Date: 20061218
Docket: T-898-05
Citation: 2006 FC 1510
Ottawa, Ontario, December 18,
2006
PRESENT: The Honourable Barry Strayer
BETWEEN:
HYUNDAI AUTO CANADA, a
division of
HYUNDAI MOTOR AMERICA
Plaintiff(s)
and
CROSS CANADA AUTO BODY SUPPLY (WEST) LIMITED,
CROSS CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED and
AT PAC WEST AUTO PARTS ENTERPRISE LTD.
Defendant(s)
REASONS FOR ORDER AND ORDER
Introduction
[1]
This
is a motion by the Plaintiff for an interlocutory injunction to prevent the
Defendants from using a trade-mark of the Plaintiff, namely HYUNDAI,
registration number 302,619 and from causing confusion in Canada between the
Defendants’automotive wares, services or businesses and the wares, services or
business of the Plaintiff. This motion is brought in an action for a permanent
injunction, damages or an accounting of profits and other incidental remedies.
Facts
[2]
The
Plaintiff, Hyundai Auto Canada (HAC), is a division of Hyundai Motor America, a
California Corporation. HAC has its headquarters in Markham, Ontario.
It imports Hyundai automobiles and parts from Korea and the United
States.
According to its affidavit evidence, it sells automobiles, parts and
accessories through a network of franchise automobile dealers in Canada and has been
doing so since January, 1984. It owns, inter alia, the trade-mark
HYUNDAI, registration number 302,619.
[3]
It
is not in dispute that the Defendants sell among other things parts for HYUNDAI
automobiles. These parts or their packaging bear the HYUNDAI trade-mark. The
Defendants take the position that these are genuine parts which they acquire in
Canada from a
single supplier who they have so far refused to name. The Defendants received
from Plaintiff’s counsel a letter dated January 22, 2004 alleging that the Defendants
were infringing the Plaintiff’s trade-mark and demanding that the Defendants
cease to sell automotive parts and accessories bearing the trade-marks
registered to the Plaintiff. Between then and July 30, 2004 there were
exchanges of correspondence which did not resolve the matter. The Defendants
then heard nothing until May 25, 2005 when the Plaintiff commenced the present
action. Counsel for the Plaintiff in forwarding the Statement of Claim to
counsel for the Defendants said that the Plaintiff would be bringing a motion
for interlocutory injunction the following week. In fact more than a year
elapsed before the present motion was brought on July 31, 2006.
[4]
The
Defendants filed a Statement of Defence in which they made the usual
counterclaim that the Plaintiff’s trade-mark is invalid.
[5]
In
the meantime, the Defendants had applied on June 20, 2006 for the registration
of the trade-mark HYUNDAI in the name of Cross Canada Auto Body Supply
(Windsor) Limited. The descriptive words to be used in association with this trade-mark
were exactly the same as in the existing registration of the Plaintiff’s trade-mark
HYUNDAI. It is agreed that that application is in abeyance pending the
completion of a proceeding under section 57 of the Trade-marks Act, R.S.C.,
1985, c. T-13 (Act) which the Defendants have also brought for the expungement of
five registered trade-marks of the Plaintiff including the trade-mark HYUNDAI.
[6]
The
only evidence provided by the Plaintiff as to possible harm to the Plaintiff if
the injunction is not given, and as to the balance of convenience, are the
following paragraphs from the affidavit of Peter Renz, Director, Marketing
& Public Relations of the Plaintiff:
36.
I believe
that Cross Canada Auto Body Supply (Windsor)
Limited and the other defendants intend to use the trade-mark HYUNDAI in order
to obtain the business and goodwill of HAC in the trade-mark HYUNDAI. The use
of the trade-mark HYUNDAI by the defendants will damage the goodwill associated
with the trade-mark HYUNDAI and the reputation of HAC. Distribution of
automobile parts and accessories by the defendants using the trade-mark HUYNDAI
do not have the warranty protection Canadian consumers would normally expect
i.e. from HAC. This conduct has the potential for undermining HAC’s
substantial investment in generating and maintaining the goodwill of Canadian
customers. A true copy of HAC’s service passport for 2005 Hyundai vehicles is
attached as exhibit “BBB”. Service passports are given to purchasers of all
Hyundai vehicles and set out information regarding maintenance, warranties and
customer relations, and identify HAC as the warrantor of Hyundai vehicles in Canada.
37.
HAC cannot
ensure that automobiles, parts and accessories marked with the HYUNDAI
trade-mark by Cross Canada Auto Body Supply (Windsor) Limited will conform to
Canadian automobile safety standards. I am not aware of any history or
expertise of the defendants producing vehicles, or producing parts to be used
in vehicles of others. Thus, the defendants’ lack of expertise may result in
potential safety risks since such parts and accessories may not conform to
Canadian automobile safety standards and will undoubtedly not conform to HAC’s
specifications. This will negatively impact on HAC’s reputation and goodwill
in the Canadian market and its trade-mark HYUNDAI.
38.
While the
damage to HAC’s goodwill and its trade-mark HYUNDAI from the defendants actions
will be very real, there is no way to measure and quantify the loss of goodwill
and in particular the loss of customers as a result of such sales. This impact
on HAC’s reputation and goodwill, although not quantifiable, could be very
serious.
Analysis
[7]
The
parties agree, and I accept, that the proper test for determining whether an
interlocutory injunction should be granted is confirmed by the Supreme Court
decision of RJR - Macdonald Inc. v. Canada (Attorney General), [1994] 1
S.C.R. 311 at 334. That test requires, for the grant of an interlocutory injunction
at the request of the Plaintiff:
1. that
there be a serious question to be tried in the main action;
2. that
in the absence of an interlocutory injunction the Plaintiff will suffer
irreparable harm; and
3. that
the balance of convenience as between the parties favours the grant of an
injunction against the Defendants.
If one of these elements is absent, then
the injunction should not be granted. I will apply these factors to the facts
of this case.
Serious
Question
[8]
The
Defendants do not dispute, and I accept, that there is a serious issue to be tried
in the main action.
Irreparable
Harm
[9]
I
am not satisfied that the Plaintiff has demonstrated that it will suffer
irreparable harm that cannot be compensated in damages if the injunction is
refused. Its only evidence on potential harm is set out in paras. 36-38 of the
affidavit of Peter Renz as quoted above. This evidence is essentially
speculative. He states that the use of the trade-mark HYUNDAI by the
Defendants will damage the Plaintiff’s goodwill associated with that
trade-mark. By way of giving substance to this conventional statement he says
that parts distributed by the Defendants do not have warranty protection. The
Defendants have produced evidence to the contrary. Further he states that
parts bearing the HYUNDAI trade-mark sold by the Defendants may not conform to
Canadian automobile safety standards. But the Plaintiff admits that it has had
samples of the parts sold by the Defendants since 2003 and I must infer that in
that time the Plaintiff has had ample opportunity to inspect those parts. Yet
there is not a bit of evidence produced by the Defendants that any of the parts
it has inspected have been found defective or unsafe. On the other hand,
evidence from the Defendants is to the effect that the parts are made by the
same company that supplies the Plaintiff. The Plaintiff, in spite of its
ability to inspect those parts, has produced no evidence to the contrary. It
is therefore pure speculation that the parts being sold by the Defendants are
inferior and will damage the goodwill attributed to the HYUNDAI trade-mark.
[10]
In
general it may also be said that the Plaintiff has produced no evidence of
confusion on the part of any customer of the Defendants: no example has been
provided of such a customer complaining to the Plaintiff or its dealers about
quality, or failure of warranty, in respect of parts sold by the Defendants.
[11]
Finally,
Mr. Renz in paragraph 38 of his affidavit says that while the damage to the
Plaintiff’s goodwill and its trade-mark HYUNDAI will be very real there will be
no way to measure and quantify the loss of goodwill and the loss of customers.
I take it this is to support the view that damages could not be an adequate
remedy. I do not believe that the Plaintiff has sufficiently established that
there would be damage to its goodwill and trade-mark by the activities of the
Defendants and, therefore, the difficulties of quantifying such damage are very
hypothetical.
[12]
The
jurisprudence of the Federal Court of Appeal is quite clear that in order to
obtain an interlocutory injunction against the use of its trade-mark a
plaintiff must demonstrate clearly that otherwise it will suffer irreparable harm,
not that it might or could suffer irreparable harm: see Syntex Inc. v.
Novopharm Ltd. (1991), 36 C.P.R. (3d) 129 at 135; Nature Co. v.
Sci-Tech Educational Inc. (1992), 41 C.P.R. (3d) 359; Centre Ice Ltd. v.
National Hockey League (1994), 53 C.P.R. (3d) 34.
[13]
The
Plaintiff has argued strenuously that whether or not it can demonstrate that it
will suffer harm, in a case of “blatant infringement” of a registered
trade-mark the Court can grant an injunction without proof of irreparable
harm. I have considered carefully the cases counsel cites in support of this
proposition. Three of these cases, I.B.M. Corp. v. Ordinateurs Spirales
Inc., [1985] 1 F.C. 190, Overseas Enterprises Ltd. v. Feathers
Publishing & Marketing Inc. (1990), 34 C.P.R. (3d) 78 and Dennis v.
Genex Communications Inc., 2003 FC 974 (all F.C.T.D.), involve copyright,
not trade-marks, and I think are distinguishable on that basis. Counsel for
the Plaintiff placed some reliance on passages from the Judgement in Vulcan
Northwest Inc. v. Vulcan Ventures Corp. (2001), 12 C.P.R. (4th)
95 (F.C.T.D.) at paras. 6 and 14. I would first observe that para. 6 cited with
approval is actually a passage from the Reasons wherein the learned motion
Judge was describing the plaintiffs’ contentions. Apart from that, the case
involved quite different companies, the two plaintiffs being well-established
high technology companies in Washington State, the defendant a
“penny stock mining exploration company” based in Vancouver. Both used
the name “VULCAN VENTURES” in their businesses. The motion Judge observed
that:
The potential for confusion is obvious
and much of it may never come to the plaintiffs' attention thus making damages
unknown and irreparable.
With respect I believe that was a natural
conclusion in the particular circumstances: the companies were in quite
different businesses and the plaintiffs might never know of any impact on its
goodwill. On the other hand, in the present case, the Plaintiff and the
Defendants are in similar businesses, each supplying HYUNDAI parts and the
impact of one on the other will be more immediately apparent and more
measurable. I believe that the outcome in the VULCAN VENTURES case was related
to the particular circumstances and not to any general proposition that
“blatant infringement” necessarily justifies the grant of an interlocutory
injunction.
[14]
Similarly,
in the case of Fednav Ltd. v. Fortunair Canada Inc. (1994), 59 C.P.R.
(3d) 1 (F.C.T.D.), which the Plaintiff also relied on, there were special
circumstances justifying the grant of an interlocutory injunction. The
defendant had widely-known business problems which created a special risk of
confusion for the Plaintiff. Further it was uncertain that the defendant could
pay any damages awarded against it and this militated in favour of an
injunction.
[15]
I,
therefore, can find no clear authority for the Plaintiff’s proposition that
“blatant infringement” justifies an injunction even in the absence of
irreparable harm. This proposition is akin to one which at one time was
accepted by some judges of the Federal Court Trial Division. It was our
understanding that the registered owner of a trade-mark had a presumptive right
to enforce the trade-mark until it was determined in a proper proceeding to be
invalid. We drew this conclusion from subsection 54(3) of the Act which states
as follows:
|
54.
(3) A copy of the record of the registration of a trade-mark purporting to be
certified to be true by the Registrar is evidence of the facts set out
therein and that the person named therein as owner is the registered owner of
the trade-mark for the purposes and within the territorial area therein defined.
|
54.
(3) Une copie de l’inscription de l’enregistrement d’une marque de commerce,
donnée comme étant certifiée conforme par le registraire, fait foi des faits
y énoncés et de ce que la personne y nommée comme propriétaire est le
propriétaire inscrit de cette marque de commerce aux fins et dans la région
territoriale qui y sont indiquées.
|
[16]
Therefore,
it was thought that if a defendant was clearly and deliberately using a
plaintiff’s registered trade-mark with identical or similar words and symbols
he could be stopped at least until he had successfully obtained a decision as
to the invalidity of the registered trade-mark. This analysis was, however,
consistently rejected by the Federal Court of Appeal which took the view that
once a defendant pleaded the invalidity of the trade-mark then the plaintiff
was not automatically entitled to have it enforced: see Syntex Inc.,
above; Nature Co., above; Centre Ice Ltd., above.
[17]
In
the present case, the Defendants have not only pleaded invalidity of the
Plaintiff’s trade-mark but they have also launched section 57 proceedings to
have it and other trade-marks expunged. In these circumstances, I am not at
liberty to make a finding of irreparable harm simply because there is clear and
undisputed identity between the Plaintiff’s registered trade-mark HYUNDAI and
the marks on the parts that the Defendants sell for Hyundai automobiles.
Balance of
Convenience
[18]
As
I have concluded that there is no irreparable harm demonstrated in the
evidence, it is unnecessary for me to consider whether a balance of convenience
would be in favour of issuing or refusing the injunction. In case I am wrong
in my other conclusions, however, I would agree with the Defendants that this
remedy should be denied on account of delay.
[19]
The
Plaintiff has taken exception to the Defendants’ activities since at least the
beginning of 2004. Indeed it admitted having obtained samples of the
Defendants’ parts as early as 2003. It did not commence action until May 25,
2005, and then did not seek this injunction until July 28, 2006 some 2 ½ years
after it first formally objected to the Defendants’ activities. According to the
evidence, during that period the Defendants have developed their business in
the sale of the products complained of. The Plaintiff seeks to justify the
delay on the basis that it did not consider the matter urgent until it
discovered in June, 2006, that the Defendants had in the preceding February
applied for registration of the HYUNDAI trade-mark. There is no affidavit
evidence to support this assertion but counsel for the Plaintiff argued that it
was only then that the urgency of the matter became apparent.
[20]
I
do not accept the Plaintiff’s explanation: there was no new urgency created by
an application for registration, an application which cannot be processed and
will not be processed until at least the section 57 proceeding is completed.
If that proceeding leaves the Plaintiff as registered owner of the trade-mark
HYUNDAI and if the Defendants still seek to advance their application to become
registered owners of the trade-mark, the Plaintiff can at that time in
opposition proceedings protect their interest.
[21]
I
note that in LifeScan, Inc. v. Novopharm Ltd. (2000), 10 C.P.R. (4th)
500 (F.C.T.D.) a delay of about one year after the commencement of the action
to seek an interlocutory injunction was found to be excessive and a bar to the
grant of an injunction and, in Ikea Ltd. et al. v. Idea Design Ltd. et al. (1987),
13 C.P.R. (3d) 476, a delay of over one year after the plaintiff became aware
of the defendant’s use of a confusing trade-name before seeking an injunction
tipped the balance of convenience against the plaintiff. By its own actions
the Plaintiff has demonstrated the lack of urgency required for an
interlocutory injunction.
[22]
This
motion will, therefore, be dismissed with costs.
ORDER
THIS COURT ORDERS that
the Plaintiff’s motion of July 31, 2006 for an interlocutory injunction is
dismissed with costs.
“ B. L. Strayer ”
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