Auld Phillips Ltd. v. Suzanne's Inc., 2005 FC 48

Date: 20050117

Docket: T-233-04

Citation: 2005 FC 48

BETWEEN:

                                                          AULD PHILLIPS LTD.

                                                                                                                                            Applicant

                                                                           and

                                                               SUZANNE'S INC.

                                                                                                                                        Respondent

                                                        REASONS FOR ORDER

SIMPSON, J.

[1]                On January 30, 2004, Auld Phillips Ltd. (the "Applicant") applied for an order expunging the respondent's trademark "Suzanne's" from the Trade-marks Register. The order is sought pursuant to subsection 57(1) of the Trade-marks Act, R.S.C. 1985, c. T-13 (the "Act"). Subsection 57(1) provides as follows:

[2]                The Applicant says that, in 1972, in British Columbia, it began the retail sale of women's clothing in association with the name Suzanne's and that it has used the name in that manner continuously since then. In the year 2000, the Applicant expanded Suzanne's into Alberta and opened the following Alberta stores:

·            In 2000, one in Grande Prairie

·            In September 2001, one in Lethbridge and two in Calgary

·            In July 2002, one in an Edmonton suburb called Sherwood Park

·            In September 2002, one in Lloydminster

·            In April 2003, one in Edmonton

[3]                The parties agree that on April 18, 1984, a women's retail clothing store called Suzanne's opened in Edmonton. Its proprietor is Suzanne Hagen. She incorporated the business as Suzanne's Inc. (the "Respondent") in 1989 and her single Suzanne's store remains in business today.

[4]                The Applicant was not aware that the Respondent had been selling women's clothing in Edmonton for many years using the same name, Suzanne's, until it received a cease and desist letter from Respondent's counsel dated April 15, 2002. The Respondent, on the other hand, knew of the Applicant's business in British Columbia, but was not concerned by its use of the name Suzanne's until it began to open stores under that name in Alberta.

[5]                On April 4, 2003, the Respondent applied to register Suzanne's as a trademark. It was advertised on July 16, 2003 and was registered as No. TMA 593,640 (the "Mark") on October 30, 2003, in connection with "Retail store services in the field of women's clothing and accessories, excluding ladies' undergarments and lingerie".

[6]                The Applicant says that it was not aware that the Respondent had registered the Mark until November 21, 2003 when the Respondent brought an action against the Applicant for trademark infringement in the Alberta Court of Queen's Bench, Judicial District of Edmonton. It bears Action No. 0303-21443 (the "Infringement Action"). It is presently stayed pending a resolution of this application to expunge the Mark.

THE PARTIES' POSITIONS

[7]                The Applicant seeks expungement on the following two grounds:

·            that, on April 4, 2003 when the Respondent filed its application for the Mark, it was not the person entitled to registration of the Mark in Canada because the Applicant had used it in 1972, long before the Respondent's first use in 1984. Registration was, therefore, contrary to paragraphs 12(1)(a) and (2) and paragraphs 16(1)(a and c) of the Act;

·            that, as of the date these proceedings were commenced, on January 30, 2004, the Mark did not actually distinguish the Respondent's wares from those of the Applicant contrary to paragraph 18(1)(b) of the Act.

[8]                The Respondent says:

·            that it, and not the Applicant, was the first user of the name Suzanne's;

·            that the Applicant's evidence does not support its allegations of substantial and continuous use since 1972;

·            that the Applicant is estopped from contesting the validity of the Mark by virtue of its failure to provide particulars of its alleged prior use;

·            that the Applicant had abandoned the name Suzanne's by the date the Respondent advertised its application for registration of the Mark;

·            that, in the alternative, any claim to the Mark to which the Applicant may be entitled is appropriately restricted to southwestern British Columbia pursuant to subsection 32(2) of the Act;

·            that distinctiveness only becomes an issue if the Applicant shows first use of the name Suzanne's and that infringement by one party, even if extensive, does not cause loss of distinctiveness.

THE EVIDENCE

[9]                The Applicant relies on the affidavit of Stephen Bowen, its Chief Operating Officer. He has been employed by the Applicant since October 2000 and assumed his current position in January 2004. His affidavit was sworn on February 27, 2004 (the "Bowen Affidavit").

[10]            The Respondent's primary affidavit for this application was sworn by Suzanne Hagen on March 29, 2004 (the "Second Hagen Affidavit"). It includes as Exhibit "E", a copy of an earlier affidavit sworn by Ms. Hagen on April 29, 2003 in support of her expedited application for registration of the Mark (the "First Hagen Affidavit"). The record also includes an affidavit sworn by Ms. Hagen on August 23, 2004 (the "Third Hagen Affidavit"). It exhibits complete copies of the advertisements mentioned in the Bowen Affidavit.

THE ISSUES

[11]            (i)          Has the Applicant shown prior use?

(ii)         Has the Applicant shown non-distinctiveness on the date the Respondent applied to register the Mark or on the date this action was commenced?

(iii)        Is the Applicant estopped by its conduct from moving to expunge the Mark?

(iv)        Has the Applicant abandoned the name Suzanne's?

(v)         Should the Applicant's use of the Mark be restricted to southwestern British Columbia, under subsection 32(2) of the Act?

Issue I Prior Use

[12]            The Bowen Affidavit includes a statement that the Applicant opened its first Suzanne's store in Chilliwack, British Columbia in 1972. Exhibit "A" to the Bowen Affidavit is a list of the Applicant's stores as of April 5, 2003 (the "List"). It includes retail locations called Auld Phillips, Top Shop, Jenny's and Suzanne's. The List shows that the Suzanne's store, which opened in 1972, was in Cottonwood. Cottonwood is a town in central British Columbia. The Bowen Affidavit does not explain this discrepancy but since other documents in Exhibit "B" to the Bowen Affidavit refer to the Cottonwood Mall in Chilliwack, I have concluded that the store which was opened in 1972 was, in fact, in Chilliwack. The second difficulty with Mr. Bowen's statement is that, although he says that the first store was operated in association with the name Suzanne's, he does not say what "in association with" means.

[13]            The question is whether the Applicant used the name Suzanne's in a substantial and public manner before the Respondent's first use in April 1984. The Bowen Affidavit addresses this question in paragraph 4 where it describes the 27 pages of newspaper and other advertisements and corporate records which comprise Exhibit "B". The Bowen Affidavit states:

I attach as Exhibit "B" hereto, copies of a collection of documents I have reviewed in the corporate records of the Applicant, showing continuous use of the trade name and trade mark "Suzanne's" by the Applicant in association with the business of the sale of women's clothing, since 1974 to the present.

[14]            It is noteworthy that Mr. Bowen does not say that there has actually been continuous use. He merely indicates that documents from the Applicant's corporate records demonstrate that to be the case. This statement is not truthful. When he provided written answers to written questions on his affidavit, Mr. Bowen acknowledged that the newspaper advertisements included in Exhibit "B" came from the Chilliwack Museum and Historical Society Archives in Chilliwack (the "Museum") and not from the Applicant's corporate records.

[15]            Although it is probable that Mr. Bowen has no personal knowledge of the Applicant's use of Suzanne's twenty-eight years before he joined the company in 2000, he did not admit this fact or make any attempt to have the evidence submitted by the Applicant comply with Rule 81 of the Federal Court Rules, 1998, SOR/98/106. It states:

[16]            Leaving the incorrect evidence about the source of the advertisement aside, there is no evidence about who collected the advertisements from the Museum or how they were selected or dated. There is also no evidence about the distribution of the newspaper from which they were taken. As well, there is no explanation for the complete absence of first-hand evidence. It might well be that a former employee, store manager, customer or supplier could have been found to testify about the signage or other use of the name Suzanne's at the Chilliwack store. Further, if efforts were made to obtain such evidence and were unsuccessful, the Bowen Affidavit should have so stated.

[17]            The Respondent says that , in addition to the defects just described, the evidence about prior use in Exhibit "B" was presented in a misleading fashion because the advertisements were edited. They were cut from the original newspaper and then cropped to give the impression that the Applicant was using Suzanne's as a free-stranding name when, in fact, in the early years, it was used in conjunction/association with the Applicant's name Auld-Phillips. To reinforce this argument, the Respondent filed the Third Hagen Affidavit which exhibits the full text of the newspaper advertisements found in Exhibit "B" to the Bowen Affidavit.

[18]            I have compared the partial texts of the advertisements in the Bowen Affidavit with the full texts in the Third Hagen Affidavit. For ease of reference I have identified each advertisement with a letter.

Advertisement A

[19]            Advertisement A appears to have been placed on Wednesday, December 4, 1974 in a newspaper called the Chilliwack Progress. In the Bowen Affidavit, the ad is cut so that all that is visible are the names of two stores which appear side by side. One is Suzanne's in Cottonwood and the other is Auld-Phillips Fabrics in Cottonwood. Both are advertising a week long sale during which items are being offered at a reduction of 10%.

[20]            In the complete version of advertisement A, three stores are mentioned. The third is Auld-Phillips in Downtown Chilliwack. The ad was a single ad which encompassed the names of all three stores and applied to all three stores. The sale was said to involve "10% of everything in all three stores".

[21]            The Respondent says that, once the complete ad is viewed, it is clear that the name Suzanne's does not stand alone. Rather, it is used in association with Auld-Phillips and Auld Phillips Fabrics. The Respondent also says that the version in the Bowen Affidavit was intentionally cropped so that the name Auld-Phillips did not show and so that it was not apparent that the sale applied to all three stores.

Advertisement B

[22]            Advertisement B was taken from the Chilliwack Progress of May 19, 1976. However, all that appears of the ad in the Bowen Affidavit is the name Suzanne's with Cottonwood under it in comparatively small type.

[23]            In contrast, the full text of the ad shows that the cropped part that appears in the Bowen Affidavit is, in fact, a small portion of a large Auld-Phillips advertisement for a half price sale from May 17 to 22, 1976.

Advertisement C

[24]            The Bowen Affidavit exhibits this ad showing only the name Suzanne's and the word Cottonwood. The excerpt is taken from the Chilliwack Progress of March 23, 1977.

[25]            The Third Hagen Affidavit, on the other hand, shows that the cropped portion in the Bowen Affidavit is again part of a large Auld-Phillips advertisement for its annual Spring Fashion Sale. In this ad the Suzanne's reference is not only associated with Auld-Phillips because it is part of its ad but also because the text under it makes a cross-reference to the entire ad when it says "all items on this page apply to Suzanne's except ...".

Advertisement D

[26]            This advertisement appeared in the Chilliwack Progress on October 21, 1981. In the Bowen Affidavit, it is cropped so that it only displays the name Suzanne's.

[27]            The Third Hagen Affidavit shows the full text of the ad in which the name Auld-Phillips is beside the name Suzanne's and linked to it with an ampersand. Further, all but two of the twelve items mentioned in the advertisement are available at both Auld-Phillips and Suzanne's.

[28]            I agree with the Respondent's submission that ads A, B, C and D, as presented in the Bowen Affidavit, were cropped to deceive the Court and I am prepared to draw a negative inference and conclude that, until 1981, Suzanne's was only used in association with Auld Phillips in advertisements in the Chilliwack Progress.

[29]            One more pre-1984 advertisement appears in the Bowen Affidavit. It is taken from the Chilliwack Progress and dated December 17, 1983. It has not been cropped and shows the name Auld-Phillips linked to Suzanne's with an ampersand. The names are side by side at the top of the ad and they are roughly the same size but the scripts are different. Store locations appear under each name in much smaller typeface. Presumably, this advertisement was not cropped on the premise that the locations would serve to distinguish the two names. However, it is my view that the overall impression created by this advertisement is that Suzanne's was associated with Auld Phillips.

[30]            To this point in the analysis, I have found nothing in Exhibit B which demonstrates that, before the Respondent's first use of Suzanne's in Edmonton in April of 1984, the Applicant was using Suzanne's as a free-standing name.

[31]            Leaving the advertising aside, there is one document in Exhibit B to the Bowen Affidavit which suggests that the name Suzanne's might have been used to describe the Applicant's store in the Cottonwood Mall before 1984. It is a signed agreement dated May 22, 1974 (the "Agreement") in which the Applicant leased a sign from Claude Neon Limited bearing the name Suzanne's. The sign was to be installed at a place described as Cottonwood Corner in Chilliwack. I am asked to infer that the Corner is the Mall or its location, that the sign was installed on or near the Applicant's store and that it was not used in association with a sign bearing another of the Applicant's names. As noted above, there is no explanation for the lack of firsthand evidence on this critical point. Further, there is not even a statement of belief with supporting grounds and none of the documents describe the Cottonwood Mall as "Cottonwood Corner". In these circumstances, I have not given the Agreement any weight.

[32]            Exhibit B also includes page two of a Supplement to the Chilliwack Progress which bears the handwritten date of September 5, 1979. It shows a picture of a mall and includes a store index which lists Suzanne's as #46. The difficulty with this document is that there is no evidence about who found it at the Museum or the accuracy of its date. More importantly, there is no evidence indicating that it actually depicts the Cottonwood Mall.

[33]            In my view, the Respondent's non-entitlement pursuant to paragraphs 16(1)(a and c) of the Act has not been established. The Applicant's evidence does not persuade me that it used the trademark or trade name Suzanne's before April 18, 1984. In other words, I am not satisfied that the requirements of subsection 4(1) of the Act have been met because I do not find, on the evidence before me, that a clear association was made between the name Suzanne's and the Applicant's wares, i.e. the ladies' apparel. Since prior use was not established, the question of confusion need not be addressed.

Issue II            Non-Distinctiveness

[34]            The Applicant alleges that the Mark was not distinctive at the time it brought proceedings questioning the Mark's validity under paragragph 18(1)(b) of the Act. It also alleges that it was not registrable because, under paragraph 12(1)(a) and subsection 12(2) of the Act, the Mark was not distinctive at the date the Respondent applied for registration.

[35]            Distinctive is defined in the Act in the following terms:

[36]            The material in Exhibit B to the Bowen Affidavit does satisfy me that, by the mid-1990's, the Applicant was using the name Suzanne's extensively in association with stores which sold ladies' apparel. Until January 1994, the stores were only in southwestern British Columbia. However, rapid expansion occurred and, by 1999, Suzanne's stores were widespread in smaller urban centres in the province. Then, between 2000 and April 4, 2003 when the Respondent applied to register the Mark, five Suzanne's stores were opened in Alberta. By the time these proceedings commenced on January 30, 2004, six Alberta stores were in operation.

[37]            In his text, The Canadian Law of Trade Marks and Unfair Competition, 3^rd ed. (Toronto: Carswell, 1972) at page 287, Harold G. Fox stated, with regard to loss of distinctiveness, that:

The amount of piracy necessary to cause loss of distinctiveness is a difficult question. A few scattered and unprosecuted infringements by several traders is not sufficient to cause a mark to become publici juris, nor will extensive infringement by a single trader be sufficient.

[38]            However, the Court does not appear to have accepted widespread infringement. In Mr. P's Mastertune Ignition Services Ltd. V. Tune Masters Inc. (1984), 82 C.P.R. (2d) 128 (Fed. T.D.), the Court stated at page 144:

The owner of a trade mark may lose his exclusive right in the mark if he permits the widespread use of it by rival traders either by concurrence or negative action. In that event the trade mark ceased to be distinctive of the owner's wares or services. But an owner does not lose his rights in his trade mark because someone infringes his rights.

[39]            In my view, the basic question must be the one stated by the Supreme Court of Canada in Breck's v. Magder (1975) 17 C.P.R. (2d) 201at 205 (S.C.C.) in which it said that, for a trade mark to be distinctive of a respondent - the message to the public must be that the respondent is the source of services.

[40]            I am confident that, before the Applicant opened stores in Alberta, it would have been fair to say that Suzanne's was distinctive of the Respondent - at least in Edmonton. However, the evidence of actual confusion in the First Hagen Affidavit, makes it abundantly clear that, both at the date of Registration of the Mark (October 30, 2003) and by the time these proceedings were commenced (January 30, 2004), the Mark no longer actually distinguished the Respondent's services from those of the Applicant. Accordingly, even though there was just one infringing party, the infringement was widespread and of significant duration. Further, although the Respondent's counsel wrote a cease and desist letter on April 15, 2002, no action was taken to protect the name Suzanne's until the Infringement Action was commenced in November of 2003.

[41]            In my view, the Mark was not registrable when the Respondent made its trade mark application because, contrary to paragraph 12(1)(a) and subsection 12(2), it was not distinctive at the date of filing (April 4, 2003) and it was not distinctive when this expungement proceeding was commenced on January 30, 2004. For these reasons, the Mark is invalid pursuant to paragraphs 18(1)(a and b) of the Act.

Issue III           Estoppel

[42]            The Respondent submits that the Applicant is estopped from attacking the validity of the Mark because it did not provide particulars of its alleged prior use when asked to do so. This, says the Respondent, left it to reasonably conclude that there was no basis for the Applicant's allegation and no bar to registration of the Mark.

[43]            However, I am not persuaded that this is a proper case for the application of the doctrine of estoppel. On April 15, 2002, the Respondent instructed its previous counsel to write the Applicant and indicate that it was prepared to seek an injunction if the Applicant did not stop opening stores in Alberta under the name Suzanne's. By this time, the Respondent knew that the Applicant had opened two stores in Calgary.

[44]            However, no proceedings for injunctive relief were brought even though, two months after counsel's letter, the Applicant opened its first store in the Edmonton suburb of Sherwood Park and two months, thereafter, the Applicant opened a Suzanne's store in Lloydminster.

[45]            No further steps were taken for almost a year. Then on March 21, 2003, the Respondent's new counsel wrote a letter asking for particulars of the Applicant's claim to prior use of the name Suzanne's. A reply was received but it did not include this information.

[46]            The Respondent says that the Applicant's failure to provide details about prior use could reasonably be interpreted to mean that it had no valid claim. I accept this evidence and, as it turns out, the Respondent was correct in its assumption that the Applicant could not prove prior use.

[47]            However, that has not proved to be material. The Respondent did not rely to its detriment on the Applicant's failure to particularize its prior use. The Respondent knew or should have known that distinctiveness was also an issue when it applied to register the Mark. The Respondent says that, from its perspective, the problem arose when the Applicant entered the Alberta market in 2000. However, the Respondent did not address the problem in a timely way either with litigation or with a geographically restricted trademark application under section 32 of the Act.

[48]            I have not found conduct which estoppes the Applicant from seeking expungement of the Mark. The Applicant made its position about prior use clear and, in the absence of litigation, had no obligation to disclose details of its business history to the Respondent.

Issue IV           Abandonment

[49]            The List indicates that, while several stores had closed, there were thirty stores in business in British Columbia, three in Saskatchewan and seven in Alberta as of April 5, 2003. The Bowen Affidavit states that Suzanne's has been used by the Applicant"continuously" since 1972 in association with the sale of women's clothing. However, the most recent exhibit to the affidavit shows use in a Suzanne's Ezze Wear catalogue only in the year 2000. The Respondent says that, for this reason and because the List was not updated to July 16, 2003, there is insufficient evidence of use when the Respondent advertised its application to register the Mark.

[50]            I have two reasons for rejecting this submission. The first is that, in paragraphs 9 and 10, the Second Hagen Affidavit states that, in March of 2004, the Applicant had stores operating under the name Suzanne's in Alberta. The second is that Mr. Bowen is now the Applicant's Chief Operating Officer and I have no reason to doubt that his statement that the name Suzanne's has been used continuously since 1972 means that it is being used at present and, more importantly, that the stores on the List were still open three months after the List was created. Accordingly, I have concluded that the Applicant had not abandoned the name Suzanne's at the relevant date.

Issue V             Subsection 32(2)

[51]            The Respondent has asked the Court to exercise its jurisdiction pursuant to subsection 32(2) of the Act to restrict the Applicant's use of the Mark to southwestern British Columbia.

[52]            Section 32 reads as follows:

[53]            In my view section 32 does not give the Court power to geographically restrict the use of a trademark, such as the Applicant's, which is not proposed for registration.

CONCLUSION

[54]            An order will be made directing the Registrar of Trade-marks to expunge the Mark on the basis of invalidity pursuant to paragraphs 18(1)(a and b) of the Act. However, in view of the Applicant's mishandling of the evidence and failure to establish its claim to prior use, it will not be awarded costs. Each party is to bear its own costs.

               "Sandra J. Simpson"           

JUDGE

Ottawa, Ontario

January 17, 2005

FEDERAL COURT

NAME OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                          T-233-04

STYLE OF CAUSE:                         AULD PHILLIPS LTD. v. SUZANNE'S INC.

PLACE OF HEARING:                    EDMONTON, ALBERTA

DATE OF HEARING:                       SEPTEMBER 16, 2004

REASONS FOR ORDER:              SIMPSON J.

DATED:                                              January 17, 2005

APPEARANCES:

MR. THOMAS K. O'REILLY                                                 FOR APPLICANT

MR. PATRICK D. KIRWIN                                                     FOR RESPONDENT

SOLICITORS OF RECORD:

FIELD LLP     

FOR APPLICANT

EDMONTON, ALBERTA

KIRWIN & KIRWIN                                                                 FOR RESPONDENT

EDMONTON, ALBERTA