Spenco Medical Corporation v. Emu Polishes Inc., 2004 FC 963

Date: 20040706

Docket: T-1021-03

Citation: 2004 FC 963

Ottawa, Ontario, this 6^th day of July, 2004

Present:           THE HONOURABLE MR. JUSTICE KELEN      

BETWEEN:

                                             SPENCO MEDICAL CORPORATION

                                                                                                                                               Plaintiff

                                                                           and

                                                           EMU POLISHES INC.

                                                                                                                                           Defendant

                                            REASONS FOR ORDER AND ORDER

[1]                This is a motion by the defendant for summary judgment seeking dismissal of the plaintiff's action for trade-mark infringement with respect to the plaintiff's registered trade-mark POLYSORB for shoe insoles, on the ground that there is no likelihood of confusion between POLYSORB and the defendant's trade-mark POLYSOFT for shoe insoles.

FACTS

[2]                The plaintiff, Spenco Medical Corporation, is a private corporation incorporated pursuant to the laws of the State of Texas, in the United States of America. In Canada, Spenco's products include replacement insoles and shoe inserts for medical purposes, such as foot support. One of these products is a line of green coloured insoles bearing the trade-mark POLYSORB, registered in Canada on March 24, 2003 as TMA578018. The plaintiff has sold shoe insoles in Canada in association with POLYSORB since February, 1990.

[3]                The defendant, Emu Polishes Inc. ("Emu"), is a private corporation incorporated pursuant to the federal laws of Canada. Emu uses the unregistered trade-mark POLYSOFT in association with its green coloured shoe insoles. Emu has filed an application to register POLYSOFT with the Canadian Trade-marks Office. The plaintiff has opposed that registration on the grounds of confusion between POLYSOFT and POLYSORB, and a decision is pending. Emu is also the owner of the trade-mark POLYCUSHION, registered in Canada on February 14, 2002 as TMA557896, and the unregistered trade-mark POLY-DRY, both formerly but no longer used in association with shoe insoles. The defendant has sold shoe insoles in Canada in association with POLYSOFT since September, 1998.

Defendant's Evidence

[4]                The defendant's evidence alleges the following:

A.         Use of "POLY" and "SORB" in existing trade-marks

1.         there has been widespread use and co-existence on the trade-mark register of the words "POLY" and "SORB", and that both words and the combination, "POLYSORB", are in use in various industries by parties other than the plaintiff;

2.         a significant number (i.e 840) of active trade-marks using the word "POLY" coexist on the trade-mark register, several of which are for use in association with similar type wares within the same general class of wares; a sample search of the trade-mark register reveals at least 13 such trade-marks in association with clothing, footwear and insoles (class 25), and 44 in association with medical instruments and apparatus (class 10);

3.         the word "SORB" is also commonly used by various traders to describe the sorbent quality of their respective products, and there are several (i.e 240) active trade-marks using the word "SORB", coexisting on the trade-mark register for use in association with similar type wares within the same general class of wares; a sample search of the trade-mark register reveals 52 such trade-marks in class 10, and 12 in class 25;

4.         the word "POLYSORB" is used in various industries to describe material qualities and composition of polyurethane sorbent products including moisture retaining materials for plants, paint sorbent products, diapers and shock absorption; and,

5.         there are three identical POLYSORB trade-marks owned and registered by three separate and unrelated entities coexisting on the trade-mark register: one is the plaintiff's; the second is owned by Roquette Freres and has been in use in the pharmaceutical and food industry since February 5, 1979, well before the registration date of POLYSORB (March 24, 2003) and date of first use (February, 1990); the third, owned by United States Surgical Corporation, has been in use in the medical field (which is the plaintiff's main area of use) since June 26, 1984, also well before the plaintiff's registration date, and date of first use.

B.          Description of respective products

1.          Emu provides ordinary shoe insoles for added comfort to regular footwear, while Spenco provides specialized shoe insoles for medical/athletic purposes; and,

2.         Emu sells its shoe insoles through a variety of general retailers and shoe repair shops, while Spenco sells its products in specialized retail outlets such as sports clothing and goods stores.

C.         Creation and choice of POLYSOFT trade-mark

1.         Emu chose POLYSOFT to be used in association with its products because it is suggestive of the qualities a customer may require in an insole: "POLY" because insoles are usually made of a polymer based element, in particular, polyurethane; "SOFT" because it describes the gentle, relaxing and comfortable sensation on the feet;

2.         that POLYSOFT was created and chosen along the same lines as the defendant's registered trade-mark POLYCUSHION;

3.         the choice of the trade-marks POLYSOFT, POLYCUSHION and POLY-DRY is based on the common practice of using closed form compound words-- which means to meld together ordinary words that may not necessarily be found in the dictionary; and,

4.         there are over 150 dictionary entries for closed form compound words with the prefix "POLY", for example: Polyacid, polycristal, polypharmacy, polypodium, polysyllable, polywater, polytechnic and polysensuous.

Plaintiff's Evidence

[5]                The plaintiff's evidence alleges the following:

1.         the prefix "POLY" has multiple meanings, and the dictionary definition of "POLY" does not refer to polyurethane or shoe insoles; POLYSORB is a coined phrase;

2.         POLYSORB is not used in association with the sale of polyurethane, polyester, or absorption; it is only used in association with the sale of shoe insoles;

3.         POLYSORB is used in capital letters on packaging, promotional materials, advertisements, and invoices;

4.         positive customer comments indicate that Spenco has acquired considerable goodwill from its POLYSORB line of shoe insoles;

5.         Spenco spends significant sums of money annually on marketing POLYSORB shoe insoles; the annual advertising budget rivals the total amount of annual sales for POLYSOFT shoe insoles; the sales of POLYSORB insoles significantly outweigh those of POLYSOFT;

6.         Spenco markets its products to podiatrists; POLYSORB is well known to podiatrists and they recommend it to their patients;

7.         POLYSORB insole packaging has strong customer identification;

8.                   POLYSORB insoles are green on top, and black and yellow on the bottom; POLYSOFT insoles are green on top, and used to be grey on the bottom; they are now black and yellow on the bottom;

9.                   the POLYSOFT packaging reads: for "Leisure, Work , and Sport"; similarly, the POLYSORB packaging reads: either "Walker/Runner", "Everyday", or "Cross Trainer";

10.               the cues consumers are most likely to use are the brand name and colour of product; the colour green in both insoles could serve as a cue triggering a purchasing sequence and increasing confusion between the two trade-marks; this is compounded by the fact that there is only a two letter difference between the two trade-marks, and it does not occurring until the end of the marks, i.e "FT" and "RB";

11.               both suffixes "SORB" and "SOFT" are capable of presenting overlapping ideas, since the consumer will understand that a material such as polyurethane has common characteristics of softness and absorbency, in addition to shock absorbency; and,

12.               consumers who ask for POLYSORB insoles are sometimes given POLYSOFT insoles, and told by sales representatives that they are "the same thing".

THE TEST FOR GRANTING SUMMARY JUDGMENT

[6]                Summary judgment is governed by Rules 213 to 219 of the Federal Court Rules, 1998 SOR198-106 , in particular, Rule 216 provides in part:

[7]                The Court is not to grant summary judgment where it is shown that there is a genuine issue for trial. However, Rule 216(3) specifically permits this Court to grant summary judgment even where there is a genuine issue for trial so long as the Court "is able on the whole of the evidence to find the facts necessary to decide the questions of fact and law." The Federal Court of Appeal has recently reviewed the principles involved in granting summary judgment in MacNeil Estate v. Canada (Indian and Northern Affairs Department) (2004), 316 N.R. 349 (F.C.A.) and in Trojan Technologies, Inc. v. Suntec Environmental Inc. 2004 FCA 140, [2004] F.C.J. No. 636 (F.C.A.)(QL).    

[8]                In MacNeil Estate, supra, the Federal Court of Appeal quotes the oft-stated principles enunciated by Tremblay-Lamer J. in Granville Shipping Co. v. Pegasus Lines Ltd., [1996] 2 F.C. 853 (T.D.) with approval, and clarifies the role of a motions judge generally, and specifically with respect to the application of Rule 216(3). The Court provides the following relevant guidance in MacNeil Estate:

1. where an issue of credibility arises from evidence presented, the case should not be decided on summary judgment under rule 216(3) but rather should go to trial because the parties should be cross-examined before the trial judge (see paragraph 32 of MacNeil Estate);

2. under rule 216(3), motions judges can only make findings of fact or law provided the relevant evidence is available on the record and does not involve a "serious" question of fact or law which turns on the drawing of inferences (see paragraph 33 of MacNeil Estate)

3. Rule 216(3) permits a judge on a motion for summary judgment, after finding that a "genuine issue" exists, to conduct a trial on the affidavit evidence with a view to determining the issues in the action. However, this is not always possible, particularly where there are conflicts in the evidence, where the case turns on the drawing of inferences or where serious issues of credibility are raised (see paragraph 46 of MacNeil Estate).

THE RELEVANT PROVISIONS OF THE TRADE-MARKS ACT, R.S.C. 1985, c. T-13

[9]                Section 2 of the Act defines "confusing", and "distinctive" as:

[10]            And section 6 of the Act provides in part:

[11]            Subsections 7(a), (b), and (c) outline certain prohibitions with respect to unfair competition and prohibited marks:

[12]            Finally, sections 19, 20 and 22 outline the relevant trade-mark rights and infringing actions:

ANALYSIS

Whether there is a genuine issue for trial

[13]            Under Rule 216(1) of the Federal Court Rules, 1998, I must first determine, on a motion for summary judgment, whether the claims in question present no genuine issue for trial or that the issue is so doubtful that it deserves no further consideration.

[14]            I am satisfied that the plaintiff has raised the following genuine issues for trial:

1.          Does the defendant's use of the trade-mark POLYSOFT in association with insoles cause confusion in that such use is likely to lead to the inference that POLYSOFT insoles and POLYSORB insoles are manufactured or sold by the same person;

2.          Has the defendant directed public attention to its wares and business in such a way as to be likely to cause confusion in Canada with the insoles of the plaintiff, contrary to subsection 7(b) of the Trade-mark Act. This subsection is the codification of the common law tort of passing off.

[15]            I note that the defendant did not argue that the plaintiff's trade-mark POLYSORB was unregisterable in that it was descriptive of the character of the insoles produced by the plaintiff so that the trade-mark registration is invalid. If the registration is invalid, there, of course, can be no claim of infringement under the Act. At the outset of the hearing, the plaintiff objected to this line of argument on the basis that it was not pleaded in the statement of defence. The defendant did not thereafter make this argument.

[16]            The general test for confusion has been recently set out by Justice Snider in Alticor Inc. v. Nutravite Pharmaceuticals Inc., [2004] F.C.J. No. 268 at paragraph 18:

... The general test for confusion has been stated as whether, as a matter of first impression in the mind of an average consumer having a vague or imperfect recollection of another mark, the use of both trade-marks in the same area and in the same manner is likely to lead to the inference that the wares associated with those marks are produced or marketed by the same company ...

[17]            In deciding that there is a genuine issue, viz. whether the trade-marks are confusing, I have regard to the following factors set out in subsection 6(5) of the Trade-mark Act.

(i)          the inherent distinctiveness of the plaintiff's trade-mark and the extent to which it has become known

I found that the POLYSORB trade-mark has been used in Canada since 1990, that the POLYSORB insoles have surprisingly high Canadian dollar sales, and that the vast majority of the customers of POLYSORB insoles are repeat customers. My conclusion is that the POLYSORB trade-mark, while not inherently distinctive, may be distinctive in that it has become known and associated with the plaintiff's product;

(ii)         the length of time the trade-mark has been in use is quite extensive

The trade-mark has been in use by the plaintiff since 1990 whereas the defendant's trade-mark has only come onto the market in 1998;

(iii)        the nature of the wares are identical

There was no evidence led to show that the nature of the POLYSORB insoles are different than the nature of the POLYSOLT insoles. Accordingly, it appears on the evidence that the nature of the wares are identical;

(iv)        the nature of the trade

The defendant admitted at the hearing that the nature of the trade overlaps. The evidence established that both brands of insoles are sold at six common retailers; and,

(v)         the degree of resemblance between the trade-marks in appearance or sound or the idea suggested by them

The plaintiff produced expert evidence that there is a high degree of resemblance between the trade-marks.

For these reasons, I am satisfied that the plaintiff has shown that confusion is a genuine issue for trial.

Use of POLY in Trade-marks

[18]            The presence of a common element in trade-marks means that small differences will serve to distinguish the mark since consumers are accustomed to making distinctions, in this case between various POLY trade-marks. In the case at bar the plaintiff's trade-mark POLYSORB was the only POLY in the marketplace for shoe insoles. In this respect, the case at bar is distinguishable from Alticor Inc., supra, where Justice Snider found that there were 81 products associated with the general class of supplements and other health related products with the prefix NUTR in their trade-marks available in Canada. Of these 81 products, 38 would be considered to be vitamins, minerals and herbal supplements, the same product as the plaintiff's NUTRILITE products.

[19]            I conclude that the proliferation of POLY in trade-marks is an issue which must be weighed by the trial judge assessing the credibility and weight of the plaintiff's evidence that consumers of POLYSORB insoles would be confused by the presence of the POLYSOFT trade-mark for insoles.

Evaluating Credibility, Weighing Evidence, and Drawing Factual Inferences

under Rule 216(3)

[20]            I am satisfied that I cannot, under Rule 216(3), properly assess the credibility or weigh the evidence of the plaintiff's witnesses that the defendant's trade-mark POLYSOFT will likely cause confusion with the plaintiffs' customers.

[21]            The following witnesses for the plaintiff gave affidavit evidence as to material facts:

1.         Mr. Gerard Mayne, President of Spenco Medical Canada ("Spenco Canada");

2.         Mr. Blake Boulden, Director of Marketing at Spenco Corporation, in Texas;

3.         Dr. Peter Dacin, professor in the School of Business at Queen's University, Kingston, Ontario, and an expert in the field of marketing; and,

4.         Dr. Robert Chelin, a certified podiatrist in Ontario, and former President of the Ontario Podiatric Medical Association.     

[22]            The credibility of this evidence needs to be evaluated at trial, and the Trial Judge will need to weigh the evidence and draw the necessary inferences. For instance:

a)         the President of Spenco Canada, Mr. Mayne deposes at paragraphs 30 - 31 of his affidavit that their customers would be confused:

30            Prior to June 2001, I became aware that Emu Polishes Inc. ("EMU") was distributing and selling a shoe insole, with a green topcloth, under the brand name POLYSOFT. I became aware of this when I saw that a distributor of POLYSORB, Industrial Safety Equipment Company (hereinafter ISECO), was selling these POLYSOFT insoles. I purchased a sample of these POLYSOFT insoles from ISECO. A copy of a photograph showing the POLYSOFT insoles that I purchased is attached to my affidavit ...

31            This discovery was disturbing to me because when I first quickly read the trade-marks they looked identical. Only upon a closer reading of the two trade-marks, POLYSORB and POLYSOFT, was the difference between them clear to me. My concern was heightened as the two insoles, sold under the brands POLYSORB and POLYSOFT, initially also looked very similar as both products have a green topsheet.

32            My first thought was that our customers, and potential customers, would be confused by the similarity in the two trade-marks, and this confusion would be heightened by the similarity between the look of the two brands of insoles. I brought this to the attention of the owner of the trade-mark, Spenco Medical Corporation.

b)          the Director of Marketing at Spenco, in Texas, Mr. Blake Boulden deposes at paragraph 37 of his affidavit that Canadian customers mistake POLYSOFT insoles for POLYSORB insoles:

37            In the case of Canada, where the POLYSOFT insoles are sold as well as POLYSORB brand insoles, consumers who ask for POLYSORB brand insoles are sometimes given POLYSOFT insoles. In some cases these customers are told that the POLYSOFT insole "is the same thing" as the POLYSORB brand insole. In some cases these consumers are not aware that they were given a different brand from what they requested and some times the consumers are confused between the POLYSORB brand and the POLYSOFT brand. Consumers purchase POLYSOFT insoles when they intended to purchase POLYSORB brand insoles. Currently these instances of confusion and passing off happen more often in Canada then [sic] in the United States as POLYSOFT insoles are more available in Canada.

c)          Dr. Peter Dacin, who provides an expert marketing opinion on behalf of the plaintiff, deposes at paragraphs 57 and 58 of his affidavit that there is a likelihood of confusion:                       

57                 The fact that the surface area of both the shoe insoles of the Defendant sold in association with the trade-mark POLYSOFT and the shoe insoles of the Plaintiff sold in association with the trade-mark POLYSORB are green heighten the likelihood of confusion between the two marks. The color green in the Plaintiff and Defendant shoe insoles could serve as a color cue which may trigger a purchasing sequence and increase the confusion between the trade-marks POLYSOFT and POLYSORB. Once the green visual cue is verified, the processing of the trade-mark could be quick resulting in the possibility of confusion.

58                 The similarity in the trade-mark POLYSOFT and the trade-mark POLYSORB and the color of the two insoles being green compounded with the potential of a sales person suggesting substitution for one product for another increases the likelihood of confusion between the trade-mark POLYSOFT and POLYSORB. The similarity of the trade-mark POLYSOFT and the trade-mark POLYSORB provides creditability to a sales person suggesting substitution of one product for another. While the color green likely adds to the confusion, independent of the color on the surface area of both the shoe insoles of the Defendant sold in association with the trade-mark POLYSOFT and the shoe insoles of the Plaintiff sold in association with the trade-mark POLYSORB, the trade-mark POLYSOFT and POLYSORB when used in association with shoe insoles/inserts are likely to be confusing with one another.

d)          and Dr. Robert Chelin, the certified podiatrist who also provides an expert opinion on behalf of the plaintiffs, deposes at paragraphs 34 and 35 of his affidavit that patients of podiatrists will be confused:

34                 I have seen these POLYSOFT insoles, and at first glance, they look identical to the POLYSORB brand insoles as they both have a green top cloth. The trade-marks POLYSORB and POLYSOFT are nearly identical, and if I was not previously made aware of the existence of these two different brands, I would definitely be confused between the brand names POLYSOFT and POLYSORB.

35                 I am concerned that the patients to whom podiatrists have recommended POLYSORB brand insoles will be confused when they see the POLYSOFT insoles. Due to the rampant problem of substitution by retailers, I am confident that many salespeople will say that POLYSORB and POLYSOFT insoles are the same in order to sell the POLYSOFT insoles that they stock. Given the nature of the insole retail industry, salespeople will try to sell whatever brand insoles that they have and will substitute their brand of insoles for the brand of insoles that are prescribed by podiatrists and confuse patients. Patients will often not even be aware that a substitution has been made.

[23]       The only evidence from the defendant on confusion is that of Mr. Armin Naldabandian, President of Emu. Counsel for the defendant acknowledges that Mr. Naldabandian's evidence on cross-examination seemed to be all over the place.

[24]         The magnitude of materials filed in this motion for summary judgment is noteworthy because it is indicative of the live controversy between the parties. The plaintiff has filed eight volumes in its motion record, five of which contain affidavit evidence and exhibits, and four     containing further exhibits and transcripts of cross-examination of the defendant's witnesses. The Defendant has filed four volumes in its motion record, three of which contain affidavit evidence and exhibits. The defendant also filed a supplementary motion record of three volumes, two of which contain transcripts of cross-examination of the plaintiff's witnesses.

[25]       The evidence raises credibility issues with respect to confusion and passing-off which     warrant the need for viva voce testimony. Accordingly, this motion for summary judgment must be dismissed.

[26]       Considering the extensive evidence filed on behalf of the plaintiff, which demonstrates that a trial is necessary to assess the conflicting evidence on confusion, the plaintiff is entitled to costs for this motion in any event of the cause.

                                                                       ORDER

THIS COURT ORDERS THAT:

This motion for summary judgment is dismissed with costs to the plaintiff in any event of the cause.

                                                "Michael A. Kelen"                                                                                                   _______________________________

         JUDGE

FEDERAL COURT

Names of Counsel and Solicitors of Record

DOCKET:                                           T-1021-03

STYLE OF CAUSE:             SPENCO MEDICAL CORPORATION

                                                                                                                                                 Plaintiff

and

EMU POLISHES INC.

                                                                                                                                             Defendant

DATE OF HEARING:                       June 21, 2004

PLACE OF HEARING:                     Ottawa, Ontario

REASONS FOR

ORDER AND ORDER BY:             THE HONOURABLE MR. JUSTICE KELEN

DATED:                                              July 6, 2004

APPEARANCES BY:                         Mr. Scott Miller                                                            

Ms. Sharon Griffin

For the Plaintiff

Mr. Bayo Odutola

Ms. Bourbonnais

For the Defendant

SOLICITORS OF RECORD:           Marusyk Miller & Swain LLP

Ottawa, Ontario                                                             

Tel: (613) 567-0762

For the Plaintiff

Odutola Law Chambers

Ottawa, Ontario

Tel: (613) 238-1140

For the Respondent

                         FEDERAL COURT

                                                          Date: 20040706

                                         Docket: T-1021-03

BETWEEN:

SPENCO MEDICAL CORPORATION

                                                                       Plaintiff

and

EMU POLISHES INC.

                                                                   Defendant

REASONS FOR ORDER

AND ORDER