Date: 20011205
Docket: T-1608-97
Neutral citation: 2001 FCT 1342
Halifax, Nova Scotia, this 5th day of December, 2001
PRESENT: THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE
BETWEEN:
CARICLINE VENTURES LTD.
Plaintiff
- and -
ZZTY HOLDINGS LIMITED and
AZIM ZONE INC.
Defendants
Docket: T-1609-97
AND BETWEEN:
CARICLINE VENTURES LTD.
Plaintiff
- and -
FARSIDE CLOTHING LTD. and
FARSIDE SKATEBOARDS & SNOWBOARDS LTD.
Defendants
REASONS FOR ORDER AND ORDER
O'KEEFE J.
Factual Background
[1] The plaintiff, Caricline Ventures Ltd., commenced an action against the defendants, Farside Clothing Ltd. and Farside Skateboards and Snowboards Ltd. for various forms of relief with respect to the trade-mark infringement in Docket No. T-1609-97. The plaintiff also commenced an action against ZZTY Holdings Limited and Azim Zone Inc. with respect to infringement of the same trade-mark in Docket No. T-1608-97. On February 7, 2000, Prothonotary Hargrave ordered that matters T-1608-97 and T-1609-97 be heard together.
[2] As the evidence was heard together for both matters, I will deal with the matters in the same judgment, but address the separate issues for each matter.
[3] The plaintiff, Caricline Ventures Ltd. is a company incorporated under the laws of the province of British Columbia, with its registered office at Vancouver.
[4] The plaintiff is the owner of the trade-mark PHARSYDE (the "plaintiff's mark"), registered in Canada on January 13, 1997 under the number TMA468,587 for use in association with a variety of clothing, footwear and accessories and with the operation of a retail business selling clothing. This registration issued from a trade-mark application filed by the plaintiff on April 4, 1995. This registration is, and at all material times has been, in full force and effect.
[5] The plaintiff's application was for a proposed trade-mark.
[6] In or about October, 1994 the plaintiff states that it developed "the basic concept and design for a retail clothing store, conveying a cutting-edge bold image which would appeal to young adults." The plaintiff's mark was adopted by the plaintiff in or about October, 1994 to connote the "far side of the mountain" or the "far side of life." The plaintiff spelled its mark "PHARSYDE".
[7] The plaintiff leased its premises in February, 1995 and engaged in its first business transaction under and in association with the mark "PHARSYDE" on May 5, 1995.
[8] The plaintiff erected a sign on the outside of its business premises displaying the plaintiff's mark on June 2, 1995.
[9] The plaintiff has continuously operated a clothing store at Granville Street in Vancouver since September 1, 1995 under and in association with the plaintiff's mark. The store sells a variety of clothing, footwear and accessories.
[10] The plaintiff advertised its store using the plaintiff's mark.
[11] The defendants, ZZTY Holdings Limited and Azim Zone Inc. operate a retail clothing store at 399 Yonge Street in Toronto, Ontario under and in association with the words "Farside Clothing Co." ("infringing mark no. 1").
[12] In documents filed with the Ontario Companies Branch in May, 1995, the defendant Azim Zone Inc. claims that it operated a retail clothing store at 399 Yonge Street, Toronto, Ontario under and in association with the infringing mark no. 1 since May 24, 1995, which is after the plaintiff filed its trade-mark application for TMA468,587.
[13] In documents filed with the Ontario Companies Branch in July, 1995, the defendant, ZZTY Holdings Limited also claims that it operated the retail clothing store at 399 Yonge Street, Toronto, Ontario under and in association with infringing mark no. 1 since June 27, 1995, which is also after the plaintiff filed its trade-mark application for TMA468,587.
[14] The defendant, Farside Clothing Ltd. ("Farside Clothing") is a company incorporated on or about June 6, 1995 under the laws of Alberta and has its registered office at 4703 - 105 Avenue, Edmonton, Alberta T6A 1A3.
[15] The defendant, Farside Clothing, operates a retail clothing store at 1353 West Edmonton Mall, Edmonton, Alberta T5T 4M2, under and in association with the word "Farside" (the "infringing mark no. 2").
[16] The defendant, Farside Clothing, obtained a business license to operate a store under and in association with infringing mark no. 2 on or about June 13, 1995, which is after the plaintiff filed its trade-mark application for TMA468,587.
[17] The defendant, Farside Skateboards & Snowboards Ltd. ("Farside Skateboards") is a company incorporated under the laws of Alberta and has its registered office at 954 Heacock Road, Edmonton, Alberta T6R 2M1.
[18] The defendant, Farside Skateboards was incorporated on or about February 7, 1997 under the name Canadian Muscle Ltd., which it subsequently changed to DSL Steel Limited. The defendant, Farside Skateboards, changed its name to its current one on or about September 28, 1998 and opened its retail store about December, 1998 which is after the plaintiff filed its trade-mark application for TMA468,587.
[19] The defendant, Farside Skateboards operates a retail store at 8536 - 109 Street NW, Edmonton, Alberta T6G 1E5, under and in association with infringing mark no. 2.
[20] The distinctive element of infringing mark no. 1 is identical to the plaintiff's mark in sound. Infringing mark no. 2 is identical to the plaintiff's mark in sound.
[21] The distinctive element of infringing mark no. 1 bears a substantial resemblance to the plaintiff's mark in the ideas it suggests. Infringing mark no. 2 bears a substantial resemblance to the plaintiff's mark in the ideas it suggests.
[22] Infringing mark no. 1 and infringing mark no. 2 together comprise the "infringing marks".
[23] The defendants used the infringing marks in association with wares, services and businesses or any of them, that are substantially similar to those of the plaintiff.
[24] Consequently, the use of the infringing marks are likely to lead to the inference that the wares sold and the services provided by the defendants are sold or provided by the same person who operates the retail clothing store bearing the plaintiff's mark, namely the plaintiff.
[25] 575726 Alberta Ltd. is a company owned by the Devji family and it operates under the name of "Deja Vu".
[26] 575726 Alberta Ltd. made an application to the Registrar of Trade-marks for the registration of the mark "FAR SIDE" in July, 1998. An amended filing was made in October, 1998 to change the mark being applied for to "FARSIDE".
[27] The defendants, ZZTY Holdings Limited and Azim Zone Inc. in their defence, pleaded that Farside Clothing or its predecessor in title commenced using the trade-mark "FARSIDE" in the normal course of trade before the plaintiff either registered or first used its trade-mark "PHARSYDE". These defendants also claim to be licensed by the owner of the trade-mark "FARSIDE" to use its trade-mark in connection with their operation of a retail clothing store known as Farside Clothing Co. in Toronto, Ontario.
[28] The defendant, Farside Clothing states that it or its predecessor in title commenced using the trade-mark "FARSIDE" in the normal course of trade before the plaintiff either registered or first used its trade-mark "PHARSYDE".
[29] The defendant, Farside Clothing also filed a counterclaim against the plaintiff claiming:
By reason of the facts alleged herein:
(a) The defendant by counterclaim was not the person entitled to secure registration of the trade-mark PHARSYDE, registration number TMA468,587 in respect of its wares or services by virtue of subsection 16(1) of the Trade-marks Act, R.S.C. 1985, c. T-13;
(b) The registration of the trade-mark PHARSYDE is invalid by virtue of section 18 of the Trade-marks Act.
WHEREFORE THE PLAINTIFF BY COUNTERCLAIM (DEFENDANT) CLAIMS:
(a) a declaration that the defendant by counterclaim (plaintiff) was not the person entitled to secure registration of the trade-mark PHARSYDE, registration number TMA468,587;
(b) an order striking out the entry of the trade-mark PHARSYDE registered on January 13, 1997 by Caricline Ventures Ltd. under No. TMA468,587;
(c) costs;
(d) such further and other relief as this Honourable Court may deem just.
[30] The plaintiff, in its statements of claim, claimed the following relief:
(a) declarations that:
(i) the defendants have infringed the plaintiff's mark, registration number TMA468,587;
(ii) the defendants have directed public attention to their wares, services and business in such a way as to cause or be likely to cause confusion in Canada between their wares, services and business and those of the plaintiff;
(iii) that the defendants made use in association with their wares and services of a description of their wares and services that is false in a material respect and likely to mislead the public as to the character and quality of their wares and services;
(b) an interim, interlocutory and permanent injunction restraining each of the defendants, by itself, its officers, directors, employees, agents and all those over whom it exercises control from:
(i) infringing the plaintiff's mark, registration number TMA468,587;
(ii) directing public attention to their wares, services or business in such a way as to cause or be likely to cause confusion in Canada between their wares, services or business and those of the plaintiff;
(iii) using the infringing mark or any similar words, in association with their wares, services or business;
(c) damages or an accounting of the defendants' profits, as the plaintiff may elect, together with pre- and post-judgment interest thereon;
(d) an order directing the defendants to deliver up to the plaintiff or to destroy, under oath, all wares, signs and printed material, including all packaging, advertising, promotional and labelling materials, the use of which would violate the rights of the plaintiff in the plaintiff's mark, which are or may come into the possession, power or control of the defendants;
(e) costs; and
(f) such further relief as this Honourable Court may deem just.
[31] Issues
1. What are the general principles?
2. Should the plaintiff's mark be expunged due to non-entitlement under subsection 16(3) of the Trade-marks Act, R.S.C. 1985 c. T-13?
(a) Does the defendant, Farside Clothing have standing to bring the counterclaim?
(b) Was there previous use of the mark "FARSIDE"?
(c) If there was previous use, was the use confusing?
3. Had the plaintiff's mark lost its distinctiveness on the relevant date so as to allow the plaintiff's mark to be expunged?
4. Did the defendants infringe?
Law
[32] The following sections of the Trade-marks Act, supra have been referred to by the parties.
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2. . . .
"use", in relation to a trade-mark, means any use that by section 4 is deemed to be a use in association with wares or services;
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2. . . .
« emploi » ou « usage » À l'égard d'une marque de commerce, tout emploi qui, selon l'article 4, est réputé un emploi en liaison avec des marchandises ou services.
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4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.
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4. (1) Une marque de commerce est réputée employée en liaison avec des marchandises si, lors du transfert de la propriété ou de la possession de ces marchandises, dans la pratique normale du commerce, elle est apposée sur les marchandises mêmes ou sur les colis dans lesquels ces marchandises sont distribuées, ou si elle est, de toute autre manière, liée aux marchandises à tel point qu'avis de liaison est alors donné à la personne à qui la propriété ou possession est transférée.
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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.
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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.
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6. (1) For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section.
(2) 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 or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
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6. (1) Pour l'application de la présente loi, une marque de commerce ou un nom commercial crée de la confusion avec une autre marque de commerce ou un autre nom commercial si l'emploi de la marque de commerce ou du nom commercial en premier lieu mentionnés cause de la confusion avec la marque de commerce ou le nom commercial en dernier lieu mentionnés, de la manière et dans les circonstances décrites au présent article.
(2) L'emploi d'une marque de commerce crée de la confusion avec une autre marque de commerce lorsque l'emploi des deux marques de commerce dans la même région serait susceptible de faire conclure que les marchandises liées à ces marques de commerce sont fabriquées, vendues, données à bail ou louées, ou que les services liés à ces marques sont loués ou exécutés, par la même personne, que ces marchandises ou ces services soient ou non de la même catégorie générale.
(3) L'emploi d'une marque de commerce crée de la confusion avec un nom commercial, lorsque l'emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à cette marque et les marchandises liées à l'entreprise poursuivie sous ce nom sont fabriquées, vendues, données à bail ou louées, ou que les services liés à cette marque et les services liés à l'entreprise poursuivie sous ce nom sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale.
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6.(4) The use of a trade-name causes confusion with a trade-mark if the use of both the trade-name and trade-mark in the same area would be likely to lead to the inference that the wares or services associated with the business carried on under the trade-name and those associated with the trade-mark are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(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
(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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6.(4) L'emploi d'un nom commercial crée de la confusion avec une marque de commerce, lorsque l'emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à l'entreprise poursuivie sous ce nom et les marchandises liées à cette marque sont fabriquées, vendues, données à bail ou louées, ou que les services liés à l'entreprise poursuivie sous ce nom et les services liés à cette marque sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale.
(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) 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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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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16. (3) Any applicant who has filed an application in accordance with section 30 for registration of a proposed trade-mark that is registrable is entitled, subject to sections 38 and 40, to secure its registration in respect of the wares or services specified in the application, unless at the date of filing of the application it was confusing with
(a) a trade-mark that had been previously used in Canada or made known in Canada by any other person;
(b) a trade-mark in respect of which an application for registration had been previously filed in Canada by any other person; or
(c) a trade-name that had been previously used in Canada by any other person.
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16. (3) Tout requérant qui a produit une demande selon l'article 30 en vue de l'enregistrement d'une marque de commerce projetée et enregistrable, a droit, sous réserve des articles 38 et 40, d'en obtenir l'enregistrement à l'égard des marchandises ou services spécifiés dans la demande, à moins que, à la date de production de la demande, elle n'ait créé de la confusion_:
a) soit avec une marque de commerce antérieurement employée ou révélée au Canada par une autre personne;
b) soit avec une marque de commerce à l'égard de laquelle une demande d'enregistrement a été antérieurement produite au Canada par une autre personne;
c) soit avec un nom commercial antérieurement employé au Canada par une autre personne.
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17. (1) No application for registration of a trade-mark that has been advertised in accordance with section 37 shall be refused and no registration of a trade-mark shall be expunged or amended or held invalid on the ground of any previous use or making known of a confusing trade-mark or trade-name by a person other than the applicant for that registration or his predecessor in title, except at the instance of that other person or his successor in title, and the burden lies on that other person or his successor to establish that he had not abandoned the confusing trade-mark or trade-name at the date of advertisement of the applicant's application.
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17. (1) Aucune demande d'enregistrement d'une marque de commerce qui a été annoncée selon l'article 37 ne peut être refusée, et aucun enregistrement d'une marque de commerce ne peut être radié, modifié ou tenu pour invalide, du fait qu'une personne autre que l'auteur de la demande d'enregistrement ou son prédécesseur en titre a antérieurement employé ou révélé une marque de commerce ou un nom commercial créant de la confusion, sauf à la demande de cette autre personne ou de son successeur en titre, et il incombe à cette autre personne ou à son successeur d'établir qu'il n'avait pas abandonné cette marque de commerce ou ce nom commercial créant de la
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(2) In proceedings commenced after the expiration of five years from the date of registration of a trade-mark or from July 1, 1954, whichever is the later, no registration shall be expunged or amended or held invalid on the ground of the previous use or making known referred to in subsection (1), unless it is established that the person who adopted the registered trade-mark in Canada did so with knowledge of that previous use or making known.
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confusion, à la date de l'annonce de la demande du requérant.
(2) Dans des procédures ouvertes après l'expiration de cinq ans à compter de la date d'enregistrement d'une marque de commerce ou à compter du 1er juillet 1954, en prenant la date qui est postérieure à l'autre, aucun enregistrement ne peut être radié, modifié ou jugé invalide du fait de l'utilisation ou révélation antérieure mentionnée au paragraphe (1), à moins qu'il ne soit établi que la personne qui a adopté au Canada la marque de commerce déposée l'a fait alors qu'elle était au courant de cette utilisation ou révélation antérieure.
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18. (1) The registration of a trade-mark is invalid if
(a) the trade-mark was not registrable at the date of registration,
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18. (1) L'enregistrement d'une marque de commerce est invalide dans les cas suivants_:
a) la marque de commerce n'était pas enregistrable à la date de l'enregistrement;
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(b) the trade-mark is not distinctive at the time proceedings bringing the validity of the registration into question are commenced, or
(c) the trade-mark has been abandoned,
and subject to section 17, it is invalid if the applicant for registration was not the person entitled to secure the registration.
(2) No registration of a trade-mark that had been so used in Canada by the registrant or his predecessor in title as to have become distinctive at the date of registration shall be held invalid merely on the ground that evidence of the distinctiveness was not submitted to the competent authority or tribunal before the grant of the registration.
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b) la marque de commerce n'est pas distinctive à l'époque où sont entamées les procédures contestant la validité de l'enregistrement;
c) la marque de commerce a été abandonnée.
Sous réserve de l'article 17, l'enregistrement est invalide si l'auteur de la demande n'était pas la personne ayant droit de l'obtenir.
(2) Nul enregistrement d'une marque de commerce qui était employée au Canada par l'inscrivant ou son prédécesseur en titre, au point d'être devenue distinctive à la date d'enregistrement, ne peut être considéré comme invalide pour la seule raison que la preuve de ce caractère distinctif n'a pas été soumise à l'autorité ou au tribunal compétent avant l'octroi de cet enregistrement.
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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, but no registration of a trade-mark prevents a person from making
(a) any bona fide use of his personal name as a trade-name, or
(b) any bona fide use, other than as a trade-mark,
(i) of the geographical name of his place of business, or
(ii) of any accurate description of the character or quality of his wares or services,
in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark.
40.(2) When an application for registration of a proposed trade-mark is allowed, the Registrar shall give notice to the applicant accordingly and shall register the trade-mark and issue a certificate of registration on receipt of a declaration that the use of the trade-mark in Canada, in association with the wares or services specified in the application, has been commenced by
(a) the applicant;
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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 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. Toutefois, aucun enregistrement d'une marque de commerce ne peut empêcher une personne_:
a) d'utiliser de bonne foi son nom personnel comme nom commercial;
b) d'employer de bonne foi, autrement qu'à titre de marque de commerce_:
(i) soit le nom géographique de son siège d'affaires,
(ii) soit toute description exacte du genre ou de la qualité de ses marchandises ou services,
d'une manière non susceptible d'entraîner la diminution de la valeur de l'achalandage attaché à la marque de commerce.
40.(2) Lorsqu'une demande d'enregistrement d'une marque de commerce projetée est admise, le registraire en donne avis au requérant. Il enregistre la marque de commerce et délivre un certificat de son enregistrement après avoir reçu une déclaration portant que le requérant, son successeur en titre ou l'entité à qui est octroyée, par le requérant ou avec son autorisation, une licence d'emploi de la marque aux termes de laquelle il contrôle directement ou indirectement les caractéristiques ou la qualité des marchandises et services a commencé à employer la marque de commerce au Canada, en liaison avec les marchandises ou services spécifiés dans la demande.
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(b) the applicant's successor in title; or
(c) an entity that is licensed by or with the authority of the applicant to use the trade-mark, if the applicant has direct or indirect control of the character or quality of the wares or services.
(3) An application for registration of a proposed trade-mark shall be deemed to be abandoned if the Registrar has not received the declaration referred to in subsection (2) before the later of
(a) six months after the notice by the Registrar referred to in subsection (2), and
(b) three years after the date of filing of the application in Canada.
(4) Registration of a trade-mark shall be made in the name of the applicant therefor or his transferee, and the day on which registration is made shall be entered on the register, and the registration takes effect on that day.
(5) For the purposes of subsection (3), section 34 does not apply in determining when an application for registration is filed.
50. (1) For the purposes of this Act, if an entity is licensed by or with the authority of the owner of a trade-mark to use the trade-mark in a country and the owner has, under the licence, direct or indirect control of the character or quality of the wares or services, then the use, advertisement or display of the trade-mark in that country as or in a trade-mark, trade-name or otherwise by that entity has, and is deemed always to have had, the same effect as such a use, advertisement or display of the trade-mark in that country by the owner.
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(3) La demande d'enregistrement d'une marque de commerce projetée est réputée abandonnée si la déclaration mentionnée au paragraphe (2) n'est pas reçue par le registraire dans les six mois qui suivent l'avis donné aux termes du paragraphe (2) ou, si la date en est postérieure, à l'expiration des trois ans qui suivent la production de la demande au Canada.
(4) L'enregistrement d'une marque de commerce est opéré au nom de l'auteur de la demande ou de son cessionnaire. Il est fait mention, sur le registre, du jour de l'enregistrement, lequel prend effet le même jour.
(5) Il n'est pas tenu compte de l'article 34 pour l'application du paragraphe (3).
50. (1) Pour l'application de la présente loi, si une licence d'emploi d'une marque de commerce est octroyée, pour un pays, à une entité par le propriétaire de la marque, ou avec son autorisation, et que celui-ci, aux termes de la licence, contrôle, directement ou indirectement, les caractéristiques ou la qualité des marchandises et services, l'emploi, la publicité ou l'exposition de la marque, dans ce pays, par cette entité comme marque de commerce, nom commercial -- ou partie de ceux-ci -- ou autrement ont le même effet et sont réputés avoir toujours eu le même effet que s'il s'agissait de ceux du propriétaire.
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50.(2) For the purposes of this Act, to the extent that public notice is given of the fact that the use of a trade-mark is a licensed use and of the identity of the owner, it shall be presumed, unless the contrary is proven, that the use is licensed by the owner of the trade-mark and the character or quality of the wares or services is under the control of the owner.
(3) Subject to any agreement subsisting between an owner of a trade-mark and a licensee of the trade-mark, the licensee may call on the owner to take proceedings for infringement thereof, and, if the owner refuses or neglects to do so within two months after being so called on, the licensee may institute proceedings for infringement in the licensee's own name as if the licensee were the owner, making the owner a defendant.
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50.(2) Pour l'application de la présente loi, dans la mesure où un avis public a été donné quant à l'identité du propriétaire et au fait que l'emploi d'une marque de commerce fait l'objet d'une licence, cet emploi est réputé, sauf preuve contraire, avoir fait l'objet d'une licence du propriétaire, et le contrôle des caractéristiques ou de la qualité des marchandises et services est réputé, sauf preuve contraire, être celui du propriétaire.
(3) Sous réserve de tout accord encore valide entre lui et le propriétaire d'une marque de commerce, le licencié peut requérir le propriétaire d'intenter des procédures pour usurpation de la marque et, si celui-ci refuse ou néglige de le faire dans les deux mois suivant cette réquisition, il peut intenter ces procédures en son propre nom comme s'il était propriétaire, faisant du propriétaire un défendeur.
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[33] Issue 1
What are the general principles?
It is accepted that the plaintiff's mark "PHARSYDE" is presumed to be valid by virtue of its registration. Lutfy J. (as he then was) very succinctly stated the jurisprudence in this area in Prologic Systems Ltd. v. Prologic Corp. (1998) 78 C.P.R. (3d) 435 (F.C.T.D.):
A registered trade mark is presumed to be valid. The burden is on the applicant to establish that the respondent's trade mark should be expunged. The party challenging the validity of the registration must establish a reputation in the trade under a style with which confusion may result. The applicant must show its use of its own trade mark or trade name prior to the registrant's date of first use and that the two competing marks are confusing one with the other.
Thus, there is a certain burden on the applicant (defendants) as a result of the plaintiff's trade-mark being registered.
[34] A further principle is that if there is any doubt as to the validity of the trade-mark, the presumption as to the validity of the trade-mark has not been rebutted and the doubt must be resolved in favour of the validity of the plaintiff's trade-mark (see California Fashion Industries, Inc. v. Reitman's (Canada) Ltd. (1991) 38 C.P.R. (3d) 439 at page 443 (F.C.T.D.)).
[35] Issue 2
Should the plaintiff's mark be expunged due to non-entitlement under subsection 16(3) of the Trade-marks Act, R.S.C. 1985 c. T-13?
(a) Does the defendant, Farside Clothing have standing to bring the counterclaim?
The counterclaim was brought by Farside Clothing, who was not the applicant for the trade-mark "FARSIDE". In fact, Farside Clothing was not incorporated until June 6, 1995. The plaintiff applied for its trade-mark "PHARSYDE" on April 4, 1995. The applicant for the trade-mark "FARSIDE" was 575726 Alberta Ltd. and this company is another Devji company.
[36] Section 17 of the Trade-marks Act, supra requires that the application for expungement of the plaintiff's mark can only be made "by a person other than the applicant for that registration or his predecessor in title except at the instance of that other person or his successor in title . . .". In the present case, 575726 Alberta Ltd. was the company that operated Deju Vu and is the company that allegedly carried out the prior use with the mark "FARSIDE" prior to April 4, 1995, the date the plaintiff made its application.
[37] In order to have standing to bring the counterclaim for the expungement of the plaintiff's mark "PHARSYDE", the defendant, Farside Clothing must establish that any trade-mark rights gained by 575726 Alberta Ltd. were transferred to it.
[38] To begin with, there was no written assignment disclosing the following from the plaintiff's read ins at pages 357 to 359 of the transcript:
Q. At some point around June of 1995, Deja Vu stopped selling merchandise with the name Farside on it.
A. Correct.
Q. And Farside Clothing Limited started selling merchandise with the name Farside on it. That is what you are saying?
A. Correct.
Q. So to make that happen, there had to be a transfer of the right to use the mark Farside from Deja Vu and its numbered company to Farside Clothing limited; is that right?
A. A transfer of?
Q. The right to use the mark Farside.
A. So how would a transfer be done? What are you saying? Like, I don't understand.
Q. Was there a transfer done of the right to use the mark Farside?
A. What kind of transfer would that be?
Q. Was it sold? Was the right to use the mark Farside sold by Deja Vu to Farside Clothing Limited?
A. Sold from me to myself?
Q. No, sold from the numbered company to Farside Clothing Limited.
A. What is there to sell? I mean, we are - - I mean, this is - - it's mine, both is mine. So why would I sell if - - you know, I mean, that doesn't - - it doesn't make sense, you know. I don't know what you are saying.
Q. It was never sold, was it?
A. What? Sold from what, Deja Vu to Farside?
Q. Yes.
A. Why would I sell it to myself?
Q. So it was never sold? The answer is no?
A. Correct.
And at page 367:
Q. You didn't make a distinction in your mind between Deja Vu and Farside Clothing Limited, Farside Clothing Limited being the Alberta company?
A. No.
And at pages 485 to 487 of the transcript:
A. There was no written - - or no agreements. It was all verbal agreements, because we are all, like, you know, a family. I mean, everything - - we don't work in that kind of manner where, you know, this is mine, that is his. You know what I mean? We all - - we are brought up to all work together, share together and do everything together, eh?
Q. All right. And can you tell the Court what was in - - what did you understand - - in the context of these discussions that you were talking about transferring, is it fair to say, did you guys - - did the group, including yourself, address its mind to the issue of the clothing line, for instance?
A. You know what, when we were in conversation, we did, and we discussed that, you know, the clothing line itself - - I mean, the name is being built. All the clothing will go to Farside Clothing. But the name will also transfer to Farside - -
Q. That was part of your discussion?
A. That was part of the discussions. That was - - even before we opened, like, I mean, that was just - - I was - - it was basically every time the name - - every time the conversation came up, it was always a part of that conversation somewhat.
Q. When you say it was always part of the conversation - -
A. Like between my family.
Q. All right. And that goes back to when?
A. Ever since - - well, I mean, our whole family knew, you know, what my intention - - what our the plan was. Because they figured it was a good plan, too, what we wanted to do. Because I always communicate with them what is going on, what we want to do, what I have to do. They tell me what they think of their plans and everything else.
And basically when we first started looking for a lease in West Edmonton Mall, that was the whole idea, was, you know, to find a store with two - - you know, that we could sell Farside product, call it Farside, and to carry other product and to do that kind of stuff. And that was before Christmas of ‘94.
So that was always our plan, but it always came up that, you know, once, you know, we will transfer - - like, Deja Vu is doing the clothing right now, but once Farside opens up, Farside will strictly carry the products.
Q. So I hear you, that these were a series of ongoing discussions?
A. That is right.
Q. All right. Now, what did Deja Vu, or did Deja Vu - - what did Deja Vu get in exchange for giving up the name Farside?
A. It was - - what did they get - - what did Deja Vu get?
Q. Right.
A. Deja Vu didn't get nothing. Because it was, like, from family going to family. Like, we were giving it to basically ourselves.
We felt - - I mean, I don't - - we don't - - like, that is how - - I don't know, that is how - - I mean, I don't - - I don't know how I can sell myself a car that I already own.
Like, that is what, in my head, I don't know, like, that is how we always think.
The only conclusion that I can reach from a review of this evidence is that the name "FARSIDE" and any related intellectual property rights were not in fact transferred from 575726 Alberta Ltd. to Farside Clothing. I am further drawn to this conclusion by the fact that in July, 1998 an application was made by the defendants' solicitors to register the trade-mark "FAR SIDE" and this application listed the owner as 575726 Alberta Ltd. A further application to correct the applied for mark from "FAR SIDE" to "FARSIDE" also listed the owner of the mark as being 575726 Alberta Ltd., and not Farside Clothing as would be appropriate if a transfer had occurred.
[39] Hafis Devji tried to explain the discrepancy by indicating that his lawyer may have assumed incorrectly that the numbered company was the applicant. However, this explanation is not supported by the comments of Mr. Devji in the transcript at pages 508 to 509, where he states:
A. And do you know, sir, is it possible that you - - in terms of the application and naming the applicant, is it possible that in the course of conversation that you may have named the said 575726?
Q. It is hard to recall the conversation. Maybe he assumed, maybe I did tell him. I guess the factor is I did not know legal terms on a lot of this stuff, on companies and how the applications should be made and all that, all the legal formats and all that.
A. But I have learned now, after going through many discussions with my - - with yourself and - - well, with Norm and everything else, the importance of the legal - - on what the application name should be made on.
But my assumption always is I own Farside, 575726 with my family, I also own Farside Clothing. So I did not - - I don't know the importance - - I did not know the importance of all of the applications and all that that we make. Now I do know, after learning and going through processes.
[40] As well, Mr. Devji's recollection was that he gave his lawyer, Mr. Bishop, instructions to make the trade-mark application but the law firm's file disclosed at the trial shows that the lawyer who received instructions was not Mr. Bishop but another lawyer. That lawyer's notes, when he was retained to make the application, mentions the numbered company and "Farside".
[41] The evidence also establishes that Hafis Devji noticed that the mark applied for in the application was "FAR SIDE" and not "FARSIDE" as it should have been. He did not, however, note that the applicant was incorrectly stated to be 575726 Alberta Ltd.
[42] I prefer the written documentary evidence as to the identity of the applicant, for the trade-mark "FARSIDE" over the uncertain evidence of Hafis Devji who provided his testimony from memory as he had no notes on this aspect of the case.
[43] The defendant, Farside Clothing urged upon me that the combination of sections 57 and 58 allows it to bring their counterclaim without the necessity to have an assignment of the trade-mark rights to it by the numbered company. I am not persuaded by this argument as section 17 of the Trade-marks Act, supra provides a specific mechanism to deal with previous use of a mark in relation to declaring a registered mark invalid. It is a principle of statutory interpretation that a specific section relating to the subject overrides a general section.
[44] In conclusion on this aspect of the action, I find that the defendant, Farside Clothing does not have standing to bring the counterclaim.
[45] Issue 2(b)
Was there previous use of the mark "FARSIDE"?
In the event I am not correct on the standing issue, I will now assume that Farside Clothing had standing to bring the counterclaim and deal with the remaining issues.
[46] Subsection 17(1) of the Trade-marks Act, supra requires the applicant establish previous use of a confusing trade-mark in order to have the plaintiff's mark declared invalid. According to subsection 16(3) of the Trade-marks Act, supra, the date for determining confusion with another trade-mark is the date of filing of the application for registration. In this case that date is April 4, 1995.
[47] For ease of reference, the following sections of the Act are reproduced:
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2. . . .
"use", in relation to a trade-mark, means any use that by section 4 is deemed to be a use in association with wares or services;
. . .
"trade-mark" means
(a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,
(b) a certification mark,
(c) a distinguishing guise, or
(d) a proposed trade-mark;
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2. . . .
« emploi » ou « usage » À l'égard d'une marque de commerce, tout emploi qui, selon l'article 4, est réputé un emploi en liaison avec des marchandises ou services.
. . .
« marque de commerce » Selon le cas_:
a) marque employée par une personne pour distinguer, ou de façon à distinguer, les marchandises fabriquées, vendues, données à bail ou louées ou les services loués ou exécutés, par elle, des marchandises fabriquées, vendues, données à bail ou louées ou des services loués ou exécutés, par d'autres;
b) marque de certification;
c) signe distinctif;
d) marque de commerce projetée.
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4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.
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4. (1) Une marque de commerce est réputée employée en liaison avec des marchandises si, lors du transfert de la propriété ou de la possession de ces marchandises, dans la pratique normale du commerce, elle est apposée sur les marchandises mêmes ou sur les colis dans lesquels ces marchandises sont distribuées, ou si elle est, de toute autre manière, liée aux marchandises à tel point qu'avis de liaison est alors donné à la personne à qui la propriété ou possession est transférée.
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The definition of "use" in the Act directs us to subsection 4(1) of the Act as the definition states use is "any use that by section 4 is deemed to be a use in association with wares or services". In this case, since the date of the applicant's application for registration was April 4, 1995 and the defendant, Farside Clothing did not open any stores until June, 1995, this case is only concerned with use in association with the wares.
[48] Subsection 4(1) states that a trade-mark is deemed to be used in association with wares if:
1) "at the time of transfer of the property in or possession of the wares";
2) "in the normal course of trade";
"it is marked on the wares themselves or the packages in which they are distributed or on the packages in which they are distributed or in any other manner so associated with the wares that notice of association is then given to the person to whom the property or possession is transferred".
[49] The prior use that is relied on by the defendants is the activity of 575726 Alberta Ltd. operating under the name Deja Vu. A perusal of the evidence shows that the activity relied on to establish prior use included the following:
1. Shipping inventory of Farside merchandise to the Toronto store (The Glasshead Store);
2. By September, 1994 the Deja Vu store was ordering t-shirts, hooded shirts and sweatshirts with "FARSIDE" screened on them to be sold from the Deja Vu store;
3. Prior to the Farside Edmonton store opening, Deja Vu posted signs inside the Deja Vu store in West Edmonton Mall indicating that a Farside Edmonton store was opening next door;
4. In March, 1995 West Edmonton Mall erected a temporary sign outside 1353 West Edmonton Mall stating "Farside Opening Soon";
5. The Farside Edmonton and Farside Toronto stores opened in June, 1995 and as soon as these stores opened, all of the Farside clothing was transferred from the Deja Vu store and the Glasshead store to the Farside stores;
6. The Farside merchandise was in the Glasshead store and the Deja Vu store to test the market and to get the name out;
7. T-shirts were given away with the name "FARSIDE" on the shirts.
[50] This Court's jurisprudence, with respect to use, has established the following:
1. SAFT - Societe des Accumulateurs Fixes Et. De Traction v. Charles Le Bargne Ltee (1975) 22 C.P.R. (2d) 178 F.C.T.D. at page 182 - a single sale of 500 flashlights to a subsidiary company was not a distribution of wares.
2. Golden Happiness Bakery v. Goldstone Bakery & Restaurant (1994) 53 C.P.R. (3d) 195 at page 199 - an order of boxes with the trade-mark on the boxes was not use as there was no proof when, if ever, the boxes were used.
3. Cornerstone Securities Canada Inc. v. Registrar of Trade-marks et al (1994) 58 C.P.R. (3d) 417 (F.C.T.D.) - the advertisement of a service without performance of the services is not use.
4. Grants of St. James Ltd. v. Andres Wines Ltd. (1969) 58 C.P.R. 281 (Registrar of Trade-marks M. Robitaille) - two isolated shipments of wine to test market are not use.
5. King Features Syndicate, Inc. et. al. v. Lechter [1950] Ex. C.R. 297 at pages 306 - 307 - use is not established by giving away a few promotional samples.
6. Siscoe Vermiculite Mintes Ltd. v. Munn & Steele Inc. [1959] Ex. C.R. 455 at page 468 - to establish use there must be "such distribution of the wares bearing the mark and in such quantities as would serve to make the mark known by persons engaged in trading in such wares in Canada or their customers . . .".
7. Mr. Goodwrench Inc. v. General Motors Corp. (1994) 55 C.P.R. (3d) 508 (F.C.T.D.) at page 513 - only "substantial and continuous use constitutes previous use".
[51] I am not satisfied that the evidence submitted at the trial establishes prior use of the mark "FARSIDE" prior to April 4, 1995, the date of the applicant's application for the proposed mark. By way of example, there is only the bald statement of prior sales - there are no sales figures and no invoices to show sales. Azim Devji admitted that he did not know how many items were sold by the Glasshead store in Toronto with the name "FARSIDE" (transcript page 399 (discovery read in)). No sample of the items sold before April 4, 1995 with the word "FARSIDE" on them were tendered as evidence. With respect to sales from the Deja Vu store, no records to show the value of sales of Farside merchandise prior to April 4, 1995 could be produced (transcript pages 371 - 372 (discovery read in)). The defendants also relied on invoices showing that they had purchased Farside merchandise from suppliers prior to April 4, 1995, however, there is no evidence that this merchandise was sold. Again, this is not sufficient to establish previous use of the trade-mark "FARSIDE" as set out in the case law in paragraph 50 of this decision.
[52] Further, a trade-mark must be used to distinguish a person's wares or services from those of others (see R.T. Hughes & T.P. Ashton, Hughes on Trade Marks, looseleaf (Toronto: Butterworths, 1984) at § 18). A mark is not a trade-mark if it is not used for this purpose. In the present case, the evidence contains the following:
1. The design of the trade-mark changed over time and there were many designs (transcript pages 618 - 619).
2. There were no samples of the goods sold prior to April 4, 1995.
3. The design was put on the items to make the items more attractive to customers (transcript pages 380 and 383 (discovery read in)).
4. Some designs were created with flames or dragons (transcript page 374 (discovery read in)).
When the features of a design change over time the design does not distinguish the wares of a person from those of another person (see Part 1 Knitting Ltd. v. Tetra Music Ltd. (1992), 43 C.P.R. (3d) 154 at page 158 (T.M.O.B.)). Also, the evidence establishes that Mr. Devji was looking for designs that would make the shirts look nice and for designs that were a "cool comment" (transcript pages 374 - 376 (discovery read ins)). Again, the case law establishes that this type of design is ornamentation and was not used to distinguish the wares of a person from the wares of another (see W.J. Hughes & Sons "Corn Flower" Ltd. v. Moraweic (1970) 62 C.P.R. 21 at page 30 (Ex. Ct.)).
[53] Based on the above reasons, I am of the opinion that the mark was not used as a trade-mark prior to April 4, 1995 as it was not used to distinguish the wares of 575726 Alberta Ltd. from the wares of others.
[54] Issue 2(c)
If there was previous use, was the use confusing?
In the alternative, if the defendants' predecessor in title of the mark "FARSIDE" did use the mark as a trade-mark prior to April 4, 1995, was the plaintiff's mark not confusing with the mark "FARSIDE" as of April 4, 1995?
[55] The test used to determine whether a trade-mark is confusing was set out by the Federal Court of Appeal in Miss Universe Inc. v. Bohna (1994), 58 C.P.R. (3d) 381 (F.C.A.) at page 387:
To decide whether the use of a trade mark or of a trade name causes confusion with another trade mark or another trade name, the court must ask itself whether, as a matter of first impression on the minds of an ordinary person having a vague recollection of that other mark or name, the use of both marks or names in the same area in the same manner is likely to lead to the inference that the services associated with those marks or names are performed by the same person, whether or not the services are of the same general class. (See s. 6(2), (3) and (4) of the Act; [1968] S.C.R. 134">Rowntree Co. v. Paulin Chambers Co., [1968] S.C.R. 134; Oshawa Holdings Ltd. v. Fjord Pacific Marine Industries Ltd. (1981), 55 C.P.R. (2d) 39, 36 N.R. 71 (F.C.A.); Mr. Submarine Ltd. v. Amandista Investments Ltd. (1987), 19 C.P.R. (3d) at pp. 9-10, [1988] 3 F.C. 91, 16 C.I.P.R. 282 (C.A.), Thurlow C.J. and Canadian Schenley Distilleries Ltd. v. Canada's Manitoba Distillery Ltd. (1975), 25 C.P.R. 1 at p. 12 (F.C.T.D.), Cattanach J.).
In determining whether there is a likelihood of confusion, the court shall have regard to all the surrounding circumstances, including those described in s. 6(5) above.
[56] Additionally, in United Artists Corp. v. Pink Panther Beauty Corp. (1998), 80 C.P.R. (3d) 247 (F.C.A.) Linden J. A. stated at pages 258 to 259:
A trade-mark is a mark used by a person to distinguish his or her wares or services from those of others. The mark, therefore, cannot be considered in isolation, but only in connection with those wares or services. This is evident from the wording of subsection 6(2). The question posed by that subsection does not concern the confusion of marks, but the confusion of goods or services from one source as being from another source. It is for this reason that marks which rely on geographic origins or generally descriptive words (e.g. the fictional marks Pacific Coffee or Premium Soda) are not afforded a wide ambit of protection. Even though proposed marks might be similar to them, the public is not likely to assume that two products that describe themselves as being "Pacific" or "Premium" necessarily originate from the same source. Because confusion is not likely, protection is not necessary.
This concentration on the source of the wares or services must inform any consideration of section 6 of the Act. Six factors are enumerated: five specific and one general one. I shall briefly discuss each one of them in turn. The five specific considerations that must be considered indicate that the Court must balance the right of the trade-mark owner to the exclusive use of his or her mark, with the right of others in the marketplace to compete freely.
[57] The first factor to be considered is:
The inherent distinctiveness of the trade-marks or trade names and the extent to which they have become known.
This factor refers to the strength of the mark. "FARSIDE" as written is not inherently distinctive. It is the combination of the words "far" and "side". The trade-mark "PHARSYDE" is not composed of known words and could be said to be inherently distinctive. At the time of the application, neither marks were well known.
[58] Even though a trade-mark is not inherently distinctive, it may acquire inherent distinctiveness through continued use in the market place. In order to establish acquired distinctiveness, it must be shown that the mark has become known to consumers as originating from one particular source (see United Artists Corp. v. Pink Panther Beauty Corp., supra at page 259). I am not persuaded that the mark "FARSIDE" had gained an acquired distinctiveness as of April 4, 1995.
[59] The length of time the trade-marks or trade names have been in use.
If the defendants' evidence with respect to sales had been accepted, the earliest use of the mark would have been in late 1994. The plaintiff's mark was a proposed mark.
[60] The nature of the wares, services or business.
The plaintiff proposed to operate a store under the name "PHARSYDE" which would sell a wide variety of clothing. As of April 4, 1995, the defendants' evidence is that their sales related primarily to the use of the word "FARSIDE" on hoodies, sweat pants and sweat shirts. They, however, planned to expand their product lines. The sale of the items prior to April 4, 1995 related to approximately the same age group.
[61] The degree of resemblance between the trade-marks or trade names in appearance or sound or in the ideas suggested by them.
"PHARSYDE" and "FARSIDE" sound the same. Their appearance is not the same as the spelling of the words are different. "PHARSYDE" and "FARSIDE" do not look the same.
[62] All the surrounding circumstances.
This heading obviously includes the specific factors discussed above and any other
factors relevant to the particular case. No factors were cited to me under this heading at the trial of this matter.
[63] Equal weight need not be attached to each of the criteria set out in subsection 6(5) of the Act (see Polysar Ltd. v. Gesco Distributing Ltd. [1985] F.C.J. No. 948 (QL)). In the present case, I would give more weight to the factors in paragraphs 6(5)(a) and 6(5)(c).
[64] Based on the above factors, I would conclude that the plaintiff's mark "PHARSYDE" was not confusing with the defendants' mark "FARSIDE" as of April 4, 1995.
[65] Issue 3
Had the plaintiff's mark lost its distinctiveness on the relevant date so as to allow the plaintiff's mark to be expunged?
The defendant, Farside Clothing, has raised the argument that the plaintiff's trade-mark has lost its distinctiveness and therefore, the trade-mark is invalid pursuant to paragraph 18(1)(b) of the Act.
[66] The plaintiff raised a preliminary point that this defence was not pleaded by the defendants and should not be entertained by the Court. The plaintiff submitted that this defence is not mentioned in the statement of defence filed in Court file T-1608-97. The plaintiff further submits that this defence is not raised in Court file T-1609-97 in either the defence or the counterclaim. The defendants argued that the reference to section 18 of the Act did raise the defence of loss of distinctiveness.
[67] The plaintiff further argues that the defendant Farside Clothing, in response to the plaintiff's demand for particulars stated, "The defence is simply one of prior use by the defendant or its predecessor in title."
[68] The defence and counterclaim filed in Court file T-1608-97 reads as follows:
STATEMENT OF DEFENCE
1. The Defendant admits the allegations contained in paragraphs 1, 2, 3, 9, 10, 11, 12, 13, and 14 of the Statement of Claim, but denies each and every allegation of fact and law elsewhere stated therein.
2. The Defendant or its predecessor in title commenced using the trademark FARSIDE in the normal course of trade before the Plaintiff either registered or first used its trademark PHARSYDE, registration number TMA468,587.
3. The Plaintiff's trademark has been registered for less than 5 years.
4. The Plaintiff's application for registration which was filed on April 4, 1995 was done so on the basis of proposed use.
5. If the Plaintiff has suffered any damages they did not result from any acts or conduct of the Defendant.
WHEREFORE THE DEFENDANT PRAYS that the Plaintiff's action be dismissed against it with costs.
COUNTERCLAIM
1. Paragraphs 1, 2, 3 and 4 of the Statement of Defence are repeated.
2. By reason of the facts alleged herein:
(a) The Defendant by Counterclaim was not the person entitled to secure registration of the trademark PHARSYDE, registration number TMA468,587 in respect of its wares or services by virtue of section 16(a) of the Trade Marks Act, R.S.C. 1985, c. T-13;
(b) The registration of the trademark PHARSYDE is invalid by virtue of Section 18 of the Trade Marks Act.
WHEREFORE THE PLAINTIFF BY COUNTERCLAIM (DEFENDANT) CLAIMS:
(a) a Declaration that the Defendant by Counterclaim (Plaintiff) was not the person entitled to secure registration of the trade mark PHARSYDE, registration No. TMA468,587;
(b) an Order striking out the entry of the trade mark PHARSYDE registered on January 13, 1997 by Caricline Ventures Ltd. under No. TMA468,587;
(c) costs;
(d) such further and other relief as this Honourable Court may deem just.
[69] I have reviewed the statement of defence and counterclaim filed in Court file T-1609-97 and I am of the view that the defence of lack of distinctiveness was not raised in the defendant Farside Clothing's defence or counterclaim. The defendant argued that its reference to section 18 of the Act in paragraph 2(b) of the counterclaim raises the defence of a lack of distinctiveness. I do not agree as this would appear to be a statutory reference to the invalidity defence of prior use raised in paragraph 2(a) of the counterclaim. Rule 174 of the Federal Court Rules, 1998 requires that every pleading contain a concise statement of the material facts on which the party relies. The pleadings in question do not contain such facts with respect to a defence of lack of distinctiveness. It is accepted that a party must plead its case in such a manner that the opposing party knows what position is being advanced (see Prêt-a-porter Orly Ltd. v. Canada (1994) 176 N.R. 149 (F.C.A.)). As well, the defence of lack of distinctiveness was not raised in Court File T-1608-97.
[70] Even if the defence of lack of distinctiveness was raised by the pleadings, I am of the opinion that the plaintiff's trade-mark was distinctive at the relevant date, which was September 16, 1997, the date when the counterclaim, which brought the issue of non-distinctiveness into issue, was filed.
[71] With respect to loss of distinctiveness, Harold G. Fox in his text The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. (Toronto: Carswell, 1972) at pages 286 to 287 states:
The test whether a name used by a manufacturer as a trade mark for his wares or services had become publici juris is whether, on the one hand, the use of it or a confusing trade mark by other persons in connection with the same wares or services is calculated to deceive the public so as to induce them to believe that in purchasing the wares or obtaining the services so named they are purchasing or obtaining those of the original manufacturer or performer of the services, [ie. In the present case, the facts admitted in paragraph 17] or whether, on the other hand, the word in question has merely become the generic or descriptive name of a type of wares or services. The owner may use the trade mark as the name of the wares or services, and if the public is permitted to do so, the mark will of course lose its character as a trade mark . . . But such use must be substantial and not a mere infrequent use based on ignorance before a mark will lose its distinctiveness. . . .
And again at page 287:
The amount of piracy necessary to cause loss of distinctiveness is a difficult question. A few scattered and unprosecuted infringements by several traders is not sufficient to cause a mark to become publici juris, nor will extensive infringement by a single trader be sufficient. [emphasis added]
[72] In Mr. P's Mastertune Ignition Service Ltd. v. Tune Masters (1984) 82 C.P.R. (2d) 128 (F.C.T.D.), the Court stated at page 144:
The owner of a trade mark may lose his exclusive right in the mark if he permits the widespread use of it by rival traders either by concurrence or negative action. In that event the trade mark ceased to be distinctive of the owner's wares or services. But an owner does not lose his rights in his trade mark because someone infringes his rights.
[73] From a review of the evidence given at this trial, I have come to the conclusion that the plaintiff's mark "PHARSYDE" was distinctive at the relevant date. The testimony of Mr. Renaud includes the following:
1. Extensive advertising was used to promote the mark using an amount from $5,000 initially to approximately $30,900 in the period of February, 1997 to February, 1998.
2. Recognition of the store name appeared in a community newspaper and positive articles concerning the mark were published in British Columbia's two major newspapers.
3. Advertising appeared in the Yellow Pages.
[74] In relation to the plaintiff's mark, the only infringement or dilution alleged was by the defendants. The plaintiff did not delay in issuing a desist notice when it learned of the defendants' activities. I am satisfied that the plaintiff's mark continued to be distinctive on the relevant date.
[75] Issue 4
Did the defendants infringe?
With respect to infringement by Farside Clothing, ZZTY Holdings Ltd. and Azim Zone Inc., the plaintiff has submitted that these defendants have admitted infringement in the pleadings. I agree. In the defence to the original statement of claim in Court file T-1609-97, the defendant admitted the following in paragraph 14 of the original statement of claim:
Consequently, the use of the Infringing Mark is likely to lead to the inference that the wares sold and the services provided by the Defendant are sold or provided by the same person who operates the retail clothing store bearing the Plaintiff's Mark, namely the Plaintiff.
[76] This same paragraph 14 appears as paragraph 17 of the amended statement of claim in Court file T-1609-97. In Court file T-1608-97, the defendants admitted paragraph 16 of the statement of claim which reads the same as paragraph 14 of the original statement of claim in Court file T-1609-97. These defendants are admitting confusion with the plaintiff's mark which is the test for infringement according to subsection 6(1) and subsection 6(2) of the Act. Therefore, I find that the defendants named above have infringed the plaintiff's mark "PHARSYDE". As a result of the admission it is not necessary that I do the analysis outlined in United Artists Corp. v. Pink Panther Beauty Corp., supra, which is required pursuant to subsection 6(5) of the Act.
[77] In relation to Farside Skateboards, this company was added as a defendant by the amended statement of claim in Court file T-1609-97 and no defence has been filed in relation to this defendant. Farside Skateboards operated its store in or about December, 1998, which was the third Farside store, and it sold goods similar to the goods sold in the West Edmonton Mall Farside store. Farside Skateboard's only claim to intellectual property rights in the name "FARSIDE" were derived from Farside Clothing as it controls Farside Skateboards. I have already ruled that Farside Clothing holds no rights in the name "FARSIDE". The parties treated the two defendants the same at trial. I will do the same and hold that Farside Skateboards has infringed the plaintiff's trade-mark.
[78] The defence raised by the defendants, ZZTY Holdings Limited and Azim Zone Inc. was the defence of prior use. Those two defendants claimed their defence based on a license from Farside Clothing. As I have already ruled that no prior use was proven for 575726 Alberta Ltd., none would exist for the defendants, ZZTY Holdings Limited and Azim Zone Inc. Farside Clothing was not in existence on April 4, 1995, the date of the applicant's application for its proposed trade-mark.
[79] As a result of the admission of paragraph 16 of the plaintiff's claim in Court file T-1608-97, the plaintiff has established that these defendants infringed their mark "PHARSYDE".
[80] I have referred to the business plan proposed by Hafis Devji, but the activity needed to pursue the counterclaim and to justify the defendants' activity in relation to the plaintiff's trade-mark were not carried out. An intention to take steps is not sufficient.
[81] I would therefore allow the plaintiff's claim in the nature of paragraph 30 of these reasons for judgment on the understanding that damages or an accounting of the defendants' profits, as the plaintiff may elect, together with pre- and post-judgment interest will be the subject of a reference.
[82] The plaintiff shall have its costs.
ORDER
[83] IT IS ORDERED that:
1. Declarations issue that:
(a) the defendants have infringed the plaintiff's mark, registration number TMA468,587;
(b) the defendants have directed public attention to their wares, services and business in such a way as to cause or be likely to cause confusion in Canada between their wares, services and business and those of the plaintiff;
(c) the defendants made use in association with their wares and services of a description of their wares and services that is false in a material respect and likely to mislead the public as to the character and quality of their wares and services;
2. A permanent injunction issues restraining each of the defendants, by itself, its officers, directors, employees, agents and all those over whom it exercises control from:
(a) infringing the plaintiff's mark, registration number TMA468,587;
(b) directing public attention to their wares, services or business in such a way as to cause or be likely to cause confusion in Canada between their wares, services or business and those of the plaintiff;
(c) using the infringing mark or any similar words, in association with their wares, services or business;
3. The plaintiff shall have its damages or an accounting of the defendants' profits, as the plaintiff may elect, together with pre- and post-judgment interest thereon to be determined in a reference;
4. The defendants are directed to deliver up to the plaintiff or to destroy, under oath, all wares, signs and printed material, including all packaging, advertising, promotional and labelling materials, the use of which would violate the rights of the plaintiff in the plaintiff's mark, which are or may come into the possession, power or control of the defendants;
5. The plaintiff shall have its costs.
"John A. O'Keefe"
J.F.C.C.
Halifax, Nova Scotia
December 5, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1608-97
STYLE OF CAUSE:CARICLINE VENTURES LTD. v. ZZTY HOLDINGS
LIMITED AND OTHER
DOCKET: T-1609-97
STYLE OF CAUSE:CARICLINE VENTURES LTD. v. FARSIDE
CLOTHING LTD. AND OTHER
PLACE OF HEARING: HALIFAX
DATE OF HEARING: JANUARY 29 TO FEBRUARY 1, 2001
AND JUNE 5 TO 6, 2001
REASONS FOR REASONS FOR ORDER AND ORDER : O'KEEFE J.
DATED: DECEMBER 5, 2001
APPEARANCES:
KEITH E.W. MITCHELL AND FOR PLAINTIFF
J. KEVIN WRIGHT
CARMEN PLANTE AND FOR DEFENDANTS
MELODI E. ULKU
SOLICITORS OF RECORD:
DAVIS & COMPANY, FOR PLAINTIFF
VANCOUVER, B.C.
BISHOP & MCKENZIE LLP FOR DEFENDANTS
EDMONTON, AB
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