Warner-Lambert Co. v. Concord Confections Inc., 2001 FCT 139

Date: 20010302

Docket: T-1562-98

     Neutral Citation: 2001 FCT 139

BETWEEN:

     WARNER-LAMBERT COMPANY and

     WARNER-LAMBERT CANADA INC.

     Plaintiffs

     - and -

     CONCORD CONFECTIONS INC.

     Defendant

AND BETWEEN

     CONCORD CONFECTIONS INC.

     Plaintiff by counterclaim

     - and -

     WARNER-LAMBERT COMPANY and

     WARNER-LAMBERT CANADA INC.

     Defendants by counterclaim

     REASONS FOR ORDER

LEMIEUX J.:

INTRODUCTION

[1]          Warner-Lambert Company is the registered owner in Canada of a family of registered trade-marks which include the word CHICLETS used since 1919 in association with confectionary products and, in particular, chewing gum. Its chewing gum products are referred to as the CHICLETS products. Warner-Lambert Canada Inc. is currently the exclusive Canadian licensee and, from 1990 to June of 1998, manufactured the CHICLETS products as licensee.

[2]          On June 31, 1998, the plaintiffs sued the defendant Concord Confections Inc. ("Concord") for trade-mark infringement and passing-off and now move for summary judgment for trade-mark infringement on the claim and counterclaim or, in the alternative, on the counterclaim and the defences of invalidity and estoppel/delay or, in the further alternative, only on estoppel/delay, and failing success, an interlocutory injunction.

[3]          The motion for summary judgment is only with respect to the word mark CHICLETS (TMDA 37840).

THE FACTUAL BACKGROUND

(1)      The statement of claim

[4]          In their statement of claim issued July 31, 1998 and amended with leave on May 29, 2000, the plaintiffs recite 70 years of use in Canada of CHICLETS products, sales in Canada during that period in excess of a hundred million dollars and millions of dollars spent in advertising CHICLETS products in Canada. The CHICLETS trade-mark has become famous and is exclusively associated by consumers with CHICLETS products.

[5]          The plaintiffs say the CHICLETS trade-marks are used in association with chewing gum tablets that have a distinctive shape and appearance which have remained constant for decades and consist of the following features: (a) a hard, candy-coated shell; (b) an overall rectangular shape; (c) a white or solid, bright colour, depending on the flavour of the gum; and (d) a slightly glossy finish.

[6]          The plaintiffs complain of Concord's activities and allege this company operates a confectionary manufacturing and distributing company in Canada and, since a date unknown to them, Concord has manufactured chewing gum in Canada for sale in Canada and the United States in association with the trade-mark CHICLE BYTES. The plaintiffs allege the CHICLE BYTES trade-mark appears on the packaging for Concord's chewing gum and on advertising for the gum including "product cards" which are displayed in vending machines and in bulk food bins at retail.

[7]          The plaintiffs allege Concord's CHICLE BYTES chewing gum is virtually identical in appearance to their CHICLETS chewing gum and, in particular, each CHICLE BYTES chewing gum tablet has: (a) a hard, candy-coated shell; (b) an overall rectangular shape; (c) a white or solid, bright colour, depending on the flavour of the gum; and (d) a slightly glossy finish.

[8]          The plaintiffs say Concord informed them it had stopped using the CHICLE BYTES trade-mark in association with confectionary products including chewing gum since about July 1998. However, in July 1999, Concord informed the plaintiffs that it wished to use a new trade-mark comprising the words "CHICLE CHEWING GUM" (the "CHICLE CHEWING GUM mark") in association with chewing gum that was identical in appearance and in shape to the CHICLE BYTES chewing gum but the plaintiffs refused to consent to the use of that mark.

[9]          Plaintiffs say in February 2000, they became aware Concord was using the CHICLE CHEWING GUM mark and says Concord now claims it began the use of this mark in or about July 1998.

[10]          The plaintiffs plead the defendant's use of the CHICLE BYTES and CHICLE CHEWING CUM mark in association with chewing gum is likely to cause confusion with the famous CHICLETS trade-marks contrary to sections 19 and 20 of the Trade-Marks Act (the "Act"). Plaintiffs also say such confusion is likely to depreciate the value of the enormous goodwill attaching to the registered CHICLETS trade-marks. Plaintiffs also say such use in association with chewing gum that is virtually identical in shape and appearance to the CHICLETS chewing gum results in Concord directing public attention and passing off its wares in such way to cause or be likely to cause confusion in Canada contrary to subsections 7(b) and 7(c) of the Act.

     (2)      The statement of defence and counterclaim

[11]          The main thrust of Concord's amended defence filed on June 6, 2000, is to plead the following: (a) the word "CHICLET" is a generic term for the species of chewing gum having a glossy coated rectangular shape with a hard shell which comes in a variety of different colours including white; (b) to deny the CHICLETS products have a distinctive appearance by saying the product has this appearance because the hard coated shell is sugar-coated to preserve flavour and to protect the chewing gum so that it is functional and does not identify any particular source. Concord says these products are known in the trade as "tablet gum" or "chicle gum"; (c) the plaintiffs' products are not distinctive there being many products on the market using the word "CHICLE".

[12]          Concord says it has used the trade-mark CHICLE BYTES for approximately 8 years in Canada by selling chewing gum in association with it. Concord says it does not sell its wares packaged in individual tablet boxes or in dozen tablet boxes as does Warner-Lambert Canada but in 3 lb. and 25 lb. bulk packages or simply in bulk in vending machines or loose in bulk in certain retail food stores.

[13]          Concord pleads in July 1999, it informed the plaintiffs it was now using a new trade-mark, DUBBLE BUBBLE CHICLE chewing gum in association with the product previously identified by the trade-mark CHICLE BYTES. Concord says it is the owner of two DUBBLE BUBBLE trade-marks registered in Canada and, as early as 1933, it and its predecessors in title have continuously used and promoted the DUBBLE BUBBLE trade-mark in association with chewing gum and confectionary products. Concord says the plaintiffs have acquiesced in its use of DUBBLE BUBBLE CHICLE chewing gum trade-mark since July 1998 when it became aware of the use of the trade-mark.

[14]          Concord says it had used the mark CHICLE BYTES for approximately 8 years without any instance of confusion and denies there is any deprivation of any goodwill associated with the plaintiffs' trade-marks. Concord says there has been no passing-off nor damage to the plaintiffs.

[15]          Concord states the appearance of the plaintiffs' chewing gum is functional and the hard-coated shell of the gum is protective, comprised of sugar to give the chewing gum flavour, and coloured to indicate the flavour of the coating and/or the gum. Concord says the appearance of the plaintiffs' chewing gum is not distinctive in that there are many other chewing gum products apart from the defendant's product on the market, being common to the trade, including CHICLE CHICKS and BABY CHICKS by Philadelphia Chewing Gum Co., TABBYLETS, CHICLE TABS, SPECIAL CHICLE TREATS, DAFFY DICE and REFRESH CHLOROPHYLL by Hershey Foods Corporation.

[16]          Concord says its trade-mark CHICLE BYTES is not confusing nor likely to be confused with the plaintiffs' trade-mark CHICLETS in that the word "CHICLE" is a common component of the marks used for chewing gum products and has been used in Canada by others than the plaintiffs not limited to but including Philadelphia Chewing Gum and Hershey Foods Corporation.

[17]          Concord adds, moreover, the word "CHICLE" is a word of art, i.e. the milky juice of the CHICLE tree used in manufacturing chewing gum.

[18]          Concord closes by saying the delay and the actions by the plaintiffs and their predecessors in title disentitle the plaintiffs to any relief. Concord also pleads and relies on the limitation period in each of the Canadian provinces and the limitation period in paragraph 36(4)(a) of the Competition Act.

[19]          By way of counterclaim, Concord attacks the validity of the plaintiffs' registered trade-marks in Canada on the grounds that they are not distinctive of the plaintiffs' at their date of registration and are not distinctive at the date of commencement of the counterclaim. Concord seeks a declaration, inter alia, that the appearance of the plaintiffs' products is not distinctive of either of the plaintiffs, the registered trade-marks are invalid, the use by it of the registered trade-mark CHICLE BYTES is not likely to be confused with any of the marks registered by the plaintiffs and the use by it of the trade-mark DUBBLE BUBBLE CHICLE chewing gum is not likely to be confused with any of the marks registered by the plaintiffs.

     (3)      The plaintiffs' affidavits filed for summary judgment and injunction

[20]          In support of their motions for summary judgment and injunction, the plaintiffs filed the affidavits of Stanley MacLachan, Director of Marketing of the Adams Canada Division of Warner-Lambert Canada Inc. and Michael Pearce, Associate Dean (Programs) at the Richard Ivey School of Business, University of Western Ontario.

[21]          In his affidavit, Mr. MacLachan essentially provided the factual foundation to the plaintiffs' statement of claim. In particular, he said: (1) since 1980, if not earlier, his company has sold more than 25 million packages of chewing gum representing a wholesale value between 1988 and 1999 of over 136 million dollars which represents 10% of the Canadian market distributed through 50,000 retail establishments; (2) his company sells to (a) wholesalers who sell to retail stores, (b) direct to retailers, small and large; (3) his chewing gum is also sold, packaged and unpackaged, in vending machines located in cafeterias, schools and other institutions across Canada with unpackaged bulk sales representing over 500,000 dollars at wholesale over the last three years; (4) his company advertises extensively in Canada including on televison and in storefront ads, particularly near high-traffic areas such as cash registers. His company also advertises through billboards and on buses as well as through cooperative advertising with many retailers.

[22]          He referred to consumer awareness surveys of CHICLETS products and said the 1997 survey showed a 97% recognition factor for consumers aged 15 and 49.

[23]          He also deposed to CHICLETS not being a generic term for a species of chewing gum having a glossy coated rectangular shape with a hard shell. He had never heard of any competitor using the word CHICLETS to describe a species or type of chewing gum or any consumer use of the word CHICLETS generically to refer to a type of chewing gum. He expressed the view the CHICLETS trade-marks distinguish the chewing gum products of his company and that these products enjoy an extremely high level of consumer awareness.

[24]          Mr. MacLachan then referred to the appearance and features of CHICLETS chewing gum and said, other than the defendant's product, he was not aware of other chewing gum on sale in Canada that has both the same shape and appearance as the CHICLETS tablets and uses a trade-mark incorporating the letters CHIC or CHICLE. Specifically, he said he never heard of the products referred to in the Statement of Defence and Counterclaim namely CHICLE CHICKS, BABY CHICKS, CHICLE TABS or SPECIAL CHICLE TREATS and did not believe that any of these products were on sale in Canada.

[25]          He said Concord was not using CHICLE descriptively acknowledging the word CHICLE was the name of an ingredient used in chewing gum prior to WW II but has not been commonly used since then for decades in chewing gum sold in North America. He deposed he was not aware of any chewing gum product on sale in Canada containing chicle as an ingredient including the defendant's chewing gum product. He does not know why Concord is using the word CHICLE in the name of its chewing gum other than to trade on the CHICLETS trade-marks.

[26]          Mr. MacLachan spoke to irreparable harm in terms of the Warner-Lambert companies having spent decades building a reputation and creating goodwill in the CHICLETS trade-marks, an investment which would be ruined if Concord began the substantial use of a confusing mark in association with a competitive product. He put forth, in his opinion, it would be impossible to quantify the loss that would be suffered if the CHICLETS trade-marks became associated with a competitive product made by a different company and, in particular, it will be impossible to determine to extent to which Concord has profited from legitimate competition with his company as opposed to unfair competition through the use of an infringing trade-mark.

[27]          Mr. Pearce, in his affidavit, spoke to the serious damage the plaintiffs will suffer to the CHICLETS trade-marks if Concord adopts and uses CHICLE BYTES or CHICLE CHEWING GUM or any other closely related brand name, a damage which would arise immediately and would increase over time. In his view, the damage caused by such use would be to the brand equity of the CHICLETS mark, a brand equity which would be diminished by confusion whose effect would not only reduce sales of the CHICLETS products but would damage the distinctiveness and goodwill of the CHICLETS brand, and the value of the CHICLETS brand name itself, a damage which would be impossible to calculate accurately in monetary terms or remedy by restorative means after it is inflicted.

     (4)      The defendant's responding affidavits

[28]          Concord responded to the plaintiffs' affidavit material by filing two affidavits: the first affidavit is by Paul Cherrie, sworn on March 27, 2000. He is Vice-President Marketing at Concord. The second affidavit is by Karl Gabert, also sworn on March 27, 2000. Mr. Gabert said he had been employed in the confections and chewing gum industry in Canada for over 35 years and was presently Special Projects Manager at Concord and, before joining Concord as plant manager in 1994, was Production Manager for 32 years at Oak Leaf Confections Ltd.

[29]          Mr. Cherrie, in his affidavit, made the following points: (1) he confirmed today most chewing gum does not contain natural chicle (a milky latex sap) gum base but was aware of at least one product called "Natural Gum Chicle" made from the natural chicle gum base and sold by Mexitrade International S.A. de C.V ("Mexitrade"). After visiting the Mexitrade web site on his computer, he produced excerpts of the company's web page and said he was informed this product came in a variety of flavours and colours in rectangular tablet shapes similar to the format used for the CHICLETS brand chewing gum and that it was possible to buy "Natural Gum Chicle" over the internet from this web page; (2) he acknowledged that initially, chicle referred only to the natural gum base used to make chewing gum, but now, in the confection and the chewing gum industry, is the term which is now commonly used to refer to a format of chewing gum, namely square or rectangular sugar-coated chewing gum tablets of varying sizes and colours. He produced price lists circulated by Leaf Confections Inc. in Canada in the period 1995 to 1997 which he said describe various tablet gums as "Tab and Chicle Gum" or "Chicle".

[30]          Mr. Cherrie then addressed Concord's "CHICLE BYTES" chewing gum which he said Concord began to sell in Canada and the United States in 1986 mostly in bulk for use in vending machines or loosely to the public sold in bulk food candy or grocery stores. He stated Concord's CHICLE BYTES gum when sold in vending machines was identified by a product card located inside the vending machine, a card which had a distinctive logo, type script and cartoon characters.

[31]          Mr. Cherrie told of several ways in which " CHICLE BYTES" gum and packaging differs from CHICLETS chewing gum. In particular, he said "CHICLE BYTES" are square hard sugar coated tablets whereas CHICLETS are distinctly rectangular in shape; "CHICLE BYTES" are sold in bulk whereas CHICLETS are sold primarily in rectangular cardboard packaging in amounts of about 12; "CHICLE BYTES" product label uses a computer like font in capitals commonly found on digital computer displays while the CHICLETS packaging uses either an Old English type or a smooth slanted font using upper and lower case letters; "CHICLE BYTES" product label displays the CHICLE BYTES name on a computer screen keyboard and various cartoon characters in the shape of square chewing gum tablets apparently bouncing off the keyboards while the CHICLETS gum packages display the mark CHICLETS in a white band in the middle of a rectangular box with a large red horseshoe-like shape enclosing the left portion of the package and rectangular pieces of gum.

[32]          He deposed Concord's name and corporate logo are clearly visible on its product label. He also pointed out the differences in pronunciation. He concluded that based on these differences he did not believe there was a likelihood of confusion between the two and stated he was unaware of any instance of confusion in the market place between CHICLE BYTES and CHICLETS.

[33]          Mr. Cherrie then said, in or about July 1998 after the inventory of CHICLE BYTES chewing gum was depleted, the chewing gum was renamed and called DUBBLE BUBBLE CHICLE chewing gum and, since that time, Concord has no longer been selling CHICLE BYTES chewing gum. He said the plaintiffs were advised by him on July 26, 1999, the defendant had changed all of its CHICLE BYTES packaging to DUBBLE BUBBLE CHICLE chewing gum and in that letter enclosed competitive literature from Hershey and Oak Leaf Confections which use the word CHICLE to describe a product or product format.

[34]          His affidavit then addressed the DUBBLE BUBBLE trade-mark by asserting that modern bubble gum was invented in 1928 and the trade-mark DUBBLE BUBBLE has been used and promoted since then becoming a well-known if not famous trade-mark in Canada in association with chewing gum.

[35]          He said on May 8, 1998, Concord purchased the confections business of the manufacturer and marketer of DUBBLE BUBBLE chewing gum and Concord's DUBBLE BUBBLE CHICLE chewing gum was sold in Canada in bulk for use in vending machines and loosely to the public in bulk food candy or grocery stores. He reiterated the differences in the packaging of DUBBLE BUBBLE CHICLE chewing gum and that of CHICLETS chewing gum and stated he was unaware of any instance of confusion in the marketplace between the two.

[36]          Mr. Cherrie then deposed to other "CHICLE" gum products manufactured or sold in Canada by Philadelphia Chewing Gum Corporation (CHICLE CHICKS) and Oak Leaf Confections (CHICLE TREATS and CHICLE TABS) as well as by Bee International which sells "CHICLE CHIPS".

[37]          Karl Gabert, in his affidavit, deposed to the following points: (1) his experience of over 35 years in the chewing gum and confections industry, asserting "CHICLE" is a term commonly used to refer to a format for chewing gum namely square or rectangular sugar-coated chewing gum tablets of varying sizes and colours; (2) "CHICLE" gum is manufactured and sold in Canada by various companies including Oak Leaf Confections Inc. and Philadelphia Chewing Gum Corporation; (3) during 1975 to 1985 he was employed at Leaf Confections Inc. and this company manufactured and sold in Canada CHICLE TABS chewing gum and that about two years ago, Oak Leaf resumed its manufacture and sale in Canada of CHICLE TABS sold in bulk in vending machines and bulk food stores. He said the company also manufactured and sold in Canada chewing gum tablets called "CHICLE TREATS" and appended various price lists for the period 1995 to 1997.

     (5)      The plaintiffs' reply affidavit

[38]          In reply, the plaintiffs filed the affidavit of Camille Nadeau, Business Development Manager of ITWAL Limited ("ITWAL") and formerly the Divisional Sales Manager for Hershey Canada Inc. He described ITWAL as having been founded in 1966 and today is a national distribution network of independent retail and wholesale distributors operating 139 warehouses across Canada distributing approximately 30% of all confectionary products sold in Canada. He said, in his affidavit, he was not aware of any sales in Canada of "CHICLE CHICKS" chewing gum by Philadelphia Chewing Gum Corporation, "CHICLE TABS" and "CHICLE TREATS" chewing gum by Oak Leaf Confections, and "CHICLE CHIPS" chewing gum by Bee International.

[39]          He said, to his knowledge, none of these products had ever been promoted at an ITWAL trade show and, in his opinion, if any of those products had been sold in Canada, any sales had been so minimal these products never came to his attention. He further deposed during his 18 years in the confectionary industry, he did not recall ever hearing a manufacturer or distributor of chewing gum, or a consumer, use the word "CHICLE" to describe chewing gum shaped like CHICLETS chewing gum and, in his experience, the term commonly used to describe square or rectangular sugar-coated gum of varying sizes is "tablet gum" or sometimes "pellet gum".

THE SUMMARY JUDGMENT RULES AND PRINCIPLES

[40]          Rules 213 to 217 of the Federal Court Rules, 1998, (the "Rules") carry forward the summary judgment provisions contained in the former rules.

[41]          Rule 216 is the main substantive provision and its central elements are:

(1)      Where the Court is satisfied there is no genuine issue for trial in respect to a claim or defence, the Court shall grant summary judgment accordingly;

(2)      Rule 216(2) provides, in part, where the Court is satisfied the only genuine issue is a question of law, the Court may determine the question and grant summary judgment accordingly;

(3)      Subsection 216(3) provides where the Court decides there is a genuine issue, the Court may nevertheless grant summary judgment in favour of any party, either on an issue or generally, if the Court is able, on the whole of the evidence, to find the facts necessary to decide the questions of fact and law.

    

[42]          Several decisions of this Court provide guidance where the line should be drawn in deciding whether or not to grant summary judgment. Some of these principles were summarized by Justice Tremblay-Lamer in Granville Shipping Co. v. Pegasus Lines Ltd., [1996] 2 F.C. 853 as follows:

(1)      The purpose of the summary judgment provisions is to allow the Court to summarily dispose of cases which ought not to proceed to trial because of lack of a genuine issue, i.e. one test is whether the case is so doubtful it does not deserve consideration by the trier of fact at the future trial;

(2)      Summary judgment will not be granted if the necessary facts cannot be found and, where there is a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge, although the mere existence of apparent conflict in evidence does not preclude summary judgment because the Court should take a hard look.

[43]          In Feoso Oil Ltd. v. The Sarla, [1995] 3 F.C. 68, Justice Stone, on behalf of the Federal Court of Appeal, said it was appropriate to have regard to decisions of provincial superior courts bearing on the interpretation of similar summary judgment rules. He referred to the Ontario Court of Appeal decision in Irving Ungerman Ltd. et al. v. Galanis et al. (1991), 4 O.R. (3d) 545, and quoted Morden A.C.J.O. to the following effect at page 81:

It is safe to say that "genuine" means not spurious and, more specifically, that the words "for trial" assist in showing the meaning of the term. If the evidence on a motion for summary judgment satisfies the court that there is no issue of fact which requires a trial for its resolution, the requirements of the rule have been met. It must be clear that a trial is unnecessary. The burden is on the moving party to satisfy the court that the requirements of the rule have been met. Further, it is important to keep in mind that the court's function is not to resolve an issue of fact but to determine whether a genuine issue of fact exists.

[44]          Justice Stone said the intention of the Rules on summary judgment appeared to be that claims or defences clearly without foundation should not take up the time or incur the costs of a trial.

[45]          In the case before him, Justice Stone reversed the motions judge who had granted summary judgment. He said there was conflicting evidence that remained to be resolved to determine just where in fact the truth lies. He added "credibility is very much involved in that determination, which cannot be made by a motions judge or by this Court".

[46]          In Ault Foods Ltd. et al. v. George Weston Ltd. et al. (1996), 68 C.P.R. (3d) 87, Justice Heald refused summary judgment in a passing-off case where expert survey evidence had been filed and the experts cross-examined. His rationale for so refusing was because the facts were not clear and opinion evidence, particularly expert opinion evidence, was the kind of evidence which should be given viva voce where possible; also the affidavit evidence he found was sufficiently contradictory raising serious credibility issues.

[47]          In Nature's Path Foods Inc. v. Country Fresh Enterprises Inc. et al. (1998), 85 C.P.R. (3d) 286, Justice Rouleau, in a passing-off case, similarly refused summary judgment stating the jurisprudence has clearly established summary judgment will only be granted in the clearest of cases, that is, will only be granted in circumstances where the facts are clear. He concluded as follows:

[9] In my view, granting summary judgment would not be appropriate in the present case. The evidence raises many valid and complex issues of fact and law such as distinctiveness, confusion and passing-off but it does not, in its present state, allow for a determination of any one of them.

[48]          In MacNeil v. Canada, [2000] F.C.J. No. 727, Justice Gibson, in dismissing an application for summary judgment, reviewed the principles regarding such applications and, cited with approval the decision of the Ontario Court of Appeal in Aguonie v. Galion Solid Waste Material Inc. (1998), 38 O.R. (3d) 161, where Mr. Justice Borins wrote that summary judgment was valuable in striking sham claims and defence but was not intended to deprive a litigant of the right to trial unless there is a clear demonstration there was no genuine issue material to the claim or defence which the trial judge must resolve. Justice Borins added at page 173:

In ruling on a motion for summary judgment, the court will never assess credibility, weigh the evidence, or find the facts. Instead, the court's role is narrowly limited to assessing the threshold issue of whether a genuine issue exists as to the material facts requiring a trial. Evaluating credibility, weighing evidence, and drawing factual inferences are all functions reserved for the trier of fact.

Justice Gibson was satisfied, in the case before him, there were credibility issues, weight of evidence issues and issues regarding reasonable factual inferences that could not be satisfactorily resolved on summary judgment. He was also satisfied the evidence before him demonstrated genuine issues for trial.

[49]          Counsel for the plaintiffs criticized the defendant's reliance on the MacNeil case, supra, where Justice Gibson also wrote this:

Recent judgments of this Court would appear to have adopted this more restrictive approach to applications for summary judgment in a manner that limits the responsibility of the respondent on such a motion to put his or her "best foot forward" where issues of credibility, weighing of evidence and drawing of factual inferences are present.

[50]          Counsel for the plaintiffs said Justice Borins had tempered his views in Aguonie in the subsequent case of Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 164 D.L.R. (4^th) 257. I do not agree.

[51]          A reading of Justice Borins' reasons in Dawson, supra, shows far from diminishing Aguonie he restated the proposition that in determining whether a genuine issue exists in respect of a material fact the Court will never assess credibility, weigh the evidence or find the facts because they are functions reserved for the trier of facts.

[52]          Justice Borins, as did Justice Stone in Feoso Oil, supra, discussed the fundamental purpose of the summary judgment rule that "little purpose is achieved by having an unnecessary trial". He added deciding whether a trial was unnecessary was "no mean task" and it was necessary "that motions judges not lose sight of their narrow role, not assume the role of the trial judge and, before granting summary judgment, be satisfied it is clear that a trial is unnecessary". He added "[T]hat is not to say that the Court is not to consider the evidence which constitutes the record. Indeed, to do so is central to determining the existence of a genuine issue in respect to material facts".

[53]          In Havana House Cigar & Tobacco Merchants Ltd. et al. v. Skyway Cigar Store (1999), 3 C.P.R. (4^th) 501, the Federal Court of Appeal upheld the decision of a motions judge made on summary judgment declaring invalid and ordering expunged four trade-marks registered in Canada by the appellants, distributors of Cuban cigars. It was of the view the motions judge was correct in finding no proof of use or acquisition of distinctiveness by the appellants.

[54]          In a parallel appeal, that Court ruled the motions judge should have awarded summary judgment to the respondent because the motions judge had concluded the evidence was insufficient to find there was a triable issue. Justice Strayer focussed on the requirements of Rule 432.3(1) of the former Rules (now Rule 215) stipulating the appellants were obliged to set out, in affidavit material, specific facts to show that there is a genuine issue for trial; if the trial judge was satisfied they had not done so, he was required by Rule 432.3(1) (now Rule 216(1)) to grant summary judgment in favour of the respondent. Justice Strayer added:

[9] When we consider the findings of fact which the [trial] judge did make, we conclude that he had found there to be no sufficient evidence to give rise to a triable issue.

. . .

[12 ] If the summary judgment rules are to have any utility then they should be used in circumstances such as these to avoid the delay and expense of a trial based on insubstantial evidence.

[55]          In Acadia Ship Brokers Limited et al. v. Kanematsu GMBH, (docket A-113-99, June 21, 2000), the Federal Court of Appeal reversed a motions judge who had allowed a motion for summary judgment determining liability in a cargo claim. Linden J.A., after stating Feoso Oil, supra, was the leading authority, found there was real doubt on certain key factual issues, i.e. "a serious factual issue that must be resolved if there is to be liability for inducing breach of contract".

[56]          Justice Linden also discussed various bases for liability including inducement to breach a contract, negligent interference with a contract, and found there was real doubt about the state of mind of the appellant. He also discussed another alternative basis of liability claimed, namely that of conversion.

[57]          He concluded as follows:

[21] On the basis of these reasons, it is clear that this is not an appropriate case for summary judgment as there are serious factual and legal issues that must be resolved in a trial. Summary judgment should not be granted if all the necessary facts have not been established or if it would be unjust to do so without a trial.

[58]          Justice Linden cited with approval decisions of the Trial Division in Granville Shipping Co., supra, Pallmann Maschinenfabrik Gmbh Co. KG v. CAE Machinery Ltd. et al. (1995), 98 F.T.R. 125 and Homelife Realty Services Inc. v. Sears Canada Inc. (1996), 108 F.T.R. 19.

CONCLUSIONS

(1)      On summary judgment

(a)      The counterclaim

[59]          Concord's counterclaim pleads the plaintiffs' trade-mark registrations are invalid for non-distinctiveness at the date of registration or at the commencement of the counterclaim (September 14, 1998). The defendant seeks an order directing the Registrar of Trade-marks to expunge the registrations.

[60]          Concord's assertions of non-distinctiveness are based upon allegations in the counterclaim:

(1)      CHICLETS is the generic term for a species of chewing gum, CHICLE is a common component of other marks and is a word of art; and

(2)      The plaintiffs failed to control licensing of the trade-marks.

[61]          I agree with counsel for the plaintiffs that on each of these points, the defendant Concord has the onus of proof at trial and therefore on summary judgment.

(i)      "CHICLETS", a generic term

[62]          I agree with counsel for the plaintiffs that Concord has not led any or even remotely sufficient evidence to sustain its claim the CHICLETS registered trade-mark in issue has lost its distinctiveness by becoming a generic term for a type of chewing gum having a rectangular shape with a hard shell which comes in a variety of different colours including white. This allegation is dismissed from the defendant's counterclaim.

(ii)      "CHICLE" -- a common trade-mark component or a word connoting a chewing gum format

[63]          In my view, there is a genuine issue as to the material facts supporting the two aspects or grounds for invalidity advanced by Concord assuming the plaintiffs are correct in stating the critical date to assess loss of distinctiveness is the date of the counterclaim rather than the date of the registration of the CHICLET trade-marks.

[64]          The issues of whether "CHICLE" is commonly used in the trade to describe a format for a particular type of chewing gum or is a common component of trade-marks used in chewing gum sold in Canada or is a word of art, are to be determined by the evidence of use in the Canadian marketplace.

[65]          In my view, the evidence of use in the Canadian marketplace is contradictory and for its resolution a trial is needed particularly, as here, some necessary findings of fact may turn on credibility.

[66]          I am not convinced, at this stage, the plaintiffs' evidence so overwhelms that of the defendant to enable me to conclude the defendant's assertions are without evidentiary foundation.

(b)      The statement of defence

(i)      Lack of control by the licencee

[67]          To the extent the defendant asserts loss of distinctiveness in the CHICLETS registered trade-mark through lack of control (paragraph 7 of the statement of defence), I agree with counsel for the plaintiffs Concord has failed to discharge its evidentiary burden as of the material date (the date of the counterclaim). Concord did not lead any positive evidence on the issue and the cross-examination on its face was not sufficient to obviate its necessity of leading some evidence. Paragraph 7 of the statement of defence is therefore dismissed.

(ii)      Delay/Estoppel

    

[68]          Concord advances its lateness or delay defences differently for CHICLE BYTES and DUBBLE BUBBLE CHICLE chewing gum. The first in relation to CHICLE BYTES would block the plaintiffs from obtaining any of the permanent relief claimed while the second in relation to DUBBLE BUBBLE CHICLE chewing gum goes to evidence on the interim injunction sought which will be discussed later in these reasons.

[69]          The substance of the latches for CHICLE BYTES is the allegation by the defendant the plaintiffs were aware of Concord's use in Canada of its trade-mark (albeit not registered) as early as 1996 and their failure to enforce their Canadian rights for at least 19 months and arguably more disentitles the plaintiffs to the main relief sought.

[70]          I find in favour of the defendant Concord on this point because the defendant has raised sufficient evidence in support of its claim coupled with evidence on cross-examination of both the plaintiffs' and the defendant's deponents as to create a barrier to summary judgment on this issue.

[71]          In order for me to find in its favour, counsel for the plaintiffs would have me find the facts necessary to a legal support of a ruling that no acquiescence occurred. While acknowledging the plaintiffs' trade-mark oppositions to the registration, both in Canada and in the U.S. of CHICLE BYTES, I am unable, on the record before me, to find such facts as it would involve an impermissible weighing of the evidence in this case where the facts are not clear and would require the drawing of substantial inferences to sustain a conclusion the plaintiffs did not know of Concord's sales in Canada and casually ignored them.

(iii)      No likelihood of confusion

[72]          I reject the plaintiffs' motion for summary judgment on this issue. What the plaintiffs would have me do is apply all of the criteria in section 6 of the Trade-marks Act to the evidentiary record before me and find infringement based on likelihood of confusion.

[73]          Plainly, the record before me does not enable such a conclusion. The defendant has raised a sufficient evidentiary basis (differences in gum and packaging, differences in trade channels -- bulk versus packaged sales particularly when the plaintiffs no longer sell its gum unpackaged) lack of actual confusion so as to raise a genuine issue for trial on the merits.

[74]          The action also raises some unresolved legal issues, the most important of which is whether get-up or packaging is a relevant consideration when dealing with registered trade-mark infringement versus passing-off under section 7 of the Act. (Contrast Mr. Submarine Ltd. v. Amandista Investments Ltd. (1987), 19 C.P.R. (3d) 3 at 11 (F.C.A.) and United Artists v. Pink Panther Beauty Corp (1998), 225 N.R. 82 at 94 (F.C.A.).

[75]          Another fundamental legal issue is whether the trade-mark now used by Concord "DUBBLE BUBBLE CHICLE" chewing gum is one mark, as asserted by Concord, or whether it is two marks, as asserted by the plaintiffs.

     (2)      On the injunction requested

[76]          The injunction requested would restrain Concord from (1) using in Canada, as a trade-mark or trade name, the word CHICLE or any marks or names confusingly similar in association, inter alia, with chewing gum; (2) from infringing the plaintiffs' registered trade-marks; and (3) from doing any act which is likely to have the effect of depreciating the goodwill associated with the registered marks.

(a)      Serious issue

[77]          I pass quickly over the serious question to be tried test. The plaintiffs have met this test and reference to the discussion in these reasons on the summary judgment issue demonstrates the point.

(b)      Irreparable harm

[78]          The plaintiffs correctly point out the only expert evidence on this point was given by Michael Pearce. He was asked to assume the following facts are true: (1) the CHICLETS trade-marks have become well-known in Canada; (2) Concord intends to resume the use of the CHICLE BYTES mark or to begin use of a new mark "CHICLE CHEWING GUM" for a chewing gum product which has a similar shape to the CHICLETS product; (3) there are no other chewing gum products on sale in Canada whose name includes the word CHIC or CHICLE; and (4) the CHICLET trade-marks and CHICLE BYTES or CHICLE CHEWING GUM are likely to be confusing. On this point, viewing the remainder of his affidavit and what he said during his cross-examination, I am satisfied Mr. Pearce did not simply assume likelihood of confusion and was of the opinion there was such likelihood.

[79]          Mr. Pearce concluded, in the circumstances, the plaintiffs would suffer serious damage which would arise immediately and would increase over time. The damage would be to the plaintiffs' brand equity which would be diminished by the confusion which would not only reduce sales and damage to distinctiveness and goodwill. The damage would be impossible to calculate accurately in monetary terms or to remedy by restorative means after it is inflicted.

[80]          After discussing the nature of brand equity (paragraphs 15 to 22 of his affidavit), Mr. Pearce talked about the nature of harm arising from mistaken association concluding "it is usually the case that a company will loose some or all of its ability to benefit from its brand equity if a competitor is allowed to adopt and use a confusing name".

[81]          The first point he makes is lost sales and profits but admits they may be quantifiable. The second point he makes is that lost equity undermines the ability of a company to position itself distinctly in the market and sell itself in the future.

[82]          He then discussed why Concord's use of the trade-marks would undermine the CHICLETS brand equity:

(1)      Lost sales which he now says the extent is unquantifiable but damage would ensue;

(2)      no control over the quality of Concord's products which may be lesser;

(3)      other companies will be emboldened to enter the marketplace.

[83]          The applicable principles in determining whether the plaintiffs have made out a case on irreparable harm for the extraordinary relief of the grant of an interlocutory injunction before trial is set out in Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34 (F.C.A.).

[84]          I am of the view, for several reasons, the plaintiffs have not provided clear evidence of irreparable harm that they would, but for the injunction, suffer irreparable harm not compensable in damages.

[85]          First, Mr. Pearce gave his opinion based on facts which he assumed were true, a state of affairs which factual or legally is very much in question as previously discussed in these reasons.

[86]          Second, there is an element of speculation in Mr. Pearce's analysis when he talks at paragraph 26 of his affidavit about Concord's possible lesser product quality and other companies being emboldened to enter the market.

[87]          Third, he admitted lost sales were quantifiable. Fourth, loss of goodwill is problematic since it hinges on a finding of confusion based on assumptions which are uncertain, particularly in the face of no evidence of actual confusion.

[88]          Fifth, I am not satisfied the plaintiffs have clearly demonstrated any harm suffered would not be compensable in damages.

(c)      Balance of convenience

[89]          In this case, I find the balance of convenience favours the defendant and I do so on the basis that on July 26, 1999, the defendant clearly advised the plaintiffs it had changed its packaging to DUBBLE BUBBLE CHICLE chewing gum and attached a copy of the packaging then and now in use. The defendant has been on the market for seven months before this motion for interlocutory injunction was launched (7 months) by the plaintiffs.

[90]          In the circumstances, the status quo which, to the extent it should be preserved, favours the defendant and the significant delay in seeking injunction relief also favours it. (See Turbo Resources Ltd. v. Petro-Canada Inc. (1989), 24 C.P.R. (3d) 1 at 23 (F.C.A.).

DISPOSITION

[91]          For all of these reasons the plaintiffs' motion for summary judgment is dismissed in all of its alternatives, except the claims at paragraphs 7 and 10 to the defendant's statement of defence and counterclaim.

[92]          The defendant has been largely successful and is entitled to costs of this motion in any event of the cause.

    

    

                                         J U D G E

OTTAWA, ONTARIO

MARCH 2, 2001