Date: 20030307
Docket: T-2492-94
Neutral citation: 2003 FCT 283
Ottawa, Ontario, March 7, 2003
Present: The Honourable Madam Justice Danièle Tremblay-Lamer
BETWEEN:
Toys "_"Us (CANADA) LIMITED and
GEOFFREY TOYS (CANADA) LIMITED
Plaintiffs
and
MANJEL INC.
Defendant
REASONS FOR ORDER AND ORDER
[1] The plaintiffs bring an action for trade-mark infringement and passing off concerning the use of the trade-mark NUTS 'R' US by the defendant for the sale of nuts.
[2] The plaintiffs plead and rely upon two trade-marks in this action.
a) One mark is a registered trade-mark which is called Toys "_" Us & Design which was registered in the Canadian trade-marks office on May 19, 1978 under registration number TMA 227,944.
b) The other mark is unregistered and comprises the words Toys "_" Us.
[3] Toys "_" Us (Canada) Ltd. ("Toys "_" Us") is now shown on the Register as the owner of the trade-mark Toys "_" Us & Design. It previously owned this trade-mark from July 1984 to April 1992 and has been the owner since December 1994. From April 1992 to December 1994, this trade-mark was owned by the plaintiff Geoffrey Toys (Canada) Ltd, which licensed it to Toys "_" Us for use in Canada. Prior to July 1984, this trade-mark was owned by Toys "_" Us, Inc.
THE PLAINTIFFS' BUSINESS
[4] The first Toys "_" Us store opened in Canada in September 1984. In 1990, there were twenty-seven Toys "_" Us stores in Canada. In 1993, there were forty-four Toys "_" Us stores in Canada. There are currently sixty-three such stores.
[5] Toys "_" Us stores carry at any given time an average of 11,000 different products, most of them bearing someone else's trade-mark. Between 1984 and 1992, the total sales of all products sold in Canada through Toys "_" Us retail stores exceeded one billion, five hundred million dollars. An annual breakdown of these sales appears below:
Year Sales
1984 $ 16,928,000
1985 $ 38,702,000
1986 $ 70,897,000
1987 $ 116,909,000
1988 $ 180,289,000
1989 $ 234,060,000
1990 $ 263,880,000
1991 $ 276,626,000
1992 $ 317,808,000
TOTAL: $ 1,516,139,000
[6] Within the amount of sales mentioned in the preceding paragraph, Toys "_" Us stores have sold candy, confectionery and snack foods. An annual breakdown of these sales figures appears below:
Year Sales
1984 Toys "_" Us presently has
no records for this period
1985 Toys "_" Us presently has
no records for this period
1986 Toys "_" Us presently has
no records for this period
1987 $ 1,151,000
1988 $ 1,457,000
1989 $ 2,019,000
1990 $ 2,596,000
1991 $ 2,899,000
1992 $ 3,299,000
[7] Some of the products sold in Toys "_" Us stores in Canada carry the Toys "_" Us trade-mark. These products include: diapers, baby powder, baby oil, baby wipes, bubbles, writing tablets, candy, confectionery and snack foods. An annual breakdown of these sales figures appears below:
Year Sales
1984 Toys "_" Us presently has
no records for this period
1985 Toys "_" Us presently has
no records for this period
1986 Toys "_" Us presently has
no records for this period
1987 $ 410,000
1988 $ 631,000
1989 $ 1,276,000
1990 $ 1,140,000
1991 $ 1,047,000
1992 $ 1,458,000
[8] Within the amount of these sales, an annual breakdown of the sales of candy, confectionery and snack foods bearing the Toys "_" Us trade-mark appears below:
Year Sales
1984 Toys "_" Us presently has
no records for this period
1985 Toys "_" Us presently has
no records for this period
1986 Toys "_" Us presently has
no records for this period
1987 $ 173,000
1988 $ 255,000
1989 $ 475,000
1990 $ 542,000
1991 $ 649,000
1992 $ 600,000
THE BUSINESS OF THE DEFENDANT
[9] The defendant, Manjel Inc., is a family business founded in 1980 by Louise Rodericks. At all material times, Louise Rodericks has been the President of the defendant. The defendant began as a wholesale business selling chocolates, artificial flowers and glassware to retailers.
[10] In 1986, her husband, Neville Rodericks joined her in the business and the defendant began acting as an agent for third party packagers of various food products including nuts.
[11] In 1987, the defendant began to sell nuts and snack food in packages using its own trade-marks. One of the trade-marks that it adopted was NUTS 'R' US.
[12] Since March 1987 (alleged but not admitted), the defendant has sold its nut products bearing the trade-mark NUTS 'R' US at national retailers including Woolco, Walmart, K-Mart, Eaton's, The Bay, Big V and IDA and Guardian drug stores.
[13] In March 1987, the defendant filed a business name registration in Ontario to carry on a division of its business under the name NUTS 'R' US.
[14] On April 27, 1987, the defendant filed a trade-mark application in Canada for the trade-mark NUTS 'R' US claiming use from March 1987.
[15] The defendant has been and continues to manufacture, distribute, sell and advertise nuts and nut based snack food items in Canada in association with the trade-mark NUTS 'R' US.
LEGAL PROCEEDINGS
[16] The defendant's trade-mark application for NUTS 'R' US was published for opposition purposes on November 30, 1988.
[17] In December 1988, Toys "_" Us (Canada) Ltd. applied for an extension to oppose and the plaintiffs filed an opposition in March 1989. The plaintiffs have known of the defendant's use of the NUTS 'R' US mark at least as early as December 1988.
[18] On November 30, 1992, the Registrar of Trade-marks rejected the opposition.
[19] On October 4, 1993, Toys "_" Us (Canada) Ltd. and Geoffrey Toys (Canada) Ltd. appealed the decision of the Registrar.
[20] The plaintiffs commenced this action on October 13, 1994.
[21] On the consent of the parties, Blais J. ordered that the parties be allowed to proceed to trial without adducing evidence upon any question as to the damages and accounting of profits flowing from any infringement alleged in this case. Blais J. also ordered that any question as to damages and the accounting of profits shall be the subject of a reference after trial if it then appears that such issues need to be decided and that the conduct of the reference shall be decided by the trial judge.
ISSUES
Did Manjel direct public attention to its wares, services or business in such a manner as to cause or be likely to cause confusion between its wares, services or business and the wares, services or business of Toys "_" Us, contrary to subsection 7(b) of the Trade-marks Act?
Has Manjel infringed Toys "_" Us' right to the exclusive use of its registered trade-mark Toys "_" Us & Design through Manjel's use of a confusingly similar trade-mark NUTS 'R' US, contrary to section 20 of the Trade-marks Act?
EVIDENCE FOR THE PLAINTIFFS
[22] Mr. Jeffrey Sarfin, controller for the plaintiffs in 1984, was responsible for the overall financial affairs of the company, the day-to-day accounting aspects of the budgeting as well as the information technology.
[23] Mr. Sarfin testified that as a controller, he attended the stores that were established by Toys "_" Us on a regular basis. On October 12, 1984, Toys "_" Us opened its first two Canadian stores in Hamilton and London. Both stores were located near prominent malls. The Toys "_" Us stores expanded rapidly between 1984 and 1990. By 1990, there were 27 stores in Canada.
[24] Prior to opening its first Canadian store, Toys "_" Us undertook a substantial advertising campaign. As part of its marketing strategy, Toys "_" Us put the Toys "_" Us trade-mark on all its trailers.
[25] Mr. Sarfin confirmed that Toys "_" Us sold food items from the time that it opened its first Canadian store. These included candy, confectionery baby food, snack food, chocolate, as well as a fair amount of seasonal items that were sold during the Christmas, Easter, Back-to-School, Halloween and Valentine periods. These items were located in the front of the store. There were no records kept tracking the sale of these products between 1984 and 1987, but it is estimated that they represented about 1% of the total sales of the Toys "_" Us stores. Toys "_" Us also sold food items bearing the Toys "_" Us trade-mark. Mr. Sarfin did not recollect whether Toys "_" Us sold nuts or popcorn at all relevant times. In cross-examination, he confirmed the plaintiffs' competitors as companies that sell toys.
[26] Ms. D. Talker was the Divisional merchandise manager at Toys "_" Us in 1988. Prior to joining Toys "_" Us, she worked for a competitor, Toys City. As part of Toys City's competitive checks, she visited many Toys "_" Us stores on a regular basis. She confirmed that Toys "_" Us stores sold candy, confectionery and snack food including seasonal items (Christmas, Easter, Halloween, etc.) prior to 1988. In cross-examination, she testified that Toys "_" Us stores did not sell nuts because "it was not kids directed". This was also confirmed by the evidence of Mr. Mark Casey, Director of the Toys "_" Us store in London, Ontario, who was a sales associate with Toys "_" Us in September 1984.
[27] Dr. J. Senders, Professor emeritus in the Department of chemical and industrial engineering at the University of Toronto has been engaged in research, teaching and consulting in the behavioural sciences since 1950. He provided an opinion on a survey he arranged on the issue of confusion. Two hundred interviews were conducted in Montreal and 192 interviews were conducted in Toronto. Both results were significantly the same and were treated as one sample for the purpose of analysis.
[28] Persons were showed a container of NUTS 'R' US and were asked who they thought made or sold the product. Based on the responses, Dr. Senders' best estimate of the probability that the trade-mark NUTS 'R' US evokes the belief in a potential purchaser that the product is made or sold by Toys "_" Us is 12.2%.
[29] Based upon the data collected, one may be 95% confident that the trade-mark NUTS 'R' US evokes the belief that the product is made or sold by Toys "_" Us in more than 9.17% and less than 15.82% of the population sampled.
[30] According to Dr. Senders, one can also say that it is more likely than not (51% vs. 49%) that the trade-mark NUTS 'R' US evokes the belief that the product is made or sold by Toys '_' Us in more than 11% and less than 13.5% of the population sampled.
[31] The persons surveyed were also asked the reason for their response. The ones who answered Toys "_" Us indicated that they focussed on the "R US" element of the NUTS 'R' US trade-mark as the reason for their response. A portion of those who responded that Toys "_" Us makes or sells the NUTS 'R' US product did so on the basis that the product contains "R US" in the product name. From this data, Dr. Senders' best estimate of the probability that the "R US" element in the NUTS 'R' US trade-mark evoked the erroneous belief that Toys "_" Us makes or sells the NUTS 'R' US product is 68.8%.
[32] In cross-examination, Dr. Senders confirmed that he never chose nor met with Mr. Xanthos, the student who conducted the survey.
[33] He acknowledged that he would have done the survey differently if he had more time. He admitted that many of the standard practices were not followed, and that overall the survey was below his standard.
[34] A detailed review of the survey itself reveals that the standard practice of taking a verbatim response was not followed by Mr. Xanthos.
[35] Mr. Xanthos, a graduate student who conducted the field work for Dr. Senders, testified that he was requested to conduct the survey in Montreal and Toronto in a crowded area (shopping mall). He approached equal numbers of men and women. In Montreal, he interviewed equal numbers of French and English speaking people. Mr. Xanthos received no specific training and no specific instructions were given as to the standards to follow. He prepared the form used for the survey himself.
[36] Mr. E. Wahle, the President of Babies "R" Us, a subsidiary of Toys "_" Us, was the executive responsible for the operations of Toys "_" Us in Canada in 1984. He gave evidence on the operations of Toys "_" Us stores in Canada since joining the company. He explained the challenge to replicate the brand and market share dominance that existed in the United States. The geographic location of the stores was very important at the time. Only Class A real estate on a high traffic artery or a location adjacent to a regional shopping centre was selected. This was done in order to first benefit from the traffic flow and second, to help build the brand recognition more quickly. An aggressive advertising campaign was also undertaken as part of their strategy (billboard campaign, teaser campaigns, radio, flyers, grand openings with stars). The fleet of trucks and trailers for the distribution of merchandise all bore the name Toys "_" Us. Mr. Wahle admitted that Toys "_" Us was famous for selling toys.
[37] In the early years, he frequently visited the stores, looking at every aspect of the store merchandising, operations presentation, cleanliness, and customer service. He confirmed that Toys "_" Us sold food items including candy, confectionery and snack foods which were located at the entrance. He confirmed that the estimates given by Mr. Sarfin for the sales of food items, including the Toys "_" Us branded ones, were accurate.
EVIDENCE OF THE DEFENDANT
[38] Mrs. L. Rodericks, has been the President of the defendant, Manjel Inc., at all material times.
[39] She testified that the defendant began in 1980 as a wholesale business selling chocolates, artificial flowers and glassware to retailers. In 1986, her husband joined her in the business. In 1987, the defendant began selling nuts and snack food in packages using its own trade-marks. They filed a business registration in March 1987 for NUTS 'R' US as well as a trade-mark application in April 1987 for NUTS 'R' US claiming use from March 1987. Since March 1987, they have sold nut products bearing the trade-mark NUTS 'R' US to a number of major stores across Canada.
[40] In cross-examination, Mrs. Rodericks testified that it was between January and March 1987 that they came up with the name NUTS 'R' US. She had never seen or been at Toys "_" Us, but her husband knew about the store. She admitted that when she first heard the name Toys "_" Us, she was quite surprised and reflected at the time that it was "awfully close to what we have".
[41] Dr. Ruth Corbin, Vice-Chair of Leger Marketing, testified regarding the survey research and analysis conducted by Dr. Senders. More particularly, she was asked the following questions: whether the results of the survey were statistically reliable; whether the questions in the questionnaire were valid measures of reputation and confusion; whether the survey was conducted in accordance to standards that industry peers would consider acceptable; whether the results could be generalized to draw any inferences about what the entire Canadian public would perceive or believe; whether the results could be generalized to draw inferences about what the Canadian public perceived or believed in the time period between now and 9 years ago; and finally what could be reasonably concluded from the survey regarding the reputation of Toys "_" Us in Canada, the distinctiveness of the "R" Us portion of the Toys "_" Us brand name and the confusion induced by the NUTS 'R' US product.
[42] In her affidavit, she concluded that Dr. Senders' survey was not statistically reliable. It breaches virtually every published standard of which she was aware in the selection of a representative sample of the pertinent population.
[43] According to well-respected publications on scientific validity, experimental design and questionnaire construction, the questions do not validly measure either reputation or confusion. In particular, the survey lacks a control condition, an essential condition of studies which purport to offer "proof".
[44] According to published industry standards for survey research in Canada, many aspects of the Senders study are below the minimum level of acceptability.
[45] The results are clearly not generalizable to Canada, nor can any inferences be drawn about perceptions of the Canadian public prior to November 2002.
[46] In her opinion, although Toys "_" Us evidently enjoys some reputation in Canada, the survey offers no valid quantitative measure of the extent of that reputation. The "R Us" portion of the name is not distinctive, based on responses of approximately 9 in 10 people aware of Toys "_" Us. The best estimate that can be derived from the survey of the confusion induced by the Nuts 'R' Us product is between 0% and 2%. Survey answers which appear to show confusion are statistically indistinguishable from guessing.
[47] Based on the evidence, I am ready to make the following findings of facts:
[48] The evidence of Messrs. Sarfin, Casey, Wahle and Ms. Talker, clearly establishes that Toys "_" Us sold candy, confectionery and snack food from the time it opened its first store in Canada in 1984. This amounted to about 1% of their total sales.
[49] The evidence establishes that since the opening of the first Toys "_" Us store in Canada, food items bearing the trade-mark Toys "_" Us amounted to approximately 10% - 20% of the 1% total sales of food products.
[50] The evidence of the plaintiffs' employees establishes that at the relevant date of March 1987, the plaintiffs' goodwill was primarily in relation to the operation of a retail store selling toys. This is emphasized by the testimonies of Mr. Wahle who stated that Toys "_" Us was famous for selling toys; Mr. Sarfin who described the plaintiffs' competitors as companies selling toys; and Ms. Talker who stated that it would be inappropriate to sell nuts because it was not kids directed.
[51] Mrs. Rodericks' evidence confirms that the NUTS 'R' US trade-mark had been used by Manjel in relation to products other than nuts such as cheese rings, oriental rice snacks, and potato rings.
[52] Mrs. Rodericks testified that her husband knew about Toys "_" Us at the relevant time. I can therefore draw the inference that Manjel commenced its use of the trade-mark NUTS 'R' US with its eyes wide open.
[53] The plaintiffs have not provided evidence of anyone who was actually confused by the defendant's use of the trade-mark NUTS 'R' US.
[54] As for the survey evidence, which is the basis for the opinion of Dr. Senders on the issue of confusion, I have serious concerns with its validity. First, it was not conducted in accordance with industry standards. Dr. Senders himself admitted that it was below his own standards, that it was less than ideal because he was in a hurry, and that he did not supervise the test, nor train Mr. Xanthos who conducted the survey.
[55] I have further concerns with the fact that Mr. Xanthos did not record answers verbatim as he should have done and consequently, that many answers were ambiguous and open to interpretation.
[56] I also note the lack of a control condition. I accept Dr. Corbin's expert evidence that it is an essential condition of studies which purport to offer "proof".
[57] Further, I am uneasy with the sampling which is not representative of Canada. Participants were sampled in only two cities, Toronto, and Montreal. No rural areas were sampled. Within the two cities, only a few locations were used for the interviews. Because inferences are drawn for all of Canada, it would have been appropriate to conduct a random sample of the population of Canada. Again, I note that this is acknowledged by Dr. Senders himself. Consequently, I conclude that the result of the survey cannot be generalized of what Canadians would perceive.
[58] In addition, there is the question of whether an appropriate "universe" of respondents was surveyed. There was no screening in advance to find out whether the individuals interviewed would ever shop for nuts, shop at Toys "_" Us stores, or be in stores where NUTS 'R' US are sold. As a result, there is no possible way of knowing if respondents were members of the pertinent population, whose views or behaviour would ever be influenced by potential confusion.
[59] In summary, I find that the flaws identified in the methodology used for the survey are so serious that I am unable to give it any probative value. Therefore, I find that Dr. Senders' opinion on the issue of confusion, which is based on this survey, has no weight.
PASSING OFF
[60] The plaintiffs argue that the defendant's use of the trade-mark NUTS 'R' US constitutes passing off, contrary to subsection 7(b) of the Act. Subsection 7(b) provides:
| 7. No person shall
[...]
(b) direct public attention to his wares, 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 wares, services or business and the wares, services or business of another;
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7. Nul ne peut :
[...]
b) appeler l'attention du public sur ses marchandises, 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 marchandises, ses services ou son entreprise et ceux d'un autre;
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[61] Subsection 7(b) is a statutory enactment of the common law action of passing off. This is a form of misrepresentation whereby a trader benefits from another person's goodwill by pretending that his wares, services or business are those of that other person ([1977] 2 S.C.R. 134">MacDonald v. Vapor Canada Ltd., [1977] 2 S.C.R. 134).
[62] In order to succeed in an action for passing off, the plaintiff must establish three elements: the existence of goodwill, deception of the public due to a misrepresentation, and actual or potential damage to the plaintiff (Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120).
[63] The plaintiff must first establish the existence of goodwill in a particular trading indicia, whether a trade-mark, trade-name, or other distinguishing feature, which indicates to the relevant public that the wares or services offered for sale in association with that indicia originate from, or are associated with the plaintiff. In this manner, the plaintiff's indicia is recognized by the public as distinctive specifically of the plaintiff's goods or services (Ciba-Geigy, ibid.).
[64] In the case at bar, I am satisfied that the evidence demonstrates that the plaintiffs have acquired substantial goodwill with their trade-marks Toys "_" Us & Design and word mark Toys "_" Us, and that these marks have become distinctive of toys and children's apparel. However, I do not believe that the evidence supports the plaintiffs' position that these marks have become distinctive of candy, confectionery, and snack foods. The evidence does not establish that the plaintiffs had a reputation for candy, confectionery, and snack foods in association with their Toys "_" Us trade-marks, at the material date of 1987, when the defendant began using the trade-mark NUTS 'R' US.
[65] In McDonald's Corp. v. Coffee Hut Stores Ltd. (1994), 76 F.T.R. 281, McKeown J. held that a trade-mark may not be distinctive of particular goods sold by a merchant where they constitute a small percentage of the total goods sold by the merchant, even if the trade-mark is very well known by reason of the large volume of total sales. The Court determined that the appellants' trade-mark MCDONALD'S had not become distinctive of coffee, as the sale of coffee represented only 4% of their total sales. Similarly, I am of the view that the trade-marks Toys "_" Us & Design and word mark Toys "_" Us have not acquired goodwill and become distinctive of candy, confectionery, and snack foods. Although the evidence of the plaintiffs, more particularly the testimony of Mr. Sarfin and Mr. Wahle, establishes that Toys "_" Us stores sold candy, confectionery, and snack foods from 1984 - 1992, these products represented only 1% of their total sales during that time period.
[66] Further, the evidence does not support a finding that the defendant's use of the trade-mark NUTS 'R' US has caused confusion with the business of the plaintiffs. There is risk of confusion when a merchant uses the name, trade-mark or packaging of a product in a manner that creates in the client's mind the impression that its business is in fact that of another well-established business, or that it is a subsidiary or affiliate of that business (Polo Ralph Lauren Corp. v. United States Polo Assn. et al (2000), 9 C.P.R. (4th) 51). The relevant consumer is one who is likely to purchase the defendant's goods and who has a recollection, perhaps imperfect, of the plaintiff's trade-mark. The evidence does not establish that a consumer would believe that the defendant's product originated, was affiliated, or was somehow endorsed by the plaintiffs. Dr. Senders' survey does not address the question of the relevant consumer and as indicated earlier, in light of its many flaws, I have assigned no weight to the survey and consequently, no weight to his opinion on confusion.
[67] On the other hand I find significant the lack of evidence of actual confusion despite a long period of co-existence in the marketplace.
[68] Finally, there is no evidence that the defendant's use of the trade-mark NUTS 'R' US has caused damage to the plaintiffs. There is no evidence that the plaintiffs have suffered a loss of control over reputation, image or goodwill.
[69] For all these reasons, I am of the view that the defendant's use of the trade-mark NUTS 'R' US does not infringe subsection 7(b) of the Act and that the plaintiffs' allegation of passing off is not supported by the evidence.
[70] In light of this conclusion, I do not need to address the issue of whether the plaintiffs' action for passing off was barred by a statutory limitation period.
TRADE-MARK INFRINGEMENT
[71] The plaintiffs further argue that the defendant's use of the trade-mark NUTS 'R' US constitutes trade-mark infringement, contrary to section 20 of the Act. Subsection 20(1) provides:
| 20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name [...]
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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 non admise à l'employer selon la présente loi et qui vend, distribue ou annonce des marchandises ou services en liaison avec une marque de commerce ou un nom commercial créant de la confusion. [...]
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[72] The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares associated with the trade-marks are manufactured, leased, hired or performed by the same person. In United States Polo Assn., supra, the Federal Court of Appeal articulated at para. 18:
[...] the question is whether the ordinary consumer will, on seeing the later mark, infer as a matter of first impression that the wares with which the second mark is used are in some way associated with the wares of the earlier.
[73] It is not necessary that the wares of the plaintiff and the defendant be of the same general class for there to be a likelihood of confusion. In Miss Universe, Inc. v. Bohna, [1995] 1 F.C. 614, the Federal Court of Appeal affirmed at page 625:
For a likelihood of confusion to be found, it is not necessary that the parties operate in the same general field or industry, or that the services be of the same type or quality. Trade-marks for wares and services of one quality intended for one class of purchasers may be confusing with trade-marks for wares and services of a different type or quality, intended for a different class of purchasers.
[74] In order to determine whether there is a likelihood of confusion, the Court shall have regard to all the surrounding circumstances, including those described in subsection 6(5) of the Act:
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(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.
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a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;
b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;
c) le genre de marchandises, services ou entreprises;
d) la nature du commerce;
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.
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Inherent Distinctiveness & Extent to which Marks have become known
[75] It is well established that trade-marks containing words which are suggestive of the wares or services offered by the owner are considered to be weak marks and consequently, are afforded a minimal level of protection (Skydome Corp. v. Toronto Heart Industries Ltd. (1997), 128 F.T.R. 71). Conversely, trade-marks containing unique or coined words possess greater inherent distinctiveness and are afforded a wider ambit of protection (Pink Panther Beauty Corp. v. United Artists Corp., [1998] 3 F.C. 534 (C.A.)).
[76] In the case at bar, I am of the opinion that the plaintiffs' trade-mark Toys "_" Us & Design possesses a strong degree of inherent distinctiveness. Although the mark is somewhat descriptive in that it is phonetically equivalent to the phrase "toys are us", I believe that its distinctiveness lies in the fact that it substitutes the word "are" with the letter "R". This is not proper grammar, and it is a creative use of the alphabet to substitute words in the English language.
[77] With regard to the extent in which the plaintiffs' trade-mark has become known, the evidence establishes that their mark has been known since 1984 as applied to the operation of retail stores selling toys and children's wear apparel, and that the plaintiffs have spent a great deal of money on advertising and marketing in order to gain market and brand dominance. However, the evidence does not support a finding that their trade-mark has become distinctive in relation to candy, confectionery and snack foods. Although Mr. Sarfin testified that Toys "_" Us stores sold these products since the first store opened in 1984, this represented only 1% of the plaintiffs' total sales. I refer again to the case of McDonald's Corp., supra, where this Court held that the appellants' trade-mark MCDONALD'S, had not become distinctive of coffee, as the sale of coffee represented only 4% of their total sales.
[78] Furthermore, within the 1% of total sales, only 10% - 20% of that amount dealt with items with Toys "_" Us labels. In other words, the sale of Toys "_" Us branded food items represented only 0.1% - 0.2% of the plaintiffs' total sales from 1984 - 1992.
The Length of Time the trade-marks have been in use
[79] The length of time that a mark has been used is a factor which will contribute to confusion on behalf of the consumer in determining the origin of wares or services. A mark that has been used for a long time is presumed to have made a certain impression amongst consumers which must be given some weight (Pink Panther Beauty Corp., supra).
[80] The evidence establishes that the plaintiffs' Toys "_" Us & Design trade-mark has been used since 1984, whereas the defendant's NUTS 'R' US trade-mark has been used since September 1987. As a result, this factor favours the plaintiffs as they have used their trade-mark three years longer than the defendant.
Nature of the Wares
[81] Where trade-marks are similar, the extent to which the wares or services are similar will be an important factor in determining whether confusion is likely to result. If the trade-marks are used on similar products, there is a greater likelihood that consumers would be confused (Pink Panther Beauty Corp., supra).
[82] The evidence establishes that the plaintiffs sold candy, confectionery and snack foods, wares for which the respondent's trade-mark was registered. However, as stated above, the sale of these food items represented only 1% of the plaintiffs' total sales. In my view, this amount is too small to establish that the wares of the plaintiffs and the defendant are similar.
Nature of the Trade
[83] This factor takes into consideration the nature of the trade in which the wares or services circulate. The risk of confusion is greater where the wares or services, though dissimilar, are distributed in the same types of stores or are of the same general category of goods (Pink Panther Beauty Corp.,supra.). It is also pertinent whether the wares are expensive or inexpensive, and whether they are purchased hastily or after careful consideration. If the goods are of such a type that people buy them only after very careful examination and consideration, as for example, where they are expensive, this fact will tend to minimize the risk of confusion as consumers usually do not buy costly items on a mere appraisal of a trade-mark (Hermès S.A. v. Fletcher Golf Enterprises Ltd., [1984] F.C.J. No. 29 (T.D.) (Q.L.)).
[84] I recognize that the plaintiffs' food items and the defendant's nut products are both relatively inexpensive. It is unlikely that a consumer would engage in a thorough examination before deciding to buy such products. I also acknowledge that these products are sold in the same types of stores, namely to casual shoppers in a retail setting. However, the evidence demonstrates that the defendant's NUTS 'R' US product has never been sold, nor will likely ever be sold in the plaintiffs' Toys "_" Us stores. Furthermore, the plaintiffs' Toys "_" Us branded food items are sold exclusively in their Toys "_" Us stores. Consequently, the wares of the plaintiffs and the defendant will never be sold in the same store, and consumers will rarely, if ever, associate Toys "_" Us branded merchandise with stores other than those of Toys "_" Us. This factor favours the defendant.
Degree of Resemblance of Marks in Appearance, Sound and Ideas Suggested
[85] When determining prospective confusion between trade-marks, the trade-marks must be considered in their entirety and not as dissected items (Park Avenue Furniture Corp. v. Wickes/Simmons Bedding Ltd., (1991), 130 N.R. 223). As such, the fact that the expression "R US" is shared by the two trade-marks is not sufficient to establish that there is a likelihood of confusion. The trade-marks have to be considered in their entirety.
[86] A similar approach was adopted by Jerome A.C.J. in the case of Toys "R" Us (Canada) Ltd. v. Babies-R-Us, Inc. (1992), 58 F.T.R. 164. He stated at para 4:
The appellant contends that the use of the term "R Us" in the respondent's trade-mark, is confusing with its own registered trademark Toys 'R' Us._ However, the fact that both marks contain the element "R Us" is not sufficient, in and of itself, to conclude that the marks are confusing. The tests to be applied are those of appearance, sound and the ideas suggested by the marks. The marks are to be looked at as totalities and not as dissected parts. It is the idea of each mark, that is, the net impression left by the mark as a whole upon the mind, which is to be considered. Accordingly, the marks should not be subjected to intense and detailed analysis, but should rather be viewed from the standpoint of a person who has only an imperfect recollection of one mark and then later sees or hears the competing mark by itself.
[87] This Court has held that when comparing marks, the first word or first syllable in a trade-mark is far the more important for the purposes of distinction (Conde Nast Publications Inc. v. Union des Éditions Modernes, [1979] F.C.J. No. 801 (Q.L.)). This is a general rule that is subject to exceptions (Fonorola, Inc. v. Motorola, Inc., (1998), 144 F.T.R. 97). Nevertheless, I am of the view that the first words in the trade-marks at issue are sufficient to distinguish the marks. The words "toys" and "nuts", while not as unique as the expression "R Us", describe the businesses of the parties and affix different meanings to the trade-marks. The word toys in the trade-mark Toys "_" Us & Design indicates that this is a business that specializes in the sale of toys. Conversely, the word "nuts" in the trade-mark NUTS 'R' US indicates that this is a business that specializes in the sale of nuts.
[88] In addition, this Court has also held that when comparing marks, it is important to look at the wording and design of the marks in question (Sum-Spec Canada Ltd. v. Imasco Retail Inc./Société de Détail (1990), 35 F.T.R. 44). In my view, a visual consideration of the plaintiffs' trade-mark Toys "_" Us & Design, and the defendant's trade-mark reveals greater differences between the marks. Although the letter R is surrounded by quotations in both marks, the plaintiffs' trade-mark has a backwards "R", a feature which the defendant's mark does not share. The style of lettering of the two marks is also different. The plaintiffs' mark is written in a balloon font, with various colours, whereas the defendant's mark is written in a black script font.
[89] In light of the foregoing, I am of the opinion, that the trade-marks Toys "_" Us & Design and NUTS 'R' US are not similar.
All the Surrounding Circumstances
[90] In addition to the five factors that must be taken into account when determining a likelihood of confusion, the Act also directs the Court or the Registrar to consider all the surrounding circumstances (Pink Panther Beauty Corp., supra).
[91] In my view, an additional circumstance which is significant is the fact that the plaintiffs were unable to put forth any evidence before the Court of a single instance of actual confusion between their trade-marks and the defendant's NUTS 'R' US trade-mark. The Court is allowed to draw a negative inference against an allegation of confusion where despite a period of co-existence in the market place, no instances of actual confusion are established. In Christian Dior, S.A. v. Dion Neckwear Ltd., [2002] 3 F.C. 405, the Federal Court of Appeal stated at para. 19:
With respect to the lack of evidence by the opponent of actual confusion, the Registrar expressed the view that an opponent does not need to file that kind of evidence. This is true in theory, but once an applicant has filed some evidence which may point to unlikelihood of confusion, an opponent is at great risk if, relying on the burden of proof the applicant is subject to, it assumes that it does not need to file any evidence of confusion. While the relevant issue is "likelihood of confusion" and not "actual confusion", the lack of "actual confusion" is a factor which the courts have found of significance when determining the "likelihood of confusion". An adverse inference may be drawn when concurrent use on the evidence is extensive, yet no evidence of confusion has been given by the opponent
[92] To the same effect, in Monsport Inc. v. Vêtements de Sport Bonnie (1978) Ltée (1988), 23 F.T.R. 222, Addy J. stated at para. 11:
Jurisprudence has also established that the plaintiff must be able to show that a likelihood of confusion between the marks exists; he is not required to prove that confusion has actually occurred. It is important to note however, that the court is entitled to draw negative conclusions about the plaintiff's case if, despite a substantial period of coexistence in the marketplace, no instances of actual confusion are established.
[93] Having considered and weighed all the factors enumerated in subsection 6(5) of the Act, and taking into account the additional circumstance that no evidence of actual confusion has been adduced by the plaintiffs, I am of the view that the trade-marks Toys "_" Us & Design, and NUTS 'R' US, are not confusing. Thus, the defendant's use of the trade-mark NUTS 'R' US does not infringe section 20 of the Act.
[94] For all these reasons, the action is dismissed with costs.
ORDER
THIS COURT ORDERS that the action is dismissed with costs.
"Danièle Tremblay-Lamer"
J.F.C.C.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-2492-94
STYLE OF CAUSE: Toys "R" Us (Canada) Limited and others v. Manjel Inc.
DATE OF HEARING: January 20, 2003
PLACE OF HEARING: Toronto, Ontario.
REASONS FOR ORDER BY: Tremblay-Lamer J
DATED: March 7, 2003
APPEARANCES BY:
Mr. Nigel Campbell
Mr. Anthony Prenol
Mr. Michael Vaillancourt For the Plaintiffs
Mr. Robert H.C. MacFarlane For the Defendant
SOLICITORS OF RECORD:
Blake, Cassels & Graydon LLP
Barristers and Solicitors
Box 25, Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1A9 For the Plaintiffs
Bereskin & Parr
Suite 4000, Scotia Plaza
40 King Street West
Toronto, Ontario
M5H 3Y2 For the Defendant
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