMA 181,249 and TMA 171,429) are inherently distinctive as they are unique. Neither trade-mark uses the word "Boston". As such, I am of the view that BMC's challenge to the validity of these trade-marks should be dismissed.

[23]            I am also of the view that BMC's challenge to the validity of the trade-marks BP'S LOUNGE (TMA 293,639) and BP'S BISTRO (TMA 362,359) should be dismissed as neither uses the word "Boston" as part of its name.

[24]            However, with regard to the remaining trade-marks, BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA, and BOSTON PIZZA QUICK EXPRESS, I believe that there is a genuine issue as to whether third party use of trade-marks including the word "Boston" has rendered these trade-marks non-distinctive.

[25]            BMC have submitted evidence of numerous restaurants in Canada using the word "Boston" in their names, and on their signs and menus. This evidence is found in the affidavits of Alan Ross, Teresa Martin, Jack Trapp, Adam Joseph, Michael Morgan, John Plessas, Bob Hissink, Santina Serson, William Cooke and Kellie Dunbar. While this evidence establishes the existence of restaurants in Canada using the word "Boston", it does not indicate whether users of BPI's wares and services are aware of their existence. I am unable to determine based on this evidence, whether third party use by restaurants in Canada of trade-marks with the word "Boston" has rendered BPI's Boston Pizza trade-marks non-distinctive. I believe that this is an issue that needs to be addressed at trial.

[26]            On the other hand, BPI relies on the telephone survey described in Mr. Barnes' affidavit to argue that its Boston Pizza trade-marks are distinctive. However, the reliability of this telephone survey has been questioned by BMC. Some of the concerns identified by BMC are that the survey did not contain a control condition, the survey asked an aided question, and that Mr. Barnes was unaware of who conducted the full work for the survey, what instructions were given to interviewers, whether screening questions were used, and whether the respondents were in fact located in Canada.   

[27]            In my view, the issue of whether the survey was conducted properly needs to be addressed at trial, where the Court will have the benefit of hearing the testimony of Mr. Barnes in direct and cross-examination.

[28]            As a result, I am of the opinion that there is a genuine issue with respect to the distinctiveness of the BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA, and BOSTON PIZZA QUICK EXPRESS trade-marks, which needs to be addressed at trial.

[29]            Furthermore, contrary to BPI's submissions, I believe that the question of the distinctiveness of the Boston Pizza trade-marks in the face of third party use of trade-marks with the word "Boston" has never been finally decided, and as such, that issue estoppel is not applicable.

[30]            The current law with respect to issue estoppel was summarized by the Federal Court of Appeal in Apotex Inc. v. Merck & Co.(C.A.), [2003] 1 F.C. 242. The Court held that:

a) Issue estoppel is wider than cause of action estoppel, and applies to separate causes of action. It arises when the same question has been decided, is final, and the parties to the judicial decision or their privies are the same persons as the parties to the proceedings in which the estoppel is raised.

b) Issue estoppel applies to preclude relitigation of an issue which has been conclusively and finally decided in previous litigation between the same parties or their privies. It applies not only to issues decided finally and conclusively, but also to arguments that could have been raised by a party in exercise of reasonable diligence.

c) Issue estoppel applies where an issue has been decided in one action between the parties, and renders that decision conclusive in a later action between the same parties, notwithstanding that the cause of action may be different

d) Finality in litigation is the paramount policy concern; a party should not be vexed twice for resolution of an issue already decided conclusively. A litigant should have only "one bite at the cherry".

[31]            In Boston Pizza International Inc. v. Boston Chicken Inc. (2001), 15 C.P.R. (4^th) 345, the applicant sought to expunge the Boston Chicken trademarks on the grounds that the trade-marks were not distinctive and were confusing with the Boston Pizza trade-marks. Although evidence of third party use of trade-marks with the word "Boston" was submitted, this evidence was led to show that the public could differentiate between restaurants with names using the word "Boston", and therefore, that the Boston Chicken and Boston Pizza trade-marks were not confusing. The question of whether the Boston Pizza trade-marks had ceased to become distinctive pursuant to paragraph 18(1)(b) due to third party use of trade-marks with the word "Boston" was not at issue in this case.

[32]            At the Federal Court of Appeal, ((2003), 301 N.R. 190) the sole issue for determination was whether the Boston Chicken trade-marks had become distinctive. The Court determined that the marks had not become distinctive as they had not been used in Canada. The distinctiveness of the Boston Pizza marks was not at issue.

[33]            As such, I am of the view that the issue of whether the Boston Pizza trade-marks had ceased to become distinctive due to third party use has never been conclusively and finally decided. BMC are therefore not estopped from raising this issue in the counterclaim.

[34]            BPI further submits that the counterclaim should be dismissed as the trade-marks BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA and BOSTON PIZZA QUICK EXPRESS are not clearly descriptive of the wares or services in association with which they are used.

[35]            In order for a mark to be clearly descriptive, pursuant to paragraph 12(1)(b), it must be more than merely suggestive of the character or quality of the wares or services in association with which it is used or proposed to be used. The descriptive character must go to the material composition of the goods or services or refer to an obvious intrinsic quality of the goods or services which are the subject of the trade mark, such as a feature, trait or characteristic belonging to the product in itself.

[36]            The test for determining whether a trade-mark infringes paragraph 12(1)(b) is the immediate or first impression formed. The determination must not be based on research into or critical analysis of the meaning of the words (Oshawa Group Ltd. v. Registrar of Trade Marks, [1981] 2 F.C. 18). The word "clearly" in paragraph 12(1)(b) is not synonymous with accurately, but rather means easy to understand, self-evident, or plain (Drackett Co. of Canada Ltd. v. American Home Products Corp. (1968), 55 C.P.R. 29). The impression must also be assessed from the perspective of the ordinary everyday purchaser or user of the wares or services (Wool Bureau of Canada Ltd. v. Registrar of Trade-marks (1978), 40 C.P.R. (2d) 25). The perspective of experts or people with special knowledge is not representative of the average ordinary purchaser (Consorzio del Prosciutto di Parma, supra).

[37]            BMC have submitted evidence of the existence of different styles of pizza, named after the city in which they were developed, such as a New York pizza, a Chicago pizza, and a Boston pizza.

[38]            The affidavit of Jennifer Stecyk indicates that there is a particular style of pizza that is called a Boston pizza. The characteristics of a Boston style pizza include a thin crust in the middle, a thick edge around the outside, a combination of mozzarella and white cheddar cheese and a tomato based sauce. A Boston style pizza is different from a New York style pizza and a Chicago style pizza because of the thickness of the crust. A Boston style pizza has a thicker crust than a New York style pizza, but thinner than a Chicago style pizza.

[39]            BMC have also submitted as evidence, the testimony of BPI's president Mr. Corboda who indicated on cross-examination on affidavit that he was aware of a Chicago style of pizza.

[40]            BMC's evidence raises the question of whether there exists a style of pizza called a Boston pizza, and as such, whether an ordinary purchaser of BPI's wares and services would find that the trade-marks at issue are clearly descriptive. I believe that this is a genuine issue that needs to be addressed at trial. Accordingly, I am of the opinion that it would be inappropriate for the Court to grant the motion for summary judgment on the issue of the descriptiveness of the trade-marks BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA and BOSTON PIZZA QUICK EXPRESS.

[41]            In addition, BPI submits that the counterclaim should be dismissed on the ground that BMC have acquiesced to the use of the Boston Pizza trade-marks, as they have been aware of their existence since 1994 and have decided to raise these issues only recently.

[42]            A defence of acquiescence may be successful if the expunging party (the plaintiff) consents to the use and registration of the trade-mark or leads the defendant to believe that the defendant's use of the mark is proper to the defendant's prejudice.

[43]            In White Consolidated Industries, Inc. v. Beam of Canada Inc. (1991), 47 F.T.R. 172, Teitelbaum J. adopted at page 186 the following definition of acquiescence from Archbold v. Scully (1861), 9 H.L.C. 360:

If a party, who could object, lies by and knowingly permits another to incur an expense in doing an act under the belief that it would not be objected to, and so a kind of permission may be said to be given to another to alter his condition, he may be said to acquiesce [...]

[44]            In Anheuser-Busch Inc. v. Carling O'Keefe Breweries of Canada Ltd. (1986), 68 N.R. 226, the Federal Court of Appeal adopted at page 238 a formulation of the test for acquiescence which focuses upon the equities between the parties:

. . . estoppel by acquiescence . . . requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment rather than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.

[45]            The key factors to consider when applying the doctrine of acquiescence and laches are the length of the delay and the nature of the intervening acts, which may affect either party and cause an imbalance of justice. The test is whether the owner of the legal right has done something beyond delay to encourage the wrongdoer to believe that he will not enforce his legal rights, and the wrongdoer must have acted to his prejudice in this belief (Institut National des Appellations d'Origine des Vins et Eaux de Vie v. Andres Wines Ltd. (1987), 16 C.P.R. (3d) 385).

[46]            BPI submits that Boston Market Canada Company and Global Restaurant Operations of Ireland Limited, through their predecessor Boston Chicken, knew of the existence of the Boston Pizza trade-marks and the other facts that are the basis for their counterclaim since at least July 1994, if not much earlier when they applied to register their Boston Chicken trade-marks.

[47]            Since 1994, BPI has made numerous business decisions based on the validity of the Boston Pizza trade-marks. If the counterclaim succeeds, BPI will be devastated financially, having made business decisions on the basis that the Boston Pizza trade-marks are valid. BMC's delay in raising these issues constitutes acquiescence.

[48]            In my view, a finding of acquiescence must be based on the particular circumstances as to whether BPI was encouraged, based on the actions of BMC and their predecessor, to believe that BMC would not contest the validity of the Boston Pizza trade-marks and whether BPI relied on the delay to its detriment. This requires consideration of credibility and weighing of all the evidence. Such a finding can only be made at trial on full evidence and not on a motion for summary judgment.

[49]            Finally, BPI submits that the counterclaim is barred by reason that the claim is made outside the limitation period, pursuant to section 39 of the Federal Court Act, R.S. 1985, c. F-7, which provides:

[50]            BPI submits that subsection 39(2) applies to the counterclaim. BMC, or their predecessor were aware of the existence of these claims since at least 1994, but did not commence a claim until 2002, well outside the limitation period. The counterclaim should therefore be dismissed.

[51]            In my opinion, a limitation period is not applicable to the institution of proceedings to expunge a trade-mark. I refer to Fox, Harold G., The Canadian Law of Trade-marks and Unfair Competition, (4^th Edition, Toronto: Carswell, 2002) where it is stated at 11-59:

With one limited exception, the Trade-marks Act does not prescribe a limitation period for the institution of proceedings to expunge a trade-mark. To have such a limitation period would be contrary to the scheme of the Act as a whole and would permit the maintenance of trade-mark registrations where the mark has clearly become non-distinctive or otherwise invalid. In other words, by curtailing the application of the concept of distinctiveness as it is defined in the Act and in the case law, such a limitation would protect what would otherwise be invalid trade-marks.

[52]               The fact that no limitation period applies to an application to expunge a registered trade-mark is illustrated by the numerous leading cases in Canadian trade-mark law in which there was an application to expunge a competitor's trade-mark well after a six year period, and there was no issue regarding a limitation period ([1940] S.C.R. 17">Pepsi-Cola Co. of Canada v. Coca-Cola Co. Of Canada, [1940] S.C.R. 17, Phillip Morris Incorporated, supra).

[53]            Consequently, I am of the view that the counterclaim is not barred by the limitation period prescribed by section 39 of the Federal Court Act.

[54]            In summary, I am satisfied that the plaintiffs have raised some valid grounds with regard to the counterclaim. I believe that there is no genuine issue for trial regarding the validity of the BP'S LOUNGE, BP'S BISTRO and BP & Design trade-marks. However, there exists in my opinion, a genuine issue for trial regarding the validity of the BOSTON PIZZA, BOSTON'S THE GOURMET PIZZA and BOSTON PIZZA QUICK EXPRESS trade-marks. As such, the counterclaim will be allowed to proceed, but will be limited to the expungement of these trade-marks.

[55]            For all these reasons, the plaintiffs' motion is granted in part, with costs in the cause.

                                                  ORDER

THIS COURT ORDERS THAT

The motion for summary judgment is allowed in part. The counterclaim is dismissed with regards to the following trade-marks:

Trade-mark                                 Date of Registration                  Registration Number

Costs in the cause.

                                                                      "Danièle Tremblay-Lamer"

J.F.C.

             FEDERAL COURT OF CANADA

                    TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:           T-1319-02

STYLE OF CAUSE:BOSTON PIZZA INTERNATIONAL INC. and BOSTON PIZZA ROYALTIES LIMITED PARTNERSHIP

and

BOSTON MARKET CORPORATION, McDONALD'S RESTAURANTS OF CANADA LIMITED, BOSTON MARKET CANADA COMPANY and GLOBAL RESTAURANT OPERATIONS OF IRELAND LIMITED

PLACE OF HEARING:                   Vancouver, B.C.

DATE OF HEARING:                    July 8, 2003

REASONS FOR ORDER

AND ORDER OF    THE HONOURABLE MADAM JUSTICE TREMBLAY-LAMER

DATED:            July 17, 2003

APPEARANCES:

Mr. Gregory N. Harney                        FOR PLAINTIFFS

Mr. Andrew Morrison

Mr. Glen A. Bloom                      FOR DEFENDANTS

SOLICITORS OF RECORD:

Shields Harney

1285 West Pender Street, 9^Th Floor

Vancouver, B.C.

V6E 4B1                                FOR PLAINTIFFS

Osler, Hoskin & Harcourt LLP

Suite 1500, 50 O'Connor Street

Ottawa, Ontario

K1P 6L2                                FOR DEFENDANTS