Date: 20070718
Docket: A-62-06
Citation: 2007 FCA 258
CORAM: DÉCARY
J.A.
LÉTOURNEAU J.A.
TRUDEL
J.A.
BETWEEN:
REMO IMPORTS LTD.
Appellant
and
JAGUAR CARS LIMITED
and
FORD MOTOR COMPANY OF CANADA,
LIMITED/FORD DU CANADA LIMITÉE carrying on business as JAGUAR CANADA
Respondents
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1]
These
proceedings involve an appeal and a cross-appeal against a decision (2006 FC
21) of Shore J. of the Federal Court of Canada (judge).
[2]
By his
decision, the judge dismissed the appellant’s action for infringement and
allowed the respondents’ counterclaim. He declared invalid the appellant’s
registered trade-mark No. 263,924 and expunged it from the registry. He
declared valid the respondents’ registration Nos. 378,643 and 378,644, including
the following wares objected to by the appellant: driving license cases, wallet
cases, business card holders, belts, credit card holders, key cases, address
books, note books, passport holders, beauty cases, document cases and pocket
wallets.
[3]
In addition,
the judge issued an injunction restraining and permanently enjoining the
appellant from, broadly stated, using the trade-mark JAGUAR and a Leaping
Jaguar design, selling and advertising products using the above trade-mark or
design and passing off its wares for those of the respondents. An order also
issued for the destruction of all products in the possession or within the
power or control of the appellant which bear a trade name, design or trade-mark
which is contrary to the injunction granted.
[4]
Finally,
the judge dismissed the respondents’ claim for damages. This part of the
judge’s decision is the subject of the respondents’ cross-appeal.
[5]
The
appellant initially asked this Court to reverse the judge’s decision, declare
its trade-mark valid and amend the respondents’ trade-marks so as to delete
from the description of the wares those to which the appellant objected. It
also sought a declaration of infringement of its trade-mark by the respondents,
the expungement of the respondents’ trade-marks and the issuance of a permanent
injunction requiring the respondents to cease to infringe the appellant’s trade-mark.
[6]
There are
other conclusions sought by the appellant such as damages. However, it is not
necessary to detail them for the purpose of this appeal.
[7]
What was
after all a simple matter has been rendered unduly and unnecessarily complex by
the litigants. The 143 page judgment of the Federal Court, with an unfortunate
use of loose language, did nothing to improve the situation.
[8]
The appeal
process has not been spared either. Orders of this Court were necessary to keep
the parties within the boundaries of reason and enforce compliance with the Federal
Courts Rules (Rules): see the orders of Sexton J.A., dated August 9, 2006,
Décary J.A. dated September 5, 2006, Noël J.A. dated November 9, 2006 and
Létourneau J.A. dated December 20, 2006.
[9]
Yet the
Amended Notice of Appeal filed by the appellant contains no less than
forty-nine (49) pages. In Marchand Syndics Inc. v. Canada (Superintendent of
Bankruptcy)
2006 FCA 368, this Court reasserted the role and purpose of the Notice of
Appeal. At paragraph 14, I wrote for the Court:
…Rule 337
indeed provides that the notice of appeal must set out a complete and concise
statement of the grounds intended to be argued. These are the grounds normally
elaborated in the memorandum of fact and law. The appellants’ notice of appeal
is twenty pages long and reflects everything but the complete, concise, and
precise grounds of appeal. It is in fact a veiled, deficient memorandum of fact
and law.
As will be seen below, the above statement is even truer in
this case.
[10]
Three days
before the hearing of the appeal, the appellant, by letter addressed to the
Registry of the Court, abandoned its claim of infringement against the respondents
as well as its demand for the expungement of the respondents’ trade-marks.
[11]
On the
first morning of the hearing, another counsel for the appellant, who had been
recently added to the record, made submissions to the Court. He argued that
the judge made five errors of law which warrant the reversal of his decision.
Some of these alleged errors were not addressed in the Memorandum of Fact and
Law or the Amended Notice of Appeal. Others were barely alluded to or cast in
such broad terms in the written material that one would be hard pressed to
recognize the development made of these errors at the hearing. As a result, the
appeal took a different turn and we expressed our concern that it had become an
appeal by ambush.
[12]
The
respondents object to this Court entertaining any issue raised for the first
time on appeal. They invoke, in support of their objection, the Federal Court
decisions in Kioroglo v. Canada (Minister of Citizenship and Immigration),
[1994] F.C.J. No. 1606 and Mishak v. Canada (Minister of Citizenship and
Immigration), [1999] F.C.J. No. 1242 in which the Federal Court quoted the
following statement from our colleague Décary J.A. in Sola Abel Lanlehin v.
M.E.I., A-610-90, March 2, 1993:
This case
raises disturbing questions as to the validity of the decision of the Refugee
Division, and specifically as to the participation of one of the two members in
the reasons for the decision. These questions were not, however, raised by the
appellant in his memorandum, and it may be that, had the respondent known in
time, she would have been able to explain the contradictions that are apparent
on the record. At this point, we cannot assume that the decision is invalid and
we are of the opinion, in the circumstances, that the appeal should be dismissed.
In the Kioroglo case, counsel for the applicants
sought to introduce at the hearing a ground which did not appear in the
application for judicial review while in the Mishak case, the applicants
wanted to argue an issue that was not in their Memorandum of Fact and Law. In
both cases, the respondent’s objection was maintained by the Federal Court.
[13]
The
respondents have every right to complain. As a general rule, for obvious
reasons, our Court will not hear grounds of appeal that were not raised in the
Notice of Appeal or the Memorandum of Fact and Law. While exceptions relating,
for example, to jurisdictional issues may be admitted, this is not the case
here.
[14]
Not
knowing the position that our Court would take on their objection, the
respondents have argued the merits of each of the five alleged errors. I
believe that it is necessary to identify these errors so that future litigants
intending to rely on the Federal Court’s decision can be aware of them and of
their treatment by this Court.
[15]
The
appellant contends that the judge:
a) erred
in imposing on the appellant the burden of proving a likelihood of confusion
and then proceeded to apply the wrong test when determining whether confusion
or likelihood of confusion existed;
b) erroneously
expunged the appellant’s trade-mark on the basis of two grounds, namely
deception and depreciation, which are not grounds of invalidity under section
18 of the Trade-marks Act, R.S.C. 1985, c. T-13 as amended (Act);
c) erroneously
expunged the appellant’s trade-mark on the basis of a prior use when the
limitation period contained in subsection 17(2) of the Act had run;
d) erroneously
expunged the appellant’s trade-mark on the basis that the trade-mark was invalid
because it was not registrable on account of confusion (paragraph 18(1)(a))
and also invalid because it was not distinctive from the wares of the
respondents (paragraph 18(1)(b)); and
e) granted an injunction against the appellant when
there were no valid grounds for issuing it.
[16]
Before I
review the submissions of counsel for the appellant, I would like to dispose of
the appellant’s main ground of appeal relating to the fame of the respondents’
trade-marks JAGUAR.
Whether
the respondents’ trade-marks “JAGUAR” for automobiles, luggage wares and other
related accessories was famous by 1980, 1990 and still is today
[17]
The judge
found that the respondents’ trade-marks had become famous for automobiles and
luggage wares by 1980. At paragraph 213 of his reasons for judgment he wrote:
[213] The
witnesses for Jaguar Cars showed that it is, and has been since at least 1980,
a natural brand extension or expansion from luxury cars into Luggage Wares,
defined as:
luggage,
bags, cases, sacs, tote bags and other wares used to contain or hold smaller
wares; attaché cases, briefcases, handbags; school bags; license cases,
wallets, cardholders; keyrings, keycases; garment bags, suitcases, flight bags,
folios, keyfobs, sports bags; driving license cases, wallet cases, business
card holders, belts, credit card holders, passport holders, beauty cases,
document cases, pocket wallets; address books, note books, camera bags;
knapsacks, carry-ons, travel bags, sport bags, tennis bags, cosmetic
bags/pouches, money belts, waist bags, lunch bags, and computer cases.
[18]
He also
found that the respondents’ trade-marks were still famous at the time the
appellant brought its action against the respondents in 1991, and still are
today.
[19]
Upon a
sampling review of the extensive record (6,000 exhibits, hundreds of binders,
dozens of samples), I am satisfied that there was ample and cogent evidence in
the agreed statements of fact and the voluminous evidence adduced by the
respondents to support the judge’s conclusion. I see no overriding and palpable
error in respect of this issue that would justify or require an intervention on
our part.
[20]
I should
add that, as an American appellate judge once said, judges are not ferrets: cited
in Dow Agrosciences Canada Inc. v. Philom Bios Inc., 2007 ABCA 122, at
paragraph 53. It cannot be expected that appeal judges will embark on a search
of the record to find pieces of evidence which could support or particularize
broad allegations made by a party to the appeal.
Whether
the judge erred in imposing upon the appellant the burden of proving that there
is no likelihood of confusion and applied the wrong test to the issue of
confusion
1. Alleged error as to the burden of proof
[21]
Paragraph
88 of the appellant’s Memorandum of Fact and Law is the only basis for the
extensive argument developed by the appellant at the hearing. The paragraph
reads:
88. It is
submitted respectfully that the criteria of section 6(2) of the Act were not
proven by the Respondents, which was their onus to do. Accordingly, the Trial
Judge erred at paragraph 306 of his Reasons (AB, Vol. 1, p. 219).
[22]
The judge
expressed himself in the following terms at paragraph 306 of his reasons for
judgment:
[306] When a
senior user’s mark has become very well known across Canada and/or
internationally, it is entitled to a much wider area of general protection
beyond the wares in respect of which the mark has been used. In such cases, the
burden on the junior user to dispel any likelihood of confusion is
particularly difficult to overcome. Remo has not met its heavy burden to dispel
likelihood of confusion where the JAGUAR cars’ mark was famous at the
material dates.
[Emphasis added]
[23]
Counsel
for the appellant submits that the respondents who were seeking the expungement
of the appellant’s trade-mark bore the burden of proving a likelihood of
confusion. He relies upon a decision of the Exchequer Court of Canada in Parke,
Davis & Co., Ltd. v. Empire Laboratories Ltd., 41 C.P.R. 121 where Noël
J. held that the burden to show invalidity rests with the party seeking
expungement.
[24]
In fairness
to the judge, I should say that each party to the proceedings was seeking the
expungement of the other’s trade-mark. In these circumstances, it would have
been helpful if the judge had addressed in a comprehensive manner the issue of
the burden of proof.
[25]
In coming
to the conclusion that he did in paragraph 306 of his reasons, the judge relied
upon the decision of the Federal Court in Advance Magazine Publishers Inc.
v. Masco Building Products Corp., 86 C.P.R. (3d) 207.
[26]
This case
involved an opposition to the registration of a trade-mark. The burden is, in
these instances, on the party seeking registration of a trade-mark to show that
there is no likelihood of confusion if the registration is allowed. Here,
however, the situation is different. The respondents are seeking the
expungement of a registered mark. I agree with the appellant that the burden of
proving confusion was on the respondents: see Parke, Davis & Co., Ltd.,
supra.
[27]
The
appellant also submits that this error of the judge permeates the other issues.
For example, the reasons for judgment are silent on the burden of proof
regarding depreciation of the value of the goodwill attached to the
respondents’ trade-marks. It is not unreasonable, the appellant says, to
conclude that the judge took the same approach to this issue as he did for the
issue of confusion.
[28]
That the
burden of showing depreciation is on the party claiming infringement of its
trade-mark has been confirmed by the Supreme Court of Canada in Veuve Clicquot
Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23 where, at paragraph 15,
Binnie J. wrote:
Despite the
undoubted fame of the mark, the likelihood of depreciation was for the
appellant to prove, not for the respondents to disprove, or for the court to
presume.
[29]
I am
willing to accept the appellant’s submission that if the judge made the alleged
error in relation to confusion, he, in all likelihood, made the same error with
respect to depreciation. Counsel for the respondents conceded that this was a
reasonable inference to draw and submitted that the opposite inference should
be made if we were to find that the judge made no error with respect to
likelihood of confusion.
[30]
Counsel
for the respondents contends that the impugned statement was made by the judge
in the context of the special difficulty created by a well known mark when
comes the time of rebutting evidence of confusion adduced by the holder of the
well known mark.
[31]
There is
no doubt that the statement made by the judge is at best ambiguous. His
reference to the Advance case would tend to support the narrow and plain
reading that the appellant makes of paragraph 306 of the reasons for judgment.
[32]
However,
in sub-paragraph 258(7)(f) of his reasons, where he distinguished the Toyota Jidosha Kabushiki Kaisha v.
Lexus Foods Inc.
case (2000), 9 C.P.R. (4th) 297 from the present instance, the judge
expressly recognized that the burdens in the case of an opposition “differ
significantly from the causes of action and expungement bases at play in this
case”. He was aware of the fact that the burden of proof was different in
matters of expungement.
[33]
Furthermore,
the judge twice used the word “dispel” in relation to the likelihood of
confusion. The word “dispel” only makes sense in this context if a likelihood
of confusion has already been established by the holder of the famous mark. One
cannot dispel what does not exist. The word cannot be read as casting on the
appellant the initial burden as regards likelihood of confusion.
[34]
I think in
the end that the judge was simply saying that, where a likelihood of confusion
with a famous trade-mark entitled to a wide protection has been established,
overcoming that evidence is a difficult task to assume. In my view, the word
“burden” in paragraph 306 was not used in the legal sense of a burden of proof,
but rather in the ordinary or colloquial sense of an arduous or daunting task.
[35]
In any
event, even if it were assumed that the judge made an error of law respecting
the burden of proof, that error, as we shall see, would not be material. This
brings me to the second part of the first error alleged, i.e. whether the judge
applied the wrong test for confusion.
2. Whether the judge applied the wrong test for
confusion
[36]
The
appellant’s contention with respect to confusion is that the judge, while referring
to the Act and stating the test as it appears in the Act, applied an erroneous
test. Counsel for the appellant finds support for his view in paragraphs 7,
303(2) and 345 of the reasons for judgment. I should point out that the
judgment itself, in its subparagraph 2(3), contains a clear conclusion as to
the likelihood of confusion now and for the future.
[37]
The
impugned paragraphs and subparagraph 2(3) of the judgment read as follows:
[7] It is
the Court’s ultimate conclusion that even if confusion did not take place in
the past, it has the potential to exist which, in and of itself is of
major significance.
[Underlined in the original]
[303] (2)
Likelihood of confusion is established when it is proven to exist on a “balance
of probabilities”. The likelihood of confusion has been established in
potential, even if it did not exist in actuality.
[Emphasis added]
[345] Based
on the principles of confusion referred to above, it is concluded that
confusion is possible.
[Emphasis added]
2.
Plaintiff’s Registration No. 263,924 is and always has been invalid, and shall
be expunged on the bases that at all material times:
…
(3)
Use of Plaintiff’s JAGUAR Mark in association with Luggage Wares is
likely to cause confusion with Defendants’ trademark JAGUAR for automobiles and
JAGUAR for Luggage Wares, and therefore:
[Emphasis added]
[38]
The three
statements referred to by the appellant are found in a sea of others regarding
confusion: see paragraphs 298, 302, 303(4), 303(5), 306, 308, 310, 313, 317
and, as already mentioned, in the formal judgment. They are disturbing as they
refer to a possibility of confusion as opposed to a likelihood. A mere
possibility of confusion is not sufficient to invalidate a trade-mark: see Veuve
Clicquot Ponsardin, supra, at paragraph 37; Mattel, Inc. v.
3894207 Canada Inc., 2006 SCC 22, 38 C.P.R. (4th) 214 (F.C.A.); Anheuser-Busch,
Inc. v. Carling O’Keefe Breweries of Canada Ltd., 10 C.P.R. (3d) 433
(F.C.A.). Indeed, the judge’s statement in subparagraph 303(2) of his reasons
waters down the test to a possibility of a probability.
[39]
I agree
with the appellant that the three statements indicate a misconception or
misapprehension of the test. However, that being said, this is not the end of
the matter.
[40]
There were
facts on the record which could lead the judge to conclude that there was
evidence of at least likelihood of confusion, if not actual confusion. First,
the definition that the appellant gave of its “Maroquinerie” included the four
items mentioned in its trade-mark, i.e. tote bags, handbags, school bags and
luggage: see appeal book, volume 2, at page 362, admission D. 356.
[41]
Second,
the respondents’ list of luggage wares included the above four items: see respondents’
appeal book, volume 2, page 697, at paragraph 2 and the definition of luggage
wares in Schedule A, at page 699.
[42]
Third, the
appellant admitted at trial confusion with some of the wares of the
respondents. That admission can be found in volume 1 of the appeal book at page
375. It reads:
Confusion:
D509. The
Plaintiff’s use of the trade-mark JAGUAR in association with the Plaintiff’s
wares is confusing with Jaguar Cars’ trade-mark JAGUAR used in association
with driving license cases, wallet cases, business card holders, belts, credit
card holders, key cases, address books, note books, passport holders, beauty
cases, document cases and pocket wallets:
(1) at
the date of commencement of the action; and
(2) at
present.
[Emphasis added]
[43]
Counsel
for the appellant points out that said admission does not cover the four
previously mentioned items that are an important part of the appellant’s
registered trade-mark and trade. It will be recalled that the judge found these
four items to be, since at least 1980, part of the “natural brand extension or
expansion from luxury cars into Luggage Wares”: see paragraph 213 of the
reasons for judgment.
[44]
In my
view, the matter can be understood as follows: as of 1991 and the time of
trial, the appellant admits the existence of actual confusion between its wares
and respondents’ wares of a slightly different category. Given this admission,
it is hard to imagine how and why the judge could not conclude that there would
be at least a likelihood of confusion between similar wares or wares of the
same category, namely the appellant’s baggage, tote bags, school bags and
handbags and the respondents’ luggage, baggage and bags. He was entitled to
draw that conclusion after having concluded that the respondents’ trade-marks
were famous and extended to the impugned wares.
[45]
Furthermore,
it is the appellant who launched an action for infringement and sought an
injunction against the respondents, alleging that their wares were either
confusing, causing confusion or likely to cause confusion with its own wares.
The respondents counterclaimed, also alleging confusion and that the appellant
was the source of that confusion. The judge found in favour of the respondents.
[46]
In
paragraphs 12, 14d), 15 and 17 of its declaration, the appellant stated:
12. By
virtue of such conduct, the Defendants are infringing Remo’s exclusive right to
the trade-mark JAGUAR in Canada. Defendants’ use of the trade name
JAGUAR and of the Offending Marks is likely to cause confusion in Canada with
Plaintiff’s Trade-Marks.
14. Plaintiff
submits that the abovementioned entries in the Register of Trade-Marks do not
accurately express or define the existing rights of the Defendant J-England
with respect to:
“driving
license cases, wallet cases, business card holders, belts, credit card holders,
key cases, address books, note books, passport holders, beauty cases, document
cases and pocket wallets” (collectively the “Offending Wares”)
for the
following reasons:
…
d)
the Offending Marks were not registrable with respect to the Offending
Wares since they were at all material times and continue to be, confusing with
the Trade-Mark JAGUAR previously registered in Canada by the Plaintiff.
15. The
Offending Wares registered under the Offending Marks, namely:
“driving
license cases, wallet cases, business card holders, belts, credit card holders,
key cases, address books, note books, passport holders, beauty cases, document
cases and pocket wallets”
are clearly
of the same general class or category of wares as those registered and sold
under the Plaintiff’s wide-known Trade-Marks.
17. The
activities of the Defendants in using the Offending Marks JAGUAR and JAGUAR
& Design with respect to Maroquinerie also constitute unfair competition in
that they:
(a)
call attention to the wares and business of Defendants in such a way as to
cause or be likely to cause confusion in Canada between Defendants’ wares and
business and the wares and business of Plaintiff; and
(b) constitute
the passing-off of other wares for those ordered or expected.
[Emphasis added]
[47]
On the
basis of alleged confusion, the appellant sought, from the Federal Court,
relief in the following terms regarding the use of the JAGUAR Mark and Design
with respect to its Maroquinerie:
(a) TO
MAINTAIN the present action;
(b)
TO DECLARE that the adoption and use by Defendants of the Offending
Marks JAGUAR and JAGUAR & DESIGN in connection with Maroquinerie
constitute an infringement of Plaintiff’s exclusive rights in its Trade
Mark JAGUAR registered under No. 263,924;
(c)
TO ISSUE an order for a permanent injunction requiring Defendants,
their directors, officers, shareholders, licensees, clients, representatives,
servants, agents, associates, employees, heirs, assignees and all those over
whom Defendants exercise control or in whom they hold an interest, or any other
persons having any cognizance of the Orders rendered pursuant hereto, to
immediately cease, whether directly or indirectly from:
(i)
infringing or being deemed to infringe Plaintiff’s registration
No. 263,924 for the trade mark JAGUAR;
(ii)
manufacturing, causing to be manufactured, importing, selling,
offering for sale, distributing, advertising, or promoting in Canada with
respect to any Maroquinerie any trade mark or trade name that consists of or
includes the word JAGUAR or any representation of a jaguar or any
combination thereof or any trade mark or trade name that is capable of
causing confusion with Remo’s trade mark JAGUAR;
(iii)
calling the attention of the public to their wares in a manner that
causes or is likely to cause confusion in Canada between
their wares or business and those of Plaintiff;
(iv)
passing-off other wares for those ordered or expected;
(d)
TO ORDER Defendants to remit to Plaintiff all Maroquinerie and
all advertising, publicity materials, signage, literature, papers and all
materials of any kind relating thereto in the possession or custody or under
the control of Defendants or third parties for whom Defendants are responsible
as may offend the injunction sought herein;
[Emphasis added]
[48]
Now, on
appeal of the same proceedings after having lost at trial, the appellant
contended at the oral hearing that there is no confusion between its wares,
consisting of baggage, tote bags, handbags and school bags and all the luggage
wares of the respondents. Its contention came after it abandoned, three days
before the hearing, its claim of infringement by the respondents. The appellant has significantly changed its argument from what it
claimed before the judge. At first instance, it initiated an infringement
action with the intention of preventing the respondents from trading in Maroquinerie
under the name Jaguar. Now, the appellant seeks to have the parties’ uses of
the marks coexist with respect to baggage, tote bags, handbags and schoolbags.
The basis for this position is that, as the parties operate in different
markets, there is no confusion between the parties’ wares. In my view, the fact
that the parties operate in different markets is not sufficient to overrule the
judge’s finding that there was a likelihood of confusion. Nothing in the terms
of either party’s registration confines that party to operation in a particular
market, and the likelihood of confusion therefore remains.
[49]
Furthermore,
paragraphs 101 and 102 of its Memorandum of Fact and Law alleged until then
existing confusion and sought a permanent injunction:
The evidence
has revealed that the Respondents are offering for sale and selling in Canada tote bags,
baggage (suitcases and luggage) and handbags in association with the
trade-mark “JAGUAR” and are continuing to do so to date.
It is
submitted that inasmuch as the Appellant has established the essential elements
set forth in the Standard Knitting case, it is entitled to a declaration
that the Respondents have infringed the Appellant’s exclusive rights in its
trade-mark “JAGUAR” registered under no. 263, 924, as well as the issuance
of a permanent injunction restraining the Respondents, their officers,
directors, licensees, dealers and employees from causing to be manufactured,
importing, offering for sale, selling, advertising or promoting in Canada tote
bags, suitcases, luggage, handbags and any other leather products in
association with the trade-mark “JAGUAR” or any other trade-mark which
is confusingly similar with the Appellant’s trade-mark “JAGUAR”.
[Emphasis added]
[50]
Counsel
for the appellant relies on a statement of L’Heureux-Dubé J. in Sport Maska
Inc. v. Zittrer, [1988] 1 S.C.R. 564 to submit that the appellant’s
pleadings are not binding on this Court. At page 612, she wrote:
A digression
must be made here. In his opinion LeBel J.A. [as he then was] notes that
[TRANSLATION] "the pleadings of respondent [here the appellant] confirm
the way in which it regarded the functions of appellants [here the
respondents]" (p. 393). This "admission" can be found in
paragraph 15 of the statement of claim, where respondent charged that
appellants had broken certain obligations although they had [TRANSLATION]
"agreed to be arbitrators". LeBel J.A. appears to regard this as a
judicial admission.
At the
hearing appellant explained that this word was used not in the legal sense, as
it is found in the Quebec Code of Civil Procedure, but in a very broad
sense as it is used in everyday language, and that, in any event, the
classification of respondents' function was a question of law which could not
be the subject of a judicial admission.
In the very
recent judgment of this Court C.(G.) v. V.-F.(T.), [1987] 2 S.C.R. 244,
in which a similar situation occurred though in a different context, Beetz J.,
delivering the unanimous judgment of the Court, held as follows at p. 257:
At the
hearing, counsel for the appellants conceded that the award of custody to a
third person would amount to a declaration of partial deprivation … This
concession on a point of law is not binding on the Court.
A similar
conclusion must be drawn here.
[51]
The appellant claims that this passage prevents
the Court from relying on its allegation that the parties’ respective uses of
the JAGUAR mark were confusing. There are at least two reasons why Sport
Maska and the current case are distinguishable. First, to state that the
Court is not bound by the parties’ concessions is very different from stating
that a party is not bound by its own statements. It is one thing for a litigant
to adopt alternative positions. It is quite another for a litigant to
simultaneously adopt positions in the same proceedings based on diametrically
opposed interpretations of the same facts, and seek to have the benefit of both
positions. As previously mentioned, the appellant stated initially that there
was confusion between the parties’ marks in all respects; it now states that
there is no confusion between the parties’ marks in respect of baggage, tote
bags, school bags and handbags. The appellant’s success in this argument would
be an internally inconsistent result. As I have already said, if the mark is
confusing for key chains and wallets, it is also confusing for baggage, tote
bags, school bags and handbags.
[52]
Second, while the Supreme Court of Canada in Sport
Maska dealt with a legal concession, the question of confusion is a
question of mixed fact and law with a large factual component. Indeed,
subsection 6(5) of the Act contains a non-exhaustive list of relevant factual
considerations to guide the Court’s analysis of confusion. On a question of
mixed fact and law which depends so heavily on the relevant facts, the Court is
entitled to rely on the facts adopted by the appellant in advancing its
argument that the respondents’ use of the JAGUAR mark was confusing with the
appellant’s registered marks with respect to all wares. That the Court now
relies on these facts in a manner detrimental to the appellant’s interests was
the risk that the appellant took in advancing this particular argument and its
factual underpinnings in the infringement claim before the Federal Court.
Whether
the judge improperly added to section 18 of the Act two grounds of invalidity,
i.e. depreciation and deception of the public, not recognized as such by
Parliament
[53]
Subsection
18(1) of the Act enumerates four grounds of invalidity of a registered
trade-mark:
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18. (1) The registration of a trade-mark is
invalid if:
(a)
the trade-mark was not registrable at the date of registration,
(b)
the trade-mark is not distinctive at the time proceedings bringing the
validity of the registration into question are commenced, or
(c)
the trade-mark has been abandoned,
and
subject to section 17, it is invalid if the applicant for registration was
not the person entitled to secure the registration.
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18. (1) L’enregistrement d’une marque de commerce
est invalide dans les cas suivants :
a) la marque de commerce n’était pas enregistrable
à la date de l’enregistrement;
b) la marque de commerce n’est pas distinctive
à l’époque où sont entamées les procédures contestant la validité de
l’enregistrement;
c) la marque de commerce a été abandonnée.
Sous
réserve de l’article 17, l’enregistrement est invalide si l’auteur de la
demande n’était pas la personne ayant droit de l’obtenir.
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[54]
Non-statutory grounds
of invalidity have been recognized such as misappropriation of a trade-mark in
violation of a fiduciary duty and fraudulent or material misrepresentations for
the purposes of registration: see Fox on Canadian Law of Trade-Marks and
Unfair Competition, (4th ed.), Thomson and Carswell, Toronto, pages 11-24. Depreciation of the value of the goodwill and
deception of the public in the context of the tort of passing off one’s goods
as those of another are not grounds of invalidity under section 18 of the Act.
[55]
The judge analyzed
depreciation within the parameters of section 22 of the Act: see paragraphs
241-284 of the reasons for judgment. Section 22 deals with that issue in the
following terms:
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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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[56]
Subsection 22(1)
provides a remedy, even when there is no evidence of confusion, by which the
respondents in this case may seek relief from the appellant’s use of a mark
sufficiently similar to theirs “to evoke in a relevant universe of consumers a
mental association of the two marks that is likely to depreciate the value of
the goodwill attaching to the [respondents’] mark”: see Veuve Clicquot
Ponsardin, supra, at paragraph 38. That remedy is not a ground of
invalidity of the registration of the appellant’s trade-mark contrary to what
the judge found at paragraph 331 of his reasons for judgment.
[57]
As for deception of
the public, the judge relied upon the 1924 decision of the Exchequer Court of
Canada in Williamson Candy Co. v. W.J. Crothers Co., [1924] Ex. C.R. 183
where expungement of the mark was ordered. The judge’s analysis of this issue
of deception in the case before us was conducted under the discussion of the
depreciation factors and treated as a possible kind of depreciation: see the
reasons for judgment at pages 203, 205 and 210 of the appeal book, volume 1.
[58]
There are two
difficulties with the judge’s reliance on the Williamson case for
expungement of the appellant’s registration in the present instance.
[59]
First, the defendant
in that case appropriated the mark of the plaintiff Williamson and
concealed the fact that he was copying the plaintiff’s mark when he applied for
registration. The Exchequer
Court found that the
defendant was not the proprietor of the mark and not an innocent user, that the
registration of the trade-mark had been improperly made and, therefore, should
be expunged.
[60]
In our instance, the
situation is different as there is no such finding with respect to the
appellant’s trade-mark and registration. Though expressing some surprise, the
judge accepted the testimony of Mr. Bassal, the sole shareholder, President and
Chief Executive Officer of the appellant, who had lived in Beirut, Paris and
Montreal for years, and traveled in Canada, Holland, Belgium, Northern Italy
and Asia (Hong Kong and Korea): see reasons for judgment at paragraphs 12 to
24. According to that testimony, Mr. Bassal never saw or heard of the
respondents’ trade-marks JAGUAR for cars and luggage wares before he filed, on
October 10, 1980, his application for the registration of the trade-mark JAGUAR
covering tote bags and baggage: ibidem. Indeed, he claimed that it was
not until 1990 that he became aware of Jaguar cars: ibidem, at paragraph
225. The judge also accepted that the respondents did not know of the existence
of the appellant when the appellant launched its proceedings in 1991. On these
facts alone, the Williamson case is clearly distinguishable and no
authority for expungement in the present instance.
[61]
In addition, section
11 of the 1906 Trade-Marks Act upon which the Williamson case is
based gave the Minister the power to refuse to register any trade-mark if it
appeared that the trade-mark was calculated to deceive or mislead the public:
see Williamson Candy Co., supra, at paragraph 6. This is no
longer the case although the Court, on an appropriate set of facts, could still
find, when registration is sought, that a trade-mark is not adapted to
distinguish the wares of the registrant because the trade-mark and its use are
calculated to deceive and mislead the public: see E.&J. Gallo Winery v.
Andres Wines Ltd., [1976] 2 F.C. 3, at pages 17 and 18 (F.C.A.). The Exchequer Court made a finding that the defendant’s
registration was calculated to deceive or mislead the public and for that
reason also should be expunged: Williamson Candy Co., supra, at
paragraph 16.
[62]
Again, in the present
instance, there is no finding made by the judge that the appellant knew of the
respondents’ trade-marks, that it was not the proprietor of the mark that it
registered and that it knew that it was not the first user of the mark. These
were all considerations that the Exchequer Court of Canada retained to ground
its finding that the defendant’s registration in the Williamson case was
calculated to deceive and mislead the public.
[63]
With respect, in the
context of his analysis of the factors of depreciation of the goodwill attached
to the respondents’ trade-marks under section 22 of the Act and on the basis of
the evidence before him, I do not think that the judge could conclude, as he
did, that the appellant’s registration of its trade-mark was “invalid and vulnerable
to expungement” because it was calculated to deceive and mislead the public:
see paragraphs 285 to 297 and 331 of the reasons for judgment.
Whether
the judge erred in expunging the appellant’s trade-mark on a prior use when the
limitation period contained in subsection 17(2) of the Act had run
[64]
Section 17 of the Act
allows for the expungement of the registration of a trade-mark on the ground of
prior use by a person other than the applicant for that registration. However,
subsection 17(2) denies the right to an expungement when the proceedings are
commenced after the expiration of five years from the date of the registration
of the trade-mark. The five-year limitation period applies unless it is
established that the person who adopted the registered trade-mark knew of the
previous use.
[65]
I reproduce section
17 in full since my summary left out some details not relevant for our purpose:
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17. (1) No application
for registration of a trade-mark that has been advertised in accordance with
section 37 shall be refused and no registration of a trade-mark shall be
expunged or amended or held invalid on the ground of any previous use or
making known of a confusing trade-mark or trade-name by a person other than
the applicant for that registration or his predecessor in title, except at
the instance of that other person or his successor in title, and the burden
lies on that other person or his successor to establish that he had not
abandoned the confusing trade-mark or trade-name at the date of advertisement
of the applicant’s application.
(2)
In proceedings commenced after the expiration of five years from the date of
registration of a trade-mark or from July 1, 1954, whichever is the later, no
registration shall be expunged or amended or held invalid on the ground of
the previous use or making known referred to in subsection (1), unless it is
established that the person who adopted the registered trade-mark in Canada
did so with knowledge of that previous use or making known.
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17. (1) Aucune demande d’enregistrement d’une
marque de commerce qui a été annoncée selon l’article 37 ne peut être
refusée, et aucun enregistrement d’une marque de commerce ne peut être radié,
modifié ou tenu pour invalide, du fait qu’une personne autre que l’auteur de
la demande d’enregistrement ou son prédécesseur en titre a antérieurement
employé ou révélé une marque de commerce ou un nom commercial créant de la
confusion, sauf à la demande de cette autre personne ou de son successeur en
titre, et il incombe à cette autre personne ou à son successeur d’établir
qu’il n’avait pas abandonné cette marque de commerce ou ce nom commercial
créant de la confusion, à la date de l’annonce de la demande du requérant.
(2)
Dans des procédures ouvertes après l’expiration de cinq ans à compter de la
date d’enregistrement d’une marque de commerce ou à compter du 1er juillet
1954, en prenant la date qui est postérieure à l’autre, aucun enregistrement
ne peut être radié, modifié ou jugé invalide du fait de l’utilisation ou
révélation antérieure mentionnée au paragraphe (1), à moins qu’il ne soit
établi que la personne qui a adopté au Canada la marque de commerce déposée
l’a fait alors qu’elle était au courant de cette utilisation ou révélation
antérieure.
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[66]
In paragraph 5 of his
reasons for judgment, the judge accepted that the appellant and the respondents
did not know of the existence of each other at the outset of the proceedings.
He wrote:
…it is noted that both
parties, respectively, claim that each, at the executive levels, did not know
of the existence of the other at the outset of the legal proceedings; and the
evidence itself, even if interpreted conversely by the respective parties, did
not demonstrate otherwise; thus the parties should be made to live with the
consequences thereof for the past.
[67]
In view of this
finding, the appellant submits, and the respondents do not challenge that
submission, that the judge erred in ordering expungement of the registration of
its trade-mark on the basis of prior use. I agree.
Whether
the judge erroneously expunged the appellant’s trade-mark on the basis that the
trade-mark was invalid because it was not registrable on account of confusion
and because it was not distinctive from the wares of the respondents
[68]
I have already dealt
with the issue of confusion. In view of the evidence supporting the judge’s
conclusion that there was in 1980, 1990, 1991, and still today, a likelihood of
confusion, if not actual confusion, with the respondents’ trade-marks JAGUAR
for automobiles and for Luggage Wares resulting from the appellant’s use of its
JAGUAR mark in association with baggage, tote bags, handbags and schoolbags, I
find no merit in the appellant’s argument based on paragraphs 18(1)(a)
(confusion) and (b) (lack of distinctiveness) of the Act: see paragraph
2(3) of the judgment. Indeed, the appellant alleged in paragraph 15c) of its
statement of claim in the Federal Court, found at page 250 of volume 1 of the
appeal book, that the offending marks were not distinctive of the respondents (defendants
at the Federal Court):
15.
…
c) the
Offending Marks are not distinctive of the Defendant as they do not actually
distinguish all the wares in association with which the Offending Marks are
registered from the wares of others, nor are they adapted to so distinguish them,
nor have they ever been distinctive of the Offending Wares of Defendants; and
[69]
Moreover, the
appellant submitted in paragraph 95 of its Memorandum of Fact and Law that absent
fame, and the requisite ambit of protection, of the respondents’ trade-marks,
its own trade-mark acquired distinctiveness as of March 6, 1992 through its
use, advertising and attendance at trade shows. In view of the judge’s finding
that the respondents’ trade-marks had acquired fame in 1980 and an extended
ambit of protection, I see no error in the judge’s conclusion that, at all
material times, the appellant’s mark JAGUAR has never been distinctive: see
paragraph 2(4) of the judgment. That being said, I wish to add the following.
[70]
I have already
alluded to the ambiguity brought about by the judge’s use of loose language
when addressing the issue of confusion resulting from the use of the
respondents’ and appellant’s respective mark in association with Luggage Wares,
including baggage, tote bag, handbag and schoolbag: see supra at paragraphs
7 and 37 to 51.
[71]
This problem is
compounded by the fact that the judge added at the beginning of his reasons for
judgment, under the heading “introduction”, an unfortunate summary of these
reasons in terms that both parties on appeal have been focusing on and
struggling with.
[72]
For example, the
judge writes in paragraph 5 (see also paragraph 235):
…by corollary,
therefore, and even more so, it then becomes readily apparent through the
evidence that the respective clienteles of the respective parties were
different, as was the marked separation in the market place of the respective
products of both parties. Remo sells its accessories, mainly, to low-end and
sometimes medium-range retail stores; whereas, Jaguar cars sells its
accessories either through its automobile dealerships or directly to its buyers
with no intermediary.
[73]
Needless to say that
the appellant is quick to seize upon this statement as evidence of the distinctiveness
of its wares sold in different markets and as a finding of a lack of confusion.
[74]
At paragraph 7 of
this summary, the judge writes:
It is the Court’s
ultimate conclusion that even if confusion did not take place in the
past, it has the potential to exist.
[This last underlining appeared in the original]
[75]
The words “even if”
refer to a hypothetical situation and do not mean that there is no confusion in
the present case. The judge found that, at all material times, there was a
likelihood of confusion: see subparagraph 2(3) of the judgment and the
appellant’s claim of actual confusion discussed in paragraphs 37 to 51.
[76]
A careful reading of
paragraphs 5, 6 and 7 of this summary shows that these statements are limited
in their scope to the issue of damages and were made by the judge in support of
his conclusion that no damages should be granted for the past. I will come back
to that question when assessing the merits of the respondents’ cross-appeal.
Whether the judge erred in granting the respondents an
injunction
[77]
For reasons already
expressed, I find no merit in this argument.
Conclusion on the appeal
[78]
I would allow the
appeal to the limited extent of setting aside the conclusions of the judge
that:
a) the appellant’s
registration has always been invalid by deleting from the first sentence of
paragraph 2 of the judgment the words “and has always been”;
b) the use of the
appellant’s JAGUAR mark in association with Luggage Wares is likely to
depreciate the value of the goodwill attaching to Jaguar Cars Limited’s
Registrations for JAGUAR marks for automobiles by deleting paragraph 2(1) of
the judgment; and
c) the use of the
appellant’s JAGUAR mark in association with Luggage Wares could potentially
deceive and mislead the public by deleting paragraph 2(2) of the judgment.
The merits of the cross-appeal
[79]
In his formal
judgment, the judge ruled that the appellant’s Registration No. 263,924 is
and always has been invalid and shall be expunged (emphasis added). He came
to the conclusion that at all material times, there was:
a)
a likelihood of depreciation of the value of the goodwill attached to
the respondents’ mark;
b) a potential
deception and misleading of the public resulting from the appellant’s use of
the JAGUAR mark with Luggage Wares;
c) a likelihood of
confusion with the respondents’ trade-marks for cars and Luggage Wares; and
d) a lack of
distinctiveness of the appellant’s trade-mark.
[80]
The key passages
relating to damages are found in paragraphs 5, 6, 7, 347, 348 and 349 of the
reasons for judgment and in paragraph 6 of the judgment. I reproduce them as
they appear in the reasons for judgment:
[5] Therefore, in
regard to the surveys and the evidence of the experts, the Court, further to
reflection, is in basic agreement with the analysis of the Plaintiff, yet, in
and of itself, that does not alter the Court's analysis, reached in conclusion,
after consideration of the evidence as a whole. Although the ultimate outcome
remains the same as that argued by the Defendants, in terms of the
interpretation of the law, doctrine and jurisprudence, it is noted that both
parties, respectively, claim that each, at the executive levels, did not know
of the existence of the other at the outset of the legal proceedings; and the
evidence itself, even if interpreted conversely by the respective parties, did
not demonstrate otherwise; thus, the parties should be made to live with the
consequences thereof for the past; by corollary, therefore, and even more so,
it then becomes readily apparent through the evidence that the respective
clienteles of the respective parties were different, as was the marked
separation in the market place of the respective products of both parties. Remo
sells its accessories, mainly, to low-end and sometimes medium-range retail
stores; whereas, Jaguar Cars sells its accessories either through its
automobile dealerships or directly to its buyers with no intermediary.
[6] Therefore, the
Plaintiff is not ordered to pay any exemplary, punitive or other damages;
nevertheless, as explained in the reasons of the judgment below, the Defendants
have a right to their "famous" trademark, thus, the Plaintiff's
trademark, bearing the name Jaguar is to be expunged.
[7] It is the Court's
ultimate conclusion that even if confusion did not take place in the past, it
has the potential to exist which, in and of itself, is of major
significance. Again, since each party, at its executive levels, claims it did
not "consciously" or "directly" know of the existence of
the other prior to the outset of legal proceedings, neither party should be
financially accountable to the other for the past, nor should either party
suffer financial consequences based on that past (other than costs which remain
to be determined); with respect to the future that would be a different matter,
and therefrom flows the judgment.
[347] The law
assumes, or presumes, that if the goodwill of a man's business has been
interfered with by the passing off of goods, damage results therefrom. He
need not wait to show that damage has resulted, (Sun Life).
[348] It is concluded
that Remo has infringed Jaguar Cars registered trademarks and passed off its
wares contrary to s.19, 20, 7(b) and 7(c) of the Trade-marks
Act.
[349] Jaguar Cars
is therefore entitled to the following relief: A declaration that Remo's
registration is invalid and Jaguar Cars' trademarks have the potential to be
depreciated, infringed and passed off, as well as the issuance of an injunction
(Whiten; Apotex).
and
in the judgment:
6. Plaintiff shall
not pay to the Defendants any exemplary, punitive or other monetary damages
because until now, no monetary damages have been proven. The respective
clienteles and markets of the respective parties have been separate until now;
however, that may not be the situation for the future.
[81]
The parties agree in
their submissions that all these statements are not easy to reconcile. For
example, the judge ruled at paragraphs 347 and 348 of the reasons for judgment
and at paragraph 2(1) of the judgment that damage is presumed when the goodwill
has been interfered with by the passing off of goods, that the appellant
infringed the respondents’ trade-marks and passed off its wares in violation of
paragraphs 7(b) and (c) and of sections 19 and 20 of the Act, and
there was a likelihood of depreciation at all material times, that is to say
since 1980. Yet, in the same breath, in paragraph 349, he shows a willingness
to issue, as a remedy, a declaration which contradicts his earlier findings,
namely that the respondents’ trade-marks “have the potential to be depreciated,
infringed and passed off”.
[82]
The judge’s reasons
leave the impression that he had a desire not to award damages for the past,
but to leave the door open for the future. I think that he came to the right
result, but for reasons which confuse the issue of damages.
[83]
The respondents argue
in their cross-appeal that the judge erred in finding that there was no
evidence of damages and in failing to order a reference as to damages or
profits in accordance with the Order of Teitelbaum J. issued on November 18,
1998.
[84]
That Order was issued
pursuant to Rules 153 et seq of the Federal Court Rules, 1998 and
used the language of former Rule 480 of the Federal Court Rules, C.R.C.
1978, c. 663. The gist of that Order is found in paragraph 1 and reads:
1. IT IS ORDERED
that the questions of:
(1) the extent of
the infringement of any rights of any party;
(2) the damages
flowing from any infringement of any rights of any party; and
(3) the
profits arising from any infringement of any rights of any party, if any, be,
after trial, the subject of a reference under Rule 153 I et seq if it
then appears that such questions need to be decided.
[85]
The judge found
likelihood of confusion and passing off from 1980 to present. In assessing the
relevant circumstances under subsection 6(5) of the Act, he took into
consideration the fact that the appellant and the respondents operated in
different channels of trade. Having so concluded, the respondents submit that
the judge could not rule that there were no damages for the past on the basis that
the parties exploited different channels of trade.
[86]
With respect to
depreciation of the value of the goodwill attached to their trade-marks, the
respondents argue that the finding of passing off by the judge required a
finding of damage. Therefore, he could not later find that there was no damage
for the past, once again on the basis that the parties were not trading in the
same channels.
[87]
Finally, the
respondents aver that the judge, having found that the appellant’s registration
was void ab initio (the judge ruled that the appellant’s registration is
and always has been invalid and has never been registrable), should have made the
appellant financially accountable for the past. Alternatively, compensation
should be available to them either as of the date the appellant was made aware
that the respondents were challenging the validity of its registration, or as
of the date of the judgment by the Federal Court.
[88]
The appellant did not
appeal directly against the judge’s finding of passing off. However, counsel
for the appellant contends that his client is not liable for damages until the
appellant’s registration was declared invalid. He also supports the findings of
the judge that there was no evidence of damages for the past resulting from
confusion or depreciation.
[89]
Three components are
necessary for a passing-off action: the existence of a goodwill, deception of
the public due to a misrepresentation and actual or potential damage to the
plaintiff: see Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120,
at page 132; Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 302, at
paragraphs 66 to 69. Misrepresentation is not limited to willful
misrepresentation: it also covers negligent or careless misrepresentation: ibidem,
at paragraph 68.
[90]
I should point out that, in stating the three components of
a passing-off action, Gonthier J. quoted from Lord Oliver in Reckitt &
Colman Products Ltd. v. Borden Inc., [1990] 1 all. E.R. 873, at page 880.
However, when referring to damages, Lord Oliver retained actual damage or
likelihood of damage as the third component, as opposed to merely potential
damage. In Fox on Canadian Law of Trade-marks and Unfair Competition,
previously cited, at page 4-83, the authors also speak in terms of likelihood
of damage and cite the Ciba-Geigy Canada Ltd. case in support of their
statement of that part of the test. These authorities, taken together with the
fact that damages are assessed on the standard of likelihood in other
trade-mark matters, lead me to conclude that the third component of a
passing-off action requires proof of actual damage or the likelihood of damage:
see Veuve Clicquot Ponsardin, previously cited, at paragraphs 37-38,
maintaining the standard of likelihood for both the issues of confusion and
depreciation. Accordingly, when Gonthier J. used the term “potential damage” in
Ciba-Geigy Canada Ltd., I believe that he used the phrase to mean
damages that had not actually occurred. He did not set the standard for
establishing damages in actions of passing off as anything lower than proof of
the likelihood of damages.
[91]
I confess that I am
at a loss to understand how and why the judge in the case at bar could have
come to the conclusion, on the basis of the evidence before him, that the
appellant passed off its wares as those of the respondents and ruled the
appellant’s Registration No. 263,924 to have always been invalid.
[92]
The appellant validly
registered its trade-mark in 1981 for tote bags and luggage and amended it in
1984 for handbags and school bags. As previously mentioned, both parties to the
proceedings were unaware at the time, and until 1991, of the existence of each
other. The judge did not impugn the credibility of either party. How then can
it be said that the appellant engaged in a willful or negligent misrepresentation
creating confusion in the public when it did not know of the existence of the
respondents’ trade-marks, applied publicly and without opposition for a
registration of, and subsequent amendments to, its own mark, and operated in
channels of trade different from those of the respondents?
[93]
It is true that in
1999, therefore after it knew of the existence of the respondents, the
appellant launched a massive Canada-wide advertising campaign of its wares
bearing its JAGUAR mark. However, at the time, the appellant’s law suit for
infringement against the respondents was pending although the respondents’
counterclaim seeking expungement of the appellant’s registration had been
filed.
[94]
These are the only
facts related by the judge even remotely linked to a finding of
misrepresentation. However, he draws no adverse inference or conclusion from
them. Even if he did find misrepresentation in these facts, it would still not
explain his implicit finding that misrepresentation existed since 1981, i.e.
the date of the registration of the appellant’s trade-mark.
[95]
Since the appellant
did not appeal against the judge’s conclusion with respect to passing off, I
will refrain from deciding that issue. I will, however, address the question of
damages, beginning with depreciation of the goodwill.
Damages resulting from depreciation of goodwill
[96]
The judge made a
finding pursuant to section 22 of the Act that use of the appellant’s mark in
association with luggage wares is likely to depreciate the value of the
goodwill attaching to Jaguar Cars Limited’s Registrations for JAGUAR marks for
automobiles.
[97]
In Veuve Clicquot
Ponsardin, supra, the Supreme Court of Canada laid a stringent test
in relation to depreciation. While depreciation of the value of the goodwill
attaching to a mark may exist in the absence of confusion, there has to be a
link, connection or mental association in the consumer’s mind between the
appellant’s display and the respondents’ famous trade-marks JAGUAR in order
that depreciation of the latter be found: see paragraph 49 of the above
decision.
[98]
The existence of the
linkage or mental association is not to be assumed. At paragraph 56, Binnie J.
wrote:
If the somewhat-hurried
consumer does not associate what is displayed in the respondents’ store with
the mark of the venerable champagne maker, there can be no impact – positive or
negative – on the goodwill attached to Veuve CLICQUOT.
[99]
The same is true
here. If the hurried consumer at Zellers, K-Mart, Giant Tiger and Sears, where
the appellant is selling its wares, does not associate what is displayed there
with the JAGUAR mark for automobiles, then there is no impact on the goodwill
attached to Jaguar cars.
[100]
Furthermore,
depreciation is not to be presumed. It has to be proven and mere possibility of
depreciation is not sufficient. Evidence of at least a likelihood of
depreciation is required: ibidem, at paragraphs 60 and 67.
[101]
The judge found that
use by the appellant of its mark JAGUAR in association with Luggage Wares is
likely to depreciate the value of the goodwill attaching to the respondents’
trade-marks JAGUAR for automobiles: see paragraph 2(1) of the judgment.
[102]
While the judge did a
theoretical review of the law relating to depreciation, his analysis of the
evidence is too broad and unspecific.
[103]
The judge rejected
all expert evidence submitted by the respondents. One is then left with the
evidence that the respondents, as of 1980, sold expensive and luxurious cars
and that, at the same period, the appellant sold inexpensive bags. While the
appellant’s claim of confusion may be sufficient to ground a finding that there
was a linkage between the parties’ marks in the mind of the somewhat hurried
consumer, there is still not enough evidence on the record to establish a
likelihood of depreciation of the respondents’ JAGUAR mark for cars. The judge
does not draw any attention to which evidence could lead to such a holding, and
I cannot conclude on the mere basis of the unequal quality or price of the
parties’ goods that a likelihood of depreciation has been established.
[104]
In the end, I do not
think that the respondents have met their burden of proving depreciation and
that an inference of likelihood of depreciation can be drawn from the record.
[105]
The reference ordered
by Teitelbaum J. applies to damages or profits flowing from any infringement.
It applies to an infringement claim pursuant to section 20 of the Act. It does
not extend to a claim of depreciation under section 22. As the Supreme Court of
Canada ruled in the Veuve Clicquot Ponsardin case, at paragraph 69, the
likelihood of depreciation is one of the elements of the cause of action and it
needs to be established for the claim to succeed before the extent of said
depreciation can be determined by way of reference.
Damages for the past
[106]
The respondents invoke
three decisions to support their contention that the judge was right in
concluding that the appellant’s registration was void ab initio: Marchands
RO-NA Inc. v. Tefal S.A., 55 C.P.R. (2d) 27 (F.C.T.D.); W.J. Hughes
& Sons “Corn Flower” Ltd. v. Morawiec (1970), 62 C.P.R. 21 (F.C.T.D.);
and Unitel Communications Inc. v. Bell Canada (1995), 61 C.P.R. (3d) 12
(F.C.T.D.).
[107]
The Marchands
RO-NA Inc. and Unitel Communications Inc. cases are distinguishable
from the present instance. In the first case, the registration had been
obtained on misleading evidence and, in the second, the marks were improperly
registered on the basis of false declarations of use.
[108]
As for the W.J.
Hughes & Sons “Corn Flower” Ltd. case, it dates back some 37 years and many
reasons were given for declaring void ab initio the registration of the
trade-mark: the plaintiff did not intend to use the design or pattern as a
trade-mark, never used the trade-mark as a trade-mark since the date of
registration (August 11, 1951) to 1970, the pattern or design was not the
subject of a trade-mark within the meaning of paragraph 2(m) of the Unfair
Competition Act, 1932 in that, as employed, it had a functional use or
characteristic being ornamental and that its intended use was solely for such
functional purpose. At page 11 of the reasons for judgment, Gibson J. wrote:
But there could have
been no valid registration of this pattern or design to be applied on glassware
for ornamentation or functional use only. If the intention to do this latter
only had been conveyed to the Registrar at the time of the application in 1951,
he probably would have refused registration.
[109]
At the time,
intention to use as a trade-mark was one of the bases for valid registration
and the plaintiff lied as to its true intention when it declared that the
pattern or design was to be used for trade-mark purposes. Again, this is a
situation quite different from the one prevailing in the present instance.
[110]
In the case at bar,
the appellant had a valid registration until found invalid and expunged by the
judge in 2006. There were no misrepresentations made by the appellant at the
time of registration. There is no finding by the judge that the appellant was
acting in bad faith at that time although no satisfactory explanation was given
as to why the appellant changed the names “Beau Sac” and “Sacsibo” of its bags
and moved to register its trade-mark JAGUAR in 1981. The judge concluded that
there was evidence of likelihood of confusion at the time of the proceedings in
1991 and that this likelihood of confusion would remain if the appellant’s
trade-mark were allowed to stay on the registry. I think that, in the
circumstances, the appellant is entitled to the benefit of section 19 of the
Act which reads:
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19. Subject to sections
21, 32 and 67, the registration of a trade-mark in respect of any wares or
services, unless shown to be invalid, gives to the owner of the trade-mark
the exclusive right to the use throughout Canada of the trade-mark in respect of those wares
or services.
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19. Sous réserve des articles 21, 32 et 67,
l’enregistrement d’une marque de commerce à l’égard de marchandises ou
services, sauf si son invalidité est démontrée, donne au propriétaire le
droit exclusif à l’emploi de celle-ci, dans tout le Canada, en ce qui
concerne ces marchandises ou services.
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[111]
The case
law stands for the proposition “that the use of a registered trade-mark is an
absolute defence to an action in passing off” where there is no significant
difference between the mark as registered and the mark as used: see Jonathan,
Boutiques Pour Hommes Inc. v. Jay-Gur International Inc. (2003), C.P.R. (4th)
492, at paragraphs 4 and 6 (F.C.).
[112]
A similar
conclusion was reached by the British Columbia Court of Appeal in Chemicals
Inc. and Overseas Commodities Ltd. v. Shanahan’s Ltd. (1951), 15 C.P.R. 1,
at page 13 and by the Ontario Court of Appeal in Molson Canada v. Oland
Breweries Ltd. (2002), 19 C.P.R. (4th) 201. In this last case, at
paragraph 16, Carthy J.A., writing for the Court, said:
[16] My
conclusion from this review of the case law is that the respondent is entitled
to use its mark throughout Canada in association with its beer. If a
competitor takes exception to that use its sole recourse is to attack the
validity of the registration. If it were otherwise, a plaintiff complaining of
confusion caused by a competitor’s registered mark would himself be infringing
on the mark by establishing that confusion. This follows from s. 20 of the Act,
which provides that a registered mark is deemed infringed by a person who sells
wares with a confusing trade-mark or trade name.
[113]
This legal
conclusion also finds support in the following obiter from Binnie J., at
paragraph 16 of his reasons for judgment in the Veuve Clicquot Ponsardin
case:
16. The
respondents say that the 1997 registration of their trade-mark Cliquot
and Cliquot “Un Monde à part” is a complete answer to the
appellant’s claim. I do not agree. The appellant has put the validity of the
registrations in issue and seeks expungement. Were the appellant to succeed
in obtaining expungement, no doubt the respondents could argue that they ought
not to be liable to pay compensation attributable to the period during which
their own registrations were in effect. However, as the appellant has not
succeeded on this appeal, the scope of compensation is not an issue that arises
for determination in this case.
[Emphasis added]
[114]
In my respectful
view, the respondents are entitled to damages or profits for infringement, but
only as of January 16, 2006 which is the date of the judgment of the judge.
Whether a reference should be ordered
[115]
The appellant was
enjoined by the judge to cease selling its wares with the JAGUAR mark. However,
by an Order of Blais J. rendered on February 13, 2006, the judgment was stayed
in part and the appellant has continued selling its wares. A reference should
therefore be made to determine the extent of the infringement since January 16,
2006 and the damages or profits flowing from that infringement.
Conclusion on the cross-appeal
[116]
I would allow the
cross-appeal with costs and set aside paragraph 6 of the judgment. Proceeding
to render the judgment that should have been rendered, I would send the matter
back to the Federal Court to determine whether the respondents, if they so desire,
are entitled to elect for an accounting of profits instead of damages. Pursuant
to the Order of Teitelbaum J., I would refer to the Federal Court the issue of
the extent of the infringement as well as that of damages or profits, as the
case may be, for a determination of their quantum as a result of the
appellant’s infringing activities since January 16, 2006.
[117]
The stay of judgment
sought by the appellant in the Federal Court was for the duration of the
present appeal. However, the Order issued by Blais J. fixes no limit on the
duration of the stay. Consequently, I would order that the partial stay of the
Federal Court decision ceases to have effect on the release of the decision of
this Court to the parties.
[118]
I would also order
that:
a) the money held in
trust by respondents’ counsel pursuant to the Order of Blais J. dated February
13, 2006 be applied towards damages or profits found on the reference; and
b) the sum
of $100,000 held in trust by respondents’ counsel as a security for costs of
the appeal be applied to the costs of the appeal and cross-appeal ordered in
favour of the respondents.
[119]
Finally, pursuant to
section 37 of the Federal Courts Act, I would order that the appellant
pay to the respondents post-judgment interests at a rate that the Federal Court
considers reasonable in the circumstances.
Summary of findings on the appeal and cross-appeal
[120]
For the sake of
clarity, I think that I should summarize the principal findings made in these
reasons for judgment since some of them are not reflected in the formal
judgment.
[121]
I agree with the
judge that the respondents’ trade-marks JAGUAR for automobiles, luggage wares
and other related accessories were famous by 1980, 1990 and still are today.
[122]
I also agree with his
finding that there is a likelihood of confusion between the appellant’s
trade-mark and wares and those of the respondents since 1991 to the present
time and that the appellant infringed the respondents’ trade-mark. Accordingly,
the judge made no mistake when he issued a permanent injunction against the
appellant and an order to destroy or deliver up all material contrary to the
injunction that is in the possession or within the power, custody or control of
the appellant.
[123]
The judge rightly
concluded that the registration of the appellant’s mark was invalid and should
be expunged. However, I believe that, on the basis of the evidence that he
accepted, he could not declare void ab initio the appellant’s
registration of its trade-mark.
[124]
I also disagree with
the judge’s interpretation of section 22 of the Act whereby he made
depreciation of the goodwill and deception of the public grounds of invalidity
of a registration pursuant to section 18 of the Act.
[125]
In the same vein, I
do not think that the evidence on the record supports his conclusion that there
is a likelihood of depreciation of the goodwill attached to the respondents’
trade-marks JAGUAR.
[126]
I also believe that
he was mistaken when he expunged the registration of the appellant’s trade-mark
on the basis that it was calculated to deceive and mislead the public and on
the basis of a prior use when the limitation period of five years had run.
[127]
With respect to
damages, the judge did not err in concluding that the appellant should not be
made liable for damages in the past. However, I come to the same conclusion for
different reasons.
[128]
Since there was no
appeal of the judge’s decision regarding passing off, I do not interfere with
his finding that the appellant passed off its wares for those of the
respondents.
[129]
Finally, since the
appellant has continued to sell its wares after the release of the judge’s
decision, I have concluded that:
a) The respondents
are entitled to seek a determination by the Federal Court of their right to
elect for an accounting of profits;
b) On their claim of
infringement, the respondents are entitled to a reference to have determined
the extent of that infringement as well as the quantum of damages or profits,
as the case may be, resulting from the appellant’s infringing activities since
January 16, 2006; and
c) The respondents
are entitled to post-judgment interests at a rate that the Federal Court
considers reasonable in the circumstances.
“Gilles
Létourneau”
“I
agree
Robert
Décary J.A.”
“I
agree
Johanne
Trudel J.A.”
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