General Motors du Canada c. Decarie Motors Inc., docket A-673-98

Date : 20000928

Docket : A-673-98

CORAM :       DESJARDINS J.A.

LÉTOURNEAUJ.A.

NOËL J.A.

BETWEEN :

                                         GENERAL MOTORS DU CANADA

                                                                   - and -

                               DÉCARIE CHEVROLET OLDSMOBILE LTÉE

                                                                                                                              Appellants

                                                                   - and -

                                                 DÉCARIE MOTORS INC./

                                            LES MOTEURS DÉCARIE INC.

                                                                   - and -

                        LE REGISTRAIRE DES MARQUES DE COMMERCE

       INDUSTRIE CANADA, OFFICE DE LA PROPRIÉTÉ INTELLECTUELLE

                    DU CANADA, BUREAU DES MARQUES DE COMMERCE

                                                                                                                          Respondents

                                              REASONS FOR JUDGMENT

DESJARDINS J.A.

[1]                This is an appeal from a decision of the Trial Division^[1] which dismissed the appellants' application to have the registration of the trade-mark DECARIE expunged from the register and to compel the respondent Decarie Motors Inc. to disclaim the right to the exclusive use of the word DECARIE in its trade-mark DECARIE LOGO DESIGN.

The facts

[2]                The facts are the following:

[3]                Since 1949, the respondent, Decarie Motors Inc./Les Moteurs Décarie Inc. ("Decarie Motors"), operated a business in Montreal engaged in the sale, lease, and servicing of new and used motor vehicles. Initially, the business was located on Décarie Boulevard, a well-known thoroughfare in Montreal, and is currently located in the vicinity of the intersection between Décarie Boulevard and Highway 40.

[4]                On January 19, 1989, Decarie Motors filed an application to register the mark DECARIE MOTORS. Pursuant to a request from the Registrar of Trade-marks (the "Registrar"), Decarie Motors filed an amended application for registration of DECARIE MOTORS, waiving the rights to exclusive use of the words DECARIE and MOTORS when used apart from the applied-for trade-marks. In 1990, the Registrar registered the trade-mark DECARIE MOTORS. The validity of this trade-mark, registered under number TMA 365,045, is not contested in these proceedings.

[5]                In 1993, Decarie Motors filed a new application with the Registrar to register the trade- mark DECARIE. The Registrar replied that the mark DECARIE was primarily merely the name of an individual who was living or had died within the preceding thirty years and consequently did not appear to be registrable under paragraph 12(1)(a) of the Trade-marks Act^[2] (the "Act").

[6]                On February 18, 1994, counsel for Decarie Motors provided documentation, by means of an affidavit of Mr. Joel Segal to which a number of advertisements were attached, tending to show that the mark DECARIE had become distinctive and could not be taken as the name of an individual when used in association with motor vehicles. The Registrar registered the name DECARIE as a trade-mark as of February 17, 1995. This trade-mark bears the registration number TMA 439,504.

[7]                On April 24, 1996, Decarie Motors filed an application for the registration of a trade-mark, namely the graphical representation of LES MOTEURS DÉCARIE INC.

[8]                The Registrar replied that the words MOTEURS and MOTORS would have to be disclaimed because they described a character of the wares and services and, as a result, did not appear to be registrable under paragraph 12(1)(b) of the Act.

[9]                In September 1996, Decarie Motors filed a revised trade-mark registration application in which it waived the rights to the exclusive use of the words MOTEURS and MOTORS except in the applied-for trade-mark. On February 28, 1997, the Registrar issued a notice that the logo was accepted as a trade-mark, hereinafter referred to as DECARIE LOGO DESIGN. The mark bears the registration number TMA 474,485 and was registered on April 10, 1997.

[10]            The registrations for all three trade-marks DECARIE MOTORS, DECARIE and DECARIE LOGO DESIGN state that the name DECARIE has been used in Canada by Decarie Motors since at least June 10, 1971.

[11]            The respondent Decarie Motors filed an action in damages and an injunction in the Quebec Superior Court, in May 1995, against the appellant Decarie Chevrolet Oldsmobile Ltée and against Decarie Saturn Saab Isuzu to prevent them from using the mark DECARIE.

[12]            On September 2, 1997, the appellants took expungement proceedings before the Trial Division of this Court under section 57 of the Act. The appellants claim, under paragraphs 18(1)(a), (b) and (c) of the Act, that the mark DECARIE was not registrable at the time of registration in 1995, that it was not distinctive at the time the expungement proceedings were commenced in 1997, and that the mark had been abandoned.

The judgment below

[13]            The trial judge declared obsolete the arguments advanced by the appellants based on paragraphs 12(1)(a) and (b) of the Act, to which paragraph 18(1)(a) of the Act refers, since he was satisfied that the respondent had demonstrated before the Registrar the distinctive character of its mark related to car dealing since 1971, as required by subsection 12(2) of the Act. He was also of the view, from the evidence before him, that the decision of the Registrar was not unreasonable.

The statutory framework

[14]            The statutory framework relevant to this case is reproduced for easy reference:

The issues

[15]            There are three issues before us: (1) whether the trial judge erred in concluding that the trade-mark DECARIE was registrable at the date of its registration, (2) whether the mark had acquired distinctiveness at the time of the proceedings seeking expungement, and (3) whether the mark DECARIE had been abandoned.

1. Whether the trade-mark DECARIE was registrable at the date of its registration

[16]            The appellants claim that the trial judge failed to consider the incomplete and misleading nature of the Segal affidavit which, they claim, renders the registration invalid ab initio.

[17]            They rely on the case of Unitel Communications Inc. v. Bell Canada^[3] and Marchand Rona Inc. v. Tefal S.A.,^[4] but more specifically on the following statement of Harold G. Fox^[5] referred to with approval in these cases:

There is... no provision in the Act under which mis-statements in an application for registration... become grounds for invalidating the registration unless the mis-statements had the effect of making the trade mark not registrable under s. 12 of the Act or unless there was a fraudulent misrepresentation.

                                                                                                                   [Emphasis added]

[18]            A registration can be invalidated by two kinds of mis-statements: (i) fraudulent, intentional mis-statements, and (ii) those that may be innocent but that are material in the sense that, without them, the section 12 barriers to registration would have been insurmountable.

[19]            The appellants allege both. They say that there was a fraudulent misrepresentation. They also say the respondent omitted to give pertinent information to the Registrar and that this omission made the trade-mark not registrable under section 12 of the Act.

[20]            The respondent Decarie Motors applied for registration of the mark DECARIE in July 1993 "in accordance with the provisions of the Trade-marks Act"^[6] and without relying on any specific provisions of the Act. The Registrar queried whether the proposed mark was primarily the surname of an individual, contrary to the provisions of subsection 12(1)(a) of the Act. The Registrar stated "DECARIE has been found as the surname of living individuals in the following telephone directories: Ottawa: 27, Toronto: 6, Vancouver: 2, Winnipeg: 1, Quebec: 10, Montreal: 3 ½ columns".^[7]

[21]            In response, Mr. Segal, executive for the respondent, stated:^[8]

... I am not aware of anyone having the surname "Decarie" being in the business of selling, leasing, repairing or servicing motor vehicles.

[22]            Here, say the appellants, is where the fraudulent misrepresentation lies. The appellants argue that the respondent had already stated, in an infringing action before the Superior Court of Quebec^[9] against a corporation carrying business under the names "Passport Decarie Automobiles" and "Decarie Saturn Saab Isuzu", that it had learned during April 1991 that the named defendant had commenced using the trade name "Passport Decarie Automobiles" and/or "Passport Decarie". Mr. Segal, it is alleged, should not have been so restrictive in his answer to the Registrar at the time of registration. His omission amounts to a fraud.

[23]            A fraudulent misrepresentation is a serious allegation. In the case at bar, it must be recognized that the Segal affidavit was given in response to a specific query made by the Registrar with respect to the use of the name or surname of an individual as envisaged in paragraph 12(1)(a) of the Act. The reply made by Mr. Segal was a direct answer to the limited question put to him. It has not been established that such answer was false, i.e. that the respondent knew at the time that the word DECARIE was used as the name or surname of an individual within the terms of paragraph 12(1)(a). Therefore, it is impossible in that context to conclude that there was misrepresentation on the part of the respondent. This case is obviously distinguishable from those of Unitel Communications Inc. v. Bell Canada ^[10] and Marchand Rona Inc. v. Tefal S.A.^[11] where the statements at issue were found to be false. The presumption of good faith, therefore, continues to apply in favour of the respondent.

[24]            The appellants, nevertheless, say there was a statutory duty on the part of the appellants to declare fully, not only the use of the surname in reference to paragraph 12(1)(a) of the Act, but also the use by other dealers of the proposed mark in light of the requirement of distinctiveness under subsection 12(2) of the Act. Failure to do so, they allege, renders the mark null ab initio.

[25]            To require the respondent to declare facts other than those related to the question put to him by the Registrar and to require him to answer a question related to a subsection 12(2) inquiry, when such inquiry is not made, would oblige the respondent to foresee all sorts of potential hurdles to the registration of a proposed mark and to address them in advance. There is nothing in the legislation and in the case law which requires such a standard of conduct.

[26]            The appellants' first contention is unfounded.

2 - Whether the mark DECARIE had acquired distinctiveness at the time of the proceedings seeking expungement

[27]            The word Decarie, by itself, may refer either to the family surname or to Décarie Boulevard which is an important artery in Montreal.^[12] The respondent claims it can also refer to its services. Decarie, they say, has gained a secondary meaning by the fact that the Segal family has been in the car dealing business for forty-eight years. Moreover, through its advertising and, in particular, through its use of slogans such as "Come to Decarie" or "Drop by Decarie", consumers have come to refer to the respondent's business by the name DECARIE.

[28]            It is certainly reasonable to say, as contended by the appellants, that prima facie the mark DECARIE was unregistrable under paragraph 12(1)(b) of the Act due to its geographic descriptiveness ("place of origin").

[29]            Subsection 12(2) of the Act states, however, that a trade-mark that is not registrable by reason of paragraphs 1(a) or (b) of the Act is registrable if it has been so used in Canada as to have become distinctive at the date of filing of an application for registration. Coupled with paragraph 18(b), which is relied on by the appellants, distinctiveness must also exist at the time the expungement proceedings were commenced in 1997. Section 57 of the Act also refers to the date of the application for expungement as being the relevant date for the appreciation of the rights of the parties.

[30]            Distinctiveness, recognized at the time of registration, must be kept alive if it is to successfully face a court challenge.^[13] It is therefore more appropriate in the case at bar to deal with distinctiveness at the time of the section 57 proceedings.

[31]            The trial judge, hearing expungement proceedings under section 57 of the Act, exercises an original jurisdiction. He does not sit in appeal or in judicial review of the Registrar's decision to register the trade-mark. He must approach the issues before him with a fresh mind. This makes sense as the proceedings before the Registrar are ex parte while expungement proceedings before the trial judge are adversarial. The onus lies on the party attacking the registration to show that it should be expunged. The registered mark is presumed valid.^[14]

[32]            The trial judge in the case at bar correctly stated, at the beginning of his reasons, that he was sitting neither in appeal nor in review of the decision of the Registrar. He had before him evidence of use of the registered trade-mark by the respondent in the form of advertisement clippings attached to a second affidavit by Mr. Segal. He was also made aware of use of the mark DECARIE by the appellants and by Decarie Saturn Saab Isuzu. Both are being sued by the appellants in proceedings before the Superior Court of Quebec. He also had two affidavits by two executives of the appellants, together with documents indicating the use of the mark DECARIE in association with numerous trades, but not exclusively with car sales. In view of this new evidence, the trial judge could not simply rely upon the reasonableness of the Registrar's decision as he did. He should have conducted an independent analysis of that evidence relating to the issues before him. In failing to do so, he made an error which calls for the setting aside of his decision.

[33]            Since the evidence is exclusively in terms of documents and no issue of credibility arises, this Court is in as favourable a position as the trial judge to determine what conclusions should be drawn from them.^[15]

[34]            The advertisements and other documents filed by the respondent are of no effect since they are not specifically related to car dealings. On the other hand, one cannot escape the fact that in none of the respondents' advertising can one find the word DECARIE used by itself as a mark. The marks DECARIE MOTORS or LES MOTEURS DECARIE appear at all times. The word DECARIE, standing alone as "Come to Decarie" or "Drop by Decarie", appears only in the text of the ads while DECARIE MOTORS or LES MOTEURS DECARIE appears prominently in bold capital letters. This, in itself, is an indication that the use of the mark DECARIE, standing alone, has been weak, if not absent. The word Decarie can only be found in the title of an article on the Segal family and their business which reads "Family Ties Keep Decarie Going Strong".^[16]    Again, however, the text of the article makes it clear that what was being referred to in the title was Decarie Motors.

[35]            In addition, the evidence reveals that the word Décarie referred in the community to a well-known boulevard in Montreal, and that it was being used by other merchants and traders operating along or in the vicinity of that location. As a matter of fact, either at the time of the registration of the mark DECARIE by the Registrar who was not aware of this or at the time of the expungement proceedings, there were at least two users of the name Décarie associated with the sale of automobiles: the appellant and Decarie Saturn Saab Isuzu. This is, in my view, a significant circumstance which, combined with the limited use of the mark DECARIE by the respondent, militates against a finding that the word DECARIE, standing alone, had acquired such a distinctiveness as to refer to the wares and services of the respondent.

[36]            Counsel for the respondent correctly pointed out that exclusivity of use is not a requirement for distinctiveness since the competitors who are using the trade-mark could be infringers. I note that there is no reference in the Act to exclusivity, neither in the definition of "distinctive" nor in the one of "trade-mark".^[17]

[37]            I believe, however, that the non-exclusive use of a mark is one of the circumstances to be taken into account in assessing distinctiveness, particularly where the mark is inherently weak. H.G. Fox expressed in the following terms the rule applicable in such matter:^[18]

The extent to which a tribunal will be influenced by a claim of distinctiveness must depend upon all the circumstances including the area within which and the time during which such distinctiveness in fact can be predicated of the mark in question.

                                                                                                                   [Emphasis added]

[38]            In the present instance, we have seen that the word DECARIE in Montreal refers to a well-known and important geographical location and that two other entities operating within that location have used the word DECARIE as a part of their trade name in relation to the same wares and services since at least the time of registration.

[39]            I am of the view that there is a lack of distinctiveness with respect to the respondent's trade-mark at the time of the expungement proceedings. This lack of distinctiveness stems from the inherent weakness of the mark itself, and the limited use of the mark made by the respondent, as a self-standing mark, establishes unequivocally that it has not acquired a secondary meaning.

3 - Whether the mark DECARIE had been abandoned

[40]            In view of the above conclusion, I need not address the third issue, namely the possible abandonment of the mark DECARIE.

Conclusion

[41]            I would allow this appeal and would set aside the judgment below. I would order the expungement from the Canadian Register of Trade-marks of the registration number TMA 439,504 dated February 17, 1995, for the trade-mark DECARIE, and would ask the Registrar of Trade-marks to make the appropriate entries on the register. I would order the respondent to file, within sixty days of the present judgment, a disclaimer to the exclusive right to use the word DECARIE outside the trade-mark DECARIE LOGO DESIGN; following which I would request the Registrar of Trade-marks to amend accordingly the trade-mark DECARIE LOGO DESIGN, number TMA 474,485, dated April 10, 1997. If the respondent does not comply with such order, within sixty days of the present judgment, the said trade-mark would be expunged in toto.

[42]            The whole with costs in appeal and in first instance.

"Alice Desjardins"

                                                                                                      J.A.

"I concur

Gilles Létourneau J.A."

"I agree

Marc Noël J.A."