Date: 20070315
Docket: A-3-07
Citation: 2007 FCA 111
Present: SEXTON
J.A.
BETWEEN:
NISSAN CANADA INC.
Appellant
and
BMW CANADA INC.
BAYERISHE MOTOREN WERKE AKTIENGESELLSCHAFT
Respondents
REASONS FOR ORDER
SEXTON J.A.
[1]
The
Respondents in this appeal, BMW Canada Inc. and Bayerishe Motoren Werke Aktiengesellschaft
(collectively, “BMW”), have requested reconsideration of the Order granted
yesterday by which a stay was granted until disposition of the main motion for
a stay is heard which the parties agree can take place next Thursday or Friday.
[2]
By a
judgment dated March 7, 2007, MacKay D.J. granted an injunction in favour of
BMW as against Nissan Canada Inc. (“Nissan”) in the following terms:
4. The
plaintiffs’ claims to injunctive relief and an order for delivery up, or
destruction under oath, of materials that may offend the terms of the
injunction granted, are allowed in the following terms:
a. The
defendant is restrained henceforth, from the date of this Judgment, from
acting, by the corporation, its officers, servants, agents, employees or others
over whom it exercises control from
i.
directing
public attention to its wares in any way likely to cause confusion in Canada,
including by using the trade-marks M and M6 in association with automobiles,
parts and accessories, between the defendant’s wares and those of the
plaintiffs contrary to paragraph 7(b) of the Act;
ii.
advertising,
promoting, offering for sale or selling automobiles, their parts and
accessories in association with the trade-marks M and M6.
b. The
defendant shall deliver up to the plaintiffs or destroy under oath all
literature, invoices, packaging, signs, advertising, promotional or marketing
material, printed matter, recorded matter, film or other material in its
possession, care, custody or control as may offend the injunction, herein
granted, in particular, materials that include the letter M or the symbol M6 as
trade-marks.
5. The
declaration, the injunction, and the order to deliver or destroy materials are
effective this day, and counsel for the parties shall consult on any issues
arising concerning implementation of those orders, with a right to make
submissions to the Court on any issue about which counsel are unable to agree.
[3]
By motion
dated March 13, 2007, Nissan moved for a stay of the judgment pending the
hearing of its appeal. Nissan also requested that an interim stay be granted
until the main motion for a stay can be heard, a request which I granted by
Order yesterday. Upon release of the Order, BMW requested reconsideration in
accordance with Rule 397(1)(b) of the Federal Courts Rules. I
agreed to reconsider the matter and the parties made oral submissions on the
motion for reconsideration. However, only Nissan has filed written material and
therefore I must dispose of the motion without the benefit of any written material
from BMW. I do not fault counsel for BMW for the lack of material as I assume
that he has had insufficient time to prepare it. Nevertheless the matter must
be dealt with.
[4]
Nissan has
filed an affidavit containing evidence of the irreparable harm which will occur
to Nissan in the event no stay is granted.
[5]
Counsel
for BMW has arranged to cross-examine on the affidavit filed by Nissan on
Monday. Cross-examination cannot take place earlier because the affiant is in Japan.
[6]
As mentioned,
the parties have agreed that hearing on the main motion can take place next
Thursday or Friday and the Court will accommodate this request.
[7]
The
irreparable harm which Nissan claims will ensue if no stay is granted is
outlined in their material as follows:
As a result of the order
of Justice MacKay, NCI will be required to immediately destroy all current
inventory of 2007 Infiniti G35 brochures, 2007 Infiniti M brochures and 2007
Infiniti All Line Brochures.
Auto Shows are scheduled
in the next two months as follows:
Quebec City – March 5 –
March 11
Calgary – March 14
to March 19
Ottawa Auto Show –
March 22 to March 25
Vancouver Auto Show –
March 31 to April 8.
As a result of the
judgment, NCI has pulled all potentially offending brochures, and had none to
give out to potential consumers at the Quebec City auto show.
The same will be true of the upcoming Calgary, Ottawa and Vancouver auto shows
if a stay is not granted by this Court. NCI had planned to distribute
approximately 25,000 brochures at the Quebec, Calgary and Vancouver auto shows.
It is impossible to have
the new brochures printed in time for any of the March-April auto shows. It takes
approximately 6 weeks to have new brochures designed and printed and will cost
approximately $85,000.
The lack of brochures at
an auto show is a serious problem. Potential customers attend auto shows and
take brochures of vehicles they are interested in. Without brochures, NCI will
lose contact with customers.
Having no brochures at
an auto show will have a negative impact on Nissan’s customers and potential
customers’ positive image of Nissan as a well run and organized company. The
negative perception of Nissan will also result in a negative perception of
Nissan and Infiniti’s products as being well made, dependable and reliable; and
it will be impossible to determine the impact on Nissan’s sales.
In addition, NCI will be
required to take the following action in order to comply with the order of
Justice MacKay:
(1) disabling
and revising the dealer Assist web site, that contains material (e.g. Service
Manual) not distributed to the public but may be seen by owners or consumers,
which may jeopardize the safety of Nissan’s customers; and
(2) disabling
and revising the infiniti.ca web site;
(3) disabling
and doing a complete review of all computer systems to remove references to M6
(short form for manual 6 speed transmission);
(4) destruction
of any inventory held by NCI and discontinuing the use of third party
Materials: Magazine Article Reprints;
(5) destruction
of all Energuide material held by NCI and advising the government that NCI can
no longer participate in the distribution of any material that contains M or M6
references;
(6) destruction
and revising and reprinting materials not distributed to the public but may be
seen by owners or consumers, such as Technical Service Bulletins, Service
Manuals, Vehicle Product Ordering Guides (VPOG), Sales Consultant Manuals
SCMs’, price lists for the Infiniti M and G vehicles, and price lists for its
Nissan vehicles that have manual 6 speed transmissions (M6);
(7) delivering
up or destroying invoices – records which the government requires NCI to
maintain
The operation and effect
of Justice MacKay’s order is far reaching to include vehicles that were not the
subject of the litigation and references to M6 in the context of bolts to
repair vehicles.
In order to carry out
these actions, NCI will have to shut down its web site, pull brochures from
auto shows, pull documents from its public websites and private databases, such
as service information. The overall message to the public will be that
Nissan/Infiniti is in some type of trouble that has resulted in disorganization
and inability to serve customers. In a highly competitive market place, this
type of message will harm Nissan’s reputation and its brands and it will never
be able to determine what the long term effect (lost sales, lost revenues, lost
customer base) will be.
Maintaining the status
quo would permit NCI to continue to market its M35 and M45 vehicles in the
manner it has done since their introduction.
[8]
I am
satisfied, on this evidence, that Nisaan would suffer irreparable harm if no
stay is granted.
[9]
By Order
dated December 16, 2005, von Finckenstein J. refused to grant an interlocutory
injunction sought by BMW, finding that BMW had failed to establish irreparable
harm. In answer to a question put by me to counsel for BMW on this hearing as
to whether BMW would suffer any irreparable harm if an interim stay is in place
until the main motion for a stay is heard next week as planned, counsel for BMW
responded in the negative.
[10]
On the
issue of balance of convenience, it is clear Nissan will suffer greater harm
from a stay being refused than BMW will suffer if a stay is granted. Nissan
will have to take many steps to implement the judgment of MacKay D.J., whereas
BMW will simply have to maintain the status quo which has existed since
approximately 2005. It has its remedy in damages awarded by MacKay D.J.
[11]
In my view,
Nissan has established that there is a serious question to be tried. The
threshold to be met on this issue is low, as described by Sharlow J.A. in Apotex
Inc. v. Sanofi-Aventis Canada Inc. et al., 2007 FCA 7 at paragraph 26:
The first test generally
is considered to represent a very low bar, with the result that it is not
usually necessary or desirable to consider the grounds of appeal in any depth.
At the same time, I cannot help but note that there are strong grounds of
appeal in this case.
[12]
It is
arguable that the decision of MacKay D.J. to allow the claim for passing off is
inconsistent with his finding regarding the evidence and his dismissal of BMW’s
claim regarding trade-mark infringement and depreciation goodwill.
[13]
It is also
arguable that the trial judge’s finding that BMW had established goodwill in
the use of the letter M alone in advertisements of its cars is inconsistent
with his finding that the letter M is also used to designate models by a number
of other auto manufacturers:
Mr. Duval however,
provides some evidence of numerous other automobile manufacturers that use the
letter M, in corporate logos, (i.e., Mazda, Mercury, Maybach all use stylized
M’s in registered trade-mark logos). Others use the letter M, in conjunction
with other letters or numbers in reference to particular classes or models of
their vehicles (e.g. Chrysler, Ferrari, Acura, Mazda and Mercedes-Benz). The
letter M is also used with numbers or letters in trim designations on many
vehicles, and in some of those combinations it is a symbol that the vehicle so
marked has a manual transmission. In short the letter M is used to designate
models, or particular trimmed vehicles, by a number of auto-manufacturers. (Reasons
of MacKay J. at paragraph 32)
[14]
In my
view, if Nissan has to take all the actions specified by MacKay D.J.
immediately, this may well make much of the relief sought by Nissan on the
motion moot. In view of the fact that this matter is to be heard in the very
near future, therefore, an interim stay is appropriate.
[15]
For these
reasons, I decline to change the Order granted on the 14th of March,
2007.
[16]
No one has
asked for costs and none shall be granted.
“J.
Edgar Sexton”
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