Date: 20070307
Docket: T-1395-05
Citation: 2007 FC 262
BETWEEN:
BMW CANADA INC.
BAYERISHE
MOTOREN WERKE AKTIENGESELLSCHAFT
Plaintiffs
and
NISSAN
CANADA INC.
Defendant
REASONS FOR
JUDGMENT
MACKAY
D.J.
[1]
The
Plaintiffs seek relief by declaration, by injunction and in damages or loss of
profits, to redress the Defendant’s alleged infringement, and depreciating the
value of the goodwill, of certain registered trade-marks, contrary to ss. 20
and 22 respectively of the Trade-Marks Act, R.S.C. 1985, c. T-13 as
amended, (the Act).
[2]
They
also seek declaratory relief against the use by the Defendant of the
trade-marks M and M6 which use is said to violate the Plaintiffs’ proprietary
rights in the trade-marks M, M3, M5, M6 and M and Design, contrary to paragraph
7(b) of the Act. The defendant’s use of the marks M and M6 in association with
automobiles, in advertising, promoting, offering for sale and selling
automobiles, parts and accessories, is alleged to cause confusion concerning
the sources of the wares of the Plaintiffs and those of the Defendant.
[3]
For
the reasons that follow, I conclude that the plaintiffs’ claim under s. 20 of
infringement of their exclusive rights in certain registered trade-marks is not
established, and that their claim under s. 22 for depreciation of the value of
goodwill attaching to the same registered trade marks by the defendant’s use of
the marks M and M6 is not established. I do find, however, that the defendant’s
use of the letter M, alone, in form similar to that of the plaintiffs’
trade-mark M, alone, and its use of M6 as a package for modifying one of its
vehicles, cause confusion in Canada between the sources of the wares of the
defendant and the wares of the plaintiffs.
BMW – its cars and
trade-marks
[4]
The
Plaintiffs are BMW Canada Inc. (BMW Canada), incorporated under the laws of
Canada, a wholly owned subsidiary of the other Plaintiff, Bayerische Motoren
Werke Aktiengesellschaft (BMW AG), a company incorporated pursuant to the laws
of Germany. The two companies together are here referred to as BMW. BMW is
known throughout Canada as a major supplier, and the German parent
corporation is known throughout much of the world as a major manufacturer and
supplier, of automobiles, parts and accessories. BMW has manufactured, sold,
distributed and promoted a number of models of automobiles, parts and
accessories through BMW Canada. BMW’s vehicles are widely known for high quality
craftsmanship in their production and for their high performance.
[5]
Within
BMW AG is a wholly owned, separate corporation, BMW M GmbH, originating in 1972
as BMW Motorsport GmbH, known within BMW simply as M, with its own directing
staff and its own research and some manufacturing facilities. Its primary
function is to adapt advanced automobile technology from BMW’s racing cars for
use in especially high performance cars produced for regular highway use for
the high end, or expensive, consumer market. These cars, produced by extensive
adaption from some of BMW’s regular models, originally by BMW M GmbH but more
recently as directed by M on BMW’s regular assembly lines, are known as “M cars”
within BMW.
[6]
For
these cars BMW uses the letter M combined with a number or a word in trade-marks
applied to particular lines or series of vehicles. Those automobiles and the
parts and accessories for BMW models are produced, and sold at higher cost than
regular models, with a cachet of exclusiveness among their owners and within
BMW. That cachet is enhanced, it is thought by BMW representatives, by
restricting M car production so that buyers of these cars must order a vehicle
some months in advance of delivery. New M cars are not readily available for
purchase in the showrooms of dealers without a prior order for future delivery.
[7]
BMW
AG is the owner of numerous trade-marks which BMW Canada has been licensed to
use in this country. Among BMW AG’s claims to ownership of trade-marks, of
particular interest in this action are M, M3, M5, M6, and M and Design, which
are said to have been used in association with automobiles, parts and
accessories in Germany and in Canada. Among those marks BMW AG owns the
following registered Canadian trade-marks, all for use in relation to wares,
i.e. automobiles and parts:
Registration TMA 544, 922 (for M3)– issued May 11, 2001
M3
Registration TMA 561, 482 (for M5) – issued May 7, 2002
M5
Registration TMA 336, 985 (for M and design) – issued
February 12, 1998
(drawing is lined for colours blue, purple and red)
[8]
The
marks M and M6, are said to have been used in Canada and both are
currently the subjects of applications for registration by BMW.
[9]
BMW
AG also owns other registered marks in Canada which include
as one element the letter M. These are the marks: M SERIES
(Registration TMA 614,701, issued July 13, 2004) for automobiles and their
constituent parts; M POWER design (Registration TMA 329,972, issued
July 10, 1987) (with horizontal color bars in blue, purple and red for the
design M POWER) for automobiles and their constituent parts, namely
engines; M‑THE MOST POWERFUL LETTER IN THE WORLD (Registration TMA
664,704 dated May 19, 2006), and M-THE MOST POWERFUL LETTER
(Registration TMA 664,875 dated May 24, 2006), both for automobiles and their
constituent parts, and for services: organization of car racing and car club
events.
[10]
In
2005 and 2006 BMW applied for registration for additional marks including: M NIGHT
(Application 1,269,440, filed August 22, 2005 and revised February 6, 2006) for
retail services in the field of automobiles, motorcycles, and parts and
accessories therefore, retail services in the field of fashion accessories,
life style articles, sporting articles and clothing, organizing and hosting of
automobile theme parties and celebrations; M (Application
No. 1,271,794 filed September 13, 2005) in relation to automobiles and
their parts and to automotive retail services; M ROADSTER and M COUPE
(Applications 1,273,588 and 1,273,589, both filed September 27, 2005) both
for automobiles and parts; M SPORT PACKAGE and M EXECUTIVE PACKAGE
and M PERFORMANCE EDITION (Application numbers 1,274,093 and 1,274,092
and 1,274,333 respectively, all filed September 30, 2005) all for automobiles
and their parts; and M6 (Application No. 1,244,305 filed April 6, 2006
revised May 2, 2006) for automobiles and parts. All of these applications for
registration by BMW, including those for M alone and M6 which are
specifically at issue in this case, were filed after commencement of this
action by BMW.
[11]
BMW
has also used the letter M in association with certain automobile parts and
accessories, including 16 different “M parts”, e.g., M Suspension, M Sports
Seats, M steering wheel, M wheels, and with the special packages known as M
Sport Package, M Performance Edition, and M Executive Package. Each package
consists of M parts and accessories to “dress” a regular BMW car to look, or to
perform, in some respects like an M car. The use of the letter M in trade-marks
and on these products and packages is considered by BMW as a sign of the
strength and reputation of its M trade-mark.
[12]
The
various M marks used by BMW AG are known within BMW as the “Family of M
trade-marks”. The M6 and the M and design trade-marks are said to have been
used in Canada as early as 1986 at least in advertising, and the M3, M5 and M
trade-marks are said to have been used in Canada as early as
1987.
[13]
The
first M car manufactured and sold was the M1 model, in 1978. In Canada the first M car
promoted and sold was the M6 car in 1987, followed by the M3 and the M5. In the
1990’s the M corporation began producing M-individual cars, each produced on a
customized order with selected materials and parts for an individual customer.
In recent years BMW has promoted and sold a variety of M cars, not all series
in a given year. In Canada, M cars sold in 2006 included the M3 Coupe, the
M3 Convertible, the M3 Cabriolet, the M5, M6, M6 Convertible, M Roadster and M
Coupe.
[14]
BMW
M cars bear the M and design mark (three coloured forward slash marks followed
by a forward sloping M (i.e. as depicted above for TMA 336,985, sometimes
depicted in the design mark with the M as a scroll letter, and sometimes in
written text as ///M)). This mark is on the shift lever, the lower portion of
the steering wheel, the wheels, the rear trunk lid, the dashboard, the kick
plate, and the M cars also bear the BMW logo (a roundel with white and blue
alternating quarters of a circle surrounded by a double ring containing the letters
BMW), which appears at the centre front, at the centre rear of the vehicle, and
also at the centre of the steering wheel. The cars are not marked with any
stand-alone M letter mark and, of course, they do not bear any mark registered
or claimed by Infiniti.
[15]
BMW
believes that because of its sales and promotions, these vehicles have come to
be widely known and generally referred to, not only within BMW but also in
their market, particularly by auto journalists and car enthusiasts, as “M
cars”. BMW representatives also believe, but they have no records to support
the belief, that success in advertising, sales and performance of its M cars
and parts enhances sales and reputation of its regular vehicles. In their view
the promotion and sale of M cars creates a halo or an aura effect which
benefits its marketing of regular BMW cars.
Nissan – its Infiniti
cars and trade-marks
[16]
The
defendant, Nissan Canada Inc. is incorporated pursuant to the laws of Ontario. It is also
in the business of selling, distributing and promoting automobiles and
accessories in Canada. Infiniti is a luxury division within Nissan
through which the Defendant sells its Infiniti cars, including its reasonably
expensive M35 and M45 model automobiles which are promoted as high performance
vehicles.
[17]
The
defendant, Nissan Canada Inc., is the licensee of a number of registered
Canadian trade-marks, including registration No. 612,708 for M45 (registered
June 15, 2004), and registration No. 640,144 for M35 (registered on May
19, 2005), both for use in association with motor vehicles, namely automobiles,
trucks, vans, sport utility vehicles, and structural parts thereof. The two
marks are used for two series of Infiniti vehicles, the M35 and the M45 that have
generally similar manufactured bodies but with different engines. Both marks are
registered in the name of the parent company of Nissan Canada Inc., i.e.,
Nissan Jidosha Kabushiki Kaisha, of Japan. Within Nissan Canada
Inc. cars bearing these trade-marks are known as Infiniti M vehicles, and they
have been referred to by some automobile journalists as M cars or Infiniti M
cars.
[18]
After
this action commenced, in 2006 Nissan, the parent company, also applied for
Canadian registered trade-marks for the marks M20, M37, M40, M48, M50,
M55 and M56, each for use in association with motor vehicles, namely
automobiles, trucks, vans, sport utility vehicles and structural parts therefore.
These marks, if obtained, are said to be intended to be used to reflect various
engine sizes contemplated to be installed in future Infinity M vehicles.
[19]
Since
January 2005, Infiniti has offered 3 models of Infiniti M vehicles in Canada, the M35,
the M35X (an all-wheel drive vehicle), and the M45. In addition to the badge of
its appropriate trade-mark, each of the Infiniti M cars has the Infiniti logo
on the centre of the front grill and the name Infiniti on the back of the car.
Infiniti M vehicles are not marked with a stand-alone M, or any trade-mark
claimed by BMW.
[20]
In
2005 and 2006 in bill board, newspaper and television advertising of its new
Infiniti M vehicles Nissan Canada used the letter M standing alone, sometimes with
an automobile outlined above a stylized partial letter, i.e., the upper portion
of the letter M, not readily identified as the letter M but described at trial
as a large M flowing off the bottom of the advertisement. Some of these
advertisements omitted the letter “M” in words such as “outperfor_” and
“do_inate”. Some of that advertising stated that “the M is coming”, later ads
stated “the M is here”, then “The 2006 M” and “The 2007 M”. All of these
“teaser” ads included Infiniti’s logo and, in smaller type font, the name
Infiniti. The M alone symbol used by Infiniti in its advertising has also been
used on banners designating Infiniti displays at auto shows.
[21]
In
form that symbol, the M, has been comparable to a similar M alone symbol used
by BMW in recent years in some advertising, in promotional brochures, and on
banners, tickets and advertising used for “M Night”, a Montreal event, annually
from 2001 to 2005, coincident with the Formula One race there, to promote BMW’s
M cars. Both manufacturers have used the letter as an upper case or capital M
with vertical legs. As we have seen BMW also uses the letter M as an element in
marks with numbers or words or in its M and design trade-mark, but in the last
of those the letter is forward sloping or in script rather than in vertical
print.
[22]
Infiniti
also uses the “M6” to designate a sports package, optional for purchasers of
the Infiniti G35, to upgrade the standard Infiniti vehicle. The M6 package was
introduced a few years after BMW’s M6 vehicle was sold in Canada at a time
when the only M6 cars available in this country would have been used, or
pre-owned, vehicles. Neither M6 nor M alone is the subject of an application
for registration as a trade-mark in Canada by Nissan.
[23]
Nissan’s
Infiniti vehicles are classified by the manufacturer in 3 series, those classed
as G, those of medium range and price classed as M, and the most expensive
class is Q. The M35 and M45 vehicles are not generally considered, even within
Nissan, as competitive in high performance and price with BMW M cars. They are
considered as luxury vehicles and are compared with regular BMW vehicles
usually of the 5 series.
Relief sought by the
plaintiff
[24]
At
the root of the plaintiff’s concerns is the use by Infiniti of brochures,
banners and advertisements using the letter M alone in association with
automobiles. The various forms of relief sought by BMW in this action exclude
any claim against Nissan for its use of its registered Canadian trade-marks M35
and M45, but the relief sought is directed against any other use of the
letter M by Nissan Canada Inc. In particular BMW objects to the use by Nissan
of the letter M standing alone in its advertisements, and the use of M6 for a
sports package developed for the Infiniti G35, or any other use of the letter M.
The relief sought by BMW includes declaratory relief that the Defendant:
(a)
is
deemed to have infringed BMW’s rights in relation to registered trade-marks M3,
M5 and M and design, contrary to s. 20 of the Act;
(b)
has
depreciated the value of good will attaching to those same registered trade-marks,
contrary to s. 22 of the Act; and
(c)
by
use of the trade-mark M and use of the trade-mark M6 violates the Plaintiffs’
proprietary rights in the trade-marks M, M3, M5, M6, and M and Design, contrary
to s.7(b) of the Act.
[25]
The
Plaintiffs also seek an injunction against the Defendant’s use of trade-marks
that would adversely affect the Plaintiffs’ trade-mark rights, an order for
delivering up or destruction of all materials that may offend the terms of any
injunction granted. Damages, or profits of the defendant, arising as a result
of trade-mark infringement or depreciation of the value of registered marks, and
interest before and after judgment at a rate greater than the prevailing prime
rate, are also claimed, to be determined in accord with a bifurcation order,
made before trial, providing for severance of issues of damages or any
accounting profits, if necessary. Finally, costs are requested on a solicitor
and client basis.
The significance of the
M mark for BMW
[26]
As
we have seen the letter M is an element in numerous trade-marks registered or
applied for in Canada by BMW. It is highly prized as a symbol by BMW
and the letter, M alone, appears in promotional brochures of the plaintiffs, in
films, in corporate publications including books about BMW’s M cars and
products, and in product guides used by dealers and for internal ordering. It
is also used in banners mounted for celebrating “M Night” in Montreal, as we have
noted, and for “M Tours” at various locations in major Canadian centres, where
M-cars and their owners are major attractions. Thus, in promotion of its M
cars, the letter M has been used by the plaintiffs in Canada for some
years. In that and in advertising and promotion activities BMW policy directs
that the general corporate mark, its logo, i.e., the BMW roundel, or other
registered trade-mark accompany an M used, and one or more other marks generally
accompany a stand-alone letter M when used in BMW materials.
[27]
It
has not been used, by itself, as a trade-mark on any of BMW’s M cars, but in
addition to registered trade-marks, such as M3 or M5 those cars are marked with
the M and design mark, sometimes referred to at trial as the “M badge”.
[28]
It
is to be remembered that the letter M alone, is not a registered trade-mark of
BMW although application for registration was made, as noted earlier, in
September 2005. M and the M and design registered mark, both sometimes referred
to at trial as the “M mark”, or the “M Brand” as we shall see, are the bases of
BMW’s claims against the defendant. The letter M is said to characterize the
core of BMW. In the words of Professor Ulrich Bruhnke, President of BMW M GmbH,
with worldwide responsibility for M cars:
M is the DNA of BMW. If you
reduce to its core, then it is the M, and M stands for motor, engine in German
language, for the man, for emotion, for motor sports, and it is the name of our
brand. We will not have the situation that others use our brand, our energy we
put into this brand and our success.
If you want to be successful,
you have to find your own way, not to copy another one. That is why I am here.
(Transcript, p. 539)
Joseph Lawrence, Director of Marketing,
BMW Canada Inc., described the “M brand”
thus:
The
M brand is BMW’s highest… represents BMW’s highest performance and most
exclusive vehicles that we market.
The interesting thing about
the M brand, it is not simply a simple designation that has been chosen out of
thin air; rather, it has its heritage with BMW Motorsport, and that is where
the M comes from, is Motorsport.
It is a racing heritage. It
has been developed over 30-some-odd years and has earned a very hard-earned
reputation among car enthusiasts and among the automotive community in general,
even non-enthusiasts I would say, as exceptionally high-performance vehicles
(transcript, p.878).
[29]
BMW’s
internal emphasis on its M brand, reflected in its development of M vehicles,
parts and packages, its marketing and promotion of those and of accessories and
sports clothing, appears widely accepted by auto journalists and at least some luxury
car enthusiasts, including purchasers of BMW cars, sometimes called “Beemers”,
in Canada.
[30]
Jim
Kenzie, a long-time auto journalist, who is featured in newspaper, magazine,
radio and television broadcasting, who is also a licensed race car driver,
submitted a report, and testified, as an expert commentator on the car industry
in Canada and the reputation of BMW’s M cars. His views on the high reputation
of BMW and its M cars for quality performance and handling in driving are
supported by the comments of other auto journalists in Canada, some of
whose articles are exhibits to his report. Those same views are supported by
the testimony of certain fact witnesses whose primary testimony concerned their
reactions to Infiniti advertisements which featured the letter M. And those
views were not seriously disputed by the testimony of Jacques Duval, another leading
Canadian auto journalist from Québec who testified for the defendant, Nissan. Mr.
Duval did not disagree with the view that BMW’s M cars were known as quality
vehicles with high performance standards, which had been recognized by a number
of awards in the automobile industry, as had the automobiles produced by others.
[31]
With
respect for his views generally, I do not accept the opinion expressed by Mr.
Kenzie, without reference to supporting evidence, that “the Canadian public
associates the M trade-mark and the M badge [i.e., the M and design trade-mark]
with cars that come from BMW”. Without some evidence it is not within his
recognized expertise as a journalist to be a spokesperson for “the Canadian
public”. I note it is Mr. Duval’s opinion that, while auto journalists and
enthusiasts may associate M symbols with BMW, that is unlikely to be reflected
among the public at large, for relatively few BMW- M cars have been sold in
Canada compared with other luxury high performance vehicles, and in his opinion
BMW has not advertised its M cars and parts in newspapers or media directed to
the general public. Rather that advertising has been in automobile magazines
for car enthusiasts and in BMW’s promotional brochures, intended for an
audience of luxury car enthusiasts.
[32]
Mr.
Kenzie’s report does include two other matters worth note. The first is that
until Nissan’s advertisements commencing in 2005 for its M35 and M45 cars he
was unaware of any other automaker than BMW who used an M alone in
advertisements, brochures and promotions of its vehicles. Mr. Duval however,
provides some evidence of numerous other automobile manufacturers that use the
letter M, in corporate logos, (i.e., Mazda, Mercury, Maybach all use stylized
M’s in registered trade-mark logos). Others use the letter M, in conjunction
with other letters or numbers in reference to particular classes or models of
their vehicles (e.g. Chrysler, Ferrari, Acura, Mazda and Mercedes-Benz). The
letter M is also used with numbers or letters in trim designations on many
vehicles, and in some of those combinations it is a symbol that the vehicle so
marked has a manual transmission. In short the letter M is used to designate
models, or particular trimmed vehicles, by a number of auto-manufacturers.
[33]
I
note here for completeness of described uses, that Dr. Pham, an expert who
testified for BMW on the significance of brands in marketing, described the
plaintiffs’ use of the “M brand” as a genuine brand of the range kind,
descriptive of BMW’s whole variety of M vehicles, known for their high
performance and the quality of the craftsmanship that produces them.
[34]
The
second additional matter noted by Mr. Kenzie is that after Nissan’s promotions
of its M35 and M45 vehicles, commencing in 2005, he and some other auto journalists
began to refer to the two Infiniti M vehicles as “M cars”, as they had done for
some time with reference to BMW’s M cars. In my opinion the references of journalists
to these cars are not significant in a legal sense for the trade-mark claims of
the parties here.
[35]
I
review the evidence of certain fact witnesses who may be described as BMW and
luxury car enthusiasts when I consider the issue of confusion alleged by BMW.
Here it is sufficient to note that those witnesses, Messrs. Tennyson, Tam, Lee,
Degobbi and Sawhney, all of them admirers, and four of them owners, of BMW M
cars, testified that they associated the letter M with automobiles produced by
one company, BMW.
[36]
Before
reviewing that evidence and the evidence of two expert witnesses called on behalf
of BMW, it is useful to review the manner in which the trade-marks here in
issue are used by BMW. The Canadian registered trade-marks M3, M5 and M and
design are used in the marking of M3 and M5 classes of vehicles, and M and
design is also used as a mark on all other M cars, and possibly on some M
parts, on accessories and clothing. They are also used, as appropriate, in
advertising and promotion of M cars, parts and accessories. The trade-mark M,
by itself, has appeared in Canada only in limited BMW M car advertising, in
magazines, on television, in brochures, promotional banners, occasional books, tickets
and other items, generally with a companion trade-mark of BMW, i.e. the BMW
roundel or one of its other trade-marks.
[37]
The
letter M is of course used in many BMW trade-marks, registered and not yet
registered, in association with numbers, letters or words. But that extensive
use of the letter is not, in my view, equivalent to use of M alone as a
trade-mark even if the extensive use of the letter M gives some comfort to BMW
when its officers speak of its family of M marks or its “M brand”. A brand so
described is not in this case a trade-mark. Unless otherwise persuaded, the use
of the letter M in other trade-marks, whether registered, such as M3 and M5, or
not registered such as M6, M- the Most Powerful Letter, is not the same as use
of the letter M alone as a trade-mark. Whether inclusion of the letter M as an
element in M and design, a registered and much used mark, can be treated as use
of the letter M alone, as a mark, a submission urged by BMW, is examined
separately after considering the evidence of expert witnesses.
Expert witnesses
[38]
The
plaintiffs called Mr. George Mantis, principal of the Mantis Group, a marketing
research and consulting firm of Chicago, to testify in relation
to a survey he had undertaken and on which he reported in writing. “Assessing
Whether the ‘M and Design Mark’ in Association with Automobiles has Achieved a
Reputation in Canada” is his
study, an exhibit before the Court, reporting on a survey completed in response
to a request from counsel for BMW.
[39]
Interviewees
ultimately included were 29 persons selected after preliminary screening at 3
shopping malls, and 92 persons interviewed after preliminary screening by telephone
interviews from a large Canada-wide data base of prospective interviewees,
developed and retained by a Canadian-based surveying company. Those interviewed
resided in four major populations centres, i.e. Montreal, Toronto, Calgary, Vancouver. Key
qualifications for the population segment included after preliminary screening,
were that the person interviewed be 40 years of age or more, who in the last 24
months purchased or leased (or someone else in their household purchased or
leased) an automobile costing $65,000 or more, and/or within the next 12 months
are (or someone else in their household is) likely to purchase or lease an
automobile costing $65,000 or more, and who was, or will be, involved in
deciding which brand of automobile was/will be likely to be purchased or
leased. Those interviewed were questioned about their impressions and
recollections when they were shown the BMW M and design mark and a hypothetical
Y design mark.
[40]
The
survey was described by Mr. Mantis as a non-probability study designed to be
representative of the relevant population, i.e. the segment to which the
purchase of a luxury car, including a BMW M car would appeal. That population
was defined for this study by the screening questionnaires about qualifications
of prospective interviewees, qualifications that were selected, in consultation
with counsel for BMW, by Mr. Mantis, based on his extensive experience in
conduct of numerous surveys over nearly 40 years. That experience included
surveys for litigation proceedings. The decision to seek interviewees by two
methods, i.e. by preliminary screening of mall patrons selected on a random
basis and by telephone screening of persons listed in a survey database, was
made before the survey was initiated, because of a concern that random selection
of mall patrons would yield a low return of interviewees, a result that was
borne out in practice.
[41]
Professor
Kenneth Deal, Chairman of Strategic Market Leadership and Health Services
Management in the De Groote School of Business at McMaster University,
and President of market POWER research inc. was called as an expert by the
defendant Nissan. His report, of his opinion on the claims advanced by BMW, was
supplemented by an affidavit and testimony, setting out his assessment of the
survey completed by Mr. Mantis. He found much at fault about the methodology,
including the definition and justification of the universe of respondents
selected, and the combining of data from two sampling methods, the small size
of the sample and the processes of validation used in the survey. In his view,
conclusions of that survey were unsupported. Not all of Professor Deal’s
criticism is persuasive in my view, for some is based on less than full consideration
of the methodology used since he was not present to hear the testimony,
including the cross-examination, of Mr. Mantis which dealt with some of the
matters of concern to Professor Deal.
[42]
In
my opinion it is unnecessary for this case to determine whether the opinions
expressed by Mr. Mantis should be ignored entirely, as Professor Deal urged.
While it is true that the survey population was small and did not purport to be
representative of the Canadian population at large or even of the population in
the major cities where the survey interviews were conducted, the stated purpose
of the Mantis study (Exhibit p.1) was
…to determine whether the “M and Design”
mark in association with automobiles has achieved a reputation in Canada and functions as a source
identifier. Specifically, the study is designed to assess whether and, if so,
to what extent relevant consumers associate the “M and Design” mark with
automobiles made or put out by one company and in particular, BMW.
[43]
Among
Mr. Mantis’ findings were that 62 or 51.2% of the 121 persons counted in the
survey associated the M and design mark with automobiles made or put out by one
company, and of that 62 persons, 42 persons, i.e. 67.7 percent of those who
associated that mark with one company, (or 34.7% of the total 121 interviewees),
associated the M and design mark with BMW as a single source.
[44]
On
the bases of these findings and his experience and education, Mr. Mantis’ first
opinion is:
That the “M and Design” mark has achieved
a reputation in Canada and is an indicator of
source. An appreciable number of relevant consumers associate the “M and
Design” mark with automobiles made by one company, particularly BMW.
Serious
criticism about the qualifications of those interviewed for the Mantis’ survey was
limited primarily to his failure to describe in his report the basis for the
qualifications he had selected, and to the effective exclusion of Infiniti M35
prospective purchasers from the group surveyed because of the minimum price
level, $65,000, of automobiles that might be considered. I accept that the
qualifications were reasonably appropriate to identify recent or prospective
purchasers of expensive luxury automobiles at the base price level of BMW M cars.
I accept that the survey does demonstrate that among the group so identified an
appreciable number, one third of them, associated the M and design mark with
automobiles made by BMW. That was significantly more than any other source
identified.
[45]
I
do not accept Mr. Mantis’ second opinion, expressed in the conclusion to his
report as further explained in his testimony (transcript p.785) that in
referring to “the M mark” he meant M alone. His second opinion is:
Based on my analysis of the verbatim
responses, it is also my opinion that the M mark, is an indicator of source. An
appreciable number of relevant consumers explicitly mention M or M series as
the basis for associating the “M and Design” mark with BMW.
[46]
This
latter opinion was not within the purpose of Mr. Mantis’ study. In his survey no
questions were asked of any respondent about an “M mark”. The number who referred
to “M” or “M series” as the basis for associating the M and design mark with
BMW, 28 of 121 respondents counted, does not, in my view constitute an
appreciable number. It is less than ¼ of the total respondents and 9 or more of
those in that 28 stated the reason for their association of the M and Design
mark with BMW was the “M series” rather than the “M” alone. Those who specified
“M” alone as the basis of their identification with BMW, constitute less than a
dozen or about 10% of the total interviewed. Moreover, as pointed out by Dr.
Alain d’Astous, who testified for the defendant, those who did identify the
letter M, like others interviewed, did so after two questions that he described
as leading, for they referred to the letter in the M and design mark shown to
interviewees as the focus of their attention. In sum, while some of those
interviewed identified the “M” as the basis for associating the M and design
mark with BMW, I am not persuaded that it was an appreciable number who did so.
[47]
A
second specialist expert witness called by the plaintiffs was Dr. Michel Tuan
Pham, Professor of Business (Marketing) of Columbia University, where he
serves as faculty Director of the University’s Strategic Marketing Management
Program. His expertise is in the area of consumer behaviour and consumer
psychology and he is knowledgeable about the use of brands in marketing. He was
asked to report, and he did so in writing, on several matters arising in
relation to Nissan’s use of the letter M alone in its marketing of the Infiniti
M35 and M45 vehicles. His opinions on two of those matters, i.e. the likelihood
of confusion, and the likelihood of depreciation of goodwill of the BMW M brand
and the overall BMW brand, I leave for later discussion in relation to those two
bases of relief claimed in this action.
[48]
Brief
reference has been made to Dr. Alain d’Astous, a senior Canadian scholar in
Business Administration, a specialist in Marketing, who is Associate Director,
Academic Affairs and Strategic Planning, Haute École Commerciale, Montreal. An expert
witness called by the Defendant in rebuttal of Dr. Pham’s report and testimony,
he was critical of Dr. Pham’s opinions and the methods on which those were
based. He was particularly critical of the lack of empirical evidence to
support Dr. Pham’s conclusions about the significance of the letter M in the M
and design mark, and to support identification of that letter with BMW by
journalists and prospective consumers interested in BMW M cars. That lack of
empirical evidence, in his view, was a serious flaw to accepting Dr. Pham’s
assumptions about consumers’ associative memory networks in regard to the use
of M in Infiniti advertisements and in regard to the element M as used in the
BMW M and design trade-mark.
[49]
Dr.
d’Astous cautioned against acceptance of Dr. Pham’s opinion that it is the
letter M that consumers identify and store in memory on observing the M and
design mark. Moreover, in his view the assumption underlying evidence of Dr.
Pham, that there is a general M concept in the memories of consumers, or that
the Infiniti M is associated with the BMW M, is speculative without empirical
evidence. The only such evidence referred to by Dr. Pham, i.e., the survey by
Mr. Mantis, is weak support, in the view of Dr. d’Astous, because of the few
respondents who referred to M alone as the basis of their association of the M and
design mark with BMW.
[50]
A
key element for Dr. Pham’s report relates to his conclusions that “In the ///M
trade mark, it is the letter M that consumers primarily associate with the
trade mark”, and that “BMW’s M brand is a genuine brand of the range kind that
has a significant reputation in the market place”. In the latter conclusion it
is not clear whether the “M brand” he refers to is the letter M or the M and design
trade-mark, for he specifically states that he refers to both as the “M brand”
since in his view they are interchangeable. While Dr. Pham sets out four
considerations to support that conclusion about the nature of the brand, those
considerations are mainly assumptions which he does not support with evidence
and some of them are purely speculative, without an evidentiary basis according
to Dr. d’Astous.
[51]
Dr.
Pham’s evidence was helpful in understanding generally the importance of
brands, the role of BMW’s brands, consumers’ memory for brands, and the
organization of memory as that may be described by an associative network. All
of that may have significance for the marketing of goods. Yet I am persuaded by
the arguments of Dr. d’Astous that the bases for Dr. Pham’s conclusions of
particular significance in this action, those concerning the M alone mark
claimed by BMW and its use as represented in the M and design mark, are not
persuasive as grounds for legal consequences.
[52]
It
is significant, in my opinion, that both Mr. Mantis and Dr. Pham, conclude,
without reference to persuasive evidence, that the M and design mark, shown to
those interviewed in Dr. Mantis’ survey can constitute an “appreciable number”
(Mantis phrase) or a reliable group “among consumers familiar with that
trade-mark” (Dr. Pham’s phrase) who consider and verbalize the mark (i.e. M and
design) as “M”. That consideration and reference is then considered to be
synonymous with use of the M alone mark. In my view the associative memory nodes
of consumers, not established by empirical evidence, cannot be the basis for
legal implications of trade-mark use.
[53]
Dr.
Pham sets out his belief early in his report (at paragraph11) that for consumers
familiar with the ///M (M and design) trade-mark, it is the letter M rather
than the pictorial aspect of the mark that is identified with the mark. He sets
out four grounds for that belief, one of which, the comparison of the space
taken by the letter M and the space taken by other element of the design, is
directly contradicted by Dr. d’Astous, and two others are said by the latter,
in the absence of empirical data, to be speculative assumptions. Dr. Pham also
sets out his conclusion that “the ///M trade-mark is interchangeable with the M
trade-mark as both are equally representative of the M brand, and I will refer
to both as the M brand in the remainder of this report”(at paragraph 13).
[54]
That
descriptive collective reference for more than one trade-mark may be useful for
considering BMW’s marketing arrangements and its brands used to identify its
products. But as earlier noted, the “M brand” as identified by Dr. Pham is not
itself a trade-mark. His report, dealing with two key trade-marks here in
issue, leaves some doubt about which of those trade-marks are intended by a
number of his considerations.
[55]
This
leads me to an underlying issue in this case. The conclusions of Mr. Mantis and
Dr. Pham concerning the significance of the letter M in the M and design mark
for association of that mark with BMW and its vehicles, are relied upon by BMW,
at least in part, as a basis for its claims. In opening comments at trial
counsel for BMW referred to the use of the letter M in its advertising and then
said:
We also claim that when BMW uses the M
and Design mark, it is also using the trade-mark M, as well (transcript, p. 6).
[56]
That
position is elaborated in Plaintiff’s Supplementary Memorandum relying on the
evidence of Dr. Pham and his associative network of the M mark by consumers who
observe the M and design mark. The letter M is said to be a highly recognizable
and familiar shape and pattern which, when seen by consumers observing the M
and design mark would be encoded by them. Notice of the association of the M
mark, i.e. in the memories of consumers, from the M and design mark is then
said to satisfy the use requirements for a trade-mark under s. 4 of the Act. I
am not persuaded that is the case. Section 4 deals with use, in association
with wares, of a trade-mark if at the time of transfer of the property in or possession
of the wares, the trade-mark appears on the wares or their packages or is
otherwise so associated with the wares that notice of the association is then
given to whoever acquires the property or possession. While use of the M and
design mark on BMW M cars qualifies as use of that mark. I am not persuaded
that use of the M and design mark qualifies also, and simultaneously as use of
the M mark.
[57]
The
plaintiffs rely on Alibi Roadhouse Inc. v. Grandma Lee’s
International Holdings Ltd. (1997) 76 C.P.R. (3d) 327 (F.C.J.D.) and Beirsdorf
AG v. Becton, Dickinson & Co., (1992), 44 C.P.R. (3d) (TMOB) in
support of their position. In my opinion neither of the cases supports the
principle the plaintiffs seek to advance, that is, that use of trade-mark A
simultaneously constitutes use of trade-mark B, simply because the mark that
constitutes B appears, even prominently, as one element in the Mark A. In the Alibi
case, supra, an application for expungement of a registered trade-mark was
dismissed by a hearing officer who found that the registered mark in question, used
in combination with other elements where the trade-mark per se formed a
dominant portion of total elements used, is used as a trade-mark in accord with
s.4 of the Act. In Briersdorf, an application for expungement of a
registered trade-mark in association with wares generally described was
dismissed when the trade-mark owner established some use in association with a
few wares in each general category included in the trade-mark description. In
my opinion neither of the cases cited supports the position of the plaintiffs.
[58]
I
am not persuaded that in the circumstances of this case, the use of the M and
design mark on BMW M cars, or in associated advertising or promotion materials,
whatever consumers may consider when they observe that mark, simultaneously
constitutes use by BMW of the claimed M mark by itself.
[59]
In
my view the use of the design mark, a registered trade-mark, however frequently
it appears, cannot in law be considered as use of the M mark, an unregistered
mark claimed by BMW. Similarly, use of the letter M in other trade-marks of
BMW, in alpha numeric combinations like M3, M5, or with words, such as M
Roadster, cannot be considered use of the M alone mark in assessing the
plaintiffs’ claims.
[60]
I
turn to one more of Dr. Pham’s conclusions, that is, that “Nissan’s recent
marketing campaign around the letter ‘M’ for Infiniti M35/M45 amounts to an
actual use of the letter as though it was a trade-mark owned by Nissan” (see
Pham report, Exhibit P-24, at paragraphs 2 d) and 158 d)). The conclusion may
be acceptable for at least some of the uses of M by itself in the advertising
by Nissan, even if the grounds set out for that conclusion (at the same report,
para. 111) are not entirely persuasive. It is not a conclusion to be based only
on the potential association of the letter M with Infiniti M35 and M45 vehicles
in the minds of potential purchasers on their first observation of the
advertisements prominently featuring the M alone. Further, the defendant’s use
of “M6” to identify its sports package for G35 cars is not persuasive that Nissan
intended to use the letter M as a trade-mark rather than as a descriptor of an
adaptive package to provide a manual six speed transmission.
[61]
Nevertheless,
Nissan’s use of the letter M by itself, as though it were a trade-mark, is a
conclusion a reasonable, knowledgeable observer would reach, considering the
manner in which the letter M was used, in larger type font than that used for
the word Infiniti or for the Infiniti logo, in the same billboard, newspaper,
television advertising films, posters, brochures and on the toolbar of
Infiniti’s website. The reasonably knowledgeable observer, aware of these
efforts to describe Infiniti’s vehicles by the letter M, for example by
reference to the M35 and M45 vehicles collectively as “M” and as “Infiniti M”
and as the “2006M” or “2007M” in promoting new vehicles, would conclude that
the M was in use by Nissan as a trade-mark for Infiniti.
[62]
While
there was evidence that Infiniti vehicles were not referred to as “M cars”
within Nissan, Mr. Ian Forsyth, Director of Corporate and Product Planning of
Nissan Canada, formerly Director of Marketing until April 2006, in
cross-examination (transcript, vol. 7, p. 1616) was asked questions and
answered as follows,
Q. When you referred to your
M35 and M45 as M cars, you want your customers to refer to them as M cars, do
you not?
A. That would be fine if they
do, yes.
Q. That is what you really are
intending to do, are you not?
A. It is a family of cars that
uses the alphabetic character M to encompass them, so it would be Okay with us.
The journalists do it. We don’t see any reason why consumers couldn’t.
Q. But it is the consumers who
buy cars, correct?
A. Correct.
[63]
The
defendant did use the letter M and the term “M vehicles” to describe its
Infiniti M35 and Infiniti M45 cars. That association of the letter M with
Infinity vehicles was as a trade-mark to identify and distinguish its wares
from those of others. That association between Infiniti and the letter M, it is
urged, caused confusion not about the products of the parties but about the source
of Infiniti vehicles and the source of BMW M cars under s. 20 of the Act. That
association by Nissan’s use of the letter M is also said to have resulted in
depreciation of the value of goodwill in BMW’s registered marks under s. 22.
[64]
Before
I turn to those claims of the plaintiffs and their claim that Nissan was
passing off the source of its products as that of BMW’s products under
subparagraph 7(b) of the Act, I turn to the evidence of confusion arising
because of Nissan’s use of the letter M and the label M6 as trade-marks. For
two of those claims the establishment of a likelihood of confusion caused by
the defendant’s use of those marks is essential.
[65]
In
two recent decisions, Mattel, Inc. v. 3894207 Canada Inc., [2006] 1 S.C.R. 772, 2006 SCC 22, [2006] S.C.J. No. 23
(QL), and Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée et al [2006] 1 S.C.R. 824, 2006 SCC 23, [2006] S.C.J. No.
22(QL), the Supreme Court of Canada discussed the appropriate process for
assessing all the surrounding circumstances to be considered in determining
whether a trade-mark, used by another without authorization of the owner of a
registered trade-mark, is confusing with the trade-mark of the registered owner.
Trade-mark confusion under the Act is defined in s-s. 6(2) as occurring where
it is likely in all the surrounding circumstances that the wares or services
associated with the trade-mark in question are manufactured, sold, leased…by
the same person whether or not the wares are of the same general class (see
s-s. 6(2) of the Act and Mattel Inc., Supra, at para. 51).
[66]
For
the claim of infringement under s-s. 20 (1) the plaintiffs seek to show on a
balance of probabilities, that the defendant’s use of the letter M and of the
description M6, is confusing with the BMW trade-marks M3, M5 and M and design. The
test of confusion is generally described as a matter of first impression from
the perspective of a reasonable consumer in all of the surrounding
circumstances. The circumstances include, but are not limited to, those listed
in s-s. 6(5) of the Act: that is, the inherent distinctiveness of the
trade-marks and the extent to which they have become known, the length of time
the trade-marks have been in use, the nature of the wares, services or
business, the nature of the trade, and the resemblance between the marks in
appearance or sound or in the ideas suggested by them.
[67]
The
plaintiffs’ claim of infringement concerns only three of their registered
marks: M3, and M5, and M and design. They urge that advertising of its vehicles
by Infiniti in association with the letter M alone, and the advertising and
sale of the M6 package, is a use of trade-marks that is confusing, that is
likely that prospective purchasers of Infiniti M vehicles and parts will
consider they are from the same source as BMW’s M3, M5 and M and design
products.
[68]
Among
circumstances of significance to be considered in this case, in addition to the
circumstances listed in s-s. 6(5) of the Act, is the evidence of “fact
witnesses” called by BMW who testified about their impressions and reactions
upon observing advertisements by Nissan which featured the letter M, and
opinions of experts about the likelihood of confusion. Other circumstances also
include the significance and nature of the process of purchase of an expensive
automobile and the particular universe of consumers who form the market for the
vehicles in question of both parties. The latter two circumstances I discuss as
aspects of the nature of the trade in relation to expensive, high performance,
luxury automobiles.
Evidence of individual
witnesses and experts on confusion
[69]
The
plaintiffs called five individuals to testify about their impressions and reactions
when they first observed advertising by Nissan featuring the letter M. They
also called a private investigator who testified about his experiences in
visiting four Nissan dealers.
[70]
Mr.
Paul Tennyson, was of a family that had owned many BMW cars over the years, He
had himself owned about 8 such cars, including 2 M5’s. For him, BMW is
synonymous with ultimate performance, quality and exclusivity in automobiles
and its M takes those qualities to the highest level. He had first seen a
Nissan billboard in 2005 on Bloor Street in Toronto when his
wife pointed it out to him, remarking on the featured large M symbol. He first
thought it was an ad for BMW, for a new M5 car that he expected would soon be
on the market. When he looked more closely, and as he later observed from Infiniti
ads in magazines, he realized that the M symbol was used by Nissan. His view of
the M mark, which he had considered to be synonymous with BMW, and exclusive to
BMW, was tarnished by promotion of M for Infiniti in the advertising he saw.
[71]
A
second witness, Mr. Norman Tam, of Vancouver, an admirer of BMW cars,
particularly the M cars, who hopes to own one some day, first saw television
advertising in July 2006 for Infiniti, featuring the letter M, with voice-over
discussion of adaptive headlights, high performance and body style features. At
first he thought it was a BMW ad for the new M series he expected to be
released that year, but at the end of the ad the voice-over referred to the new
M series from Infiniti. He was confused, because of his association of M with
BMW. He first thought BMW had bought out Infiniti. When he found that was not
the case he was left with a sense of bad taste by Infiniti’s use of the letter
M. In cross-examination he admitted he had not closely watched the TV ad, and he
did not know Nissan had been selling its M45 vehicle for four years or more.
His first impression on seeing the ad was that it was a BMW ad.
[72]
Mr.
Joseph Lee, of Calgary, has owned BMW cars since 1986, including an
M3. The letter M represents to him very high performance BMW cars. He
appreciates the engineering, performance, handling and styling of those cars.
Among his friends there is continuing discussion about who will purchase the
next M car, from BMW. Mr. Lee first observed an ad featuring the letter M, from
Infiniti it turned out, while watching the Golf channel on television. He was
surprised when he learned by the end of the ad that it was from Infiniti. He
had thought until then that BMW had an exclusive right to use the letter M, as if
it were a patent or a brand name.
[73]
Mr.
Kitty Sawhney, of Montreal, is a car enthusiast, currently the owner of an
M5, the fifth BMW car he has owned since 1997. He has been an admirer of BMW
cars since he was a teenager. He has attended M nights in Montreal and in 2005
he there saw an M5 on display which he so liked that he ordered his own for
later delivery. He considers his M5 a very special car, prestigious, featuring
high performance and handling. His recollection of his first sight of
advertising by Nissan featuring the letter M was not precise but he recalls
seeing ads about late July or early August 2006, first on television referring
to adaptive headlights, featuring a side view of a car somewhat similar to a
BMW, and featuring the letter M. References to that letter for a vehicle, which
he learned, at the end of the ad, was an Infiniti, was a surprise. He had never
heard of an M vehicle other than a BMW. He had assumed that BMW had the only M
car and until the end of the TV ad he thought the advertising was by BMW.
[74]
The
final individual witness, Joseph De Gobbi, has been the owner of a car
dealership in Granby for nearly
20 years, of cars other than those of the parties, and he has been in the
automobile business for 33 years. He is the owner of a 2006 M Coupe, his second
BMW car. He has participated in a BMW driver training program at Toronto in
2004 and he has attended M Nights in Montreal. His son is employed by
BMW Canada Inc. Owning an M car is a matter of prestige for Mr. De Gobbi,
though he acknowledged only car enthusiasts would recognize an M car.
Knowledgeable about automobiles generally, he was unaware of the Infiniti M35
and M45 until July 2006 when he saw Infiniti’s ad in a Montreal newspaper. He
first thought, from the featured M, that it was a BMW ad for he associates M to
the 3, 5, 6 series of BMW cars. To him M is a symbol of power, performance, and
prestige. He was somewhat offended by Infiniti’s use of the letter M, which he
had always associated with BMW. The uniqueness of the M as a description for a
special car was no longer apt in his mind, though he acknowledged his
appreciation of his own M Coupe remained as it had been before he saw the
Infiniti ad.
[75]
In
summary, these individual witnesses came forward when sought by BMW and they
testified after questioning and review of their prospective evidence by BMW
counsel. In sum, they came before the Court as witnesses often do. They are not
presented as representative of the population of auto enthusiasts generally interested
in luxury high performance vehicles, though they are among that group, and four
are owners of BMW cars or M cars. Their evidence may well result from memory
somewhat reconstructed over time, as Dr. d’Astou suggested might be the case.
Collectively, they say upon first viewing Nissan’s ads for Infiniti M cars, M35
and M45, in 2005 or 2006 their first impression from the prominence of the
letter M was that the ad was from BMW, concerning its M cars. But that
impression gave way to awareness, while still observing the initial billboard,
newspaper or TV ad, that the advertising concerned Infiniti cars. The initial
impression arose from the association of each, in his memory, of M with BMW,
but that impression was not long-lived. Upon recognition that the M was used by
Infiniti, it seemed to them the letter had lost its uniqueness and its prestige
as a symbol for BMW cars was somewhat tarnished.
[76]
Mr.
Edward Reshen, a private investigator retained by counsel for BMW, testified
about his visit to four Nissan dealerships where he inquired about Infiniti M
cars. I do not find his testimony helpful and do not take it into account. His
testimony was of his recollection, not from any notes he had made at the time.
Moreover, the evidence of Nissan was clear that Infiniti vehicles are sold by a
special staff through Nissan dealerships which are separately incorporated by
the dealers. The dealers contract to sell Nissan and Infiniti vehicles and the
vehicles are sold to them for resale to ultimate purchasers in the market.
There was no effort to seriously question the independence of the dealership,
or the relationship between Nissan and its dealers, or the responsibility of
Nissan for actions of dealers or their staff.
[77]
Finally,
I turn to evidence of expert witnesses whose reports and testimony included
discussion of the likelihood of confusion arising from the defendant’s advertising
featuring the letter M.
[78]
Dr.
Pham, testifying for BMW, speculated, in the absence of empirical evidence, based
on his theory of associative networks of human memory, that “it is likely that
Nissan’s use of the letter M…will elicit a significant degree of confusion with
the BMW M brand across relevant consumers”. Dr. Deal, testifying for the
defendant, and in his report, also speculated for a variety of other reasons
why in his opinion there would be little likelihood of association of Nissan’s
use of M with BMW and that even if there were such an association initially it
would be dispelled in the process followed by a consumer contemplating and then
buying a luxury car.
[79]
With
respect, neither of these opinions is helpful. No opinion of an expert could
here provide a basis for a finding the Court must make, with respect to the plaintiffs’
claims, based upon alleged confusion for infringement under s-s. 20 (1) and for
passing-off under paragraph 7 (b) of the Act.
Surrounding
circumstances
[80]
In
addition to the circumstances described by the individual witnesses, other
circumstances to be considered in relation to possible confusion include those
listed in s-s. 6 (5).
[81]
The
first of these is the inherent distinctiveness of the trade-marks and the
extent to which they have become known. There is nothing particularly unique or
distinctive in the plaintiff’s registered trade-marks M3, M5 and M and design.
The alpha-numeric combinations of M3 and M5 include the letter M and a single
numeral both of which elements are common and widely used. The M and design
mark including three coloured forward slash marks and a forward sloping or
script letter M is distinctive only in the combination of symbols and colours.
I accept the evidence of Mr. Kenzie and some of the individual witnesses that
the plaintiffs’ three registered marks, here in issue, are known among auto
journalists and luxury car enthusiasts. As for the letter M used by Nissan,
that mark associated with Infiniti ’35 and M45 vehicles, has been in use since
spring 2005, about two years, and it is not any more distinctive than the same
letter as used by the plaintiffs. By itself, M is a weak mark offering at best
a narrow range of protection whether it be registered as a trade-mark or not.
[82]
A
second factor, the length of time the trade-marks have been in use has already
been referred to: the plaintiffs’ registered marks have been in use in Canada for some years, the
defendant’s letter M mark has been in use about 2 years. In addition, it is
worth note that the plaintiffs’ common law marks here in issue have also been
in use for some years, the letter M is claimed for use since 1986, and M6 for
BMW’s M6 car has been in use in Canada at least since that vehicle was first sold here
in 1987. Clearly the plaintiffs’ marks have been in use in Canada longer than that of the
defendant.
[83]
A
third consideration is the nature of the wares, services or business with which
the marks are associated. In this case the marks of the plaintiffs and those of
the defendant are all associated with luxury high performance automobiles or
motor vehicles, their parts and accessories. True, the defendant’s M35 and M45
vehicles and parts do not compete in the market place among car enthusiasts
with the plaintiffs’ M vehicles, but the market for both manufacturers is that
segment of consumers and journalists seriously interested in expensive, high performance
luxury vehicles.
[84]
For
both parties the nature of the trade is generally similar in many respects. For
both the market for their wares, is restricted. It is comprised of prospective
consumers, interested in and able to purchase luxury, high performance
automobiles. While BMW considers Canada a surprising interested market for its vehicles
including M cars, and Nissan has initially sold a relatively high number of M35
and M45 vehicles, together the combined sales of these vehicles from both
operations would constitute less than 2% of annual car sales in excess of
160,000 vehicles in Canada.
[85]
Both
manufacturers and suppliers, BMW and Nissan, assemble their vehicles abroad and
market them through the arrangements made by the Canadian corporations with
suppliers and with local automobile dealerships across the country. Much
advertising of the vehicles, and the promotional activities featuring the
vehicles, is conducted on a national basis by the Canadian corporation, with
local advertising then carried on by local dealers
[86]
There
is one other circumstance in the nature of the trade that cannot be ignored.
That is the process followed by purchasers who acquire one of the vehicles in
question. Professor Deal outlined various stages in the mental process of a
prospective purchaser. As noted by Mr. Justice Binnie, writing for the Supreme
Court of Canada in Mattel, supra, at para.58:
A
consumer does not of course approach every purchasing decision with the same
attention or lack of it. When buying a car or a refrigerator, more care will
naturally be taken than when buying a doll or mid-priced meal: General
Motors Corp. v. Bellows, [1949] S.C.R. 678, 10 C.P.R. 101, [1950] 1
D.L.R. 569. In the case of buying ordinary run-of-the-mill consumer wares and
services, this mythical consumer, though of average intelligence, is generally
running behind schedule and has more money to spend than time to pay a lot of
attention to details.
[87]
In
my view it is in the nature of the trade, in the market for luxury high
performance vehicles, that a purchaser decides to buy only after significant
study of the manufacturer’s products generally and of the wares that
particularly interest him or her. Advertisements and promotions may meet their
eyes and pique their interests, but they would not proceed without significant
further consideration, including comparison of the product offered with their
needs, and their experience with other vehicles.
[88]
That
quality of the trade, in my view, has some significance for considering the
perspective from which the likelihood of a mistaken inference from the defendant’s
use of the letter M is to be measured. It is not the same as the perspective of
hurried purchaser with an imperfect recollection of the plaintiffs’ registered
marks. In addition, the careful considerate purchaser of a BMW M car, cannot
obtain a vehicle, from a dealer for BMW cars, without awaiting delivery for
some months after ordering. The purchaser of a new BMW M car is unlikely to be
in a hurry to order it or to take delivery.
[89]
When
one compares the registered trade-marks of the plaintiffs with the letter M
used by Nissan there is a measure of resemblance in the letter M. The M as used
by Nissan, except for the upper half of the letter sliding off the bottom of
the advertisement, is made of vertical left and right legs joined by the V between
the legs. It is in the same form as the M appears in BMW’s certified marks M3
and M5. The M used by BMW in its M and design mark is a forward sloping M with
left and right legs sloping to the right from bottom to top, and sometimes the
M in that design as a script M, forward sloping. It is recognizable as M but it
does not directly resemble the M used by Nissan.
[90]
The
testimony of individual and expert witnesses and the surrounding circumstances
in this case I consider in dealing with the plaintiffs’ claims.
The claim for
infringement under s-s. 20(1) of the Act.
[91]
The
plaintiffs’ claim is that Nissan’s use of the letter M, and the package
description M6 in advertising its vehicles and parts creates confusion in the
relevant universe, that is, among consumers and car enthusiasts interested in
expensive, high performance cars and parts, about the sources of the wares in
association with the Nissan trade-mark and that of the wares of BMW associated
with its registered trade-marks, M3, M5 and M and design.
[92]
The
relevant portion of s-s. 20(1) of the Act provides:
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20. (1) The right of the
owner of a registered trade-mark to its exclusive use shall be deemed to be
infringed by a person not entitled to its use under this Act who sells,
distributes or advertises wares or services in association with a confusing
trade-mark or trade-name …
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20. (1) Le
droit du propriétaire d’une marque de commerce déposée à l’emploi exclusif de
cette dernière est réputé être violé par une personne non admise à l’employer
selon la présente loi et qui vend, distribue ou annonce des marchandises ou
services en liaison avec une marque de commerce ou un nom commercial créant
de la confusion. …
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[93]
All
of BMW’s registered marks here in issue, allegedly infringed by Nissan’s use of
the letter M, and the mark M6, are comprised of more than one symbol. When I
consider all of the circumstances concerning use of the marks in issue I find
there is no likelihood of confusion as to the sources of the wares, or as to the
wares themselves, among the relevant group of prospective purchasers in the
market.
[94]
Nissan’s
use of the letter M does not duplicate any registered mark of BMW. The facts
that some, a relatively small portion of, persons interviewed on behalf of BMW
identified the M and design mark as associated with BMW, and that individual
witnesses testified that, on first observing an advertisement by Nissan
featuring the letter M, they believed it was from BMW, do not establish that
Nissan’s use of M is likely to create confusion with BMW’s registered M3, M5,
or M and design marks. The witnesses who observed the advertisements were
aware, before this initial advertisement contact ended, that the ad was placed
by Nissan, not by BMW. Their initial inference did not create any lingering confusion
with respect to the source of the wares in any sense that would have confused
their process of considering purchasing an automobile.
[95]
Further,
I am not persuaded by any argument, and there was little, that the use of the
M6 by Nissan for its sports package to be installed on a G35 vehicle created
any confusion with BMW’s registered marks, M3, M5, and M and design.
[96]
Since
I find no likelihood of confusion arising by the defendant’s use of the letter
M or the descriptor M6 with the plaintiffs’ registered marks M3, M5 and M and
design, I dismiss the claim by BMW of infringement under s-s. 20 (1).
Likelihood of depreciation of the value of
goodwill, s-s. 22 (1)
[97]
A
second major claim of the plaintiffs is the likelihood of depreciation of the
goodwill attaching to the plaintiffs’ registered trade-marks M3, M5, and M and
design by the defendant’s use of the registered marks, pursuant to s-s. 22 (1)
of the Act which provides:
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22. (1) No person shall
use a trade-mark registered by another person in a manner that is likely to
have the effect of depreciating the value of the goodwill attaching thereto.
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22. (1) Nul ne peut employer une
marque de commerce déposée par une autre personne d’une manière susceptible
d’entraîner la diminution de la valeur de l’achalandage attaché à cette
marque de commerce.
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[98]
The
background, the purpose and the requirements of s-s. 22 (1) are dealt with by
Mr. Justice Binnie writing for the Supreme Court of Canada in Veuve Clicquot
Ponsardin, supra, at paras. 38-70 including, at para. [46]:
…section
22 has four elements. Firstly, that a claimant’s registered trade-mark was used
by the defendant in connection with wares or services- whether or not such
wares and services are competitive with those of the claimant. Secondly, that
the claimant’s registered trade-mark is sufficiently well known to have
significant goodwill attached to it…Thirdly, the claimant’s mark was used in a
manner likely to have an effect on that goodwill (i.e. linkage) and
fourthly that the likely effect would be to depreciate the value of its
goodwill.
[99]
In
considering those requirements in this case, the defendant’s use of the letter
M was not a use of a registered trade-mark of the plaintiffs. BMW’s claim is
essentially that its M and design mark was associated with, and recalled as, M
by interested prospective consumers. That does not meet requirements of the
section about use, unauthorized, of registered trade-marks. Moreover, in this
case the only evidence of likely loss of goodwill came from individual
witnesses. Their initial impressions on seeing Nissan’s advertising featuring
the letter M were that the M was not as exclusive a mark of BMW as they had
believed. There is no evidence of sales lost, or of any reduction in BMW prices
or parts, or any measurable loss of goodwill in BMW’s registered marks.
[100] Dr. Pham concluded that
as a result of likely confusion among relevant consumers caused by Nissan’s use
of the letter M, over time there would likely be “significant damage to BMW in
terms of depreciation of goodwill of the M brand and of the overall BMW brand”.
His conclusion arises from his portrayal of possible confusion in the
associative memory traces of the consumers. With no underlying empirical
evidence, his conclusion, while interesting, is purely speculative. It is moreover,
not a matter for an expert’s opinion, since it is the Court’s task to determine
the matter on the evidence adduced by the parties.
[101] In my opinion there was
insufficient evidence before me to support a conclusion that the defendant used
the plaintiffs’ registered marks or other closely similar marks in a manner
likely to depreciate the value of BMW’s goodwill in its registered marks. Thus,
I dismiss the plaintiff’s claim for depreciation of the value of goodwill in
their registered trade-marks M3, M5, and M and design.
The claim for passing off
[102] The plaintiffs’ third
claim for relief is that the defendant’s use of the letter M and its use of M6
violate BMW’s proprietary rights in the trade-marks M, M3, M5, M6 and M and
design contrary to paragraph 7 (b) of the Act. That provision is:
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7.
No person shall
…
(b)
direct public attention to his wares, services or business in such a way as
to cause or be likely to cause confusion in Canada, at the time he commenced
so to direct attention to them, between his wares, services or business and
the wares, services or business of another;
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7. Nul ne peut :
…
b) appeler l’attention du public
sur ses marchandises, ses services ou son entreprise de manière à causer ou à
vraisemblablement causer de la confusion au Canada, lorsqu’il a commencé à y
appeler ainsi l’attention, entre ses marchandises, ses services ou son
entreprise et ceux d’un autre;
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[103] The plaintiffs’ claim
that the defendant’s use of the letter M and the descriptor M6, as trade-marks,
has directed public attention to its wares and business in such a way as to
cause confusion in Canada, at the time it commenced to direct attention to them
(i.e. in early 2005) between its automobiles, parts and accessories and the
automobiles, parts and accessories of BMW contrary to para. 7 (b) of the Act.
[104] In view of my earlier
finding that the acts of the defendant are not deemed to infringe the
plaintiffs’ rights to exclusive use of registered trade-marks M3, M5 and M and
design, the plaintiffs’ claim for passing off against those marks is considered
met, so that this claim for passing off is treated as a claim that the
defendant’s actions complained of caused confusion in early 2005 between
Nissan’s wares, and those of the plaintiffs’ carried on in association with the
unregistered marks M and M6 which BMW claims it has used in Canada for some
years, at least since 1987.
[105] There is evidence that
the plaintiffs’ unregistered trade-mark M has been in use in advertising and
promotional materials and in the promotion at M-Night in Montreal, at least for some
years before 2005. Their M6 trade-mark in association with an M edition of the
6 series of vehicles was used at least in sales in Canada of the M6 cars, first
in 1987. That vehicle has not been reissued until 2006, but used models may
still be on the road in Canada. Nissan’s introduction
of its M6 package, of auto parts and accessories for a G35 model, was
introduced at a time when BMW was not selling new M6 vehicles in Canada, but there is little
doubt that Nissan was aware in 2005 of earlier sales of BMW’s M6, if not of its
plans to reintroduce the M6 model in 2006.
[106] The evidence of Mr.
Kenzie and of the individual BMW car enthusiasts who appeared, provide a basis
for the Court to conclude the BMW is known among auto journalists and luxury
high performance car enthusiasts, particularly BMW owners, for its wares advertised
by the M trade-mark, including its automobile the M6. This awareness of special
interest groups in a relatively small market of consumers is sufficient in this
case to establish BMW’s goodwill in the two common law trade-marks it claims
and has used.
[107] A passing-off action, as
this is, requires the establishment of three components: the existence of
goodwill, deception of the public due to a misrepresentation and actual or
potential damage to the plaintiff (Ciba-Geigy Canada Ltd. v. Apotex
Inc. [1992] 2 S.C.R. 120 at 132, 143 N.R. 241, 44 C.P.R. (3d) 289).
[108] In considering the
likelihood of confusion in this claim there is a significant difference from
the circumstances considered for the claim of infringement under s-s. 20(1)
where the M and M6 marks used by Nissan are not the same as BMW’s registered
trade-marks. In my opinion, use by Nissan in 2005 of the letter M, as a
trade-mark, and of the descriptor M6, as a trade-mark, both similar in form to
the same trade-marks of BMW, for generally similar wares, automobiles and
parts, in essentially the same trade or business as BMW, created a likelihood
of confusion between the sources of the wares of the defendant and of the
plaintiffs. Whether intentional or not, that confusion was likely because of
Nissan’s actions.
[109] In the absence of
evidence of damages which, in accord with the Court’s pre-trial bifurcation
order will be settled after submissions to be made by the parties, I assume,
subject to further consideration, that there will be damages, whether nominal
or substantial.
[110] In these circumstances I
find that the defendant is liable, in damages to be determined, pursuant to
para. 7 (b) of the Act for the use of the letter M and the descriptor M6, as
trade-marks for automobiles, parts and accessories, which caused a likelihood
of confusion between the sources of its wares and of BMW’s wares associated
with BMW’s marks, the letter M and the symbol M6.
Conclusions
[111] For these reasons by
separate judgment I dismiss the plaintiffs’ claims for declaratory and other
relief for deemed infringement, under s. 20 of the Act, of their registered
trade-marks for M3, M5 and M and design and for similar relief for depreciation
of the value of goodwill attaching to the same registered marks under s. 22 of
the Act.
[112] That judgment allows the
plaintiffs’ claim for declaratory relief that the defendant’s use of the letter
M and the descriptor M6 as trade-marks violates the plaintiffs’ proprietary
rights in the trade-marks M and M6, contrary to s. 7 (b) of the Act. The
defendant is henceforth restrained, as are its officers, directors, servants,
agents, employees and any others over whom it exercises control from directly
or indirectly directing public attention to its wares and business in any way,
including by advertising, promoting, offering for sale or selling, that is
likely to cause confusion with the wares of the plaintiffs in Canada by using
the marks M and M6 as trade-marks in association with automobiles, parts and
accessories.
[113] The defendant is also
ordered to deliver to the plaintiffs or to destroy under oath, all literature,
invoices, packaging, signs, advertisements, promotional or marketing material,
printed or otherwise recorded, in the possession, custody or control of the
defendant which may be considered to offend the injunction now granted.
[114] Any damages sustained by
the plaintiffs or profits of the defendant arising as a result of its passing
off, any pre-judgment or post-judgment interest to be awarded to the plaintiffs,
shall be determined in accord with the bifurcation Order dated October 5, 2005.
[115] The Court shall
determine costs of this action after consideration of submissions by the
parties, to be made in accord with directions to issue after consultation with
counsel.
W. Andrew MacKay
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