Docket: T-779-11
Citation:
2014 FC 559
Ottawa, Ontario, June 12, 2014
PRESENT: The
Honourable Mr. Justice Manson
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BETWEEN:
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THE DRIVING ALTERNATIVE INC
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Plaintiff
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and
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KEYZ THANKZ INC, BRENT KILBOURN AND TRACY WILKINS
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Defendants
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JUDGMENT AND REASONS
[1]
This is a motion by the Plaintiff for a judgment
against the Defendants pursuant to Rules 213 and 216 of the Federal Courts Rules,
SOR/98-106 [the Rules], according to the terms of the draft Order attached to
the Plaintiff’s notice of motion as Schedule A. The Plaintiff seeks relief
under sections 7(b), 19, 20 and 22 of the Trade-marks Act, RSC, 1985, c
T-13 [the Act].
[2]
The Plaintiff’s statement of claim was filed on
May 6, 2011, alleging:
i.
trade-mark infringement of the Plaintiff’s
registered trade-marks KEYS PLEASE and THE DRIVING ALTERNATIVE, under
registrations TMA 570,390 and TMA 542,824, contrary to section 19 and subsection
20(1) of the Act;
ii.
that the Defendants directed public attention to
their services and business in such a way as to cause or to be likely to cause
confusion in Canada between their services and business and the services of the
Plaintiff and falsely suggesting an association between the business of the
Defendants and the business of the Plaintiff, contrary to subsection 7(b) of
the Act;
iii.
passing off their services in Canada as and for those of the Plaintiff, contrary to subsection 7(c) of the Act; and
iv.
depreciating the value of the goodwill of the
Plaintiff’s registered trade-marks, contrary to subsection 22(1) of the Act.
[3]
The Plaintiff is not asserting subsection 7(c)
of the Act in this motion for summary trial.
[4]
The Defendants have not filed any material in
response to this motion or attempted to cross-examine any of the Plaintiff’s
affiants. A Request to Admit was served on the Defendants on September 19,
2013, but no response was received by the Plaintiff.
[5]
The Defendants filed a statement of defence and
counterclaim on June 24, 2011.
[6]
The Plaintiff’s reply and defence to
counterclaim was filed July 21, 2011.
[7]
The Defendants’ reply to defence to counterclaim
was filed August 2, 2011.
[8]
While the Defendants challenged the validity of
the Plaintiff’s registered trade-marks, they provided no material facts or any
evidence to support their bald assertions. I give no weight to their
allegations of invalidity.
I.
FACTS
A.
Business of the Plaintiff
[9]
The Plaintiff is the registered owner of the
registered Canadian trade-marks KEYS PLEASE (TMA 570,390) and THE DRIVING
ALTERNATIVE (TMA 542,824). Both trade-marks are registered in association with
the following wares and services:
•
Wares: clothing and accessories, namely golf
shirts, t-shirts, western shorts, novelty items, namely key chains.
•
Services: Providing professional designated
driving services, namely meeting customers at predetermined locations and
driving them to their destinations in their own vehicles.
[10]
The Plaintiff has used these trade-marks
continuously since August, 1997, by providing professional designated driving
services in Canada under both of these trade-marks. These services currently
include a company-owned location in Calgary, Alberta, and franchise locations
operated by licensees in Medicine Hat, Alberta, and Prince George, British Columbia. Since the Plaintiff began operations, it or its licensees have operated in
17 locations in five provinces, including British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario.
[11]
The Plaintiff features its trade-marks on a
range of promotional material and in advertising media, including print,
television, and the internet via www.thedrivingalternative.com,
since 2001, and www.keysplease.net,
since 2004, and a Facebook page since 2010. The trade-marks are also featured
on vehicles used by the Plaintiff, the clothing of its drivers, and various
sponsorships. This evidence is included in the affidavits of Ginger Greenwood
and Jill Roberts.
[12]
The Plaintiff has submitted evidence of third
party recognition, including stories on television, radio and written media, as
well as direct customer feedback. This evidence is provided in the affidavits
of Ginger Greenwood and Graham Honsa.
[13]
The Plaintiff produced evidence that it and its
licensees had made sales in excess of $15 million in Canada since the inception
of its services in 1997. It is clear from the evidence before me that the
Plaintiff’s trade-marks KEY PLEASE and THE DRIVING ALTERNATIVE have both become
well-known in Canada.
B.
Activities of the Defendants
[14]
From 1999 to 2001 the Defendants were licensed
to operate a franchise location using the Plaintiff’s trade-marks in London, Ontario. In December, 2001, the Plaintiff terminated the license for non-payment of
royalties.
[15]
Subsequent to the termination of the license,
the Defendants continued to operate a designated driving service under the mark
KEYZ PLEAZE. The Plaintiff became aware of this in 2005, and demanded by way of
a letter dated September 15, 2005, that the Defendants cease using the marks
THE DRIVING ALTERNATIVE, KEYS PLEASE, KEYZ PLEAZE and KEYS PLEZE.
[16]
In response to this letter, the personal
Defendants signed an undertaking dated October 25, 2005, to permanently cease
using, among other things:
…all use of any trademarks causing or
potentially causing confusion with Canadian Trademark Registration No.
TMA570,390 for KEYS PLEASE…and Canadian Trademark Registration No. TMA542,824
for THE DRIVING ALTERNATIVE…in any manner whatsoever, including…all use of the
trademarks THE DRIVING ALTERNATIVE, KEYS PLEASE, KEYZ PLEAZE and KEYS PLEZE and
any logo bearing those trademarks or any mark confusingly similar thereto on
any website and on any advertising or promotional materials…and all use of the
trademarks THE DRIVING ALTERNATIVE, DRIVING ALTERNATIVE, KEYS PLEASE, KEYS
PLEASE and KEYS PLEASE or any marks confusingly similar thereto to any
telephone directions, including the yellow pages, the White Pages and the
Canada 411 Directory.
[17]
The personal Defendants also undertook that:
…all materials in our possession or placed on
display by us at all locations, including without limitation, signage,
advertising materials, posters, bar coasters, tent cards, brochures, invoices,
letterheads, business cards, and clothing, including all credit card imprinter
plates, bearing the words THE DRIVING ALTERNATIVE, KEYS PLEASE, KEYZ PLEAZE and
KEYZ PLEZE or any words confusing therewith, have been retrieved and destroyed.
[18]
After signing this undertaking, the personal
Defendants incorporated the corporate Defendant KEYZ THANKZ on September 30,
2005 and operated a designated driving service in London, Ontario under that
name. The Defendants continue to operate a website under the domain name www.keyzthankz.com.
[19]
While the Defendants allege that there was a verbal
consent from the Plaintiff to use KEYZ THANKZ, which the Plaintiff denies,
there is no corroborative evidence beyond hearsay provided by the Defendants in
support of their position. I give this evidence no weight.
[20]
The Plaintiff became aware of the Defendants’
activities in the fall of 2010, after receiving a substantial number of
telephone calls from London, Ontario. The Plaintiff’s counsel sent the
Defendants a cease and desist letter on November 26, 2010, but the Defendants
refused to comply with the terms of the letter, or subsequent letters sent to
them in January and February, 2011.
[21]
The Plaintiff retained a private investigation
firm to examine the activities of the Defendants. This investigation was
concluded in January, 2011. The investigation made a number of findings,
including:
a.
the following statement was posted to www.keyzthankz.com [the KEYZ PLEAZE
Statement]:
Keyz Thankz is celebrating its tenth
anniversary in business and you may recognize their name from a poster in a bar
or restaurant, but if you don’t you may know them as Driving Alternative or
Keyz Pleaze.
This statement
appeared continuously from at least May 2010 until June 2012.
b.
the personal Defendant Tracy Wilkins identified
herself on her Facebook page as the “owner of keyz
pleaze”;
c.
a representative of the corporate Defendant
associated herself with KEYS PLEASE and THE DRIVING ALTERNATIVE over the
telephone.
[22]
While the Defendants offer their designated
driving services in the greater London area, they drive customers beyond the
greater London area to various cities, including Windsor, Toronto, Barrie, Oshawa and outside Ontario, to cities such as Montreal. Mr. Kilbourn admitted
during discovery that they would drive customers “anywhere.”
[23]
From 2005 to the present date, the KEYZ THANKZ
mark has been displayed on advertising or promotional materials that have been:
a.
Distributed in bars and restaurants in London, Ontario;
b.
Displayed at events in London, Ontario that were
sponsored by Keyz Thankz;
c.
Displayed on brochures, business cards, gift
cards, vehicle signage, and uniforms;
d.
Featured on radio and television commercials;
and
e.
Listed in London Yellow Pages telephone
directories under the name KEYZ THANKZ since 2006 to the present day.
[24]
The Plaintiff commenced this action on May 6,
2011.
II.
ISSUES
[25]
The issues in this motion are as follows:
a.
Is this matter within the applicable limitation
period of the Federal Courts Act?
b.
Is this matter appropriate for resolution by way
of summary trial?
c.
Are the personal Defendants liable as well as
the corporate Defendant?
d.
Are the Defendants liable for trade-mark
infringement under sections 19 and/or 20 of the Act?
e.
Do the Defendants’ activities cause or are
likely to cause confusion with the services offered by the Plaintiff associated
with the Plaintiff’s trade-marks, contrary to subsection 7(b) of the Act?
f.
Are the Defendants depreciating the value of
goodwill of the Plaintiff’s trade-marks, contrary to section 22 of the Act?
g.
If the Defendants are liable, what is the
quantum of damages?
A.
Applicable Limitation Period
[26]
The Defendants argue that the applicable limitation period is two years
under paragraph 5(1)(b) of the Limitations Act of Ontario, SP 2002, c24:
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Discovery
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Découverte des
faits
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5. (1) A claim is
discovered on the earlier of,
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5. (1) Les faits
qui ont donné naissance à la réclamation sont découverts celui des jours
suivants qui est antérieur aux autres :
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(b) the day on
which a reasonable person with the abilities and in the circumstances of the
person with the claim first ought to have known of the matters referred to in
clause (a). 2002, c. 24, Sched. B, s. 5 (1).
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b) le jour où toute
personne raisonnable possédant les mêmes capacités et se trouvant dans la
même situation que le titulaire du droit de réclamation aurait dû apprendre
les faits visés à l’alinéa a). 2002, chap. 24, annexe B, par. 5 (1).
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[27]
The Plaintiff submits that the applicable period is six years under
subsection 39(2) of the Federal Courts Act, RSC 1985, c F-7 [Federal Courts
Act]:
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Prescription and
limitation on proceedings
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Prescription —
Fait survenu dans une province
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39. (1) Except as
expressly provided by any other Act, the laws relating to prescription and
the limitation of actions in force in a province between subject and subject
apply to any proceedings in the Federal Court of Appeal or the Federal Court
in respect of any cause of action arising in that province.
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39. (1) Sauf
disposition contraire d’une autre loi, les règles de droit en matière de
prescription qui, dans une province, régissent les rapports entre
particuliers s’appliquent à toute instance devant la Cour d’appel fédérale ou
la Cour fédérale dont le fait générateur est survenu dans cette province.
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Prescription and
limitation on proceedings in the Court, not in province
(2) A proceeding in
the Federal Court of Appeal or the Federal Court in respect of a cause of
action arising otherwise than in a province shall be taken within six years
after the cause of action arose.
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Prescription — Fait
non survenu dans la province
(2) Le délai de prescription
est de six ans à compter du fait générateur lorsque celui-ci n’est pas
survenu dans une province.
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[28]
I agree with the Plaintiff. Section 39 of the Federal Courts Act
describes the appropriate limitation period to apply, as the cause of action in
this proceeding did not arise exclusively within the province of Ontario.
[29]
In Canada v Maritime Group, [1995] 3 FC 124 [Maritime Group], the
Court interpreted “cause of action” in the context of section 39 of the Federal
Courts Act as including the damage suffered by a party, not just the act that
caused the damage.
[30]
Maritime Group was interpreted in the trade-mark context in Kirkbi AG v
Ritvik Holdings Inc, 2002 FCT 585 [Kirkbi]. At issue was a trade-mark claim by
the company making Lego against a company in Quebec who based their
manufacturing and distribution facilities in Quebec, but sold their product
across Canada. Although Kirkbi was different than the current action in that
the infringing company in Kirkbi sold their product across Canada, the Court did refer to confusion occurring in consumers across Canada:
161 Based on what follows, I am satisfied that the relevant
prescription period is six (6) years. I am satisfied on the evidence before me
that all sales by Ritvik of its MICRO MEGA BLOKS for further retail sale
throughout Canada were made "f.o.b. Ritvik's facilities in the province of Quebec. But its advertising and promotional programs have been conducted
throughout Canada, the point-of-retail-sale displays have been utilized
throughout Canada and, if confusion between Ritvik's product and the product of
the LEGO group has occurred with resultant damage, it has largely, if not
entirely, been in the minds of retail purchasers throughout Canada rather than
in the minds of those who purchase at wholesale from Ritvik. Thus, I am
satisfied that it simply cannot be said that all of the elements of the cause
of action before me arose in Quebec or in any other particular province.
[31]
The evidence of the Plaintiff established that the activities of the
Defendants have caused damage to the Plaintiff beyond Ontario, including
confusion in Alberta.
[32]
Moreover, I agree with the Plaintiff that it seems unjust to bar, by way
of a provincial statute of limitations, national trade-marks rights of the
Plaintiff.
[33]
Is this matter properly decided by way of summary trial?
[34]
A party may bring a motion for summary trial pursuant to rule 213 of the
Rules. If this Court is satisfied that there is sufficient evidence for
adjudication, it may grant judgment, regardless of the amount of evidence
involved, the complexity of the issues or the existence of conflicting
evidence, unless this Court is of the view that it would be unjust to do so.
[35]
The appropriate circumstances for this Court to grant judgment by way of
summary trial were well-stated by Justice Roger Hughes in Teva Canada Ltd v
Wyeth LLC, 2011 FC 1169 , at para 34:
34 In the present case, I find that a summary trial and
summary judgment is an appropriate way to proceed so as to secure a just,
expeditious and least expensive determination of the issues before the Court. I
do so for the following reasons:
a. the issues are well defined and, while a disposition
of the issues may not resolve every issue in the action, they are significant
issues and their resolution will allow the action or whatever remains, to
proceed more quickly or be resolved between the parties acting in good faith;
b. the facts necessary to resolve the issues are clearly
set out in the evidence;
c. the evidence is not controversial and there are no
issues as to credibility; and
d. the questions of law, though novel, can be dealt with
as easily now as they would otherwise have been after a full trial.
[36]
Likewise, in Louis Vuitton Malletier SA v Singga Enterprises (Canada) Inc, 2011 FC 776 at paras 96, 97 [Vuitton], Justice James Russell held:
96 Further, the British Columbia
Court of Appeal has confirmed that if the judge on a Rule 18A application can
find the facts as he or she would upon a trial, the judge should give judgment,
unless to do so would be unjust, regardless of complexity or conflicting
evidence. In determining whether summary trial is appropriate, the court
should consider factors such as the amount involved, the complexity of the
matter, its urgency, any prejudice likely to arise by reason of delay, the cost
of taking the case forward to a conventional trial in relation to the amount
involved, the course of the proceedings and any other matters that arise for
consideration. See Inspiration Management Ltd. v. McDermind St. Lawrence
Ltd. (1989), 36 B.C.L.R. (2d) 202, [1989] B.C.J. No. 1003 at paragraphs 48
and 53-57 (C.A.).
97 The Federal Court has confirmed the application of
such British Columbia jurisprudence to the consideration of summary trial
applications. See Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd.
2010 FC 966, 87 C.P.R. (4th) 412 at paragraph 34.
[37]
For the following reasons, with respect to trade-mark infringement,
likelihood of confusion, passing off and depreciation of goodwill, I find that
the evidence establishes the Plaintiff’s case and that summary trial judgment
is appropriate.
B.
Liability of the Personal Defendants
[38]
In Mentmore Manufacturing Co v National Merchandise Manufacturing Co,
[1978] FCJ No 521 at para 28, the Federal Court of Appeal explained the
circumstances in which defendants are personally liable for infringement by a
company:
…there must be circumstances from which it is reasonable to
conclude that the purpose of the director or officer was not the direction of
the manufacturing and selling activity of the company in the ordinary course of
his relationship to it but the deliberate, wilful and knowing pursuit of a
course of conduct that was likely to constitute infringement or reflected an
indifference to the risk of it.
[39]
I find that the Defendant Brent Kilbourn is personally liable.
[40]
I find that the Defendant Tracey Wilkins is not personally liable.
[41]
Both Mr. Kilbourn and Ms. Wilkins admit that:
a.
Both were involved in the selection of the name
KEYZ THANKZ; and
b.
Both were aware of the existence of the
Plaintiff’s trade-marks KEYS PLEASE and THE DRIVING ALTERNATIVE in 2005, at the
time when Keyz Thankz was incorporated.
[42]
From 2005 to today, Mr. Kilbourn has been:
a.
The sole director, officer and president of Keyz Thankz;
b.
Responsible for all major decisions regarding the business and
advertising of Keyz Thankz; and
c.
Arranged for the domain name www.keyzthankz.com
to be registered.
[43]
On discovery, Mr. Kilbourn explained that he is the owner of Keyz Thankz
and stated “I am the company” and “I oversee
everything”. He described his direction and control over the
corporate Defendant as follows:
a.
He is responsible for all final decisions concerning Keyz Thankz and its
strategic direction and growth;
b.
He has final responsibility and oversight of financial matters relating
to Keyz Thankz, including sales and revenue; and
c.
He makes final decisions with respect to marketing and advertising
including the content and form of advertising, such as:
i.
Approval of the content of the company Facebook page; and
ii.
Responsibility for and approval of the design, layout and content of the
Keyz Thankz website at www.keyzthankz.com.
[44]
Notwithstanding that since 2005 Ms. Wilkins has performed managerial
duties for Keyz Thankz, and is described as the manager of Keyz Thankz in the
press, I do not find that the evidence establishes a course of conduct by Ms. Wilkins
that shows she acted outside her duties as a manager, or that she was an
officer or director of the corporate Defendant. She is not personably liable.
[45]
Accordingly, in the reasons that follow, liability for the Defendants’
activities is limited to the corporate Defendant and Mr. Kilbourn.
C.
Liability under section 19 and/or 20 of the Trade-Marks Act
[46]
Subsection 6(2) of the Act establishes that confusion will result if the
use of two trade-marks or trade names in the same area would likely lead to the
inference that the services performed under those trade-marks were performed or
marketed by the same company or by a licensee under its control.
[47]
The test for whether there is a likelihood of confusion is a matter of
first impression and imperfect recollection. This first impression is held in
the mind of a casual consumer somewhat in a hurry, who sees the mark at a time
when they have no more than an imperfect recollection of the prior trade-mark.
This consumer does not pause to give the matter any detailed consideration or
closely scrutinize any similarities or differences between the marks.
[48]
It has also been held that geographical separation in the use of
confusing marks does not alter the test for the likelihood of confusion. This
is because the Canadian trade-mark regime is national in scope and the owner of
a registered trade-mark is entitled to the exclusive use of its trade-mark in
association with the wares or services throughout Canada. It has been further
held by the Supreme Court of Canada that the use of the words “in the same area” used in subsection 6(3) of the Act means that the test for
confusion is based on a hypothetical assumption that both trade-marks are used in
the same area irrespective of whether this is actually the case (Masterpiece
Inc v Alavida Lifestyles Inc, 2011 SCC 27).
[49]
In determining the likelihood of confusion, subsection 6(5) of the Act
lists a number of factors to be considered, including:
a.
Inherent distinctiveness and the extent to which each has become known;
b.
The length of time each has been in use;
c.
The nature of the wares, services and business;
d.
The nature of the trade; and
e.
The degree of resemblance in appearance, sound and idea suggested.
[50]
I agree with the Plaintiff that with respect to the Plaintiff’s use of
the KEYS PLEASE trade-mark and the Defendants’ use of the KEYZ THANKZ
trade-mark, the evidence shows:
i.
KEYS PLEASE has a strong degree of inherent and acquired
distinctiveness;
ii.
Use of the KEYS PLEASE trade-mark has been continuous since 1997 to the
present date by the Plaintiff and its franchisees;
iii. Use
by the Defendants of KEYZ THANKZ since 2005 was deliberate and knowingly made
for the same services, notwithstanding the personal Defendants’ undertaking
not to do so, executed in 2005;
iv. The
ideas suggested by both trade-marks, KEYS PLEASE and KEYZ THANKZ, are very
similar, and the first words in both marks are essentially the same, both
phonetically and in appearance;
v.
There is a likelihood that as a matter of first impression and imperfect
recollection in the mind of an ordinary consumer of each party’s designated
driver services that they would confuse and wrongly believe that there is a
relationship or an association between the Plaintiff and the Defendants.
[51]
The Plaintiff has established that the Defendants caused a likelihood of
confusion and actual confusion and have infringed the Plaintiff’s registered
trade-marks KEYS PLEASE and THE DRIVING ALTERNATIVE under section 20 of the Act
by use of DRIVING ALTERNATIVE and KEYS PLEASE, since 2005, in:
i.
Use on the Defendants’ website www.keyzthankz.com
from at least May 2010 to June 2012;
ii.
Use by Tracy Wilkins on Facebook as the owner KEYS PLEASE during the
relevant period;
iii. Dispatcher(s)
for the Defendants indicating to callers that the Defendants were associated
with KEYS PLEASE and THE DRIVING ALTERNATIVE; and
iv. The
above uses were deliberately and knowingly made, notwithstanding the 2005
undertaking by the personal Defendants not to do so.
[52]
Further, the Plaintiff has established a likelihood of confusion under
section 20 of the Act, by the activities of KEYZ THANKZ since 2005:
a.
Telephone logs from July 2012 to October 2013, in which the Plaintiff’s
dispatchers record and summarize telephone calls from the 226 and 529 area code
for London, Ontario, and surrounding areas, showing confusion between the
Plaintiff’s services and those offered by the Defendants.
b.
Email notes created by Ginger Greenwood, general manager of the Plaintiff,
in which she recorded and summarized calls from London, Ontario, which show confusion
between the Plaintiff and the Defendants;
c.
Postings of messages by the public to the Plaintiff’s website which show
confusion between the Plaintiff and the Defendants; and
d.
Emails received by the Plaintiff from people who mistook the Plaintiff
for the Defendants.
D.
Liability under subsection 7(b) of the Trade-Marks Act
[53]
The Plaintiff has established a reputation for its trade-mark in Canada and has established a likelihood of confusion. The evidence also shows that damages
will result from the Defendants’ activities, in that such activities:
a.
Diminish the distinctiveness of the Plaintiff’s KEYS PLEASE and THE
DRIVING ALTERNATIVE trade-marks in Canada;
b.
Cause a likelihood of confusion in the Canadian market place and loss of
control over the Plaintiff’s registered trade-marks; and
c.
Undermine the Plaintiff’s ability to franchise under its trade-marks now
and in the future.
[54]
I find that the Plaintiff has established its cause of action under subsection
7(b) of the Act.
E.
Liability under section 22 of the Trade-Marks Act
[55]
In addition to alleging trade-mark infringement and passing off, the
Plaintiff alleges depreciation of goodwill under section 22 of the Act, which
provides:
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Depreciation of
goodwill
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Dépréciation de l’achalandage
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22. (1) No person
shall use a trade-mark registered by another person in a manner that is
likely to have the effect of depreciating the value of the goodwill attaching
thereto.
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22. (1) Nul ne peut employer une marque
de commerce déposée par une autre personne d’une manière susceptible
d’entraîner la diminution de la valeur de l’achalandage attaché à cette
marque de commerce.
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[56]
The likelihood of confusion is not a factor under section 22. The
Plaintiff need only show that the Defendants have used marks the same as or
sufficiently similar to the registered trade-mark KEYS PLEASE or THE DRIVING
ALTERNATIVE to evoke amongst the relevant universe of consumers a mental
association of the two marks that is likely to depreciate the value of the
goodwill attaching to the Plaintiff’s registered trade-mark.
[57]
The Defendants’ use of the mark KEYZ PLEAZE is the same as KEYS PLEASE
phonetically and in meaning, and almost identical in appearance. Both marks are
associated with designated driving services. The Defendants purposely relied on
this mental association or linkage in the minds of consumers when it used the
term KEYZ PLEAZE in the KEYZ PLEAZE Statement from 2009 to 2012 on the
Defendant’s website, and in the London Free Press advertisement in 2009.
[58]
I find that use by the Defendants of KEYZ PLEAZE, as above, contravenes
section 22 of the Act.
[59]
Likewise, use by the Defendants of the Plaintiff’s trade-marks KEYS
PLEAZE and THE DRIVING ALTERNATIVE, as set out above, contravenes section 22.
F.
Damages
[60]
The Plaintiff claims that if it franchised use of its registered
trade-marks in London, it could have generated a franchise fee of $35,000 and
based on a conservative estimate, earned $350,000 in royalties from 2005 to
2013. In support of this estimate, the Plaintiff relies on the local population
and statements of royalties for its franchises in Prince George, Medicine Hat and Calgary. This estimate also includes an assumed 15% growth rate, an
assumption which is drawn on the collective annual growth of its three
franchises from 2005 to 2012.
[61]
The Plaintiff also relies on a default judgment decided in its favour against
an infringer in Oshawa, Ontario. In The Driving Alternative Inc v Jarvis
(cob Keyz Pleezz), 2012 FC 1430), Justice Michael Shore awarded damages in
the amount of $50,000 based on a period of infringement of approximately one
year.
[62]
Moreover, the Plaintiff points to the fact that Mr. Kilbourn paid
$200,000 to the corporate Defendant for the exclusive rights to use KEYZ
THANKZ.
[63]
Finally, the Plaintiff submits the Court should have little regard for
the financial information produced by the Defendants, which was scant at best
and lacks credibility.
[64]
The Defendants argue that any award of damages should be mitigated by the
fact that the Plaintiff failed to exercise its rights from 2005 to 2010,
despite being aware of the activities of the Defendants. Furthermore, the
Defendants note that the Plaintiff has not had any franchise in Ontario since 2005. I agree that these facts weigh against the amount of damages sought by
the Plaintiff.
[65]
I have carefully received the financial information provided by the
Plaintiff in respect of its franchisees over the 2005 to 2013 period. It is
difficult to assess what, if any, franchise fees the Plaintiff may have been
able to make in London, but for the Defendants’ infringing activities, or for
that matter, anywhere in Ontario, given there has not been an Ontario
franchisee at all in the relevant time frame.
[66]
However, as the Plaintiff’s counsel rightly pointed out, the Court must
do its best to ascertain appropriate damages, no matter the difficulty in doing
so. Moreover, the Defendants did not cross-examine any of the Plaintiff’s
affiants, nor did they file any rebuttal evidence, and therefore adverse
inferences can be drown against the Defendants (Vuitton, above, at para
99).
[67]
I find that based on the facts before me, it is reasonable to estimate
the Plaintiff’s damages in the amount of $25,000 for each of the years of
infringement, for a total damage award of $225,000.
[68]
I have also considered the Plaintiff’s arguments for punitive and
exemplary damages, and I am not persuaded they are appropriate. The Defendants’
activities do not amount to the threshold test set out in either Whiten v
Pilot Insurance, [2002] 1 S.C.R. 595 [Whiten] in the Supreme Court of
Canada, or the Vuitton case, above, to award punitive and exemplary
damages. The Defendants’ failure to comply with the Court’s Orders and process,
as well as failure to be forthcoming on discovery, are matters properly dealt
with in costs.
G.
Costs
[69]
The fact that the Defendants dismissed counsel, allegedly due to
impecuniosity, and chose to be self-represented, does not excuse them from
failing to comply with multiple orders of this Court during this summary trial
proceeding, nor does it excuse their lack of compliance with discovery
obligations. This includes repeated failures to produce relevant documents and
to file a motion pursuant to Rule 120 to allow Mr. Kilbourn to represent the
corporate Defendant, even though I allowed him to proceed to do so at the
hearing.
[70]
Their lack of regard for this Court’s process has unduly lengthened
proceedings and increased the Plaintiff’s costs unnecessarily. The Defendants’
willful blindness to their ongoing infringement, even if through ignorance of
the law, is no excuse for doing so.
[71]
I find therefore that an award of solicitor and client costs is
appropriate.
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