Docket: T-2041-12
Citation:
2015 FC 1336
Ottawa, Ontario, December 03, 2015
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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SCOTT TECHNOLOGIES, INC.
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Plaintiff
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and
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783825 ALBERTA LTD., (FORMERLY KNOWN AS
SCOTT SAFETY SUPPLY SERVICES, LTD.) AND SCOTT SAFETY SUPPLY SERVICES INC.
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Defendants
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JUDGMENT AND REASONS
[1]
This litigation involves three trade-marks
registered under the Trade-marks Act, RSC, 1985,
c T-13. The plaintiff alleges that the defendants:
a.
Have directed public attention to their
services, wares, and business in such a way as to be likely to cause confusion
between their services, wares, and business and those of the plaintiff,
contrary to paragraph 7(b) of the Trade-marks Act;
b.
Have passed off their wares or services as and for
those of the plaintiff, contrary to paragraph 7(c) of the Trade-marks Act;
c.
Have infringed the plaintiff’s rights in its
registered trade-marks, contrary to sections 19 and 20 of the Trade-marks
Act; and
d.
Have depreciated the value of the plaintiff’s
goodwill in its registered trade-marks, contrary to section 22 of the Trade-marks
Act.
The Trademarks
[2]
The three trademarks at issue are:
a.
TMA 183,312 registered on May 26, 1972, for the following
stylized trademark:
with respect to:
(1) Hydraulic
and fuel line valves, and pneumatic pressure control valves, aircraft
tailwheel, stabilizer yoke and aileron assemblies, and brake cylinders and
valves; aircraft instruments and gauges-namely, air temperature and oil
pressure gauges, and ammetres, measuring and testing apparatus for brathing [sic]
equipment and components thereof, portable directreading [sic] toxic gas
detectors of the type for use in conjunction with breathing equipment with a
hand operated bellows pump and interchangeable glass detector tubes calibrated
to show the amount of toxic gas present in the air being tested, and electrical
instruments for detecting and measuring explosive or toxic gases; breathing
equipment-namely, portable and fixed air and oxygen breathing systems and
self-contained underwater breathing systems, and seat back portable oxygen
holders, mask hose connections, demand regulators, pressure regulators, audible
low pressure alarms, therapeutic plug-ins, oxygen outlets, filler and charging
couplings, plug-in couplings, manifold assemblies, cylinder valves and turn-on
valves, masks and mask assemblies, flow indicators, oxygen flow control units,
oxygen cylinder and valve assemblies, external recharging valve assemblies,
harness assemblies, connectors, breathing tubes, filter and control assemblies
and oxygen drop-out compartment latches for such systems and first aid kits,
inhalation and inhalation-resuscitation equipment, and chemical oxygen
generators.
b.
TMA 193,968 registered on September 1973 for the
word mark AIR-PAK with respect to “breathing
equipment;” and
c.
TMA 667,252 registered on July 11, 2006, for the
word mark SCOTT with respect to:
(1) Portable and
fixed instruments and instrument systems used by industrial, laboratory and
emergency personnel to detect, measure, indicate and/or record the level of
toxic and/or combustible gases in ambient air or in other gases and which may
provide an alarm when certain levels are exceeded, namely, toxic or combustible
gas detectors and gas detecting systems utilizing catalytic thermal
conductivity, electrochemical, pyrolyzing, paper tape and infrared detection
means and remote receivers for single or multiple detector locations and transmitters
for the transmission of gas detection information; portable toxic or
combustible gas detecting dosimeter devices used in industrial, laboratory and
emergency personnel to indicate the cumulative exposure over time to toxic
gases by means of visible color change; portable and fixed instruments used by
industrial, laboratory and emergency personnel to detect flame by ultraviolet
and ultraviolet/infrared means and to provide electrical signals and/or
warnings or alarms; and portable heat detectors used by industrial, laboratory
and emergency personnel to monitor ambient temperature using a thermistor and
to provide an alarm when certain temperature levels are exceeded.
(2) Compressed
breathing air gases; portable combination air compressor, filtration and
purification apparatus for charging tanks with air for breathing; compressed
breathing air storage cylinders; breathing air charging systems designed for
measuring and analyzing air for breathing, and pressurizing respiratory
breathing air cylinders used by scuba divers and emergency personnel,
comprising an air compressor assembly, drive motor, air purifiers, air storage
cylinders, and automatic controls; breathing air storage cylinders for use by
scuba divers and emergency personnel; instruments for breathing air gases and
breathing air gas handling equipment, sold separately or as a unit, consisting
of breathing air charging systems designed for measuring and analyzing air for
breathing, and pressurizing respiratory breathing air cylinders used by scuba
divers and emergency personnel, comprising an air compressor assembly, drive
motor, air purifiers, air storage cylinders, and automatic controls.
The
Plaintiff
[3]
The plaintiff, Scott Technologies, Inc. [Scott
Technologies], traces its corporate history back many decades to Uniloy
Accessories Corporation, a US company started in 1932 by Earl Scott which
manufactured the first pivoting tailwheel for airplanes. The company’s name
was soon changed to Scott Aviation Corp.
[4]
The company developed a walk-around on-board
oxygen system for pilots, enabling them to fly at high altitude. From that invention,
the company developed the first North American self-contained breathing
apparatus [SCBA] which became known as the Scott AIR-PAK. It was marketed to fire
departments whose firefighters until that time had nothing to prevent smoke
from entering their lungs or to provide them with clean air. The plaintiff
remains one of two major manufacturers and suppliers of SCBA.
[5]
Scott Aviation Corp. was purchased by Figgie
International in 1967. Figgie International sold off all of its businesses
except the Scott business in 1997, and changed its name to Scott Technologies
Inc. In 1999, the company split into two separate business units – Scott
Aviation and Scott Health and Safety. In the early 2000s, Scott Technologies
Inc. was purchased by Tyco International and was placed into its fire and
security division, where it operated using the trade name Scott Health &
Safety. The aviation component of the business was sold, leaving only the SCBA
business operating as Scott Health & Safety.
[6]
In or about 2011, Tyco International decided to brand
its fire and security division internationally as Scott Safety. On February
24, 2011, it applied for the following trade-mark, which application is opposed
by the defendants and remains outstanding:
The goods to which
this trade-mark was applied are described as the following:
Self-rescue apparatus, namely,
self-contained breathing units; measuring and controlling devices for oxygen
breathing units, namely, compressor controllers, compressor gauges and
compressor valves; thermal imaging cameras; face masks for breathing; apparatus
for transmission of communication, namely, voice amplifiers and two way radios;
safety garments for use by firefighters, industrial workers, first responders,
and military personnel, namely, safety garments, fire protective clothing, fire
retardant clothing and haz-mat suits; non-medical respirator equipment, namely,
stationary and mobile air charging stations; electronic devices for assisting
emergency personnel for people needing assistance comprised of sensors for
determining status of person and apparatus for sending electronic alerts to
emergency personnel; respirators; filters for respiratory masks; gas masks;
portable and fixed gas detectors; protective clothing, namely, gloves, suits,
socks, shoes, boots, ear muffs, face masks, hats and caps; self-rescue
apparatus, namely, oxygen breathing units used in the airline industry; air
purifying units; hearing protection headsets, not for medical use; industrial
safety eye protection; computer hardware and software system for tracking
equipment and assets using GPS data on a device on the tracked equipment and
asset, not including any of the aforesaid goods for sports or sporting
activities.
[7]
Scott Technologies does not directly sell its
SCBA in Canada; rather it has distributorship agreements with a number of
businesses across Canada. Personnel of Scott Technologies become involved when
negotiating large sales contracts, but otherwise the Canadian market is left to
its distributors.
[8]
Originally, the exclusive Canadian distributor
of Scott Technologies’ SCBA was Safety Supply Company, which also distributed
equipment made by others. Safety Supply Company was later acquired by
Aucklands Auto Parts which itself was later acquired by an American company
named Grainger, now known as Aucklands Grainger. The day-to-day sale of Scott
Technologies’ SCBA in Alberta was done by Fides Marketing and its local
representative Mr. Madiema.
[9]
Scott Technologies offers three levels of maintenance
training regarding its SCBA. The user level maintenance is for companies and
persons that have purchased the product and want to be trained on how to use
it. The field level or specialist level maintenance trains an owner on how to
do basic repairs to the equipment. The technician level maintenance involves
all repairs plus verification, adjustment, and repair of the critical
components of the SCBA. The only persons permitted to be trained to that high
level work for a Scott Technologies authorized service centre or an in-house
service centre. An in-house service centre, such as a large fire department, repairs
and services its own equipment but not that of others. An authorized service
centre repairs and maintains SCBA owned by others under an agreement with Scott
Technologies.
The
Defendants
[10]
The business of the defendants may be traced to
1995, when Brent Stark, as he then was, began the business. Mr. Stark was 18
years old and working for Flint Canada “on the end of a
shovel.” His girlfriend, Tanya Scott, became pregnant. When he told
his father, his father’s advice was: “If you breed, you
feed. Get your crap together.”
[11]
Mr. Stark took this advice to heart and started
a business filling and repairing fire extinguishers. He knew something of this
work as he had done it for his grandparents’ and parents’ businesses. The unique
feature of the new business, and that which appears to have been instrumental
in its growth, was that rather than requiring customers needing their fire
extinguishers filled or repaired to come to his place of business, Mr. Stark
purchased a used van and went to them.
[12]
Mr. Stark registered his business in Alberta on
May 24, 1995, as “Scott Safety Supply & Services,”
describing the business as “Fire extinguisher sales and
maintenance.” By December 1995, the ampersand in the trade name
disappeared and the business was called simply “Scott
Safety Supply Services.” An advertisement in a local newspaper dated
December 13, 1995, shows the business using a descriptive trade-mark:
[13]
On November 29, 1996, Brent Stark changed his
name to Brent Scott. He continued to use that name until August 5, 2008, when
he and Tanya Scott separated and he changed it back to Brent Stark.
[14]
By April 1998, in addition to listing fire
alarms, fire hose, first aid supplies, emergency lights, fire suppression
systems, and sprinkler systems, the advertising of Scott Safety Supply Services
indicated that it also provides “S.C.B.A. Service &
Rentals.” In 1998, Mr. Scott took field level maintenance training on
the Scott AIR-PAK through Mr. Madiema.
[15]
In 1998, Scott Safety Supply Services expanded
into British Columbia, and on May 5, 1998, the business was incorporated in
Alberta as Scott Safety Supply Services Ltd.
[16]
On June 16, 2000, Scott Safety Supply Services
Ltd. entered into an “in-house repair center agreement”
with Scott Technologies, giving it “the right to
inspect, repair, and service” the Scott SCBA it owned. That agreement
continued until it was terminated by Scott Technologies effective December 31,
2003.
[17]
Over the years, Scott Safety Supply Services
Ltd. used a variety of logos, abbreviated its trade name to Scott Safety, and
by 2007 had developed its current logo which is the following:
[18]
In 2011, Scott Safety Supply Services
Ltd. entered into an agreement with the Town of Whitecourt, Alberta, to sponsor
a local hockey team. The hockey arena was renamed “Scott
Safety Centre.”
[19]
Counsel for the plaintiff sent a letter on
September 30, 2011, demanding that Scott Safety Supply Services Ltd. “discontinue all use of the trade-mark and tradename SCOTT
alone, or as part of any trade-mark, trade name or any other commercial
designations in association with your business.”
[20]
On December 3, 2012, Scott Safety Supply
Services Ltd. [Old Scott Safety] sold substantially all of its assets to Scott
Safety Supply Services Inc. [New Scott Safety] for $24,850,000. Thereafter,
Scott Safety Supply Services Ltd. changed its name to 783825 Alberta Ltd. A
term of the sale agreement is that Old Scott Safety and Brent Stark indemnify
New Scott Safety against all costs arising from this litigation.
[21]
Except where a distinction between the two
defendants is necessary, Old Scott Safety and New Scott Safety shall be
referred to collectively as Scott Safety.
The Evidence
[22]
The Court heard the testimony of five
witnesses. With minor exceptions, noted below, there was no conflict between their
testimony and other evidence tendered orally or through documents. They each
testified in a straightforward manner and none overstated their evidence. There
was no conflict among these witnesses with respect to material matters. The
testimony of one witness, Brent Stark, is problematic in that he previously
provided false evidence by way of an affidavit. As noted below, the Court has
exercised care in assessing his testimony.
[23]
Scott Technologies called three witnesses:
Casper Gelein, Monica Ratzke, and Derek Roy.
[24]
Mr. Gelein is employed by Talisman Energy Inc.
in Alberta. In 2010 he was promoted to the position of Health, Safety and
Environment Coordinator; a position he held until April 2014. In this position
he was responsible for the maintenance and repair of his employer’s SCBA
equipment. He talked to a sales rep from Scott Safety and testified that “when I first made contact with them, I thought they were
affiliated with Scott Technologies.” He contacted Scott Technologies,
having obtained their phone number from the web site www.scottsafety.com, and
was told that Scott Safety was not affiliated with Scott Technologies, and that
Scott Safety had no agreement with Scott Technologies to repair and maintain the
latter’s SCBA.
[25]
After this conversation Mr. Gelein again spoke
to the sales rep and told her that he had been informed that Scott Safety was
not qualified to do the work required. She showed him two certificates of
training dated July 27, 2006, naming two employees of Scott Safety and showing
their attendance at a course on “Specialist Level
Maintenance” on Scott AIR-PAK equipment. Mr. Gelein decided not to
engage Scott Safety but to go with an authorized Scott Technologies service
centre.
[26]
Derek Roy, who was also called by the plaintiff,
testified on cross-examination that the plaintiff frequently receives calls
from users of its SCBA wanting to know if a company or person that the user is
considering doing business with is authorized to repair and service Scott SCBA.
[27]
Monica Ratzke is a private investigator
who was asked by an agent of the plaintiff “to gather
evidence of advertising and promotion or any representations that [Scott Safety
Supply Services Ltd.] or its employees suggest they are either owned, licensed
or authorized by Scott Technologies Inc. to offer their services or sell their
products.”
[28]
She and her husband, posing as prospective
customers, attended at the business premises of Scott Safety in Whitecourt,
Alberta, on April 23, 2012, and she prepared a report. She writes that she was
told by Scott Safety staff that they “do not sell Scott
fire extinguishers; however they do service and repair Scott fire
extinguishers.” The audio of the recording was difficult to comprehend
at times; however, I heard no statement made to the investigator to this
effect. I conclude she wrote this in error as it is uncontroverted that the
plaintiff does not manufacture or sell fire extinguishers. In my view, this
error does not materially impact her credibility.
[29]
The portion of her investigation relied upon by
Scott Technologies goes to its allegation of confusion. She recorded her
conversation with Ambre, an employee of Scott Safety. Ambre made it very clear
that Scott Safety was not a licensed or authorized distributor of Scott SCBA,
but as required obtains Scott SCBA from an authorized dealer. She also stated
that their technicians service some parts of the Scott SCBA but other parts
require them to send the equipment to authorized centres for servicing. That
evidence is consistent with the testimony of both Brent Stark and Russell
Rogers called by Scott Safety. It also accords with the evidence of Mr. Roy
called by Scott Technologies, who explained that the company provides three
levels of training and it is only the third level that is unique to in-house
repair centres and authorized service centres.
[30]
Scott Technologies relies on a portion of the evidence
collected by Monica Ratzke as evidence of confusion. It consists of the
following exchange between the investigator and Ambre - the man referred to in
their discussion is the investigator’s husband:
Investigator: Now with the Scott Air would
it be cheaper for him to find a dist - like you’re not a distributor.
Ambre: We’re not a distributor. We can
order them in. That’s - it gets confusing -
Investigator: Oh Yeah.
Ambre: - especially with us being called
Scott Safety Supply -
Investigator: Yeah like that’s why he
wanted to stop, right, because we saw the sign and he’s like -
Ambre: Yeah. That gets confused a lot.
We’re not actually a distributor. We can sell the products, we can service the
products, but we’re not an actual distributor of Scott products.
Investigator: Oh okay.
Ambre: you mostly find distributors in the
bigger cities and I think its [sic] predominately in the States and I
know I’ve been called a few times by people that call from the States for a
distributor but no its just kind of a naming coincidence but -
Investigator: Oh okay.
[31]
Derek Roy is the Associate Sales Director for
North America for Scott Technologies. He joined the company in 2008 as the
zone manager for Canada. Mr. Roy testified as to the history and products of
Scott Technologies, that it offers three levels of training, that it sells and
repairs its SCBA in Canada through authorized service centres, and that for
three years from 2000 to 2003, Scott Safety was under contract with Scott
Technologies as an in-house repair centre and some of its staff received
training from Scott Technologies. He admitted that at least from the date of
the in-house repair agreement (June 16, 2000), and probably up to six months
earlier, Scott Technologies was aware of Scott Safety but took no action to
prevent it from using that name. He further admitted that Scott Technologies
would have known of Scott Safety earlier through Scott Technologies’ local
representative Mr. Madiema. He also admitted that Scott Technologies would
have been aware that Scott Safety used the email address scotsafe@telusplanet.net
from 2003. Lastly, he admitted that Scott Technologies was aware that Scott
Safety was using the two words “Scott Safety”
and it used those two words before the plaintiff did. He acknowledged that the
evidence showed that the defendants used the phrase “Scott
Safety” as early as 1995, that the plaintiff branded itself as Scott
Health and Safety in about 2000, and that it did not use “Scott Safety” until 2011.
[32]
He accepted that Scott Technologies has no
control over who services its products after they are sold and agreed that “the users are operating in environments that are dangerous
and they are – they have some level of sophistication and understanding of
their environment.” As noted earlier, he acknowledged that Scott
Technologies is regularly faced with inquiries as to whether businesses that sell
or rent its SCBA are or are not authorized service centres.
[33]
Mr. Roy was also cross-examined on three alleged
instances of actual confusion relied upon by the plaintiff, in addition to Ms.
Ratzke’s conversation with Ambre. The first related to evidence from LinkedIn
of an employee of the defendants. The capture of the web page shows that she
has been a Registered EMR, EMT of Scott Safety for four months. Under the
heading “Background” and opposite her “Experience” listing of “EMR,
Scott Safety” is the plaintiff’s current logo reproduced at paragraph 6,
above. Mr. Roy admitted that when someone enters their employer’s name, the LinkedIn
program automatically fills in their “supposed”
employer and that the plaintiff had put its details on LinkedIn. The
reasonable conclusion to be drawn from this is that if one enters the name “Scott Safety” on this web site, the plaintiff’s
current logo will be automatically filled in opposite that name because the
plaintiff has entered that information. The Court notes that the LinkedIn page
for the defendants’ employee and witness Russell Rogers does not show the
plaintiff’s logo and that he entered as his employer “Scott
Safety Supply Services Inc.” and not simply “Scott
Safety.”
[34]
Mr. Roy also testified that the plaintiff
relied on an email message received from Brogan Safety Supplies on November 12,
2012, seeking “clarification whether or not Scott
Safety of Whitecourt Alberta is authorized in any fashion to service, flow,
repair, or adjust any SCOTT breathing air equipment.” Mr. Roy testified
that “the confusion was whether or not Scott Safety of
Whitecourt, Alberta, is authorized in any fashion to service, flow, repair, or
adjust any Scott breathing air equipment.” He agreed on
cross-examination “that’s a common question that you
get regularly in connection with those that hold themselves out as having the
capacity to service.”
[35]
Lastly, Mr. Roy was questioned about an email
inquiry sent to the plaintiff by Mr. Chernichen L.L.B., Manager, Corporate
Security, Canadian Natural Resources Limited, who was concerned about
reductions in the labour force of Scott Safety. He wrote on February 2, 2015,
at 1:24 p.m.:
There is some urgency to my request. I’ve
been informed by one of your employees working in your Whitecourt Alberta office
that Scott Safety personnel are being given verbal notice to the
effect that they are being let go at the end of this month.
Canadian Natural is a client of Scott
Safety. If the information I have been given is accurate, this could have a detrimental
effect on the performance of the Scott Safety personnel working with Canadian
Natural staff in the field. [emphasis in original]
Just over two hours
later at 3:44 p.m. he wrote again:
My apologies. I have confused “Scott
Safety” and “Scott Safety Services”. The organization I am concerned with is
the latter. My apologies. Please ignore my previous email.
[36]
When cross-examined, Mr. Roy admitted that there
had been no contact with Mr. Chernichen other than these two email messages.
[37]
The defendants called two witnesses: Brent Stark
and Russell Rogers.
[38]
Brent Stark, as noted above, started Scott
Safety in 1995 and remained its principal shareholder until its sale in 2014.
[39]
Brent Stark changed his name to Brent Scott on
November 29, 1996, after he had established his business. The plaintiff notes
that until very recently the defendants took the position that he was named Brent
Scott when he started the business. At paragraph 3 of the Amended Statement of
Defence (dated October 17, 2014), Scott Safety pleads: “Beginning
in 1995, Brent Scott (as he then was) began conducting business in
Alberta under the name Scott Safety Supply & Services …” [underlining
in original]. Also, in response to the plaintiff’s demand letter, counsel for
Scott Safety in his reply writes: “[A]t the time that
Mr. Brent Stark commenced operating the Scott Safety Business, his name was Mr.
Brent Scott.” Lastly, in his affidavit sworn April 22, 2013, filed with
the Trade-marks Office in opposition to the plaintiff’s application to register
its trade-mark SCOTT SAFETY & DESIGN, Brent Stark attests at paragraph 3: “In 1995 at the time I commenced business my legal name was
Brent Scott.” Exhibit A to that affidavit is the change of name
application which clearly shows that his statement is false. There are other
serious difficulties with that affidavit, including attesting that pictures
attached as exhibits show company logos at a much earlier date than is true. These
previous statements go to Mr. Stark’s credibility as a witness at this trial.
Accordingly, I shall not accept his testimony unless it is confirmed by other
testimony or documentary evidence, or unless the circumstances attest that it
has a ring of truth.
[40]
I do accept his evidence of the origin of the
business name Scott Safety Supply & Services in May 1995.
[41]
The plaintiff pleads in its Reply at paragraphs
2 and 10 that:
The name “Scott” was adopted for the
business for the purpose of concealing or obscuring the identity of the
proprietor of the business.
…
By adopting the name Scott after founding
the business, Mr. Stark sought to mislead the plaintiff as to his true identity
and provide himself with a basis upon which he and the defendants could rely on
s. 20(1)(a) of the Trade-marks Act. The defendants were determined to build
their business on the Scott name regardless of the plaintiff’s actions.
[42]
Brent Stark testified that he adopted the name “Scott” for his new business because it was his
pregnant girlfriend’s family name, that her father, Cec Scott, had a company named
Scott Wireline serving oil and gas customers in the area, that he was about to
retire, and that he had a good business reputation. Mr. Stark’s parents, on
the other hand, had run a previous fire extinguisher company, and did not have
a good business reputation. In short, Mr. Stark did intend to trade on
someone’s reputation but it was not the plaintiff’s reputation; it was his
future father-in-law’s reputation.
[43]
Mr. Stark’s testimony in this respect has the
ring of truth and was not contradicted by any other evidence. There is no evidence
that Mr. Stark was aware of the plaintiff or Scott SCBA at the time he started
his business. More importantly, when he started his business with the “Scott” name, the business was restricted to filling and
repairing fire extinguishers – a business in which the plaintiff was not then and
has never been engaged. Even counsel for the plaintiff admitted in his closing
address that Brent Stark did not name his business Scott Safety with a view at
that time to trading on the plaintiff’s business reputation. Rather, the plaintiff
submits that later on Mr. Stark did do just that.
[44]
How did Mr. Stark adapt his business from
servicing only fire extinguishers to also servicing Scott SCBA? The only
evidence is from Mr. Stark and again I accept his testimony as it aligns with
the documentary evidence of the period and has the ring of truth. He testified
that as he travelled around servicing fire extinguishers, he was asked if he
could also service the Scott breathing apparatus and that made by its
competitors. He testified that as he was just starting up he would do
anything. So, he told his customers that he could do it, and then retained
someone else to do so, marked up the cost, and provided this service and others
to clients. This explanation rings true. First, Mr. Stark was just starting
up and he is a man with an obvious (in hindsight given the value of his
business some 20 years later) entrepreneurial bent. Second, he was travelling
to remote areas of the Alberta oil patch providing a service and it rings true
that his customers would prefer to have someone who is coming to them provide
as many services as possible, thus saving them the time and money that it would
take to travel to cities to have the work performed.
[45]
The remainder of Mr. Stark’s testimony, to the
extent that it is relevant, dealt with his business, the changes in name and
the various logos it used over time. To the extent that his evidence was
relevant to the issues required to be determined by the Court, it was
corroborated by documents produced and by other witnesses, including the detective
hired by the plaintiff.
[46]
The Court notes in particular that one of the
documents produced by the defendants and spoken to by Mr. Stark is an
advertisement in the “Whitecourt Star Small Business
Week October 22, 2003.” It contains an ad under the heading “Scott Safety” and, although the ad itself reflects
the defendants’ earliest logo reproduced at paragraph 12 above, the ad’s
heading and content refer to the business simply as “Scott
Safety” and not by its full business name. This evidence is the
earliest use by the defendants of the trade-mark “Scott
Safety” – some seven and one-half years before the plaintiff rebranded
itself as Scott Safety in 2011.
[47]
Mr. Stark changed his name back from Scott when
he and his partner separated.
[48]
The other witness called by the defence was
Russell Rogers, Vice President Business Development for New Scott Safety. He
had worked since 2007 for Old Scott Safety and continued with the purchaser
after it was sold. He confirmed that, at the time he was hired, the company
was using the logo reproduced in paragraph 17 above.
[49]
Mr. Rogers confirmed the evidence of Brent Stark
that the level of work done for others on their Scott SCBA consisted of testing
the integrity of the air tank and minor repairs, such as strap or buckle replacement,
but that any other service work was contracted out to a third party. He also
testified about an offer received from a US company to purchase up to 2000
refurbished Scott SCBA, an offer that was not accepted because the reselling of
refurbished SCBA is not part of the defendants’ core business.
[50]
Mr. Rogers also addressed two of the situations
relied on by the plaintiff as evidence of confusion. First, he confirmed the evidence
of Derek Roy, that when one types one’s employer’s name in a LinkedIn profile,
it automatically fills in the employer’s logo, if it has been previously
uploaded to that web site.
[51]
He also addressed the email received from Mike Chernichen
of Canadian National Resources Limited, a customer of Scott Safety. He
explained that he had laid off Kirk Madden, Mr. Chernichen’s stepson. He
offered his interpretation of the email as: “If you’re
going to lay him off, make sure you take care of him, or it could affect your
business.” The Court accepts that interpretation as reasonable given
that Mr. Chernichen was not directly involved in his employer’s contract with
Scott Safety.
Issues to be Decided
[52]
The matters the Court must decide based on the
pleadings and evidence are these:
a.
Have the defendants directed public attention to
their services, wares, and business in such a way as to be likely to cause
confusion between their services, wares, and business and those of the
plaintiff, contrary to paragraph 7(b) of the Trade-marks Act;
b.
Have the defendants passed off their wares or
services as and for those of the plaintiff, contrary to paragraph 7(c) of the Trade-marks
Act;
c.
Have the defendants infringed the plaintiff’s
rights in its registered trade-marks, contrary to sections 19 and 20 of the Trade-marks
Act; and
d.
Have the defendants depreciated the value of the
plaintiff’s goodwill in its registered trade-marks, contrary to section 22 of
the Trade-marks Act.
If the answer to any of these is “yes” then the Court must consider the defences raised
by the defendants; namely, (1) delay and acquiescence by the plaintiff, (2)
estoppel, (3) that the defendants have used the trade-marks only to describe
the services and products that they offer for re-sale and rental, (4) bona
fide use of a personal name, and (5) loss of distinctiveness of the Scott
trade-mark.
If none of the defences are made out then
the Court must then assess the damages to be awarded for infringing the
plaintiff’s trade-mark, for passing off, or for the depreciation of its
goodwill.
Analysis
[53]
The plaintiff claims that the defendants have
engaged in passing off, contrary to subsection 7(b) of the Trade-marks Act.
In order to make out that statutory claim, it must prove:
1.
That there is goodwill associated with a valid
trade-mark held by the plaintiff: Kirkbi AG v Ritvik Holdings Inc / Gestions
Ritvik Inc, 2005 SCC 65, [2005] 3 S.C.R. 302 at para 67, BMW Canada Inc v
Nissan Canada Inc, 2007 FCA 255 [BMW Canada] at paras 14 and 30;
2.
That the defendants have made a negligent or
deliberate misrepresentation that causes, or is likely to cause, confusion
between their goods, services, or business, and the plaintiff’s: Kirkbi AG v
Ritvik Holdings Inc / Gestions Ritvik Inc, 2005 SCC 65, [2005] 3 S.C.R. 302 at
para 68; and
3.
That the defendants’ misrepresentation has
caused, or is likely to cause, damage to the plaintiff: Ciba-Geigy Canada
Ltd v Apotex Inc, [1992] 3 S.C.R. 120 at para 33, Remo Imports Ltd v
Jaguar Cars Ltd, 2007 FCA 258, [2008] 2 FCR 132 at para 90, Pharmacommunications
Holdings Inc v Avencia International Inc, 2009 FCA 144 at paras 6-12, Target
Event Production Ltd v Cheung, 2010 FCA 255 at paras 20, 24, Hollick
Solar Systems Ltd v Matrix Energy Inc, 2011 FC 1213 at para 118.
[54]
The plaintiff claims that the defendants have “pass[ed] off other wares or services as and for those
ordered or requested” contrary to paragraph 7(c) of the Trade-marks
Act. There is no evidence before the Court that supports this allegation
and it will not be further considered.
[55]
The plaintiff further claims that the defendants
have infringed its registered trade-mark. In order to succeed in a trade-mark
infringement action, the plaintiff must prove that: “(1)
it is entitled to commence the action with respect to the registered trade-mark
in issue; and that (2) a sale, distribution or advertisement of any wares or
services has occurred; (3) in association with a confusing trade-mark or
trade-name; (4) by a person not entitled under the Trade-marks Act to the use
of the registered trade-mark; (5) as a trade-mark” (Kelly Gill, Fox
on Canadian Law of Trade-marks and Unfair Competition, 4th ed
(Toronto: Carswell, 2014) at s 7.4(b)).
[56]
Central to the concepts of passing off and
infringement is the concept of confusion. The passing off prohibition in
paragraph 7(b) “prohibits a person from directing
public attention to his wares, services or business in such a way as to cause
or be likely to cause confusion:” BMW Canada para 14. The
infringement prohibition in sections 19 and 20 requires that there is or is
likely to be confusion. Confusion results if the defendants lead the public to
believe that their goods, services, or business is that of the plaintiff or is
approved, authorized, or endorsed by the plaintiff, or that there is some business
connection between them.
[57]
The plaintiff submits that there is a likelihood
of confusion between “Scott Safety” and the
plaintiff’s trade-mark SCOTT. Allegations respecting the trade-mark AIR-PAK
were not seriously pursued and need not be considered. If the plaintiff cannot
establish that there is a likelihood of confusion between the defendants’ use
of Scott Safety and its trade-mark SCOTT, then this claim must fail.
[58]
The plaintiff submits that the predominant
element of the trade-mark used by the defendants is “Scott.”
It also submits that adding the descriptor “Safety”
to the word “Scott” does not serve to
distinguish the defendants’ mark from the plaintiff’s, because the products and
services of all parties are safety-related.
[59]
The defendants, on the other hand, submit that the
additional word “Safety” is very important.
Indeed, they submit that this litigation is all about the plaintiff’s decision
to add the word “Safety” to its mark SCOTT,
following Tyco’s decision to rebrand its business globally as “Scott Safety,” the name that has been used by the
defendants for many years.
[60]
I suspect that the defendants are correct in
pointing to this global rebranding as the impetus for this litigation; however,
while that may have some relevance to the defence of delay, acquiescence, and
estoppel, it is not relevant to the inquiry regarding confusion.
[61]
The test for confusion is one of first
impression and imperfect recollection by the relevant consuming public. Subsection
6(5) of the Trade-marks Act sets out a non-exhaustive list of criteria
that the Court should consider when determining whether a trade-mark or
trade-name is confusing:
In determining whether trade-marks or
trade-names are confusing, the court or the Registrar, as the case may be,
shall have regard to all the surrounding circumstances including
(a) the inherent distinctiveness of the trade-marks or trade-names and
the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in
use;
(c) the nature of the goods, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names
in appearance or sound or in the ideas suggested by them.
[62]
Factor (a), inherent distinctiveness and extent
known, cuts slightly against the plaintiff because the word “Scott” is a common name, lacking inherent
distinctiveness. I accept and find that the plaintiff’s mark is well known in
Canada (including in the Alberta oil patch) in relation to its SCBA product.
However, it is equally clear that, within the principle market the defendants
serve (the Alberta oil patch), its trade-mark - Scott Safety - is equally well
known.
[63]
Factor (e), the degree of resemblance of the
marks, cuts slightly in favour of the plaintiff because “Scott” resembles “Scott
Safety.” This is an important factor because if two marks do not
resemble each other then “it is unlikely that a strong
finding on the remaining factors would lead to a likelihood of confusion:”
Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27, [2011] 2 S.C.R. 387 at
para 49.
[64]
It is unclear which party factors (b)-(d) favour.
With respect to factor (b), period of use, the plaintiff has used “Scott” as a trade-mark in Canada for longer than the defendants
have used “Scott Safety.” However, this factor
is not telling in this case. The Supreme Court of Canada stated in Mattel
USA Inc v 3894207 Canada Inc, 2006 SCC 22, [2006] 1 S.C.R. 772 [Mattel]
at para 77 that “[length] of user [sic] is only
important in considering the question of fact, whether the trade mark has
really and truly become distinctive” (citing Harold G Fox, The
Canadian Law of Trade Marks and Unfair Competition, 3d ed (Toronto:
Carswell, 1972) at 133). In this case, the evidence shows that both the plaintiff
and the defendants’ trade-marks are distinctive in western Canada and in the Alberta
oil patch in particular. It has not been shown that one is more distinctive
than the other.
[65]
Similarly, the evidence with respect to factors
(c) and (d), nature of the goods and trade, cuts both ways. On one hand, the plaintiff
and defendants offer different goods/services. The plaintiff is primarily
involved in the manufacture and sale of SCBA. The defendants are primarily
involved in the provision of emergency medical and fire services, and safety
training. There is some overlap insofar as they both sell gas detection
equipment (although of different brands). In addition, a small portion of the defendants’
business (about 5%) consists of servicing, renting out, and reselling
refurbished and new SCBA, including some manufactured by the plaintiff. While
the plaintiff does not rent out its SCBA in Canada, or sell refurbished SCBA,
it is arguable that these rental and resale markets overlap with the market for
new SCBA, insofar as each appeals to customers who are looking to use SCBA
manufactured by the plaintiff. Furthermore, Mr. Stark does testify that the defendants
resold some new SCBA, although it was not made clear whether they were
manufactured by the plaintiff.
[66]
On the other hand, the customers of the plaintiff
and the defendants overlap; both are substantially involved in providing
products and services to companies in the oil patch.
[67]
Given the slight overlap in the parties’ goods/services
and the more significant overlap in their customer base, one might form the
view, as urged by the plaintiff, that factors (c) and (d) point towards a
likelihood of confusion. However, in my view, this is undercut by the
sophistication of both parties’ customers in the oil patch. Both Mr. Roy and
Mr. Rogers testified that their respective customers in the oil extraction
business were sophisticated customers for their respective products. This general
sophistication mitigates concern about confusion.
[68]
What we are left with, then, is a situation
where factor (a) slightly favours the defendants, factor (e) slightly favours
the plaintiff, and the remaining factors do not unambiguously favour either.
In the face of this ‘tie’ I am of the view that the most important contextual
factor is the lack of evidence of actual confusion. This factor was discussed
by the Supreme Court in Mattel at para 55:
Evidence of actual confusion would be a
relevant ‘surrounding circumstance’ but is not necessary (Christian Dior
S.A., at para 19) even where trade-marks are shown to have operated in the
same market area for ten years: Mr. Submarine Ltd. v. Amandista Investments
Ltd. (1987), 19 C.P.R. (3d) 3 (Fed. C.A.). Nevertheless, as discussed
below, an adverse inference may be drawn from the lack of such evidence in
circumstances where it would readily be available if the allegation of likely
confusion was justified. [emphasis added]
[69]
First, Mattel makes clear that evidence
of actual confusion cannot be necessary to establish a likelihood of confusion
because, if it were, it would have the effect of raising the test from a “likelihood of confusion” to “confusion”
itself, contrary to subsection 6(2) of the Act. Second, Mattel establishes
that, although not necessary, evidence of actual confusion is relevant to proving
a likelihood of confusion. This is because, by definition, things that are
likely to occur do occur more often than things that are unlikely to occur and,
therefore, the fact that something has occurred suggests, other things being
equal, that it was likely to occur. Third, and most importantly in the present
context, Mattel establishes that a lack of evidence of actual confusion
can be an indicator that confusion is not likely. This is the natural
corollary of point two; the fact that something did not occur suggests, other
things being equal, that it was not likely to occur.
[70]
The extent to which a court may draw an
inference from a lack of actual confusion depends on the circumstances. In Mr
Submarine Ltd v Amandista Investments Ltd, [1988] 3 FC 91 [Mr Submarine],
the Federal Court of Appeal recognized at para 29 that the lack of evidence of
actual confusion was a “very weighty fact,”
given that the parties had been using their respective trade-marks in
association with restaurant businesses in the Dartmouth area for the past 10
years. This may be contrasted with Absolute Software Corporation v Valt.X
Technologies Inc, 2015 FC 1203 [Absolute], where I held at para 8
that the lack of evidence of actual confusion was “not
surprising given that the Respondent is in start-up and development mode and
has sold less than $2000 in product thus far.”
[71]
The facts in this case are clearly much closer
to Mr Submarine than to Absolute. The parties have both been
marketing their products to customers in the oil patch for several years. If
customers were likely to be confused by the defendants’ use of the mark “Scott Safety,” one would expect to find evidence of
their confusion. I agree with the defendants that the evidence of actual
confusion in this case is extremely weak.
[72]
In particular, I agree with the defendants’
interpretation of the evidence of Mr. Gelein. Mr. Gelein did not confuse the defendants
with the plaintiff, nor did he confuse their products and services; rather, he
simply wanted to know whether Scott Safety was an authorized distributor of the
plaintiff. He might well have asked that question, as many others frequently
had, irrespective of the name of the business. There is no indication that he
thought that the defendants might be authorized because of their name.
Furthermore, Mr. Gelein was able to confirm that the defendants were not
authorized when he called the plaintiff after finding its contact information
on www.scottsafety.com. The only point at which Mr. Gelein got confused was
when the defendants’ sales rep produced certificates of training which were
made out to individuals at “Scott Safety.” He
states that:
Well, when I received them, I mean I didn’t
really -- I mean the thing that kind of confused me about these is it says, it
has All Out Group as the core sponsor and then the affiliation Scott Safety.
So I didn’t know who – who’s that Scott Safety. Was that Scott Safety
Whitecourt? Is that Scott AIR-PAK? And like, I -- I don’t know.
Mr. Gelein’s confusion appears to flow from
the use of the phrase “Scott Safety.” Mr.
Gelein might have found this phrase confusing because, on one hand, he
associated “Scott Safety” with “Scott Safety Whitecourt” but, on the other hand, he
found the plaintiff’s contact information on the website “www.scottsafety.com.” In other words, Mr. Gelein was
not confused because both the plaintiff and defendants used “Scott;” he was confused because they both used “Scott Safety.”
[73]
The same can be said of the email from Mr.
Chernichen. He admits that he confused “Scott Safety,”
meaning the plaintiff, with “Scott Safety Services,”
meaning the defendants. Again, the confusion was not directed or reliant upon
the trade-mark SCOTT; rather it was dependant on both using the phrase “Scott Safety” to describe their business.
[74]
Similarly, Ambre, the defendants’
employee who spoke to the undercover investigator, said merely that because the
company is called Scott Safety Supply, some people think it is an authorized
distributor of Scott products. Her statement suggests that any confusion
relates to whether her employer is an authorized distributor of the plaintiff. As
she says “We can sell the products, we can service the
products” and the defendants’ ability to do so confuses some into thinking
that they are an authorized distributor “especially
with us being called Scott Safety Supply.”
[75]
If this can be said to constitute evidence of
actual confusion with the trade-mark SCOTT, it is de minimis evidence. I
acknowledge that confusion with respect to whether the defendants are an authorized
distributor of the plaintiff might be sufficient to satisfy the test for
confusion in subsection 6(2), if that confusion arose from the defendants’ use
of the name “Scott.” This is because, if a
person thinks that the defendants are an authorized distributor of the
plaintiff, then they might infer that the “goods or
services associated with [the plaintiff and defendants’ trade-marks] are
manufactured…or performed by the same person.” A person’s mistaken
belief that the defendants are an authorized distributor of the plaintiff might
also be sufficient to satisfy the test for confusion in subsection 7(b),
insofar as this belief may lead that person to confuse the plaintiff’s goods,
services, or business with those of the defendants.
[76]
However, in my view, this is very weak evidence
of confusion. It is not direct evidence of actual confusion, but is simply a
statement from a person, who was not called as a witness, who was chatting with
a prospective customer who offered that they had stopped because they were
confused. At most, the statement is evidence that “some”
unknown number of people told Ambre that they were confused about whether the
defendants were an authorized distributor of the plaintiff, in part because of
the defendants’ name.
[77]
The email from Brogan Safety Services provides
even less evidence of confusion. While the email sought clarification about
whether the defendants were authorized to service equipment manufactured by the
plaintiff, there is no indication that anyone thought that the defendants might
be authorized because of their name. Indeed, Mr. Roy accepted that “that’s a common question that you get regularly in
connection with those that hold themselves out as having the capacity to
service.”
[78]
Finally, the evidence of the LinkedIn profile of
the defendants’ new employee is not persuasive of confusion. She inputted her
employer’s name as “Scott Safety” and there is
no evidence that she meant that it was any business other than the defendants’
business. The automatic filling in of the plaintiff’s new and as yet
unregistered logo was done only because the plaintiff provided that to
LinkedIn. All this may show is that this four-month employee was not careful
in noting that a logo had been inserted that was not that of her new employer –
it does not show that she was confused about the identity of her employer.
[79]
There is no real evidence of confusion despite
the fact that the defendants’ business has operated in a market in which the
plaintiff has been doing business for more than 20 years. There is little
meaningful confusion and thus no infringement of the plaintiff’s trade-marks,
nor has there been any passing off.
[80]
There remains the claim that the defendants have
depreciated the goodwill of the plaintiff’s trade-mark, contrary to subsection
22(1) of the Act. Unlike passing off and infringement, “confusion” is not part of the analysis under
subsection 22(1).
[81]
One of the required elements that must be proven
to establish a claim under subsection 22(1) is that the likely effect of the
defendants’ use was to depreciate the value of the goodwill attached to the
plaintiff’s trade-mark (i.e. damage): Veuve Clicquot Ponsardin v Boutiques
Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824 at para 46.
[82]
The plaintiff has offered no evidence that it
has lost or had any sale impacted by the defendants’ trade-mark. It frankly
admits that there has been no such loss. In this circumstance, it cannot be
said that the effect of the defendants’ use of Scott Safety has “likely” depreciated its goodwill. I find as a fact
that it has had no impact at all on the goodwill associated with the plaintiff’s
trade-mark, SCOTT.
[83]
For these reasons, the plaintiff’s claim must be
dismissed.
[84]
Had I found that the defendants had breached the
plaintiff’s trade-mark SCOTT, I would not have awarded any damages in light of
the admission that there have been none. Further, I would not have provided
the plaintiff with any injunctive relief. That relief is equitable and
discretionary. Here, the plaintiff has long known of the use by the defendants
of “Scott Safety” and it was even warned some years
ago by Mr. Roy to keep an eye on that business; but it did nothing – nothing
until it decided to globally rebrand itself as Scott Safety – the defendants’
very trade-mark. A business cannot lie in the weeds, allowing another to carry
on and invest in and grow its business, and then spring up and enlist the aid
of the court when it suits its purposes, claiming it has been unfairly
treated. In this case, if there is any unfairness, it is that the defendants
were unfairly treated by the plaintiff when it decided to use the same name the
defendants had been using in excess of 20 years.
[85]
The defendants are entitled to costs. If the
parties cannot agree on an amount of costs, the defendants are to serve and
file written submissions not exceeding ten (10) pages, and a Bill of Costs
within fifteen (15) days of these Reasons. The plaintiff shall service and
file its responding submissions within fifteen (15) days after receipt of the
defendants’ submissions. Judgment on costs is reserved.
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