Imax Corp. v. Showmax, Inc, docket T-592-99

Date: 20000118

Docket: T-592-99

BETWEEN:

     IMAX CORPORATION

     Plaintiff

     - and -

     SHOWMAX, INC.,

     and

     SHOWMAX MONTREAL, INC.,

     and

     THE MONTREAL FORUM ENTERTAINMENT CENTER COMPANY, a partnership comprising CANDEREL PROPERTIES LIMITED, SIMON

     PROPERTY GROUP, DLJ REAL ESTATE CAPITAL PARTNERS and MADISON MARQUETTE,

     and

     THE FORUM ENTERTAINMENT CENTER COMPANY,

     and

     THE FORUM ENTERTAINMENT CENTER G.P., a

     partnership comprising SDG MONTREAL FORUM

     COMPANY, CANDEREL PROPERTIES LIMITED and

     SOCIÉTÉ RECP DE MONTRÉAL,

     and

     SHOWMAX

     Defendants

     REASONS FOR ORDER

TEITELBAUM, J:

[1]      This is a motion by the plaintiff, Imax Corporation (Imax) for an interim and interlocutory injunction to restrain the defendant, Showmax Inc.(Showmax) from using the word Showmax as the name of a large-format motion picture theatre it proposes to open in Montreal.

[2]      According to the Notice of Motion, the plaintiff claims the following:

1.      An order granting the plaintiff an interim and interlocutory injunction restraining the defendant, its officers, directors, servants, agents, employees and all over whom they exercise control, either directly or indirectly, from:

(a) using the word SHOWMAX, or other imitation of the plaintiff"s IMAX trade mark, as or in the name of its proposed large-format motion picture theatre or any other motion picture theatre;

(b) selling, offering for sale, distributing or advertising any large-format motion picture theatre services, or related wares or services, to the public in association with the trade mark or trade name SHOWMAX, or other imitation of the plaintiff"s IMAX trade mark;

(c) infringing the plaintiff"s trade marks IMAX, registered in Canada under No. 170, 718, and The IMAX Experience registered in Canada under No. 505, 349;

(d) directing public attention to their wares, services or businesses in such a way as to cause or be likely to cause confusion in Canada between its wares, services or businesses and the wares, services or business of Imax Corporation, through use of the word SHOWMAX, or other imitation of the plaintiff"s IMAX trade mark, as a trade mark or trade name; and,

(e) using the plaintiff"s registered trade mark IMAX in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto;

2.      Costs of this motion; and

3.      Such further and other relief as counsel may request and this Honourable Court may allow.

[1]      The plaintiff lists 16 paragraphs as its grounds for making its request for the interim interlocutory injunction.

[2]      Plaintiff claims it is the inventor and developer of the large-format cinema industry and for over 30 years Imax has been engaged in a range of activities in the large-format cinema field.

[3]      The trade-mark IMAX is registered in Canada under number 170,718 in association with a variety of motion picture related wares and services, including motion picture theatre services. There are presently 25 Imax or Omnimax motion picture theatres in Canada with 3 Imax theatres operating in Montreal with two others operating in the Province of Quebec.

[4]      Plaintiff states the Imax name has become well-known across Canada in association with large-format motion picture theatres and related services. Plaintiff also states that the defendant intends to open a large-format motion picture theatre in Montreal in June 2000 under the name and mark SHOWMAX in a location at the Forum Entertainment Centre; The defendant has admitted it intends to use the trade-mark SHOWMAX with large-format motion picture theatres in Toronto and Vancouver.

[5]      Plaintiff believes the defendant"s activities are likely to cause confusion. In paragraph 7 of the grounds, the plaintiff states:

More particularly, the defendant"s use or display of the term SHOWMAX as a name or mark for a giant screen movie theatre in Montréal is likely to cause visitors and potential visitors to such a theatre to believe that the SHOWMAX theatre is owned by, operated by, or has some business association with, the company that owns or operates IMAX theatres.

[6]      In paragraphs 8 to 13 of the grounds, the plaintiff states:

8. A survey recently conducted in Montreal to test the likelihood of such confusion shows that about half of the people surveyed (49%) held this mistaken belief.

9. The defendant refuses, despite demand, to cease and desist from using the name and mark SHOWMAX in association with large-format motion picture-related wares and services marketed to the public in Canada.

10. The defendant"s internet website uses linking and framing technology such that viewers of the Showmax website see the IMAX mark juxtaposed with the SHOWMAX mark in a manner likely to foster the mistaken belief that the two companies are related.

11. The plaintiff has no control over the character or quality of the defendant"s services offered in association with the SHOWMAX name and mark. The defendant"s activities will cause irreparable harm to the plaintiff by diminishing the distinctiveness of the plaintiff"s IMAX trade mark.

12. The balance of convenience favours the plaintiff. The plaintiff"s theatres and other motion picture-related wares and services are well established in the Canadian marketplace, and the plaintiff has earned very wide-spread and extremely valuable goodwill in association with its IMAX name and mark.

13. By contrast, the defendant has not opened any theatres yet under the SHOWMAX name and mark, nor has it gained any significant reputation among the Canadian public. The defendant"s proposed theatre is not scheduled to open for nearly a year. The defendant can easily adopt a new name and mark not likely to cause confusion.

[7]      In support of the grounds for which the plaintiff is asking for an interlocutory injunction, the plaintiff filed the affidavit of Carl Galletta and exhibits, the affidavit of Robert Holz and exhibits, the affidavit of Joanna Kotsopoulos and exhibits, the affidavits of G. Mary Ruby and exhibits sworn August 24, 1999 and November 22, 1999, the affidavit of John W. Senders, the affidavit of Ruth M. Corbin and Exhibit "A" , the affidavit of Michael R. Pearce and Exhibit "A" as well as portions of cross-examinations of Linda Nelson on her affidavit sworn on November 8, 1999.

[8]      The defendant filed, as its evidence, the affidavit of Linda Nelson, of John P. Liefeld, parts of the transcript of the cross-examination of M. Ruby, Robert G. Holz, Dr. R.M. Corbin, J.W. Senders and of Dr. Michael Pearce.

[9]      In its Statement of Claim, to which the interlocutory injunction is attached, the plaintiff is claiming:

(a) an injunction restraining the defendants, their officers, directors, servants, agents, employees and all over whom they exercise control, either directly or indirectly, and anyone having knowledge of such Order as may be granted, from:

(i) using the word SHOWMAX, or colourable imitations thereof, as the name of a large-format motion picture theatre, or as a name or mark used in association with large-format motion picture theatres or related wares or services marketed to the public;

(ii) infringing the plaintiff"s trade marks IMAX, registered in Canada under No. 170, 718, and The IMAX Experience registered in Canada under No. 505, 349;

(iii) directing public attention to their wares, services or businesses in such a way as to cause or be likely to cause confusion in Canada, at the time they commenced so to direct attention to them, between their wares, services or businesses and the wares, services or business of Imax Corporation, through use of the word SHOWMAX, or colourable imitations thereof, as a name or mark;

(iv) using the plaintiff"s registered trade mark IMAX in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto;

(v) infringing the plaintiff"s copyright in its internet website;

(vi) making false or misleading statements, tending to discredit the business, wares or services of the plaintiff, to the effect that there is or will be a business relationship between the Imax Corporation and Showmax, Inc., other than solely as competitors;

(b) an Order requiring the defendants to deliver up to Imax Corporation, within 10 days after service of such Order, all materials in the possession, custody or control of the defendants as may offend any injunction granted herein;

(c) damages in the amount of $10,000,000.00 or an accounting of the profits the defendants, as Imax Corporation may elect after due inquiry, for trade mark infringement, statutory trade libel and passing off, depreciation of goodwill, and copyright infringement;

(d) exemplary damages in the amount of $5,000,000.00;

(e) the costs of this action on the highest scale;

(f) pre-judgment and post-judgment interest;

(g) all applicable taxes to which the plaintiff is entitled; and,

(h) such further and other relief as counsel may advise and this Honourable Court allows.

GENERAL FACTUAL BACKGROUND

[10]      Imax is a corporation incorporated under the laws of Canada and has a principal place of business at 2525 Speakman Drive, Sheridan Science and Technology Park, Mississauga, Ontario, Canada, L5K 1B1.

[11]      Showmax is a corporation incorporated under the laws of California and has a principal place of business at 1105 Quail Street, Newport Beach. California, United States of America, 92660.

[12]      Showmax Montreal Inc. is a corporation incorporated under the laws of Québec, and has a registered head address of 600, De La Gauchetière West, Suite 2400, Montreal, Quebec, H3B 4L8.

[13]      The Montreal Forum Entertainment Center Company is a partnership comprising CANDEREL PROPERTIES LIMITED, SIMON PROPERTY GROUP, DLJ REAL ESTATE CAPITAL PARTNERS and MADISON MARQUETTE and has a principal office or place of business at 2000, rue Peel, Suite 900, Montréal Québec, H3A 2W5.

[14]      The Forum Entertainment Center Company is a corporation incorporated under the laws of Nova Scotia, and has a registered head office address of Upper Water Street, Halifax, Nova Scotia, B3J 2X2.

[15]      The Forum Entertainment Center G.P. is a partnership registered under the laws of Québec, consisting of SDG Montreal Forum Company, Canderel Properties Limited and Société RECP de Montréal, and has a registered head office address of 2000, rue Peel, Suite 900, Montréal Québec, H3A 2W5.

[16]      On March 30, 1999 the plaintiff commenced this action against Showmax Inc. for trade-mark infringement, passing off, depreciation of goodwill, and statutory trade libel under the Trade-marks Act R.S.C. 1985, c. T-13, as amended, and for copyright infringement.

[17]      The action is based on the defendant"s use of the trade-mark and trade name Showmax in association with a large-format motion picture theatre to be opened at the Forum Entertainment Centre in Montréal, and the advertisements for this theatre on banners, magazines and through an internet website which all bear the name Showmax.

[18]      The plaintiff states that since as early as November 1996, Showmax has provided real estate development and consulting services in relation to the development and operation of large-format motion picture in Canada in association with the trade-mark SHOWMAX.

[19]      In July 1998, Showmax announced publicly that it had entered into an agreement with Canderel to open a 450-seat large-format motion picture theatre under the name Showmax in Montréal, Québec at the Forum Entertainment Center (the site of the hockey arena formerly known as The Montréal Forum) which is scheduled to open in late 1999.

[20]      On July 23, 1998, Canderel Properties Limited SDG Montreal Forum Company, and Société RECP de Montréal registered a partnership in Québec under the name "The Forum Entertainment Center G.P." with the object of developing the Montréal Forum into a fully integrated multi-tenant entertainment and retail centre.

[21]      In October 1998, Canderel Properties Limited announced that construction on the Forum Entertainment Centre had begun, that Showmax would be a major tenant, and that it had formed the Montréal Forum Entertainment Company with partners, Simon Property Group, DJL Real Estate Capital Partners, and Madison Marquette to fund and develop the complex.

[22]      Showmax is responsible for an internet website with the following address, or Universal Resource Locator (URL): http://www.showmax.com. Showmax has used this site to advertise the opening of the Showmax large-format theatre at the Forum Entertainment Centre.

[23]      The plaintiff states that the technology page on the Showmax website offers further links, including one which leads the viewer to the Old Port of Montréal website, which appears still framed within the framing page of the Showmax website. The Old Port of Montréal website, as framed, contains information and advertising regarding the Imax theatre at the Old Port of Montreal and displays the Imax trade-mark.

[24]      The plaintiff states that the arrangement of framing and linking causes the viewer to be likely to infer that Imax is responsible for, or is connected with Showmax, for the purposes of the proposed large-format Showmax theatre.

[25]      Showmax has applied to register the trade-marks SHOWMAX and Showmax Montreal in Canada in association with large-format motion picture theatres and related wares and services.

[26]      The plaintiff states that, through the above stated activities, the defendant has:

(a) infringed the plaintiff"s exclusive right to use its registered trademark Imax contrary to section 19 of the Trade -marks Act and threaten further infringement, and deemed infringement, of the registered marks Imax and The Imax Enterprise under section 19 and 20;

(b) directed public attention to their wares, services, or business in such a way as to cause or be likely to cause confusion in Canada, at the time they commenced so to direct attention to them, between their wares, services, or businesses and the wares, services, or business of the plaintiff, through the use of the word Showmax as a trademark or trade name, contrary to section 7(b), and threaten further such wrongful activity; and

(c) used the trade mark Imax, registered by the plaintiff, in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto, and threaten further such wrongful activity.

[27]      The plaintiff states that the Imax website (http://www.imax.com) is an original compilation under section 2 of the Copyright Act, R.S.C. 1985, c. C-42, as amended (Imax Website Work) and Imax is the owner of the copyright in the Imax Website Work.

[28]      The plaintiff is seeking an interim and interlocutory injunction prohibiting the defendant from continuing to use the name Showmax in Canada in association with large-format theatres and related services.

RELEVANT STATUTORY PROVISIONS

Trade-marks Act, R.S.C 1985, c. T-13, as amended.

7. No person shall (a) make a false or misleading statement tending to discredit the business, wares or services of a competitor; (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; (c) pass off other wares or services as and for those ordered or requested; (d) make use, in association with wares or services, of any description that is false in a material respect and likely to mislead the public as to (i) the character, quality, quantity or composition, (ii) the geographical origin, or (iii) the mode of the manufacture, production or performance of the wares or services; or (e) do any other act or adopt any other business practice contrary to honest industrial or commercial usage in Canada. 19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services. 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.

7. Nul ne peut_: a) faire une déclaration fausse ou trompeuse tendant à discréditer l'entreprise, les marchandises ou les services d'un concurrent; 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; c) faire passer d'autres marchandises ou services pour ceux qui sont commandés ou demandés; d) utiliser, en liaison avec des marchandises ou services, une désignation qui est fausse sous un rapport essentiel et de nature à tromper le public en ce qui regarde_: (i) soit leurs caractéristiques, leur qualité, quantité ou composition, (ii) soit leur origine géographique, (iii) soit leur mode de fabrication, de production ou d'exécution; e) faire un autre acte ou adopter une autre méthode d'affaires contraire aux honnêtes usages industriels ou commerciaux ayant cours au Canada. 19. Sous réserve des articles 21, 32 et 67, l'enregistrement d'une marque de commerce à l'égard de marchandises ou services, sauf si son invalidité est démontrée, donne au propriétaire le droit exclusif à l'emploi de celle-ci, dans tout le Canada, en ce qui concerne ces marchandises ou services. 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.

Copyright Act, R.S.C. 1985, c. C-42

2.1 (1) A compilation containing two or more of the categories of literary, dramatic, musical or artistic works shall be deemed to be a compilation of the category making up the most substantial part of the compilation. (2) The mere fact that a work is included in a compilation does not increase, decrease or otherwise affect the protection conferred by this Act in respect of the copyright in the work or the moral rights in respect of the work. 3. (1) For the purposes of this Act, "copyright", in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right (a) to produce, reproduce, perform or publish any translation of the work, (b) in the case of a dramatic work, to convert it into a novel or other non-dramatic work, (c) in the case of a novel or other non-dramatic work, or of an artistic work, to convert it into a dramatic work, by way of performance in public or otherwise, (d) in the case of a literary, dramatic or musical work, to make any sound recording, cinematograph film or other contrivance by means of which the work may be mechanically reproduced or performed, (e) in the case of any literary, dramatic, musical or artistic work, to reproduce, adapt and publicly present the work as a cinematographic work, (f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication, (g) to present at a public exhibition, for a purpose other than sale or hire, an artistic work created after June 7, 1988, other than a map, chart or plan, (h) in the case of a computer program that can be reproduced in the ordinary course of its use, other than by a reproduction during its execution in conjunction with a machine, device or computer, to rent out the computer program, and (i) in the case of a musical work, to rent out a sound recording in which the work is embodied, and to authorize any such acts. 27. (1) It is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that by this Act only the owner of the copyright has the right to do. (2) It is an infringement of copyright for any person to (a) sell or rent out, (b) distribute to such an extent as to affect prejudicially the owner of the copyright, (c) by way of trade distribute, expose or offer for sale or rental, or exhibit in public, (d) possess for the purpose of doing anything referred to in paragraphs (a) to (c), or (e) import into Canada for the purpose of doing anything referred to in paragraphs (a) to (c), a copy of a work, sound recording or fixation of a performer's performance or of a communication signal that the person knows or should have known infringes copyright or would infringe copyright if it had been made in Canada by the person who made it.

2.1 (1) La compilation d'oeuvres de catégories diverses est réputée constituer une compilation de la catégorie représentant la partie la plus importante. (2) L'incorporation d'une oeuvre dans une compilation ne modifie pas la protection conférée par la présente loi à l'oeuvre au titre du droit d'auteur ou des droits moraux. 3. (1) Le droit d'auteur sur l'oeuvre comporte le droit exclusif de produire ou reproduire la totalité ou une partie importante de l'oeuvre, sous une forme matérielle quelconque, d'en exécuter ou d'en représenter la totalité ou une partie importante en public et, si l'oeuvre n'est pas publiée, d'en publier la totalité ou une partie importante; ce droit comporte, en outre, le droit exclusif_: a) de produire, reproduire, représenter ou publier une traduction de l'oeuvre; b) s'il s'agit d'une oeuvre dramatique, de la transformer en un roman ou en une autre oeuvre non dramatique; c) s'il s'agit d'un roman ou d'une autre oeuvre non dramatique, ou d'une oeuvre artistique, de transformer cette oeuvre en une oeuvre dramatique, par voie de représentation publique ou autrement; d) s'il s'agit d'une oeuvre littéraire, dramatique ou musicale, d'en faire un enregistrement sonore, film cinématographique ou autre support, à l'aide desquels l'oeuvre peut être reproduite, représentée ou exécutée mécaniquement; e) s'il s'agit d'une oeuvre littéraire, dramatique, musicale ou artistique, de reproduire, d'adapter et de présenter publiquement l'oeuvre en tant qu'oeuvre cinématographique; f) de communiquer au public, par télécommunication, une oeuvre littéraire, dramatique, musicale ou artistique; g) de présenter au public lors d'une exposition, à des fins autres que la vente ou la location, une oeuvre artistique " autre qu'une carte géographique ou marine, un plan ou un graphique " créée après le 7 juin 1988; h) de louer un programme d'ordinateur qui peut être reproduit dans le cadre normal de son utilisation, sauf la reproduction effectuée pendant son exécution avec un ordinateur ou autre machine ou appareil; i) s'il s'agit d'une oeuvre musicale, d'en louer tout enregistrement sonore. Est inclus dans la présente définition le droit exclusif d'autoriser ces actes. 27. (1) Constitue une violation du droit d'auteur l'accomplissement, sans le consentement du titulaire de ce droit, d'un acte qu'en vertu de la présente loi seul ce titulaire a la faculté d'accomplir. (2) Constitue une violation du droit d'auteur l'accomplissement de tout acte ci-après en ce qui a trait à l'exemplaire d'une oeuvre, d'une fixation d'une prestation, d'un enregistrement sonore ou d'une fixation d'un signal de communication alors que la personne qui accomplit l'acte sait ou devrait savoir que la production de l'exemplaire constitue une violation de ce droit, ou en constituerait une si l'exemplaire avait été produit au Canada par la personne qui l'a produit_: a) la vente ou la location; b) la mise en circulation de façon à porter préjudice au titulaire du droit d'auteur; c) la mise en circulation, la mise ou l'offre en vente ou en location, ou l'exposition en public, dans un but commercial; d) la possession en vue de l'un ou l'autre des actes visés aux alinéas a) à c); e) l'importation au Canada en vue de l'un ou l'autre des actes visés aux alinéas a) à c).

ISSUES RAISED BY THIS MOTION

[29]      The issues to be determined in this motion for an interim and interlocutory injunction, as articulated in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at page 334 are:

(1)      Has the applicant demonstrated a serious question to be tried?

(2)      Has the applicant established that it will suffer irreparable harm if the relief is not granted?

(3)      In whose favour does the balance of convenience lie?

    

SUBMISSIONS OF THE PARTIES

Plaintiff"s Submissions

[30]      The plaintiff submits that the defendant"s use or display, and threatened further use or display, of the trade-mark and trade name Showmax in association with large-format theatres and wares or services in the large-format motion picture field marketed to the public has caused, or is likely to cause, confusion with the Imax family of trademarks and the trade name Imax.

[31]      The plaintiff argues that by adopting the mark and the name Showmax, the defendant"s intend and threaten to appropriate the goodwill earned in Canada by Imax over many years and at great expense. Further, the likelihood of confusion is exacerbated by Showmax"s deceptive use of the Imax trade-mark in its internet website.

[32]      Secondly, the plaintiff submits that if the defendant is permitted to use or display the mark or name Showmax in Canada in association with wares or services in the large-format motion picture field, then Canadian consumers will be deceived into the mistaken belief that the defendant"s products and services are made or provided by Imax or under its authority, or that the defendant is affiliated with Imax. This would result in the defendant unlawfully benefiting from Imax"s reputation for excellent service and high quality products.

[33]      Thirdly, the plaintiff argues that it has no control over the character or quality of the defendant"s wares or services. The defendant"s use or display of the name or mark Showmax will harm irreparably the plaintiff"s valuable reputation and the goodwill attaching to its Imax Family of Marks.

[34]      Lastly, the plaintiff submits that by the arrangement of linking and framing in the Showmax website, Showmax has created, a compilation pursuant to section 2 of the Copyright Act which reproduces the Imax Website Work or a substantial part thereof, and which communicates the Imax Website Work to the public by telecommunication, all without Imax"s consent. It is argued that Showmax has thereby infringed Imax"s rights in the Imax Website Work contrary to sections 3 and 27 of the Copyright Act .

Defendant"s Submissions

[35]      The defendant"s submissions can be summarized by the statement that the plaintiff has failed to satisfy the test for the issuance of an interlocutory injunction.

[36]      The defendant submits that no serious issue exists because of the fact that there is no valid evidence of confusion. That the "Senders" survey is flawed and cannot be relied upon to show a serious issue of confusion.

[37]      That, therefore, assuming no confusion, there is no valid evidence of irreparable harm.

ANALYSIS

[38]      I believe it necessary to state that a request or the issuance of an interlocutory injunction is a most serious type of proceeding and should only be issued on clear and convincing evidence. I say this because the issuance of an interlocutory injunction prevents a party from doing what he or she would normally be permitted to do.

[39]      In the case before me, the issuance of the interlocutory injunction would prevent the defendant from opening a large-format theatre in Canada under the name of SHOWMAX. This, normally, the defendant would be permitted to do.

Test for an Interlocutory Injunction

Part I: Serious Issue to be Tried

[40]      The three-stage test to be applied in an application for an interlocutory injunction was established in American Cyanamid Co. v. Ethicon Ltd. , [1975] A.C. 396 (H.L.) and affirmed by the Supreme Court of Canada in RJR MacDonald, supra.

[41]      The applicant must succeed on each of the three parts of the test in order to be granted an injunction. In assessing the first stage of the test, Justices Cory and Sopinka stated at page 337 of RJR MacDonald, supra that "there are no specific requirements which must be met in order to satisfy this test. The threshold is a low one."

[42]      There is sufficient evidence before the Court which has led me to conclude that there is a serious issue to be tried. The plaintiff is the registered owner of a Family of Marks (Imax) and therefore has the exclusive right throughout Canada to the use of these marks in respect of its wares and services. In their Statement of Claim, the plaintiff alleges that the defendant has infringed this right through their use of the trade-mark SHOWMAX in association with a large-format motion picture theatre proposed for Montreal.

[43]      The plaintiff has filed the affidavit of Dr. John W. Senders. I don"t intend to recite the qualifications of Dr. Senders to give evidence other than to state that after reading his curriculum vitae and the method that he used to conduct his survey to show "confusion", I am prepared to accept what he states on the issue of "confusion".

[44]      In paragraphs 5, 6 and 7 of Dr. Senders" affidavit, he states:

5. I have been asked to give my expert opinion on the question of whether the use of the term SHOWMAX as the name of a giant screen movie theatre in Montréal would be likely to cause visitors and potential visitors to such a theatre to infer that it is owned or operated by, or affiliated with, any other company.

6. In order to obtain field data upon which to base my opinion, I collaborated with Sara Parikh of Leo J. Shapiro and Associates, a market research firm located in Chicago, Illinois, in the design and implementation of a consumer perception survey bearing on the question to be investigated. My opinion set out in this affidavit is primarily based on my analysis of the data yielded by the survey conducted. It also derives from knowledge and experience gained from years of reading scientific reports on human cognitive and perceptual performance, from my discussions with my colleagues about related scientific matters, and from my trained observations of human behaviour both in the laboratory and in the outside world, all extending over more than 45 years of research and application.

7. My opinion, strongly supported by the data collected through the survey, is that the use of the term SHOWMAX as the name of a giant screen movie theatre in Montréal would be likely to cause visitors and potential visitors to such a theatre to believe that SHOWMAX theatres are owned by, operated by, or have some business association with, the company that owns or operates IMAX theatres. The survey data show that about half of the people surveyed held this belief.

[45]      In the balance of the paragraphs of Dr. Senders" affidavit, he explains the method of his survey, the questions asked of the participants (paragraph 14) and how the participants of the survey were chosen (paragraph 10) and the findings (paragraph 16 and following).

[46]      In paragraph 35, Dr. Senders" conclusion is:

35.      The excess of the rate of the IMAX response to the SHOWMAX image over the rate of the IMAX response to the MEGAVUE image is 49%. That is my best estimate of the likelihood of mistaken belief that there is some kind of association between the company that operates Showmax theatres and the company that operates Imax theatres.

[47]      To counter Dr. Senders" evidence, the defendant filed the affidavit of John P. Liefeld sworn on November 10, 1999.

[48]      Dr. Liefeld is a Professor in the Department of Consumer Studies at the University of Guelph. Dr. Liefeld has, as does Dr. Senders, an impressive curriculum vitae. In paragraph 7 of his affidavit, Dr. Liefeld states:

7.      Over the past 31 years, I have been directly involved in the design, conduct and supervision of many research projects for industry and government, and academic research funded by granting agencies such as SSHRC. These studies have spanned a wide variety of marketing and social research methods including qualitative, survey and experimental approaches. They have included shopping mall intercepts, telephone surveys, door-to-dor household surveys and field and laboratory experiments.

[49]      In paragraphs 11, 12, 13 and 14 of Dr. Liefeld"s affidavit, he states:

11.      I was asked by counsel for Showmax, Inc. to review the affidavit of Dr Senders filed in this case, and provide comments.

12.      My general conclusion is that the results of Dr Senders"s research are not reliable, and do not support his conclusions.

13.      The questions he asked are not valid. They do not measure beliefs about which company owns or operates Showmax theaters. They measure respondent recall from memory of company names, which share syllables or sound similar, when that respondent is under pressure to guess a name. Even if names share syllables, or sound similar, that does not mean a consumer will choose to attend a theater or purchase a product mistakenly believing that it is owned, operated or produced by another company.

14.      Dr Senders"s results suggest to me that the name IMAX may be used by some consumers as a generic term to apply to all large format theaters. Dr Senders did not test this possibility.

[50]      The balance of Dr. Liefeld"s affidavit are specific comments by Dr. Liefeld as to why he made the above comments found in paragraphs 12, 13 and 14.

[51]      As Dr. Liefeld states in paragraph 11 of his affidavit, he was only asked to review the affidavit of Dr. Senders and this he did.

[52]      What Dr. Liefeld states, and I paraphrase, is that he disagrees with the method of Dr. Senders" survey, with the questions asked, with the method of choosing participants, etc.

[53]      What Dr. Liefeld does not say, and he cannot say, is that, based on the method Dr. Liefeld believes should have been adopted to conduct the survey, the results are different from the conclusion of Dr. Senders.

[54]      The fact that Dr. Liefeld disagrees with the method used by Dr. Senders is not sufficient for me to set aside the result of Dr. Sender"s survey.

[55]      It might have been very different if Dr. Liefeld would have conducted his own survey in a manner he thought appropriate and concluded of no possible confusion.

[56]      For the purpose of an interlocutory injunction, I do not have to decide that there is confusion. I must only decide that an arguable case exists on the issue of confusion.

[57]      I am satisfied that the plaintiff has made out such a case.

[58]      At this stage of the proceedings, I will abstain from commenting any further on the merits of the action other than to say that I am satisfied that the plaintiffs have satisfied the first part of the test in establishing that there is a serious issue to be tried.

[59]      Clearly, I cannot say that the claim of the plaintiff as to the issue of possible confusion is frivolous.

Part II: Demonstrating Irreparable Harm

[60]      The plaintiff must satisfy the Court that it will suffer irreparable harm if an injunction is not granted. On this issue, Justices Sopinka and Cory stated the following at page 341 of RJR MacDonald, supra:

At this stage the only issue to be decided is whether a refusal to grant relief could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court"s decision (R.L. Crain Inc. v. Hendry (1988), 48 D.L.R. (4th ) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel v. Mullin, [1985] 3 W.W.R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).

[61]      This stage of the test was reiterated by the Federal Court of Appeal in Turbo Resources Ltd. v. Petro Canada Inc. (1989), 24 C.P.R. (3d) 1 (F.C.A.) at pages 463-464 as follows:

(a) Where a plaintiff"s recoverable damages resulting in the continuance of the defendant"s activities pending trial would be an adequate remedy that the defendant would be financially able to pay, an interlocutory injunction should not normally be granted;

(b) where such damages would not provide the plaintiff an adequate remedy but damages (recoverable under the plaintiff"s undertaking) would provide the defendant with such a remedy for the restriction on his activities, there would be no ground for refusing an interlocutory injunction.

[62]      It has been well established in the jurisprudence of this Court that there must be clear and unequivocal evidence of irreparable harm in order to satisfy this stage of the three-part test. Rothstein J. discussed the nature of the evidence required to satisfy this stage in The Sports Authority Inc. v. Howard Vineberg et al., [1995] F.C.J. No. 622 at page 3 in the following terms:

Mere assertions of loss of distinctiveness, harm to goodwill or lost sales per se are insufficient to prove irreparable harm. In a quia timet application such as the one at bar, there is no evidence of actual harm because the alleged infringing or passing off is not yet in the marketplace. Therefore, logical inferences must be drawn. However, loss of distinctiveness, harm to goodwill or loss of sales cannot be inferred simply from evidence of confusion. To demonstrate irreparable harm, an applicant must lead clear evidence showing how such harm will occur and why it will be irreparable. In the absence of such evidence, there is nothing on which an inference of irreparable harm can reasonably and logically be based.

[63]      Applying the reasoning set out in the above cited cases to the facts before the Court, in my view there may be evidence of confusion between the trade-marks of Imax and Showmax to satisfy the first part of the test, that is, a serious issue to argue. Firstly, the affidavit of G. Mary Ruby states at page 3, paragraph 7, that Showmax is exhibiting an image of an Imax theatre in its promotional materials. Specifically, the image from the film Skyward on screen at the Bradford Imax theatre at the National Museum of Photography, Film and Television in Bradford, England.

[64]      Secondly, I am satisfied that the Showmax website does contain images of the Imax theatre at the Old Port of Montreal and that it is reasonable to conclude that consumers would infer that the proposed Showmax theatre is operated and controlled by the same entity as the Imax theatre.

[65]      It is relevant to these proceedings to consider the decision of the Federal Court of Appeal in Centre Ice Inc. v. National Hockey League (1994), 53 C.P.R. (3d) 34 (F.C.A.) which held that evidence of confusion is insufficient to infer the existence of irreparable harm and to satisfy the second stage of the test the plaintiff must show actual evidence of a loss of goodwill or reputation:

In am unable to agree that a finding of confusion between competing products necessarily leads to a loss of goodwill for which the plaintiff cannot be compensated in damages. A similar issue was considered by the Alberta Court of Appeal in Petro-Canada Inc. v. Good Neighbour Fast Food Stores Ltd. (1987) 18 C.P.R. (3d) at pp. 63-64. Kearns J.A. speaking for the Court said: The suit here sounds in passing off, and the first category of harm alleged is diminution of goodwill as a result of confusion of names in the minds of reasonable persons. There is evidence in the material presented by the applicant to indicate that it is reasonable for him to allege the existence of confusion. That kind of confusion, as we have said in other suits, leads to loss of "name" goodwill the loss of which in the normal course is a kind of damage which, when suffered by a commercial firm in the ordinary course, is fairly readily calculable and therefore can be fairly compensated for in damages.

On the basis of that decision, which I find persuasive, even if loss of goodwill through the use of a confusing mark was shown, a case for irreparable harm would not have been made out because such loss could be fairly compensated for in damages.

[66]      On the issue of irreparable harm, it must be remembered that the defendant has not, as yet, commenced operations of a large-format theatre using the name of Showmax. Therefore, how does plaintiff show evidence of irreparable harm, such as loss of goodwill and loss of sales due to confusion.

[67]      The plaintiff filed the affidavit of Michael R. Pearce, Associate Dean (Programs) at the Richard Ivy School of Business at the University of Western Ontario. In paragraphs 1 to 8 of his affidavit can be found Dr. Pearce"s qualifications. As in the case of Dr. Senders and Dr. Liefeld, Dr. Pearce"s qualifications are impressive.

[68]      I accept the conclusions of Dr. Pearce on the issue of irreparable harm as I have nothing before me to contradict what Dr. Pearce states in his affidavit.

[69]      It is important to note Dr. Pearce"s mandate and the facts that he was asked to assume.

9. In November 1999, I was contacted by Mark Robbins of the law firm of Bereskin & Parr, and asked to provide my opinion regarding the probability of harm and the nature of the harm that Imax Corporation ("Imax") will suffer, if any, if the defendants Showmax,Inc. And Showmax Montreal, Inc. ("Showmax") begin use of SHOWMAX as the name for a large format movie theatre in Montreal.

10. For the purpose of rendering an opinion, I reviewed the following documents that were provided to me by Mark Robbins: the Amended Statement of Claim, Showmax"s Amended Statement of Defence, the plaintiff"s Notice of Motion for an interlocutory injunction, the affidavit of G. Mary Ruby sworn August 24, 1999, and the affidavit of John W. Senders sworn August 20, 1999. In addition, I looked at photographs showing SHOWMAX banners which I was told hang on the exterior of the Montreal Forum Entertainment Centre, and I reviewed the showmax.com internet website.

11. I have not been asked to assess the facts set out in the documents but rather I have been asked to assume for the purposes of this opinion that the following facts are true: (i) that Imax operates a chain of large-format movie theatres under the IMAX and OMNIMAX names; (ii) that Imax operates IMAX large-format movie theatres in Montreal; (iii) that the IMAX name is a recognized trade mark in Montreal; (iv) that Showmax intends to open a large-format movie theatre in Montreal under the name SHOWMAX; and (v) that the IMAX and SHOWMAX names are likely to be confusing when used with large-format movie theatres in Montreal.

[70]      In paragraphs 12 and 13 of his affidavit, Dr. Pearce gives a summary of his conclusions.

12. Regarding the likelihood of damage, it is my opinion that Imax will suffer serious damage to its goodwill if the defendants use the SHOWMAX name with a large-format movie theatre in Montreal. The damage would arise once the SHOWMAX theatre received publicity, and it would become increasingly more serious after the theatre opened and carried on business using the SHOWMAX name.

13. Regarding the nature of the damage, it is my opinion that use of the SHOWMAX mark will damage the brand meaning or equity of the IMAX mark (that is, the ability of the IMAX mark to act as a distinctive and unique signifier of the plaintiff"s movie theatres). The IMAX mark will no longer identify and distinguish theatres controlled by Imax as strongly and clearly as it did before use began of the confusing SHOWMAX mark. In my opinion, confusion will not only result in lost sales, but also will cause damage to good will and to the value of the IMAX mark. This latter type of damage will be impossible to calculate in monetary terms or to remedy by restorative measures after it is inflicted.

[71]      As I have said, I am satisfied that I have no evidence of any value that convinces me that Dr. Pearce is wrong when he states that Imax will suffer "serious damage" to its goodwill and that use of the Showmax mark "will damage the brand meaning or equity of the Imax mark. He also states in paragraph 13 "In my opinion, confusion will not only result in lost sales, but also will cause damage to goodwill and to the value of the IMAX mark. This latter type of damage will be impossible to calculate in monetary terms or to remedy by restorative measures after it is inflicted".

[72]      The balance of Dr. Pearce"s affidavit gives his reasons for the above conclusions.

[73]      Now I have said that defendant did not file any evidence to contradict Dr. Pearce"s expert evidence. Defendant does say that Dr. Pearce bases his expert opinion on an assumption that is incorrect, that is, that there exists confusion as found by Dr. Senders. Defendant states that if there is no confusion then Dr. Pearce could not find any irreparable harm.

[74]      I agree with the defendant"s submission, except that, as I have already said, I accept Dr. Senders finding on the issue of confusion for the purpose of this application for an interlocutory injunction.

[75]      Therefore, and basing myself on the affidavit evidence of Dr. Pearce, I am satisfied that plaintiff will suffer irreparable harm if the defendant were to be permitted to open a large-format theatre under the name of SHOWMAX in Canada and in Montreal particularly.

Balance of Convenience

[76]      I am satisfied that the balance of convenience favours the plaintiff. The defendant has not commenced doing business in Canada. In Montreal, the only expense that defendant has incurred are the cost of the sign on the Montreal Forum Building and the costs of pamphlet advertising the eventual opening of a large-format theatre.

[77]      These costs are relatively insignificant.

CONCLUSION

[78]      Having thoroughly reviewed the documentary evidence submitted by the plaintiffs and having heard the oral submissions, I am satisfied that inferences can be drawn from the evidence so as to conclude that it is reasonable for the plaintiff to allege the existence of confusion. However, this in itself is insufficient.

[79]      In my opinion, there are numerous pieces of evidence before the Court which lead me to believe, for the purpose of showing a serious issue and irreparable harm, that the evidence of confusion is clear and sufficient to support an inference of loss of "name" goodwill and reputation.

[80]      It is correct to say that the plaintiff has not adduced any evidence of loss of sales. This, of course, is true. The defendant has not commenced business in Montreal and therefore one cannot adduce direct evidence of loss of sales. I accept the statement of Dr. Pearce in paragraph 22 of his affidavit.

22. In my opinion, it is usually the case that a company will lose some or all of the ability to benefit from the retail brand equity in its name, if a competitor adopts a confusing name. Aside from the issue of lost sales or profits (which may be quantifiable), the lost equity in a name undermines the ability of the company to position itself in the marketplace, and to further develop and enhance its business in the future. Once a name loses its unique or distinctive quality, it is impossible to determine the value of what has been lost in terms of the company"s ability to expand and market itself in the future.

[81]      This evidence clearly indicates the nature of the harm that plaintiff would suffer if defendant would be permitted to commence to use Showmax for large-format theatres.

[82]      Furthermore, in paragraph 23, Dr. Pearce states:

23. I have not been asked to comment on the research study conducted by Dr. John Senders other than to assume, for the purpose of my affidavit, that the results are sound and accurate. The research study conducted by Dr. Senders shows that theatre-goers are likely to believe that a SHOWMAX theatre is operated by the same organization as an IMAX theatre or that they are at least associated. In other words, the study shows that a significant number of theatre-goers are likely to be confused.

[83]      For the above reasons, the application for an interlocutory injunction is allowed with costs.

                            

                            

                        

                                 J.F.C.C.

Ottawa, Ontario

January 18, 2000