Dockets: A-5-16
A-33-16
Citation:
2017 FCA 96
CORAM:
|
STRATAS J.A.
GLEASON J.A.
WOODS J.A.
|
BETWEEN:
|
VENNGO INC.
|
Appellant
|
and
|
CONCIERGE
CONNECTION INC. c.o.b. as PERKOPOLIS, MORGAN C. MARLOWE and RICHARD THOMAS
JOYNT
|
Respondents
|
REASONS
FOR JUDGMENT
GLEASON J.A.
[1]
Venngo Inc. appeals from the December 3, 2015 judgment
of the Federal Court (per Manson J.) in Venngo Inc. v. Concierge
Connection Inc. c.o.b. as Perkopolis, Morgan C. Marlowe and Richard Thomas
Joynt, 2015 FC 1338, 262 A.C.W.S. (3d) 465 [Venngo] in which the Federal
Court dismissed Venngo’s claims for trade-mark infringement and related actions.
Venngo also appeals from the January 7, 2016 costs order of the Federal Court granting
costs in the respondents’ favour in the lump sum amount of $231,000 (Venngo
Inc. v. Concierge Connection Inc. c.o.b. as Perkopolis, Morgan C. Marlowe and
Richard Thomas Joynt, unreported Federal Court order, docket T-467-11 [Costs
Order]).
[2]
For the reasons that follow, I would dismiss the
appeal from the judgment on the merits, but would allow the costs appeal on the
basis outlined below and would remit the matter of costs to the trial judge for
re-determination in accordance with these reasons.
I.
Background and the Decisions of the Federal
Court
[3]
Both Venngo and the respondent, Concierge
Connection Inc. (CCI), provide discount benefit and incentive programs to Canadian
organizations to facilitate the organizations’ extension of perks to their own
employees or members. The organizations sign contracts with either Venngo or
CCI, which, in turn, offer discounts on various products and services, such as entertainment
tickets, spa visits, hotel stays, car rentals or fitness club memberships to
the participating organizations’ members or employees. Human resources
representatives from client organizations are generally the points of contact
for Venngo and CCI. At the time of trial, Venngo and CCI were the only two such
providers in Canada.
[4]
Venngo was founded in 2000 and from 2007
onward has offered access to a wide range of perks to its clients’ members or
employees across various sectors, using several trade-marks in connection with
its business. It filed and registered the following trade-marks that are
relevant to this appeal:
Trade-mark
|
Filed on:
|
Declared Use:
|
Registered:
|
WORKPERKS
|
May 4, 2007
|
Aug. 17, 2009
|
Sept. 15, 2009
|
MEMBERPERKS
|
May 4, 2007
|
Jan. 18, 2011
|
Feb. 28, 2011
|
ADPERKS
|
May 4, 2007
|
April 9, 2009
|
April 30, 2009
|
PARTNERPERKS
|
May 7, 2008
|
Aug. 13, 2009
|
Sept. 10, 2009
|
CLIENTPERKS
|
May 29, 2009
|
May 7, 2010
|
June 8, 2010
|
CUSTOMERPERKS
|
May 29, 2009
|
May 7, 2010
|
June 9, 2010
|
[5]
Venngo’s trade-marks were registered in
reference to a broad category of wares and services. For example, as noted by
the Federal Court, the description of the wares and services for the WORKPERKS
mark provides:
WARES/MERCHANDISE
Computer software,
namely internet software for portal applications, networking, business to
business (B2B) communications, business to consumer (B2C) communications,
marketing, product and service distribution.
SERVICES
Providing packaged
employee saving and value added programs delivered online and through printed
publications; Providing online facilities and printed publications to allow
companies to advertise and market products and services; Providing services
designing, creating, hosting, maintaining, operating, managing, advertising and
marketing savings and value-added programs; Providing software interfaces
available over the internet with multiple users access to a wide range of
information.
[6]
CCI was incorporated in 2001. It initially
operated in Toronto and offered an employee discount ticket and attraction
program. By 2011, it expanded its offerings to sixteen categories, providing
access to a wide variety of discounts beyond entertainment and attractions.
[7]
CCI filed an application to register the
trade-mark PERKOPOLIS on November 28, 2008 in reference to “Entertainment ticket sales and Hotel bookings services”.
CCI began using the PERKOPOLIS trade-mark in 2009, and it was registered on
March 1, 2011. By that time, CCI was using the PERKOPOLIS mark in respect of a
variety of goods and services beyond hotel bookings and entertainment ticket
sales. When CCI’s application for the PERKOPOLIS mark was filed, Venngo’s
applications for WORKPERKS, MEMBERPERKS, ADPERKS and PARTNERPERKS had already
been filed. The Canadian Trade-marks Office did not cite any of Venngo’s
trade-marks in opposition to CCI’s application for PERKOPOLIS or the PERKOPOLIS
mark in opposition to any of Venngo’s trade-mark applications.
[8]
Venngo alleges that CCI’s use of the trade-mark
PERKOPOLIS is an infringement of Venngo’s intellectual property rights in its
own suite of perks-related trade-marks. In its action, it made several claims
against CCI and the individual respondents, but abandoned some of the claims
prior to or at trial. At trial, Venngo advanced claims under subsections 7(a)
and 7(b), section 19, paragraph 20(1)(a) and section 22 of the Trade-marks
Act, R.S.C. 1985, c. T-13 (Trade-marks Act) against CCI
and the individual respondent, Morgan C. Marlowe, having abandoned all other
claims in the Statement of Claim, including those against the other personal
respondent, Richard Thomas Joynt.
[9]
Subsection 7(a) of the Trade-marks Act
requires that:
7. No person shall
|
7. Nul
ne peut :
|
(a) make a false or misleading statement tending to
discredit the business, goods or services of a competitor.
|
a) faire une déclaration fausse ou trompeuse tendant à
discréditer l’entreprise, les produits ou les services d’un concurrent.
|
This provision in
effect codifies the common law tort of injurious falsehood, which makes liable
those who cause damage to competitors by making false or misleading statements
that undermine the competitors’ reputations, goods or services.
[10]
Subsection 7(b) of the Trade-marks Act
provides that:
7. No person shall
|
7. Nul
ne peut :
|
[…]
|
[…]
|
(b) direct public attention to his goods, services or
business in such a way as to cause or be likely to cause confusion in Canada,
at the time he commenced so to direct attention to them, between his goods,
services or business and the goods, services or business of another.
|
b)
appeler l’attention du public sur ses produits, ses services ou son
entreprise de manière à causer ou à vraisemblablement causer de la confusion
au Canada, lorsqu’il a commencé à y appeler ainsi l’attention, entre ses
produits, ses services ou son entreprise et ceux d’un autre.
|
The common law tort
of passing off is essentially codified in subsection 7(b). This tort
protects one party from damages that are triggered when another party attempts
to “pass off” its own goods or services as those
of the other through the use of a confusing mark, which may be registered or
unregistered.
[11]
Section 19 of the Trade-marks Act states:
19. Subject to sections 21, 32 and 67,
the registration of a trade-mark in respect of any goods 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 goods or
services.
|
19. Sous
réserve des articles 21, 32 et 67, l’enregistrement d’une marque de commerce
à l’égard de produits 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 produits ou services.
|
Section 19 embodies
the right of the registered trade-mark owner to the exclusive use of its
registered trade-mark and operates to prevent the appropriation of a registered
trade-mark by another party.
[12]
Paragraph 20(1)(a) of the Trade-marks
Act states:
20. (1) The right of the owner of a
registered trade-mark to its exclusive use is deemed to be infringed by any
person who is not entitled to its use under this Act and who
|
20. (1)
Le droit du propriétaire d’une marque de commerce déposée à l’emploi exclusif
de cette dernière est réputé être violé par une personne qui est non admise à
l’employer selon la présente loi et qui :
|
(a) sells, distributes or advertises any goods or services
in association with a confusing trade-mark or trade-name.
|
a) soit
vend, distribue ou annonce des produits ou services en liaison avec une marque
de commerce ou un nom commercial créant de la confusion.
|
Distinct from
section 19, paragraph 20(1)(a) identifies an infringement where an
unauthorized party uses a trade-mark that is confusing in light of (but not
necessarily identical to) the claimant’s registered trade-mark.
[13]
Finally, section 22 of the Trade-marks Act
provides in relevant part that:
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.
|
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.
|
In general terms, section
22 protects against the goodwill in one party’s trade-mark being undermined by
another party’s use of the trade-mark or something so closely akin to it so as
to be understood as the other party’s mark.
[14]
In the decision under appeal, the Federal Court dismissed
Venngo’s claims under the foregoing provisions of the Trade-marks Act
against CCI and Ms. Marlowe. In terms of Ms. Marlowe, the Federal Court
held that there was no evidence that she acted in any way outside the normal
course of her duties as an officer and director of CCI and, accordingly, concluded
that there was no basis for finding her personally liable for the activities of
CCI. Venngo does not challenge this finding in the present appeal. It likewise
does not challenge the Federal Court’s dismissal of the claims against CCI under
subsection 7(a) and section 19 of the Trade-marks Act.
[15]
However, Venngo does challenge the Federal
Court’s dismissal of the claims against CCI under subsection 7(b), paragraph 20(1)(a)
and section 22 of the Trade-marks Act. It is therefore necessary to
review the Federal Court’s treatment of these issues in more detail.
A.
The Federal Court’s treatment of the claim under
section 22 of the Trade-marks Act
[16]
The Federal Court began its discussion of the
claim under section 22 for depreciation of goodwill by outlining the
requirements for a successful cause of action under the section, quoting from
the seminal decision of the Supreme Court of Canada in Veuve Clicquot
Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824 [Veuve
Clicquot]. In Veuve Clicquot at paragraph 46, the Supreme Court
outlined the following four elements of a successful claim under section 22:
first, that a claimant’s registered trade-mark was used by the defendant in
connection with wares and services whether or not they are competitive with
those of the claimant; second, that the claimant’s registered trade-mark is
sufficiently well-known to have significant goodwill attached to it, although
it need not be famous; third, that the claimant’s mark was used by the
defendant in a manner likely to affect that goodwill; and, finally, that the defendant’s
actions would likely depreciate the value of the goodwill.
[17]
After outlining these four elements, the Federal
Court noted that “use” under section 22 of the Trade-marks
Act “requires use [by a defendant] of a plaintiff’s
trademark, as registered” (Venngo, para. 86). The Court noted
that the only potential example of such use alleged by Venngo was CCI’s use of
the phrase “MEMBER PERKS INCLUDE” on its websites.
The Federal Court determined that this was not “use as a
trade-mark for the purpose of distinguishing CCI’s wares or services from
others, and cannot constitute the basis for a valid section 22 claim” (Venngo,
para. 86). Consequently, the Federal Court dismissed the section 22 claim.
B.
The Federal Court’s treatment of the claim under
subsection 7(b) of the Trade-marks Act
[18]
In terms of the claim for passing off under subsection
7(b) of the Trade-marks Act, the Federal Court noted that, in
accordance with the decisions of the Supreme Court of Canada in Ciba-Geigy
Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120 at p. 132, 95 D.L.R. (4th)
385 [Ciba-Geigy] and Kirkbi AG v. Ritvik Holdings Inc., 2005
SCC 65 at para. 66, [2005] 3 S.C.R. 302, there are three elements to a
claim for passing off: the existence of goodwill, deception of the public due
to a misrepresentation and actual or potential damage to the plaintiff. The
Federal Court held that Venngo had established it possessed the requisite
goodwill in its trade-marks to found a claim for passing off, but that it
failed to establish the other two requisite elements of the claim. More
specifically, the Court held that Venngo had not shown that it had suffered any
damage as a result of CCI’s use of the PERKOPOLIS trade-mark. The Federal Court
also held that there was no likelihood of deception through misrepresentation
for the same reasons it subsequently found there to be no likelihood of
confusion between Venngo’s and CCI’s trade-marks. It thus dismissed the passing
off claim under subsection 7(b).
C.
The Federal Court’s treatment of the claim under
paragraph 20(1)(a) of the Trade-marks Act
[19]
In addressing Venngo’s claim under paragraph
20(1)(a) of the Trade-marks Act, the Federal Court assessed
whether there was likely to be confusion between the PERKOPOLIS trade-mark and
any of Venngo’s marks. The Court noted that section 6 of the Trade-marks Act,
when read with section 2, sets out the framework for assessing confusion and
outlines in subsection 6(5) factors to be considered as part of the exercise.
Subsection 6(5) of the Trade-marks Act states:
6.
(5) 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
|
6.
(5) En décidant si des marques de commerce ou des noms
commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l’espèce, y
compris :
|
(a) the inherent
distinctiveness of the trade-marks or trade-names and the extent to which
they have become known;
|
a)
le caractère distinctif inhérent des marques de commerce ou noms commerciaux,
et la mesure dans laquelle ils sont devenus connus;
|
(b) the length of time the
trade-marks or trade-names have been in use;
|
b)
la période pendant laquelle les marques de commerce ou noms commerciaux ont
été en usage;
|
(c) the nature of the
goods, services or business;
|
c)
le genre de produits, services ou entreprises;
|
(d) the nature of the
trade; and
|
d)
la nature du commerce;
|
(e) the degree of
resemblance between the trade-marks or trade-names in appearance or sound or
in the ideas suggested by them.
|
e)
le degré de ressemblance entre les marques de commerce ou les noms
commerciaux dans la présentation ou le son, ou dans les idées qu’ils
suggèrent.
|
[20]
After citing at length from the decisions of the
Supreme Court of Canada in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC
22, [2006] 1 S.C.R. 772 [Mattel], Masterpiece Inc. v. Alavida
Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387 [Masterpiece] and Veuve
Clicquot, the Federal Court articulated its understanding of the applicable
law (Venngo, para. 105):
A distillation of
these three Supreme Court decisions and consideration of the subsection 6(5)
factors of the Act results in the Court having to decide:
i. As a matter of first impression,
would the relevant public – primarily the [human resources] decision makers of
the parties’ customers, but also end-users of the services offered by the
parties, be confused or likely to be confused into thinking that the source of
PERKOPOLIS services (CCI) is the same as or associated with the source of
WORKPERKS, ADPERKS, CUSTOMERPERKS or MEMBERPERKS services (Venngo);
ii. In determining the likelihood of
confusion, as a first step the Court will consider the degree of resemblance
between the marks in appearance or sound or in the ideas suggested by the marks
– the [paragraph] 6(5)(e) factor most likely to have the greatest effect
on the confusion analysis (Masterpiece, above, at para 49);
iii. The other section 6 factors and
surrounding circumstances must then also be considered, including the evidence
of actual confusion.
[21]
The Federal Court further noted that the likelihood
of confusion is to be considered from the perspective of the “casual consumer somewhat in a hurry” as described in
Mattel at paragraph 56.
[22]
After setting out the foregoing legal framework,
the Federal Court commenced its analysis of the marks in question by considering
the degree of resemblance between PERKOPOLIS and each of Venngo’s trade-marks
under paragraph 6(5)(e) of the Trade-marks Act. The Federal Court
held that the only similarity between Venngo’s marks and the PERKOPOLIS mark
was the use of the word “perk”. Because “perk” is a generic term for the types of services at
issue, the Federal Court concluded that it cannot in and of itself be the basis
for resemblance between the parties’ marks. It also noted that Venngo’s use of
the word “perk” is associated in its marks with the
intended audience for Venngo’s offerings while PERKOPOLIS is a non-specific
reference that suggests the idea of “perks” but does
not tie these perks to particular audiences. The Federal Court therefore concluded
that it is “readily apparent that […] there is little
resemblance in either appearance or sound [… or] in the ideas suggested by the
marks” (Venngo, para. 110).
[23]
The Federal Court observed that this conclusion
tended to be confirmed by the evidence offered by some of Venngo’s own
witnesses, a review of the trade-marks register revealing the common use of the
term “perk” in association with benefit programs
and the dictionary definitions of “perk” and “perquisite”. The Federal Court concluded that this
factor favoured CCI.
[24]
With respect to inherent distinctiveness and
acquired distinctiveness, the Federal Court came to a similar conclusion.
Noting that Venngo’s marks are “at best highly
suggestive, if not descriptive” because they simply refer to “perks” (i.e. the wares and services offered) and the
audiences for those perks, the Federal Court held that Venngo’s marks lack any
remarkable or unique elements to render them distinct (Venngo, para.
117). The Federal Court also concluded that Venngo’s use of the generic term “perk” in its own advertising materials and on its
website eroded any possible distinctiveness of its marks. Consequently, the
Federal Court determined that Venngo’s trade-marks have
“little inherent distinctiveness and are afforded a narrow ambit of protection”
(Venngo, para. 119). The Federal Court concluded that this factor likewise
favoured CCI.
[25]
On the question of how long the relevant
trade-marks had been in use under paragraph 6(5)(b), the Federal
Court concluded that this factor favoured Venngo because use of some of its
marks had pre-dated CCI’s use of PERKOPOLIS.
[26]
Pursuant to paragraph 6(5)(c), the
Federal Court also considered the nature of the wares, services or business at
issue. Noting that the services and business of Venngo and CCI largely overlap,
the Federal Court concluded that this factor also favoured Venngo.
[27]
The Federal Court then addressed other
surrounding circumstances. The Federal Court began by observing that CCI’s
registration of its PERKOPOLIS mark occurred without any citation of Venngo’s
registered trade-marks or any other marks involving the word “perk” in opposition by the Canadian Trade-marks
Office and that, similarly, the Venngo marks had been registered without
PERKOPOLIS being cited in opposition by the Trade-marks Office. The Federal
Court found that this consideration favoured CCI.
[28]
Under this heading, the Federal Court also
addressed Venngo’s evidence and arguments concerning actual confusion. Venngo
adduced potential evidence of actual confusion from three client
representatives (Sharon Mitchell, Elizabeth Kieffer and Kevin Hayashi), one employee
(Bradley Moyer) and a representative from a similar perk program for
salespeople (Douglas Garcia). The Federal Court rejected Mr. Moyer’s evidence
as unreliable and unnecessary hearsay. It found that the remaining evidence was
insufficiently compelling to outweigh the other factors and surrounding
circumstances. The Federal Court also noted that the President of Venngo agreed
during his cross-examination that the nature of the trade is such that senior
human resources professionals represent the customer base and that, in
practice, they choose a program only after conducting some research, thereby
lessening the likelihood of actual confusion.
[29]
Relying on Masterpiece, the Federal Court
noted that the confusion analysis is a weighing exercise that falls to the
trial judge. In weighing all of the relevant factors and circumstances
together, the Federal Court concluded at paragraph 129 that:
Although there was some limited evidence of confusion,
it was insufficient to convince [the Court] that the casual consumer somewhat
in a hurry would confuse the Venngo and CCI marks, other than simply on the
basis that the parties engage in a relatively closed or “niche” market, and
have chosen a generic term within their marks highly suggestive of their
services, which is afforded a very narrow ambit of protection.
Given this
conclusion, there was no basis to find infringement under paragraph 20(1)(a)
of the Trade-marks Act.
D.
The Costs Order
[30]
In its Costs Order, the Federal Court
awarded CCI costs, inclusive of all fees, disbursements and taxes, in a lump
sum amount of $231,000 in light of its disposition of the action on its merits
and the submissions of the parties. In reaching its decision on costs, the
Federal Court found amounts paid to its predecessor counsel and fees paid to
its current counsel outlined by CCI in a solicitor’s affidavit to be
reasonable, determined that there was inadequate documentary evidence to
support all of CCI’s claimed disbursements, noted the implication of Venngo’s
rejection of an offer to settle under Rule 420(2)(b) of the Federal
Courts Rules, SOR/98-106 (the Rules) and observed that Venngo had
brought and maintained multiple unmeritorious claims in the action. As a
general consideration, the Federal Court concluded that a lump sum award in
excess of the standard costs that would typically be assessed under Rule 400
of the Rules was appropriate given that Venngo and CCI are both
sophisticated commercial parties and in light of the factors listed above. It
settled on a final lump sum award that represents approximately 50% of the
total fees and disbursements incurred by CCI in defence of the action.
II.
Venngo’s Arguments on Appeal
[31]
Turning now to the arguments on appeal, Venngo
first argues that the Federal Court erred in finding no confusion and thus no
infringement under paragraph 20(1)(a) and no passing off under subsection
7(b) of the Trade-marks Act. Venngo asserts five errors in the
Federal Court’s confusion analysis and argues that, but for these errors, the
weighing exercise under subsection 6(5) of the Trade-marks Act
would have resulted in a finding of confusion, or, in the alternative, would at
least merit reconsideration.
[32]
In terms of the errors alleged in the confusion
analysis, Venngo first challenges the Federal Court’s assessment of the degree
of resemblance between Venngo’s and CCI’s trade-marks. It submits that the
Federal Court erred by inferring that PERKOPOLIS and Venngo’s trade-marks do
not evoke in the mind of consumers the same idea. Venngo argues that
PERKOPOLIS, on the contrary, suggests an umbrella program that could include
Venngo’s programs. Venngo also says that the Federal Court did not give enough
weight to the constituent term “perk” in
assessing the degree of resemblance between the relevant marks.
[33]
Second, Venngo submits that the Federal Court
committed a legal error by not addressing acquired distinctiveness under
paragraph 6(5)(a) of the Trade-marks Act. It points to the House
of Lords’ decision in Reddaway v. Banham, [1896] A.C. 199, 13 R.P.C.
218, the Supreme Court of Canada’s decision in Pepsi-Cola Company of Canada,
Ltd v. The Coca-Cola Company of Canada, Ltd., [1940] S.C.R. 17 (available
on CanLII) and this Court’s decision in Miss Universe, Inc. v. Bohna,
[1995] 1 F.C.R. 614, 58 C.P.R. (3d) 381 (F.C.A.) for the proposition that
descriptive trade-marks can acquire distinctiveness over time, mainly by virtue
of public awareness. Venngo argues that the Federal Court erred in law by not
considering whether Venngo’s trade-marks had become distinct on this basis.
Venngo also says that the Federal Court’s conclusions that there is goodwill
attached to Venngo’s trade-marks, but that the trade-marks are not distinct,
are inconsistent, primarily on the basis that the same evidence underlies both
inquiries.
[34]
Third, Venngo submits that the Federal Court erred
in its analysis of the nature of the trade under paragraph 6(5)(d) of
the Trade-marks Act. Venngo asserts that the Federal Court erred in law
by improperly focusing on the due diligence of the senior human resources professionals
who choose between perks programs as opposed to the first-impression lens of a
consumer somewhat in a hurry as taught in Mattel. Subsequent to the
appeal in this matter being heard, Venngo directed this Court to the British
Columbia Court of Appeal’s recent decision in Vancouver Community College v.
Vancouver Career College (Burnaby) Inc., 2017 BCCA 41 (available on CanLII)
[VCC] to support its proposition that the confusion analysis turns on
impressions drawn upon first encountering a mark. Venngo also argues, citing
the Supreme Court of Canada’s decision in Ciba-Geigy, that the Federal
Court was bound to consider the experiences of end-user consumers (e.g.,
employees who get access to the perks) and that, in failing to do so, the
Federal Court erred in law.
[35]
Fourth, Venngo argues that it was not open to
the Federal Court to consider trade-mark registration proceedings in its
confusion analysis.
[36]
Finally, Venngo submits that the Federal Court
gave too little weight to Venngo’s evidence of actual confusion and improperly
determined the evidence of Mr. Moyer to be inadmissible hearsay.
[37]
Venngo also submits that the Federal Court erred
in its assessment of damages under subsection 7(b) of the Trade-marks
Act by failing to consider Venngo’s evidence of sales diversion and
trade-mark tarnishing. Again, following the hearing of its appeal, Venngo
pointed this Court to the VCC decision to establish that evidence of interference
with goodwill is sufficient to establish damages.
[38]
On the question of depreciation of goodwill
under section 22 of the Trade-marks Act, Venngo submits that the Federal
Court committed a legal error under the first step of the Veuve Clicquot
test by narrowing the requirement for “use” to
only uses of a plaintiff’s trade-mark as it is registered. In this regard, it
submits that Veuve Clicquot recognizes that a defendant need not use a
mark identical to the plaintiff’s trade-mark to be liable under section 22.
Rather, Venngo says that the Supreme Court held in Veuve Clicquot that
section 22 could be infringed where the marks are so similar that “the casual observer would recognize the mark used by the
respondents as the mark of the appellant (as would be the case if Kleenex
were spelled Klenex)” (Veuve Clicquot, para. 48). Given
that the Federal Court applied the wrong test under section 22 of the Trade-marks
Act, Venngo says that the Court’s decision under section 22 must be set
aside.
[39]
In terms of the Costs Order, although
Venngo raised additional points in its memorandum of fact and law, it limited
its oral submissions to two arguments. First, it argues that the Federal Court
improperly relied on untested hearsay evidence to establish amounts for CCI’s
claimed payments to its predecessor counsel. More specifically, it says that
the only evidence as to the fees, disbursements and taxes paid to CCI’s former
solicitors was a hearsay statement in the affidavit one of its current counsel
filed in support of these amounts. As this statement was hearsay, Venngo says
that the Federal Court erred in considering it. Second, Venngo argues that the
Federal Court treated CCI’s offer to settle as operative under Rule 420 of the Rules
when it did not meet the requirements of that Rule. For both these reasons it
requests that, even if it is unsuccessful in its appeal on the merits, the Costs
Order be set aside.
III.
Analysis
A.
Did the Federal Court err in assessing likely confusion
between the PERKOPOLIS trade-mark and Venngo’s trade-marks?
[40]
As Venngo’s claims in large part turn on whether
CCI’s PERKOPOLIS mark is likely to be confusing with Venngo’s own marks – and
indeed the bulk of Venngo’s arguments on appeal target the Federal Court’s
confusion analysis – it is useful to begin with this issue.
[41]
In order for this Court to disturb the Federal
Court’s assessment of the lack of likely confusion between Venngo’s and CCI’s
marks, Venngo must demonstrate either that the Federal Court relied on an
incorrect legal principle or committed a palpable and overriding error in
addressing questions of fact or questions of mixed fact and law where there are
no extricable questions of law: Housen v. Nikolaisen, 2002 SCC 33, [2002]
2 S.C.R. 235 [Housen].
[42]
Prior to discussing the five errors that Venngo
says the Federal Court made in its confusion analysis, it bears repeating that
we should be careful not to be overly intrusive and extricate questions of law
where the dispositive question is actually driven by the facts because so doing
undercuts the deference that is owed to the trier-of-fact: Housen at
para. 36; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at
para. 54, [2014] 2 S.C.R. 633; Teva Canada Limited v. Leo Pharma Inc.,
2017 FCA 50 at para. 17 (available on CanLII). It also bears repeating that the
appellate standard of review applied to questions of fact and questions of mixed
fact and law from which a legal issue cannot be extricated is a deferential one.
As noted by this Court in Canada v. South Yukon Forest Corporation, 2012
FCA 165 at para. 46, 431 N.R. 286:
[…] “Palpable” means an error that is
obvious. “Overriding” means an error that goes to the very core of the outcome
of the case. When arguing palpable and overriding error, it is not enough to
pull at leaves and branches and leave the tree standing. The entire tree must
fall.
[43]
In many respects, as is apparent from the
discussion that follows, Venngo is asking this Court to intervene and conduct a
de novo confusion assessment and to substitute our assessment of the
evidence for that of the Federal Court. However, that is something that we
cannot do on appeal. We can only intervene in factual issues or issues of mixed
fact and law from which a legal issue cannot be extricated if the Federal Court
made a palpable and overriding error and in legal issues if the Federal Court
applied an incorrect legal principle.
(1)
Resemblance
[44]
As concerns the first error that Venngo says the
Federal Court made, Venngo urges us to find that the Federal Court erred in concluding
that the term “perk” creates little commonality
between the relevant marks and, relatedly, erred in its articulation of the
ideas evoked by PERKOPOLIS and Venngo’s trade-marks. In both cases, Venngo is
asking this Court to disturb inferences drawn from the evidence by the Federal
Court. Accordingly, Venngo must establish a palpable and overriding error
before we can intervene. I do not see that the Federal Court committed any such
error in its treatment of either point.
[45]
Even a cursory reading of the Federal Court’s
decision reveals that the centrality of the term “perk”
was a focus of the Court’s confusion analysis and its assessment of the degree
of resemblance between the parties’ marks. Contrary to what Venngo argues must
be the impact of the dominance of the term “perk”,
the Federal Court explicitly noted that (Venngo, para. 108):
[…] the Court can and should have regard to a dominant component in
a mark if that component is particularly striking, such that it affects the
overall impression of the average consumer. While Venngo argues the word “PERK”
or “PERKS” is the dominant component of the marks in issue, even if arguably
“perk” or “perks” has an effect on the overall impression of the average
consumer, for the reasons below I find that “perk” or “perks” as used in the
Venngo trademarks is highly suggestive and hardly distinctive.
[46]
The Federal Court thus determined that any
dominance of the term “perk” is of little consequence
because the term is descriptive. In my view, this inference was open to the
Federal Court on the record and also as a matter of interpretation as trade-marks
that are plainly descriptive are presumptively weak and are thus generally afforded
only a narrow ambit of protection: Molson Cos. v. John Labatt Ltd. (1994),
178 N.R. 20 at paras. 5-8, 58 C.P.R. (3d) 527 (F.C.A.) [Molson]. Therefore,
it was open to the Federal Court to note the descriptive nature of the term “perk” and to consider the implications of such
descriptiveness in its assessment of the resemblance between the parties’
trade-marks.
[47]
Similarly, Venngo has failed to demonstrate a
palpable and overriding error underlying the Federal Court’s inference that
there is little resemblance between the relevant trade-marks on the basis of
the ideas they evoke. The core of Venngo’s argument is that the use of the term “perk” in PERKOPOLIS and Venngo’s trade-marks necessarily
evokes the same kind of idea in consumers’ minds. This contention relies, once
again, on “perk” being a dominant common factor.
However, the Federal Court properly considered the trade-marks as they appear,
without breaking them into their constituent parts, in conformity with the
applicable law: Masterpiece at para. 83; Molson at para. 4.
[48]
On the basis that each of Venngo’s marks is a
straightforward descriptor of Venngo’s offerings and intended audience, while
PERKOPOLIS is an invented suggestive term, it was not a palpable and overriding
error for the Federal Court to infer that the marks evoke different ideas and as
a result share little resemblance beyond the use of the descriptive term “perk”. There is a difference between the ideas the marks
of the parties evoke. Consequently, Venngo has failed to demonstrate a palpable
and overriding error in the Federal Court’s assessment of the “degree of resemblance” between the pertinent
trade-marks under paragraph 6(5)(e) of the Trade-marks Act.
[49]
In Masterpiece, the Supreme Court of Canada
confirmed that the degree of resemblance is the most relevant consideration in
assessing confusion. If there is no resemblance, then the other factors under
subsection 6(5) become less relevant. In Masterpiece at paragraph 49,
the Court stated:
[...] the degree of resemblance, although the last factor listed in
s. 6(5), is the statutory factor that is often likely to have the greatest
effect on the confusion analysis […]. As Professor Vaver points out, if the
marks or names do not resemble one another, it is unlikely that even a strong
finding on the remaining factors would lead to a likelihood of confusion. The
other factors become significant only once the marks are found to be identical
or very similar […].
[50]
Therefore, it was open to the Federal Court to
put significant weight on its determination that there was little resemblance between
the parties’ trade-marks and to rely on this factor as the principal
underpinning in favour of its conclusion that CCI’s mark was not likely to
cause confusion with Venngo’s trade-marks.
(2)
Acquired Distinctiveness
[51]
Moving on to consider acquired distinctiveness, Venngo
is correct to note that the jurisprudence recognizes that even trade-marks with
little inherent distinctiveness can nonetheless acquire distinctiveness. I do
not believe that the Federal Court, though sparse in its reasons on this point,
erred in determining that Venngo had failed to establish acquired
distinctiveness in its marks.
[52]
At the outset, Venngo frames its challenge on
this point as a legal error by arguing that the Federal Court failed to
consider a necessary factor under the applicable statutory test. I reject this
contention. Although it might well have been preferable for the Federal Court
to have offered a more explicit discussion of acquired distinctiveness, I
believe that the Court’s reasoning on this point is decipherable from its
decision: Canada v. Long Plain First Nation, 2015 FCA 177 at para. 143,
388 D.L.R. (4th) 209. More specifically, the Federal Court was alive to the
question of the distinctiveness of Venngo’s marks as they exist and operate in
the market. The Federal Court noted that Venngo had continued to use the term “perk” in a generic manner in its own advertising and
website materials and, thus, had eroded any possible distinctiveness the marks
might have possessed.
[53]
In my view, a fair reading of the Federal
Court’s reasons reveals its conclusion that the lack of inherent
distinctiveness in Venngo’s marks had not been shown to have given way to any
acquired distinctiveness. In other words, the Federal Court considered this
issue and concluded that Venngo’s trade-marks remain indistinct. Accordingly,
for this Court to intervene, Venngo needs to demonstrate that it was a palpable
and overriding error for the Federal Court to give this factor little or no
weight. I do not believe that Venngo has demonstrated any such error,
especially in light of the lack of evidence to establish any degree of acquired
distinctiveness in the Venngo marks.
[54]
Lacking any such evidence, Venngo instead asserts
that it was inconsistent for the Federal Court to have found goodwill in
Venngo’s marks as part of its passing off analysis but to find that the marks
were not distinct. This argument is misplaced. Goodwill is not synonymous with
distinctiveness. As confirmed by the Supreme Court of Canada in Veuve
Clicquot at paragraph 54, acquired distinctiveness is but one of many
possible indicators of goodwill. However, the two are not necessarily
equivalent and it was therefore open to the Federal Court to make the findings
it did.
[55]
I thus see no reversible error in the Federal
Court’s treatment of the issues of inherent and acquired distinctiveness.
(3)
Nature of the Trade
[56]
With respect to its arguments concerning the Federal
Court’s assessment of the nature of the trade, Venngo focuses on the following
statements made by the Federal Court (Venngo, para. 128):
[…] Mr. Stucke in his evidence agreed that
the nature of the trade is such that most customers are relatively
sophisticated senior HR professionals, who take significant time and due
diligence before deciding on a service provider such as Venngo or CCI. This
further reduces any likelihood of confusion.
[57]
Venngo rightly notes that this excerpt
represents the only occasion where the Federal Court explicitly used the words “nature of the trade” in its confusion analysis. The
impugned comments form part of the Court’s discussion of “other surrounding circumstances”.
[58]
If these statements formed the entirety of the
Federal Court’s assessment of this factor, I might agree that the Court
committed a legal error by drawing a conclusion concerning the nature of the
trade and lack of likely confusion out of the researched buying decisions of
consumers (rather than their first impressions), contrary to the teachings of
the Supreme Court of Canada in Masterpiece at paragraphs 67-74 and Mattel
at paragraph 56. However, I believe that Venngo’s reading of the Federal
Court’s reasons on this point is flawed for two reasons.
[59]
First, the impugned statements were made in the
context of the Federal Court’s assessment of Venngo’s evidence of actual
confusion. Read fairly, paragraph 128 appears to me to be a reproduction of the
testimony of Venngo’s chairman for the purpose of contextualizing Venngo’s
evidence of actual confusion as opposed to being the Court’s treatment of the
likelihood of confusion. It deals with the latter issue elsewhere in its
reasons and applies the correct test – that of a casual consumer somewhat in a
hurry (Venngo, para. 129).
[60]
Second, I believe a fair reading of the Federal
Court’s reasons reveals that it turned its mind to the nature of trade factor, considered
it in its assessment of confusion and thus did not commit a legal error. This
factor is concerned with the channels of trade, or the relevant consumer
markets, that are exploited by the parties: Mattel at para. 86. This
Court’s decision in Pink Panther Beauty Corp. v. United Artists Corp.,
[1998] 3 F.C.R. 534, 80 C.P.R. (3d) 247 [Pink Panther] offers a
comprehensive description of elements that may animate the factor. This Court
held that this factor queries what is being sold, how and where it is sold, to
whom it is sold and the nature of the trading environment generally: Pink
Panther at paras. 30-33.
[61]
The Federal Court’s consideration of the relevant
indicia is evident in its reasons. For example, the Federal Court identified
the parties’ consumers and end-users, outlined various commercial interactions
between the parties, including CCI’s success in securing some of Venngo’s
clients, described the parties’ recruitment and advertising activities and
noted the difference between the commercial activities of these parties and
those organizations that provide perks directly to members (Venngo,
paras. 2, 30, 32, 36, 38, 56, 58-59, 66, 120). Crucially, the Federal Court concluded
for the purpose of its confusion analysis that (Venngo, para. 120):
There is no
question that the services and business of CCI and Venngo substantially
overlap, as do their customers and clients. Both Venngo and the corporate
Defendant are engaged in a similar business in the same geographic area.
[62]
The Federal Court held that the overlap between
the parties’ commercial activities, which includes overlap between customers
and clients and therefore channels of trade, favoured Venngo’s position in the
confusion analysis.
[63]
Although the Federal Court would have been
clearer in its reasons had it specifically addressed the nature of the trade as
an independent consideration, the Court’s repeated references to relevant indicia
confirm that it was alive to the issue and thus committed no error of omission.
I accordingly see no reviewable error in the Federal Court’s treatment of this
factor.
(4)
Prosecution History
[64]
Venngo’s fourth argument that the Federal Court
erred in law by considering the prosecution history of the PERKOPOLIS mark is
without merit. The Supreme Court of Canada in Masterpiece at paragraph
112 and this Court in Reynolds Presto Products Inc. v. P.R.S. Mediterranean
Ltd., 2013 FCA 119 at paras. 39-40, 444 N.R. 223 have at least implicitly confirmed
that it is not erroneous for the Court to consider prosecution history in its
assessment of confusion. The decision of this Court cited by Venngo to support
its position – Alticor Inc. v. Nutravite Pharmaceuticals Inc., 2005 FCA
269, 257 D.L.R. (4th) 60 – simply confirms at paragraphs 15 and 16 that for an
injunction to issue, confusion must be established as of the time of the hearing
or other material date and that confusion at the time of registration may not
be relevant. There is nothing in the Federal Court’s decision to suggest that
the Court conflated a lack of confusion at the time of CCI’s registration of
the PERKOPOLIS trade-mark with a lack of confusion at the times relevant to
Venngo’s infringement claims. I also note that the marks’ prosecution histories
played a relatively minor role in the Federal Court’s assessment of confusion. Therefore,
I do not believe that the Federal Court erred in mentioning prosecution history
as part of the other surrounding circumstances it considered.
(5)
Actual Confusion
[65]
Finally, I turn to Venngo’s concerns about the
Federal Court’s treatment of Venngo’s evidence of actual confusion, a question
that occupied a significant portion of the parties’ oral arguments. This issue
involves two distinct questions: did the Federal Court err in not admitting Mr.
Moyer’s evidence of statements made by tradeshow attendees as unreliable and
unnecessary hearsay and did the Federal Court err in according little weight to
Venngo’s remaining evidence going to actual confusion?
[66]
On the question of hearsay, the Federal Court
declared inadmissible for the truth of their contents various excerpts from the
testimony of Mr. Moyer, a Venngo representative who managed Venngo’s booths at
tradeshows. These statements, if accepted for the truth of their contents, arguably
suggested some level of actual confusion between PERKOPOLIS and Venngo’s
trade-mark WORKPERKS on the part of tradeshow attendees or members of their
organizations. Mr. Moyer testified that attendees would approach him at the
WORKPERKS program booth, state that they used WORKPERKS, and then ask “well, you are PERKOPOLIS, aren’t you?” As his
conversations with attendees progressed, Mr. Moyer testified, he would come to
realize (Appeal Book, Vol. 9, p. 2793):
[…] that [the
attendees] did not in fact have the WORKPERKS program, they had a PERKOPOLIS
program.
So it was clear
to me that these individuals were confused as to the WORKPERKS and the
PERKOPOLIS program. They thought it was coming from the same company.
[67]
When testifying about his interactions with a tradeshow
participant whose company had switched from WORKPERKS to PERKOPOLIS, Mr. Moyer
noted that “she said, internally, the employees still
refer to the program as WORKPERKS” (Appeal Book, Vol. 9, p. 2794). At
trial, Venngo’s counsel acknowledged that these statements were hearsay if they
were adduced for the truth of their contents and, when faced with objections
and the Court’s intervention, offered no arguments as to the reliability or
necessity of the evidence.
[68]
However, on appeal, Venngo argued that the
Federal Court erred by rejecting these statements as they are admissible for a
non-hearsay purpose as evidence of Mr. Moyer’s interactions with potential
clients, suggesting that the statements went to the declarants’ states of mind.
I disagree. The impugned statements are hearsay and were properly excluded.
[69]
It is the purpose for which an out-of-court
statement is tendered that determines whether or not it is hearsay. Such a
statement is hearsay if it is offered for proof of the truth of its contents. Or,
to put it another way, hearsay is an oral or written statement made by someone
other than the witness that the witness testifies about and offers in an effort
to establish that what was said is true: R. v. Starr, 2000 SCC 40 at
para. 162, [2000] 2 S.C.R. 144; Pfizer Canada Inc. v. Teva Canada Limited,
2016 FCA 161 at para. 89, 400 D.L.R. (4th) 723.
[70]
Here, Mr. Moyer offered as truthful the facts
that the out-of-court declarants’ companies used either WORKPERKS or PERKOPOLIS
and that such companies’ employees were mistaken about which company was the
service provider. These statements do not go to the state of mind of the out-of-court
declarants but rather were offered to show what service-provider their
organizations used and that others in their organizations said or otherwise
indicated that they were confused as to which service provider was engaged. There
was no evidence or argument that this evidence was reliable or necessary. Thus,
the Federal Court did not err in rejecting it. In any event, even if this
evidence had been admitted, it is entirely similar to the other evidence that
was before the Federal Court on actual confusion that the Court found to be
insufficiently compelling to lead to a conclusion in Venngo’s favour. Thus, the
rejection of Mr. Moyer’s evidence had no impact on the result reached.
[71]
With respect to the Federal Court’s treatment of
Venngo’s non-hearsay evidence of actual confusion from the other witnesses,
Venngo argues that the Federal Court afforded such evidence too little weight. However,
weighing evidence is the province of the trial judge. Thus, this Court can only
intervene if Venngo demonstrates a palpable and overriding error in the Federal
Court’s assessment of the evidence. Venngo asserts two such possible errors,
neither of which has merit.
[72]
Venngo’s first asserted error – that the Federal
Court’s interpretation of the actual confusion evidence was improperly coloured
by the Court’s incorrect conclusions on resemblance and distinctiveness – is baseless
given my determination that the Federal Court’s assessment of these factors was
not erroneous.
[73]
Venngo secondly submits that the Federal Court’s
weighing exercise should have been calibrated to favour Venngo given the
existence of actual evidence of confusion, citing this Court’s decision in Asbjorn
Horgard A/S v. Gibbs/Nortac Industries Ltd. (1987), 38 D.L.R. (4th) 544 at
p. 560, [1987] 3 F.C.R. 544 (F.C.A.) [Asbjorn] for the proposition that
evidence of actual confusion is a trump card of sorts. However, I do not
believe that Asbjorn assists Venngo for two reasons. First, Venngo
states the proposition too strongly. The jurisprudence directs that although
evidence of actual confusion may be an important factor in the analysis, it is
not dispositive: Mattel at paras. 55, 89; Marlboro Canada
Limited v. Philip Morris Products S.A., 2012 FCA 201 at para. 59, 434
N.R. 207. Second, in Asbjorn, the Court relied on the evidence of actual
confusion only to reinforce its conclusion as to the likelihood of confusion
based on the other factors listed in subsection 6(5) of the Trade-marks Act (Asbjorn,
pp. 560, 564). Therefore, the evidence of actual confusion was not used by the
Court as a trump card.
[74]
In the present case, the Federal Court
determined that any inference of the likelihood of confusion was driven almost entirely
by the parties’ use of the generic term “perk”,
which it found did not give rise to a likelihood of confusion. As this
determination is error-free for the reasons already noted, I believe that
Venngo has failed to establish any palpable and overriding error in the Federal
Court’s assessment and weighing of the evidence of actual confusion.
[75]
Thus, there is no basis for interfering with the
Federal Court’s confusion analysis.
B.
Did the Federal Court err in dismissing Venngo’s
claim for infringement under paragraph 20(1)(a) of the Trade-marks Act?
[76]
Given my conclusion that the Federal Court’s
confusion analysis should stand, it necessarily follows that the Federal Court
did not err in dismissing Venngo’s claim for infringement under paragraph
20(1)(a) as the likelihood of confusion was the basis for the paragraph
20(1)(a) claim in this case.
C.
Did the Federal Court err in dismissing Venngo’s
claim for passing off under subsection 7(b) of the Trade-marks Act?
[77]
For the same reason, I believe that the Federal
Court did not err in dismissing Venngo’s claim for passing off under subsection
7(b) of the Trade-marks Act.
[78]
The second element of the test for passing off
is misrepresentation causing deception or confusion. In cases not involving
intentional deception, this element is made out where the plaintiff can
establish a likelihood of confusion between the marks at issue under subsection
6(5) of the Trade-marks Act: Ciba Geigy at pp. 136-137, 140; Sadhu
Singh Hamdard Trust v. Navsun Holdings Ltd., 2016 FCA 69 at para. 21, 483
N.R. 33. Given that Venngo has not demonstrated an error in the Federal Court’s
confusion analysis warranting this Court’s intervention, its challenges to the
Federal Court’s assessment of the passing off claim must also be dismissed, and
it is unnecessary to consider the other arguments Venngo advances regarding the
Federal Court’s subsection 7(b) determination.
D.
Did the Federal Court err in dismissing Venngo’s
claim for depreciation of goodwill under section 22 of the Trade-marks Act?
[79]
Turning to Venngo’s argument in respect of the
Federal Court’s treatment of its claim under section 22 of the Trade-marks
Act, I agree with Venngo that a defendant need not use a mark that is
completely identical to the plaintiff’s trade-mark to be liable under section
22. Rather, the Supreme Court of Canada has held that this section addresses
circumstances where “the casual observer would
recognize the mark used by the respondents as the mark of the appellant (as
would be the case if Kleenex were spelled Klenex)”, or,
stated another way, where a defendant has used a mark
“sufficiently similar […] 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 appellant’s mark”: Veuve Clicquot at paras. 38,
48.
[80]
Thus, the Federal Court may well have described
the nature of trade-mark use that comes within the ambit of section 22 of the Trade-marks
Act too narrowly when it stated that “‘[u]se’ under
section 22 requires use of a plaintiff’s trademark, as registered” (Venngo,
para. 86). The section also encompasses use of a mark that, while not identical
to the plaintiff’s registered trade-mark, is so closely akin to the registered
mark that it would be understood in a relevant universe of consumers to be the
registered mark.
[81]
However, any error made by the Federal Court in
describing the test under section 22 of the Trade-marks Act too narrowly
is irrelevant to this appeal as the Federal Court’s decision is unrelated to
this point. As I read the Federal Court’s reasons, it did not reject Venngo’s
section 22 claim because the impugned use of the words “MEMBER PERKS” by CCI was not entirely identical to Venngo’s
registered MEMBERPERKS trade-mark. Rather, the Federal Court rejected the
section 22 claim because CCI’s impugned use on two websites of the words “MEMBER PERKS INCLUDE” (followed by web-links to
examples of the sorts of perks available to PERKOPOLIS members) does not
constitute “use” within the meaning of section
22 of the Trade-marks Act. In so holding, the Federal Court did not err.
[82]
As was held in Veuve Clicquot at paragraph
47 and Clairol International Corp. v. Thomas Supply and Equipment Co., [1968]
2 Ex. C. R. 552 at paras. 37-38, 55 C.P.R. 176 (F.C.A.), section 4 of the Trade-marks
Act defines what is meant by “use” within
the meaning of section 22 of the Act. Section 4 makes it clear that what
must be used by the defendant is a trade-mark. Section 4 provides:
4. (1) A trade-mark is deemed to be
used in association with goods if, at the time of the transfer of the
property in or possession of the goods, in the normal course of trade, it
is marked on the goods themselves or on the packages in which they are
distributed or it is in any other manner so associated with the goods that
notice of the association is then given to the person to whom the property or
possession is transferred.
|
4. (1)
Une marque de commerce est réputée employée en liaison avec des produits si,
lors du transfert de la propriété ou de la possession de ces produits, dans
la pratique normale du commerce, elle est apposée sur les
produits mêmes ou sur les emballages dans lesquels ces produits sont
distribués, ou si elle est, de toute autre manière, liée aux produits à tel
point qu’avis de liaison est alors donné à la personne à qui la propriété ou
possession est transférée.
|
4(2) A trade-mark is deemed to be used in association with
services if it is used or displayed in the performance or
advertising of those services.
|
4(2) Une marque de commerce est réputée employée en liaison avec
des services si elle est employée ou montrée dans l’exécution
ou l’annonce de ces services.
[emphasis added]
|
[83]
Here, the Federal Court did not err in holding
that CCI’s use of the words “MEMBER PERKS INCLUDE”
was not use of Venngo’s trade-mark or something closely akin to it as it is
clear that CCI was not using the words in question as a trade-mark. Rather, on
the impugned web pages, CCI was merely writing an introductory phrase, using
common English words, to describe its own offerings to its own membership by
noting that its perks included the items that appeared in the web links. In so
doing it did not offend section 22 of the Trade-marks Act because the
words “MEMBER PERKS” were not being used as a
trade-mark and therefore could not fall within the ambit of section 22. Thus, the
Federal Court did not err in in its section 22 analysis.
E.
Did the Federal Court err in its construction of
the lump sum costs award against Venngo?
[84]
Finally, as concerns the Costs Order,
Venngo argues that the Federal Court’s lump sum costs award was erroneous as it
was premised on hearsay evidence and the application of the double costs rule (Rule
420 of the Rules) when the offer in question does not meet the criteria
for that rule to be engaged.
[85]
This Court has held that costs determinations
fall squarely within the discretion of a trial judge under Rule 400 of the Rules
and that significant lump sum cost awards well in excess of the Tariff can be
appropriate in intellectual property litigation for various reasons. These include
the need to address the disjunction between what is covered by the default
tariffs and the complexity of proceedings and the need to streamline litigation
in an effort to avoid the final phase devolving into a costly accounting
exercise: Nova Chemicals Corporation v. Dow Chemical Company, 2017 FCA
25 at paras. 10-13 (available on CanLII) [Nova Chemicals]; Philip
Morris Products S.A. v. Marlboro Canada Limited, 2015 FCA 9 at paras. 3-4, 131
C.P.R. (4th) 1; Canada (Attorney General) v. Chrétien, 2011 FCA 53 at
para. 3, 198 A.C.W.S. (3d) 296; Consorzio del Prosciutto di Parma v. Maple
Leaf Meats Inc., 2002 FCA 417 at para. 12, 297 N.R. 135. Thus, neither
the fact of assessing costs on a lump sum basis nor the quantum of the award,
of themselves, would provide any grounds to interfere with the Costs Order.
[86]
Turning to the law applicable to the two grounds
advanced more specifically by Venngo during the hearing, this Court noted in Nova
Chemicals that “as a matter of good practice,
requests for lump sum awards should generally be accompanied by a Bill of Costs
and an affidavit in respect of disbursements that are outside the knowledge of
the solicitor” (Nova Chemicals, para. 14). However, this Court
went on to note in Nova Chemicals that the evidentiary record before a trial
judge to justify a lump sum award need not contain the level of detail that
might be required if costs were subject to assessment as this would largely
defeat the purposes of a lump sum award (Nova Chemicals, para. 15).
[87]
The case law regarding the types of offers that
fall within the ambit of Rule 420 of the Rules establishes that, for the
Rule to be engaged and a defendant to be presumptively entitled to double costs
from the date of service of the offer, the offer in question must be clear and
unequivocal, must contain an element of compromise, must comply with the time
limits in the Rules and must bring the litigation to an end: H-D
U.S.A., LLC v. Berrada, 2015 FC 189 at para. 32, 475 F.T.R. 311; Syntex
Pharmaceuticals International Ltd. v. Apotex Inc., 2001 FCA 137 at para.
10, 273 N.R. 217. In terms of timeliness, Rule 420(3) provides that costs
consequences of rejecting an offer do not apply unless the offer is made at
least 14 days before trial and is open for acceptance until the
commencement of trial.
[88]
I agree with Venngo that the Federal Court
committed a legal error in its assessment of CCI’s written offer to settle
dated October 23, 2015. Although the Federal Court was correct to note that an
offer that meets the requirements of Rule 420 of the Rules presumptively
entitles a successful defendant to double costs from the date of its offer
where that offer is refused by the plaintiff and the plaintiff does less well after
trial than it would have done under the offer, the Federal Court was incorrect
to conclude that the rule applied in the circumstances of this case as CCI’s
offer did not meet the criteria set out in the jurisprudence and the Rules.
[89]
The operative portion of CCI’s offer provided
for the dismissal of Venngo’s action, the dismissal of CCI’s defensive
counterclaim (that the Federal Court found no need to adjudicate) and payment
of only 75% of the respondent’s costs pursuant to column III of Tariff B if the
offer were accepted by October 30, 2015, which was more than a week before the
commencement of the trial. Thereafter, presumably, the normal rules regarding
costs would have become effective.
[90]
Even if it is possible to assume the latter
point, CCI’s offer still fails to meet the requirements of Rule 420(3). As its
counterclaim was purely defensive, the only element of compromise contained in
the offer was the provision on costs. However, the compromise on costs was not
open until the commencement of trial. Thus, the offer did not comply with Rule 420(3)
and the trial judge was incorrect in holding otherwise.
[91]
It is impossible from the Costs Order to
discern what role the offer played in the lump sum amount awarded by the trial
judge. Therefore, I would set aside his costs award and remit the issue of
costs to the trial judge for re-determination in accordance with these reasons.
In conducting the re-determination, the trial judge should also examine whether
the amounts paid to CCI’s prior counsel are relevant to the amount to be
awarded and, if so, whether they have been adequately established in accordance
with the principles from Nova Chemicals discussed above, as that case
was decided after the Costs Order was made.
IV.
Proposed Disposition
[92]
In light of the foregoing, I would dismiss Venngo’s
appeal from the judgment on the merits of its trade-mark action, with costs,
but would grant its appeal of the Costs Order, again with costs, and would
remit the issue of costs to the trial judge for re-determination in accordance
with these reasons.
“Mary J.L. Gleason”
“I agree.
David Stratas J.A.”
“I agree.
J. Woods J.A.”