Date: 20070322
Docket: A-3-07
Citation: 2007 FCA 119
Present: SEXTON
J.A.
BETWEEN:
NISSAN CANADA INC.
Appellant/Moving Party
and
BMW CANADA INC.
BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT
Respondents
REASONS FOR ORDER
SEXTON J.A.
[1]
Nissan
Canada Inc. (“Nissan”) moves for a stay of the Judgment and Order of Justice
MacKay of the Federal Court dated March 7, 2007 pending disposition of an
appeal of his decision by this Court. I granted an interim stay on March 15,
2007 pending the disposition of this motion.
[2]
In the
Federal Court, BMW Canada Inc. and Bayerische Motoren Werke Aktiengesellschaft
(collectively, “BMW”) alleged that Nissan was liable for infringement and
depreciation of goodwill in respect to certain trade-marks registered by BMW,
contrary to sections 20 and 22 of the Trade-Marks Act, R.S.C. 1985, c.
T-13, as amended. BMW also claimed that Nissan’s use of the trade-marks M and
M6 in the marketing of its Infiniti brand of cars violated BMW’s rights in a
number of its trade-marks, contrary to paragraph 7(b) of the Act. MacKay
J. concluded that BMW had not made out its claim for infringement and
depreciation of goodwill, but was successful in part in arguing that Nissan was
liable for passing off contrary to paragraph 7(b). As a result of the
latter holding, Justice MacKay ordered the following relief, which Nissan now
seeks to stay:
4. The
plaintiffs’ claims to injunctive relief and an order for delivery up, or
destruction under oath, of materials that may offend the terms of the
injunction granted, are allowed in the following terms:
a. The
defendant is restrained henceforth, from the date of this Judgment, from
acting, by the corporation, its officers, servants, agents, employees or other
over whom it exercises control from
i.
directing
public attention to its wares in any way likely to cause confusion in Canada,
including by using the trade-marks M and M6 in association with automobiles, parts
and accessories, between the defendant’s wares and those of the plaintiffs
contrary to paragraph 7(b) of the Act;
ii.
advertising,
promoting, offering for sale or selling automobiles, their parts and
accessories in association with the trade-marks M and M6.
b. The
defendant shall deliver up to the plaintiffs or destroy under oath all
literature, invoices, packaging, signs, advertising, promotional or marketing
material, printed matter, recorded matter, film or other material in its
possession, care, custody or control as may offend the injunction, herein
granted, in particular, materials that include the letter M or the symbol M6 as
trade-marks.
5. The
declaration, the injunction, and the order to deliver or destroy materials are
effective this day, and counsel for the parties shall consult on any issues
arising concerning implementation of those orders, with a right to make
submissions to the Court on any issue about which counsel are unable to agree.
[3]
In RJR-Macdonald
Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (“RJR-Macdonald”),
the Supreme Court of Canada set out a three-part test to determine whether a
stay should be granted. The Court explained the three parts of this test as
follows:
First, a preliminary
assessment must be made of the merits of the case to ensure that there is a
serious question to be tried. Secondly, it must be determined whether the
applicant would suffer irreparable harm if the application were refused.
Finally, an assessment must be made as to which of the parties would suffer
greater harm from the granting or refusal of the remedy pending a decision on
the merits.
[4]
The first question
in assessing this motion, therefore, is whether there is a serious issue to be
tried. During the hearing of the motion, very little argument was directed to
this question and thus there would seem to be no reason to deviate from my
previous reasons on this issue. Moreover, counsel for BMW acknowledged that the
critical issue on this motion is whether Nissan has established irreparable
harm as a result of MacKay J.’s Judgment. Consequently, I am satisfied that
there is a serious issue to be tried.
[5]
The second
question for me to address is whether Nissan will suffer irreparable harm from
a refusal to grant a stay. Nissan stresses that its reputation will suffer
considerably if a stay of MacKay J.’s Judgment is not granted as a result of
the various steps that need to be taken to ensure it does not use M and M6 in
its marketing material. BMW, on the other hand, argues that there has been no
evidence of irreparable harm to Nissan. In addition, BMW has offered to agree
to allow Nissan until March 30, 2007 to remove all trade-mark references to M
and M6 on its websites and until April 15, 2007 to remove all trade-mark
references to M and M6 from its brochures and other printed literature.
[6]
After
considering the submissions of the parties, I am satisfied that Nissan has
established that it will suffer irreparable harm if required to comply with
MacKay J.’s Judgment prior to the disposition of its appeal. In particular,
Nissan will be unable to rely on its family branding in promoting the Infiniti
M family of vehicles, as is the practice among other luxury vehicle
manufacturers. Nissan presented evidence that other manufacturers use this type
of family branding, even using the letter M to designate a class. Moreover, if
successful on appeal, Nissan will revert to family branding in promoting its
Infiniti M vehicles to maintain consistency with the advertising message used
in the U.S. and that used with respect to
its other lines of Infiniti vehicles. This inconsistency will likely leave a
negative message in the minds of consumers. Nissan’s affiant, Ian Forsyth,
swore that such a disruption in Nissan’s marketing strategy would cause
customers to mistakenly wonder if there was a problem with the cars being
promoted, threatening Nissan’s reputation.
[7]
Without a
stay, Nissan would also be required to discontinue its practice of distributing
reprints of favourable articles written by third parties that refer to the
vehicles by reference to the letter M alone, such as “Infiniti M” cars. This
disruption is likely to have a negative impact on the ability of Nissan to
market its vehicles, particularly because many customers put a great deal of
weight on reviews of vehicles by third parties.
[8]
Furthermore,
to comply with MacKay J.’s Judgment, Nissan will have to incur expense in
revising its promotional materials, such as its brochures and websites, to
remove references to M and M6. BMW, however, has failed to provide an
undertaking as to damages, thereby preventing Nissan from recovering these
costs should it succeed on appeal. Marceau J.A. explained this situation in Apotex
Inc. v. Wellcome Foundation Ltd. (1998), 82 C.P.R. (3d) 429 (F.C.A.) (“Wellcome”)
at paragraph 4:
There is now an
injunction in force ordering both appellants to immediately cease all marketing
activities involving zidovudine products. If the appeal is successful, it will
become clear then that this injunction was issued erroneously and that the
important loss of profits suffered by both appellants for having been excluded
from the market would have been imposed on them without real justification and
only as a result of a judicial error. There being no undertaking as to damages
offered by the respondents, there will be no way then far [sic] the
appellants to recover their losses. No cause of action could support a claim
against the respondents or any other potential defendant.
[9]
At the
hearing, counsel for BMW stressed that Nissan was unable to point to any
concrete evidence of harm that would be suffered by Nissan as a result of
compliance with MacKay J.’s Judgment and was instead merely speculating about
the harms that might arise. However, as Justice Rothstein, then speaking for
the Federal Court, Trial Division, explained in Ciba-Geigy Canada Ltd. v.
Novopharm Ltd. (1994), 56 C.P.R. (3d) 289 at 325 (F.C.T.D.), in situations
such as that in the present case, the harm that will arise may be inferred from
the evidence presented:
It will be remembered
that these applications are brought quia timet. There is no actual
evidence of harm because the defendants are not yet in the market- place. The
evidence relating to loss resulting in irreparable harm must, of necessity, be
inferred. I do not think that Heald J.A. was precluding the drawing of such
inferences or other inferences that logically follow from the evidence.
[10]
In any
event, Nissan has been able to point to harm already suffered as a result of
the injunction. After MacKay J.’s Judgment was released on March 7, 2007, it instructed
its customer service department to discontinue sending out brochures to
customers who called to ask for them and has received complaints from
dissatisfied customers as a result.
[11]
In
establishing irreparable harm, it is not necessary for the moving party to show
that the very viability of the business is threatened (Wellcome at
paragraph 8). In my view, the reputational and financial consequences Nissan
will likely suffer from having to comply with MacKay J.’s Judgment meet the
test for irreparable harm.
[12]
Finally,
the last element of the RJR-Macdonald test that I must consider is which
of the parties will suffer the greater harm from the granting or refusal of the
stay. I have already found that Nissan will suffer irreparable harm if a stay
is not granted. BMW, conversely, was not able to show that it will suffer any
such irreparable harm if the stay is granted. Moreover, as I have already
explained, BMW counsel stated in the hearing that the outcome of the motion would
turn on the second element of the RJR-Macdonald test, that is, whether
Nissan would suffer irreparable harm. Accordingly, I conclude that the balance
of convenience favours Nissan.
[13]
For these
reasons, the stay will be granted with costs in the cause.
“J. Edgar Sexton”
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