Toronto.Com v. Friendship Enterprises, docket T-1163-99

Date: 20000601

Docket: T-1163-99

BETWEEN:

TORONTO.COM

     Plaintiff

     - and -

     RITCHIE SINCLAIR AND GARTH COLE

     doing business as FRIENDSHIP ENTERPRISES

     Defendants

     REASONS FOR ORDER

HENEGHAN J.

[1]      The Applicant in this motion, Toronto.com (the "Plaintiff"), brought a motion for an interlocutory injunction to restrain Ritchie Sinclair and Garth Cole (the "Defendants") from:

(i) using, displaying, advertising or authorizing others to use, display or advertise the trade-mark TORONTO2.com;

(ii) using, displaying, advertising or authorizing others to use, display or advertise any other words, names, domain names or marks that are similar to the trade-mark TORONTO2.com;

(iii) using, displaying or advertising the trade-mark TORONTO2.COM, or authorizing others to use, display or advertise the trade-mark TORONTO2.COM, in a manner which is likely to cause confusion with the Plaintiff"s trade-marks TORONTO.COM and TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O. & design;

(iv) doing any other act likely to have the effect of depreciating the goodwill attaching to the Plaintiff"s Trade-marks;

(v) passing off their wares, services, or business as and for the wares, services or business of the Plaintiff or otherwise directing public attention to their wares, services or business in such a way as to cause or be likely to cause confusion between their wares, services, or business and the wares, services or business of the Plaintiff; and

(vi) copying, publishing, framing or linking content of the Plaintiff"s website at www.toronto.com ;

(vii) otherwise infringing the Plaintiff"s copyright in its www.toronto.com website pages.

[2]      By order made on January 27, 2000, I dismissed the motion with reasons to follow. These are my reasons.

[3]      The Plaintiff is an organization called "Toronto.com". It is a limited partnership consisting of Metroland Printing, Publishing and Distributing Limited, Bell ActiMedia Inc. and City Search Canada Inc. Since March 30, 1998, the Plaintiff has been operating a website called "toronto.com" which provides a guide to the services and amenities offered in the city of Toronto.

[4]      The Defendants, Respondents in this motion, are two individuals who carry on a business under the name and style of "Friendship Enterprises". The Defendants began operation of their website, under the domain name "toronto2.com", in late April 1999. However, even as of January 14, 2000, the date of the hearing of the Plaintiff"s motion, the Defendant"s website was incomplete.

[5]      It is the existence of the Defendants"website which precipitated the Plaintiff to bring an action against the Defendants and to seek an interlocutory injunction enjoining the Defendants, Richie Sinclair and Garth Cole et al., from using, displaying and advertising the trade-mark TORONTO2.COM.

[6]      The Plaintiff claims that at its website it has used, displayed and advertised the trade-marks TORONTO.COM and TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O. & design in association with an internet guide and directory for the city of Toronto. The Plaintiff alleges that it has and continues to sell advertising space on the website to third parties.

[7]      The Plaintiff claims that as a result of its extensive use in Canada of the TORONTO.COM trade-mark, it has acquired substantial goodwill in the trade-mark and is entitled by virtue of the common law to exclusive use of the trade-mark.

[8]      With respect to the Plaintiff"s copyright in the webpages, the Plaintiff submits that it is the owner of the copyright in the webpages at www.toronto.com. The Plaintiff also submits that it has the exclusive right to reproduce those webpages in any material form and to authorize any such reproduction.

[9]      The Plaintiff claims that the Defendants have: (i) "framed"several webpages or portions of webpages published at www.toronto.comby the Plaintiff, and displayed them on their website at www.toronto2.com; and (ii) linked their website to some of the same websites to which the Plaintiff has linked its website.

[10]      At the time this motion was filed, searches performed by the Plaintiff confirmed that the Defendants"website no longer appeared to frame content of the Plaintiff"s website. Nevertheless, the Plaintiff maintains that there is no evidence that the framed portions of the Plaintiff"s webpages will not reappear on the Defendant"s website.

[11]      The Plaintiff maintains that the activities of the Defendants have caused the Plaintiff to suffer irreparable harm through, inter alia, a loss of distinctiveness of its TORONTO.COM trade-mark and a loss of goodwill attaching to the trade-mark. The Plaintiff contends that this harm cannot be compensated for in damages. Moreover, the Plaintiff submits that if an interlocutory injunction is not issued, the Plaintiff will continue to suffer such harm.

[12]      Rule 373 of the Federal Court Rules, 1998 provides as follows:

373. (1) On motion, a judge may grant an interlocutory injunction. (2) Unless a judge orders otherwise, a party bringing amotion for an interlocutory injunction shall undertake to abide by any order concerning damages caused by the granting or extension of the injunction.

373. (1) Un juge peut accorder une injonction interlocutoire sur requête. (2) Sauf ordonnance contraire du juge, la partie qui présente une requête pour l'obtention d'une injonction interlocutoir s'engage à se conformer à toute ordonnance concernant les dommages-intérêts découlant de la délivrance ou de la prolongation de l'injonction.

(4) A judge may order that any evidence submitted at the hearing of a motion for an interlocutory injunction shall be considered as evidence submitted at the hearing of the proceeding.

(4) Le juge peut ordonner que la preuve présentée à l'audition de la requête soit considérée comme une preuve présentée à l'instruction de l'instance.

[13]      A tri-partite test is applied to determine whether an interlocutory injunction should be granted. This test considers whether there a serious issue to be tried, whether an applicant will suffer irreparable harm if the relief is not granted and finally, the balance of convenience is examined in assessing whether to grant an interlocutory injunction. (See Manitoba (A.G.) v. Metropolitan Stores (MTS) Ltd., [1987] 1 S.C.R. 110 and RJR-Macdonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 311).

[14]      In the present motion, it is unnecessary to address the question of whether the Applicant has demonstrated a serious issue to be tried and the question of the balance of convenience, as the Applicant has failed to show that it will suffer irreparable harm.

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Irreparable Harm

[15]      In Syntex Inc. v. Novopharm Ltd.¹, Nature Co. v. Sci-Tech Educational Inc.², Centre Ice Ltd. v. National Hockey League³, the Federal Court of Appeal clearly established that in order to be successful in a motion for an interlocutory injunction, an applicant must show clear evidence that he or she will suffer irreparable harm. This evidence cannot be speculative.

[16]      Moreover, Centre Ice Ltd., supra, requires that the evidence show that an applicant will, in fact, suffer irreparable harm. It is insufficient to show that irreparable harm is likely.

[17]      Irreparable harm is harm which cannot be quantified in monetary terms, and hence, refers to the nature of the harm and not its magnitude. (See: RJR-Macdonald Inc., supra)⁴

[18]      In situations where the validity of the trade-mark is in issue, even if there is an infringement of a trade-mark, this still may not constitute irreparable harm. For example, in Syntex, supra, Justice Heald wrote:

In my view, a determination of the merits which involve extensive evidence and contentious and disputed factors which address the vital question of the validity of the mark should not be decided at the interlocutory injunction stage. In such a situation a conclusion that mere infringement of a proprietary right in a trade mark constitutes, of itself, irreparable harm is somewhat contradictory since it is the very "proprietary right" which is at issue. When a court decides via an interlocutory injunction that an aggrieved party has "proprietary rights in a trade mark", that court is deciding the very issue which is to be determined at trial. In my view such a determination should not be made at an interlocutory stage where, as in this case, the question of validity is strenuously addressed by the parties.5

[19]      Furthermore, a court cannot infer, from a finding of confusion, the existence of a loss of goodwill or reputation. In order to be granted an interlocutory injunction, the moving party must produce concrete evidence of irreparable harm. For example, in Nature Co., supra, Stone J.A. stated:

While, as the motions judge stated, there was in the present case some evidence of actual confusion, that evidence did not go so far as to show, in my view, that the confusion would cause irreparable harm to the respondent. As I understand it, the learned judge was able to arrive at his conclusion from what he viewed as loss of distinctiveness in the respondent's mark if this confusion were allowed to go unchecked. This latter conclusion, it seems was in turn dependent on the assumption that this contested mark should be taken to be valid in determining the issue of irreparable harm.6

[20]      Similarly, Justice Tremblay-Lamer in Caterpillar Inc. v. Chaussures Mario Moda Ltd.,⁷ articulated the same principle as in Nature Co., supra, when she clarified that Centre Ice, supra, is to be interpreted as in the following way:

...the court cannot infer from the existence of confusion the existence of a loss of goodwill or reputation. Actual evidence of irreparable harm is necessary.8

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Application to the Present Motion

[21]      The Defendants allege that the Plaintiff has merely asserted the likelihood of confusion without adducing any evidence. The Defendants have also argued that the Plaintiff has tendered no actual evidence of loss of goodwill or reputation.

[22]      I agree with the Defendants. I am unable to locate in the materials any clear evidence, which is not speculative in nature, that demonstrates the Plaintiff will suffer irreparable harm.

[23]      The only evidence tendered in support of the proposition that the Plaintiff will suffer irreparable harm is the affidavit, including its attached exhibits, of George Jewell. The relevant portions of his affidavit read:

40. By the activities complained of, the Defendants have caused and will continue to cause, irreparable harm to the Plaintiff by, inter alia:

(a) jeopardizing the reputation, brand name awareness, and user or consumer loyalty which the Plaintiff has developed, and continues to develop, in connection with its Toronto.com web site and Trade-marks;

(b) jeopardizing the Plaintiff"s ability to attract advertisers who pay to have their products, services and businesses advertised on the Plaintiff"s web site in association with the mark Toronto.com;

(c) jeopardizing the commercial relationship between the Plaintiff and its advertisers (because of (a), for example) such that the advertisers will not advertise on the web site, or insist upon purchasing the advertising space at a lower price;

(d) causing the Plaintiff"s sole source of revenue, and the significant value of its internet brand name, to be lost or diminished as a result of (a) to (c);

(e) abetting others to provide internet services encroaching on the Plaintiff"s Trade-marks and pass off their own products, services and businesses as and for those of the Plaintiff. Given the speed at which the internet world is developing, it is reasonable for the Plaintiff to apprehend that others will be tempted to follow the example of the Defendants if the Defendants are not restrained from using the trade-mark and domain name Toronto2.com and from copying and "framing" the Plaintiff"s web site contents;

(f) diminishing the value of the goodwill attaching to the Trade-marks;

(g) diminishing the distinctive character of the Trade-marks; and

(h) encouraging others to engage in activities which attempt to render common-place the distinctive Toronto.com trade-mark and domain name of the Plaintiff.

41. The loss of distinctiveness which the Plaintiff"s Trade-marks are suffering and will continue to suffer by the Defendants" use of "Toronto2.com" cannot be adequately compensated by an award of damages on the merits. The extent of loss is not quantifiable because of the very nature of what is being lost, namely distinctiveness.

42. The Plaintiff has invested tremendous time, money and effort to create, operate and advertise its web site in association with its Trade-marks in Canada. It has incurred significant operational costs, including the initial costs to get the site up and running, and the continuing costs associated with creating new web site pages and content and generally maintaining the site.

43. The Plaintiff is not aware of any investment made by the Defendants for the promotion of the Toronto2.com trade-mark on their web site or elsewhere in Canada. The Defendants have been, and continue to be, unjustly enriched by their improper and unlawful activities. They have, among other things, avoided having to invest the time, effort and money that would have been required to start-up, operate and maintain a web site with content or web pages that they had themselves created or had licensed from others. They have also avoided having to expend the time, effort and money they otherwise would have had to expend to develop a valuable internet brand name, market their site to potential advertisers and generate revenue through the sale of advertising space to those advertisers. The Defendants are simply taking a free ride on the Plaintiff"s investments and goodwill.

44. The Plaintiff does not know whether or not the Defendants have sufficient assets to satisfy any favourable judgment which this court may grant to the Plaintiff inasmuch as damages and profits could be ascertained.

[24]      Mr. Jewell has simply not pointed to any clear evidence on which this Court could conclude that irreparable harm will ensue if the interlocutory injunction is not granted. The exhibits to Mr. Jewell"s affidavit do not prove that www.toronto.com has or will lose reputation, brand name awareness or consumer loyalty, nor do the exhibits prove that www.toronto.com is losing the ability to attract advertisers. Likewise, there is no proof that the value of its goodwill is being diminished.

[25]      As was noted in Man and his Home Ltd. (c.o.b. Sentinel Alarm) v. Mansoor Electronics Ltd.⁹, by Madame Justice Tremblay-Lamer, "a bare allegation on the part of the Plaintiff that the Defendant"s activities have caused it to suffer irreparable harm is, in my opinion, insufficient".¹⁰

[26]      Although an inability to ultimately pay damages can constitute irreparable harm, in the present motion, the Plaintiff has failed to show, based on all the evidence submitted, that it will suffer any irreparable harm. Without proof of harm, it is impossible for me to conclude that the harm is irreparable solely on the basis that the Defendants may be impecunious. Thus, there is no need to address the adequacy of damages as the Plaintiff has failed to adduce clear and confirming evidence that irreparable harm will ensue.

[27]      I have already issued an Order dismissing the motion for the interlocutory injunction and the foregoing constitute my reasons for that Order. However, at this time I direct that the Defendants will maintain accounts in relation to all activities in connection with their website pending the final disposition of this matter at trial.

[28]      Costs will be costs in the cause.

        

"E. Heneghan"

J.F.C.C.

OTTAWA, Ontario

June 1, 2000

__________________

¹(1991), 36 C.P.R. (3d) 129 at 133-138 (F.C.A).

²(1992), 41 C.P.R. (3d) 359 at 366-368 (F.C.A.).

³(1994), 53 C.P.R. (3d) 34 at 52-54 (F.C.A.).

⁴[1994] 1 S.C.R. 311 at 315.

⁵Ibid. at 138.

⁶Ibid. at 367.

⁷(1995), 62 C.P.R. (3d) 338 (F.C.T.D.).

⁸Ibid. at 344.

⁹[1996] F.C.J. No. 1558, T-2097-96 (November 28, 1996) (F.C.T.D.).

¹⁰Ibid. at para. 21.