Docket: T-1447-11
Citation:
2017 FC 779
Toronto, Ontario, August 22, 2017
PRESENT: The
Honourable Mr. Justice Southcott
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BETWEEN:
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THE STORK
MARKET INC
AND RICCARDO
FRONTE
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Plaintiffs/
Defendants
by Counterclaim
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and
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1736735 ONTARIO
INC
O/A HELLO PINK
LAWN CARDS INC AND
CIPRIANO
PRIMICIAS III
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Defendants/
Plaintiffs
by Counterclaim
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JUDGMENT AND REASONS
I.
Overview
[1]
This decision results from a trial of claims and
counterclaims related to intellectual property rights between two companies,
and their principals, active in the lawn sign business in the Greater Toronto
Area [GTA] and other parts of southern Ontario. Specifically, the Plaintiffs
claim infringement of registered trade-marks of two images of a stork holding a
baby above its head under a banner announcing, respectively, “It’s a Girl” and “It’s a Boy”.
The Plaintiffs also assert a claim for passing off under s. 7(b) of the Trade-marks
Act, RSC 1985, c T-13 and a claim for copyright infringement. These claims
all arise from the Defendants’ use and advertisement of lawn signs displaying
images of a stork in a similar posture. The Defendants deny that their stork
images infringe the Plaintiffs’ rights and seek a declaration that the
Plaintiffs’ trade-mark registrations are invalid and an Order expunging those
registrations.
[2]
For the reasons explained below, I have found
that the Plaintiffs’ trade-mark registrations are valid and have been infringed
by the corporate Defendant, contrary to the Trade-marks Act. The claim
by the corporate Plaintiff for passing off under s. 7(b) of the Trade-marks
Act also succeeds, again against the corporate Defendant. The Plaintiffs
have not convinced me that the individual Defendant has any personal liability
for the claims under the Trade-marks Act. Nor have they convinced me
that the Defendants have infringed the copyright of the individual Plaintiff in
his stork images.
[3]
The Plaintiffs’ success in their trade-mark
infringement and passing off claims results in an award of $30,000 damages to
the corporate Plaintiff, injunctive relief and an Order for destruction or
delivery up under s. 53.2 of the Trade-marks Act. The claims and
counterclaims are otherwise dismissed.
II.
Background
[4]
The Plaintiffs are an Ontario incorporated
company called The Stork Market Inc. [Stork Market] and its owner-operator, Mr.
Riccardo Fronte. In November 2009, Stork Market commenced its business, which
consists solely of renting what the parties refer to as “lawn storks”, i.e. large signs depicting a stork and
a newborn baby, intended to be placed on a customer’s front lawn to announce
the birth of a child or a related event. Stork Market’s lawn storks all display
one of two images. Both images include a location at which information such as
a baby’s name, birth date and weight can be displayed. Other than this
customization, Stork Market’s two images are identical, with the exception that
the top of one image displays a pink banner with the words “It’s a Girl” and the top of the other displays a blue
banner with the words “It’s a Boy”.
[5]
The two images employed by Stork Market on its
signs [the Stork Market Images] were designed in the fall of 2007 by Mr.
Russell Challenger, who is a commercial artist and a long-time friend of Mr.
Fronte. In November 2012, after the commencement of this lawsuit, Mr.
Challenger and Mr. Fronte entered into an agreement entitled Copyright
Assignment and Moral Rights Waiver [the Copyright Assignment] under which Mr.
Challenger assigned to Mr. Fronte his copyright in the stork images he
designed, effective as of the time of their creation.
[6]
On November 30, 2009, Mr. Fronte also applied for
registration of these two images as trade-marks under the Trade-marks Act.
As a result, these images were registered as trade-marks in Mr. Fronte’s name [the
Fronte Marks] under No. TMA 794,667 and No. TMA 794,672, with a registration
date of April 4, 2011 [the Registrations]. The Registrations refer to goods and
services in connection with which the marks are used as, respectively, “lawn ornaments, namely lawn storks” and “7 day rental service of the Stork image on a wooden plank,
planted on the front lawn of the customer’s home, for the purpose of announcing
the birth of their child or children.” The Fronte Marks appear as
follows in the Registrations, along with descriptions of the colours employed
in the marks:
[7]
Shown in colour, the Stork Market Images appear
as follows:
[8]
The Defendants are an Ontario corporation named
1736735 Ontario Inc., which operates under the name Hello Pink Lawn Cards Inc.
[Hello Pink], and its sole director, officer and shareholder, Mr. Cipriano Primicias
III. Mr. Primicias was self-represented at the trial and served as Hello Pink’s
representative pursuant to leave granted by Prothonotary Milczynski in an Order
dated June 25, 2014. Hello Pink commenced business in July 2007. Like Stork
Market, Hello Pink is in the business of rental and installation of lawn signs
for special occasions. However, while it rents lawn storks intended to
celebrate births, it also rents signs related to a variety of other occasions,
such as birthdays, anniversaries and graduations.
[9]
At the commencement of Hello Pink’s business
operations, its sign inventory included two stork images, one announcing the
birth of a boy and the other announcing the birth of a girl. These signs were purchased
on eBay from suppliers in the Pennsylvania area, and as part of the purchase
Mr. Primicias also acquired an exclusive Canadian licence to use the images on
the signs. Mr. Primicias described them as “traditional”
stork images, depicting a stork carrying a baby in its beak. The traditional
images employed by Hello Pink on its lawn storks from the beginning of its
business, currently referenced in Hello Pink’s inventory as “GS2-Bird 2” and “BS2-Bird 2”
[the Original Hello Pink Images], appear as follows:
[10]
In or about June 2010, Hello Pink began renting
lawn signs with new stork images, again employing both “girl”
and “boy” versions, along with signs with the
Original Hello Pink Images and the rest of its inventory related to other
special occasions. Details surrounding the decision to develop the new stork
images are addressed later in these Reasons. It is the use of these new stork
images, referenced in Hello Pink’s inventory as “GS2-Bird
1” and “BS2-Bird 1” [the New Hello Pink
Images], which gives rise to the Plaintiffs’ claims. The New Hello Pink Images
appear as follows:
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GS2-Bird
1
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BS2-Bird
1
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[11]
After becoming aware of Hello Pink’s lawn signs
using the New Hello Pink Images, which Mr. Fronte considered to be copies of
the Stork Market Images, he telephoned Mr. Primicias. Mr. Fronte asked him to
stop using the New Hello Pink Images, and Mr. Primicias refused. The Plaintiffs’
counsel subsequently sent a “cease-and-desist”
letter to Hello Pink on August 15, 2011, along with a follow-up email to Mr. Primicias
on August 29, 2011. The Defendants did not respond to this correspondence, and
the present litigation ensued.
III.
Witnesses
[12]
Three witnesses testified in support of the
Plaintiffs’ claims. Mr. Fronte testified as to the development of the Stork Market
Images by Mr. Challenger, the registration of the Fronte Marks, the commencement
and development of Stork Market’s business, how Mr. Fronte became aware of
Hello Pink’s use of the New Hello Pink Images, and the subsequent assertion of
the claims that are the subject of this action. Mr. Challenger testified as to
his role in the development of the Stork Market Images, including the creative
process by which the images were developed. The Plaintiffs’ third witness was a
former customer, Ms. Wendy Pitblado, who gave evidence which the Plaintiffs
argue demonstrates actual confusion between the New Hello Pink Images and the
Fronte Marks. These witnesses were all cross-examined by Mr. Primicias.
[13]
Mr. Primicias was the sole witness for the
Defendants. He testified as to the commencement and development of Hello Pink’s
business, the procurement of the Original Hello Pink Images, how he became
aware of Stork Market’s lawn signs employing the Stork Market Images, the development
of the New Hello Pink Images, and the subsequent communications between the
parties prior to commencement of this action. Mr. Primicias was cross-examined
by the Plaintiffs’ counsel.
[14]
The Plaintiffs also tendered into evidence
certain excerpts from Mr. Primicias’ discovery examination, and the parties
tendered a Joint Book of Documents. The parties agreed to the authenticity of
the documents and that all documents in the Joint Book would form part of the
evidentiary record. Although there was no agreement between the parties that
the documents were necessarily admitted for the truth of their contents, the
nature of the documents and their use at trial is such that this is not
significant.
[15]
Beyond this general overview of the evidence,
details of specific pieces of evidence are discussed below where relevant to
the Court’s analysis of the issues in dispute.
IV.
Issues
[16]
In broad strokes, the issues in this action are
the validity of the Registrations of the Fronte Marks and whether the
Defendants, or either of them, are liable to the Plaintiffs, or either of them,
for infringement of the Fronte Marks, passing off, or infringement of Mr.
Fronte’s copyright in the images designed by Mr. Challenger. However, based on
the parties’ pleadings and arguments, I would subdivide the issues as follows:
A.
Are the Registrations of the Fronte Marks valid?
B.
If so, have the New Hello Pink Images been used
as trade-marks?
C.
If so, have the Defendants infringed the Plaintiffs’
rights under ss. 19 and 20 of the Trade-marks Act?
D.
Did the Defendants violate s. 7(b) of the Trade-marks
Act?
E.
Are the Stork Market Images subject to copyright
owned by Mr. Fronte?
F.
If so, did the Defendants infringe this
copyright?
G.
If the Plaintiffs succeed in establishing any of
the causes of action asserted, to which remedies are the Plaintiffs entitled?
V.
Analysis
A.
Are the Registrations of the Fronte Marks valid?
[17]
The Defendants raise two arguments in support of
their position that the Registrations are invalid and should be expunged. They
take the position that the Registrations are not distinctive of a single source
and that the subject matter of each Registration is primarily functional and/or
merely ornamental.
(1)
Not Distinctive of a Single Source
[18]
The Defendants note that the Registrations are in
the name of Mr. Fronte but that the Fronte Marks were used only by Stork
Market. They argue there is no indication that Mr. Fronte licensed Stork Market
to use the Fronte Marks or that Mr. Fronte exercised any control over the
quality of the wares or services of Stork Market in connection with which the
Fronte Marks were used.
[19]
The Defendants are correct that there was no
evidence adduced at trial as to a written or express license agreement between
the Plaintiffs related to the use of the Fronte Marks. However, the Plaintiffs
argue that the applicable jurisprudence supports a conclusion that the Fronte
Marks were used by Stork Market under an implied oral license from Mr. Fronte.
This argument relates to the application of s. 50(1) of the Trade-marks Act,
which deems use of a mark by a licensee to be use by the registered owner,
provided that the owner has direct or indirect control over the character or
quality of the wares or services in question.
[20]
I accept the Plaintiffs’ proposition that the
required license need not be in writing and that, where the owner of a
trade-mark also controls a closely held corporation that uses the mark, an
inference may be drawn that the corporation uses the mark under oral license
from the owner, with the owner asserting the requisite control over the
character or quality of the wares or services (see TGI Friday’s of Minnesota
Inc v Canada (Registrar of Trade Marks) (1999), 241 NR 362 (FCA); Fairweather
Ltd v Registrar of Trade-marks, 2006 FC 1248; Smart & Biggar v
Powers (2001), 16 CPR (4th) 276 (TM Bd)).
[21]
The Statement of Claim alleges that Mr. Fronte
is the sole director, officer and shareholder of Stork Market. The Plaintiffs
did not adduce evidence explicitly addressing Stork Market’s corporate
structure. However, Mr. Fronte testified that he is the owner–operator of Stork
Market and, other than one week during which his brother performed the delivery
of lawn signs, its sole employee. It is clear from Mr. Fronte’s testimony that
he started and runs the company. In accordance with the applicable
jurisprudence, I find that this is an appropriate case in which to infer an
oral license from Mr. Fronte to Stork Market and that Mr. Fronte exercises the
requisite control over the wares and services. Therefore, the Plaintiffs have
the benefit of s. 50(1) of the Trade-marks Act, and the
Defendants’ argument that the Fronte Marks are not distinctive of a single
source does not represent a basis to find that the marks are invalid.
(2)
Primarily Functional/Merely Ornamental
[22]
Referencing the descriptions of the relevant
wares and services in the Registrations, the Defendants’ position is that, if
the stork image was removed, the wares would no longer function as “lawn storks” and the services would no longer
function as “rental services of the Stork image on a wooden
plank”. They argue that the subject matter of the Registrations is
primarily functional and/or merely ornamental and that registration as a trade-mark
is therefore precluded by the doctrine of functionality.
[23]
This doctrine was explained by the Supreme Court
of Canada in Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65 [Kirkbi],
as follows at paragraphs 42-44:
42 The doctrine of functionality
appears to be a logical principle of trade-marks law. It reflects the purpose
of a trade-mark, which is the protection of the distinctiveness of the product,
not of a monopoly on the product. The Trade-marks Act explicitly adopts
that doctrine, when it provides, at s. 13(2), that the registration of a mark
will not interfere with the use of the utilitarian features it may incorporate:
13. …
(2) No registration of a
distinguishing guise interferes with the use of any utilitarian feature embodied
in the distinguishing guise.
43 In these few words, the Act
clearly recognizes that it does not protect the utilitarian features of a
distinguishing guise. In this manner, it acknowledges the existence and
relevance of a doctrine of long standing in the law of trade-marks. This
doctrine recognizes that trade-marks law is not intended to prevent the
competitive use of utilitarian features of products, but that it fulfills a
source-distinguishing function. This doctrine of functionality goes to the
essence of what is a trade-mark.
44 In Canada, as in several other
countries or regions of the world, this doctrine is a well-settled part of the
law of trade-marks. In the law of intellectual property, it prevents abuses of
monopoly positions in respect of products and processes. Once, for example,
patents have expired, it discourages attempts to bring them back in another
guise.
[24]
As noted in the above quotation, the
functionality doctrine is adopted in s. 13(2) of the Trade-marks Act, by
reference to a “distinguishing guise”, which is
defined in s. 2 as follows:
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distinguishing guise means
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signe distinctif Selon le cas :
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(a) a shaping of
goods or their containers, or
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a) façonnement
de produits ou de leurs contenants;
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(b) a mode of
wrapping or packaging goods
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b) mode
d’envelopper ou empaqueter des produits,
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the appearance of
which is used by a person for the purpose of distinguishing or so as to
distinguish goods or services manufactured, sold, leased, hired or performed
by him from those manufactured, sold, leased, hired or performed by others;
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dont la
présentation est employée par une personne afin de distinguer, ou de façon à
distinguer, les produits fabriqués, vendus, donnés à bail ou loués ou les
services loués ou exécutés, par elle, des produits fabriqués, vendus, donnés
à bail ou loués ou des services loués ou exécutés, par d’autres.
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[25]
Kirkbi involved
an action for passing off brought by the manufacturer of LEGO toys after its
patents expired. Kirkbi argued that the geometric pattern of raised studs at
the top of LEGO bricks represented an unregistered trade-mark and sought to prevent
its competitor, Ritvik, from manufacturing and selling bricks interchangeable
with LEGO. Kirkbi was unsuccessful before the Federal Court, the Federal Court
of Appeal, and the Supreme Court of Canada. In rejecting Kirkbi’s argument that
the configuration of its bricks was subject to trade-mark protection, the
Supreme Court quoted with approval, at paragraph 60, the following portion of
the decision of the Federal Court of Appeal:
Indeed, in my view, subsection 13(2)
reinforces the concept that the doctrine of functionality invalidates a mark
which is primarily functional. It makes clear that the public is not
constrained from using any utilitarian features of a distinguishing guise. It
follows that if a distinguishing guise is wholly or primarily functional, then
the public is not constrained from using the distinguishing guise in its
entirety. Thus a distinguishing guise which is primarily functional provides no
rights to exclusive use and hence no trade-mark protection. In other words the
fact that the distinguishing guise is primarily functional means that it cannot
be a trade-mark. The appellants have simply misconstrued subsection 13(2).
[para. 59]
[26]
I also note the analysis by this Court in the
subsequent decision in Crocs Canada Inc v Holey Soles Holdings Ltd, 2008
FC 188 [Crocs], at paragraphs 18 to 19, to the effect that the text of
s. 13(2) of the Trade-marks Act suggests a policy choice by the
legislature to permit some functional or utilitarian features in a mark so long
as they do not create a monopoly in relation to the function. Crocs
involved a passing off claim by Crocs Canada Inc. against a competitor which
manufactured foam shoes that, like the plaintiff’s product, had holes in the
upper surface and vents on the side. The defendant moved for summary judgment,
seeking dismissal of the claim on the basis that it was barred by the doctrine
of functionality. Justice Hugessen noted that whether the design and pattern of
the holes and vents is primarily functional is one of fact, not to be decided
on a summary judgment motion. In dismissing the motion, Justice Hugessen also
noted that there was evidence that the holes and vents performed a function,
but that there was no evidence linking that function to the pattern and
arrangement of those holes and vents, and that it would be open to the Court at
trial to find that the pattern and arrangement constituted a distinguishing
guise. Justice Hugessen further observed that, while this would require further
examination at trial, it was noteworthy that other manufacturers had been able
to use some of the purely functional features of the plaintiff’s shoes without
mimicking their get up.
[27]
I have difficulty concluding that the Fronte
Marks offend the doctrine of functionality as described in Kirkbi or
Crocs. One cannot characterize the marks as a distinguishing guise, as they
represent neither a shaping of goods or their containers nor a mode of wrapping
or packaging goods, and the Plaintiffs’ claims certainly cannot be
characterized as an effort to assert a protection that would more properly be
the subject of a patent. I cannot conclude that the marks are primarily
functional within the meaning of the case law.
[28]
Moreover, even if one were to consider the
doctrine of functionality more broadly, as a principle applicable even where
the law of patents has no application, intended to ensure that trade-marks law
is not employed to prevent the competitive use of utilitarian features of
products, I cannot conclude the protections afforded by the Registrations to
the Fronte Marks create the sort of anti-competitive effect about which the
doctrine is concerned. I note that, in support of their argument, the
Defendants referred the Court to articles analysing decisions of courts in the
United States, applying what is described as the doctrine of “aesthetic functionality”. This appears to represent
an application of the doctrine of functionality, not in relation to the
technical function of a product’s features, but rather in relation to the
product’s aesthetic qualities. For instance, one of the articles submitted by
the Defendants (see Rachel Rudensky, “Aesthetic
Functionality After Louboutin”, (2013) 68:7 INTABulletin) referred to
the decision in Christian Louboutin S.A. v Yves Saint Laurent America, Inc,
7 F Supp (2d) 445 (SDNY 2011), in which the trial court held that Louboutin’s
marketing of women’s shoes with red lacquered soles, despite being instantly
recognizable as Louboutin’s product, did not attract trade-mark protection. The
Court concluded that the colour was aesthetically functional, serving the non-trade-mark
functions of decoration and beauty.
[29]
This decision was reversed by the Second Circuit
(Christian Louboutin S.A. v Yves Saint Laurent America, Inc, 696 F (3d)
206 (2d Cir 2012)) [Louboutin], holding that there is no legal
prohibition against colour serving as trade-mark and that a determination of
aesthetic functionality involves consideration whether protecting the aesthetic
element in question would significantly undermine a competitor’s ability to
compete.
[30]
Another article submitted by the Defendants
analysed decisions of the Ninth Circuit Court of Appeals in the United States,
applying the doctrine of aesthetic functionality, although the article
criticized much of that jurisprudence and described the Ninth Circuit’s
application of this doctrine as out of step with other US courts (see Nancy
Clare Morgan, “Aesthetic Appeal”, Los Angeles
Lawyer (February 2012) 34.
[31]
It is therefore difficult to assess from the
authorities identified by the Defendants the extent to which the doctrine of
aesthetic functionality forms part of US law or exactly how that doctrine is
formulated and applied. Nor have the parties identified any instances of this
application of the doctrine of functionality in Canadian law. Furthermore, even
applying this doctrine as apparently formulated by the Second Circuit Court of
Appeals in Louboutin would not particularly assist the Defendants in the
case at hand. As will be canvassed in more detail below in my analysis of the
likelihood of confusion between the parties’ respective stork images, Mr. Fronte
testified as to the commercial success of the signs employing the Stork Market
Images. His designer, Mr. Challenger, also testified as to the emotional
reaction his design was intended to achieve. While this evidence speaks to the
commercial merits of the Plaintiffs’ product employing the Stork Market Images,
I do not consider that evidence, or any other evidence adduced at trial, to
support a conclusion that the particular design elements of the Stork Market
Images are essential or sufficiently important to success in the lawn stork
business, such that affording trade-mark protection to those images would
significantly undermine a competitor’s ability to compete.
[32]
I note Mr. Primicias’ testimony that his
objective in designing the New Hello Pink Images was to accommodate the
inclusion of a customizable baby, i.e. a baby with a range of different attire
customized to be meaningful to the parents. He explained that this commercial
objective prompted the development of the New Hello Pink Images, with a clothed
baby positioned on the stork’s shoulder rather than in the traditional position
wrapped in a bag or blanket held in the stork’s beak. When asked in cross-examination
about elements of the New Hello Pink Images which are similar to the Stork
Market Images, Mr. Primicias testified that the stork’s splayed stance was a
function of the fact the stork is supporting the baby and that positioning the
stork on a patch of grass was necessary to hide the sign’s hardware. Mr. Primicias
also considered it critical that the new design include a banner or plaque
large enough to hold the announcement “It’s a Girl”
or “It’s a Boy” and another area for information
about the baby. He testified that the use of customizable clothing for the baby
meant that the baby’s information could not be positioned on the baby itself
and therefore had to be placed on a sign hung around the stork’s neck. This
left the location above the stork’s head as the only available position for the
“It’s a Girl/Boy” announcement. Therefore, the
wings were raised above the stork’s head to hold the announcement.
[33]
In essence, the Defendants argue that the design
elements of the New Hello Pink Images which the Plaintiffs argue to be
confusingly similar to the Stork Market Images are a function of the commercial
objective of incorporating a customizable baby. They also submit that the
raising of the hands or wings is a common celebratory gesture which is
aesthetically functional and that competitors of the Stork Market must be free
to use. With respect, I cannot accept these arguments as a basis to conclude
that affording trade-mark protection to the Stork Market Images would
significantly undermine competitors’ ability to compete. My analysis of the degree
of resemblance between the parties’ images, and the other aspects of the
confusion analysis, follow later in these Reasons. However, for purposes of
addressing the present issue, I note that the documentary evidence introduced
by the parties includes a large number of quite varied “traditional”
stork images, and the Defendants have not convinced me that the commercial
objective of a customizable baby, or any other ingredient of a commercially
successful lawn stork, requires the use of the Plaintiffs’ design elements in a
manner that is confusingly similar to the Stork Market Images.
[34]
Finally, I am conscious that the images for
which the Plaintiffs claim trade-mark protection are themselves an integral part
of Stork Market’s products and services. However, the Defendants have not cited
any authority to support a conclusion that this disentitles the Plaintiffs to
such protection. I take from the Crocs decision that a product can have
features which serve a utilitarian function and also serve the trade-make
function of identifying the source of the product, without necessarily
invalidating the mark. In the present case, while the Stork Market Images form
part of Stork Market’s products and services, they also serve a
source-distinguishing function. Section 4(2) of the Trade-marks Act
(reproduced in the next portion of these Reasons) provides that a trade-mark is
deemed to be used in association with services if it is used or displayed in
the performance or advertising of those services. Mr. Fronte’s evidence establishes
that Stork Market has used the Stork Market Images as branding on its website
and a variety of other promotional materials, including business cards,
pamphlets distributed at trade shows, flyers distributed throughout the GTA,
posters employed in connection with hand sanitizers in hospitals and, at one
stage in the company’s operations, a vehicle with the Stork Market Images
applied as decals to the sides.
[35]
In conclusion on the first issue, I find no
basis to declare the Registrations of the Fronte Marks invalid. As between the
parties to this proceeding, the Registrations are valid.
B.
Have the New Hello Pink Images been used as
trade-marks?
[36]
The Defendants take the position that the New
Hello Pink Images have not been used as trade–marks and that there can
therefore be no violation of ss. 19, 20 or 22 of the Trade-marks Act.
[37]
Sections 4(1) and (2) of the Trade-marks Act
deem a trade-mark to be used in connection with goods or services in the
following circumstances:
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When deemed to be
used
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Quand une marque de commerce est réputée employée
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|
4 (1) A
trade-mark is deemed to be used in association with goods if, at the time of
the transfer of the property in or possession of the goods, in the normal
course of trade, it is marked on the goods themselves or on the packages in
which they are distributed or it is in any other manner so associated with
the goods that notice of the association is then given to the person to whom
the property or possession is transferred.
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4 (1) Une marque de commerce est réputée employée en liaison avec
des produits si, lors du transfert de la propriété ou de la possession de ces
produits, dans la pratique normale du commerce, elle est apposée sur les
produits mêmes ou sur les emballages dans lesquels ces produits sont
distribués, ou si elle est, de toute autre manière, liée aux produits à tel
point qu’avis de liaison est alors donné à la personne à qui la propriété ou
possession est transférée.
|
|
Idem
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Idem
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(2) A trade-mark
is deemed to be used in association with services if it is used or displayed
in the performance or advertising of those services.
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(2) Une marque de
commerce est réputée employée en liaison avec des services si elle est
employée ou montrée dans l’exécution ou l’annonce de ces services.
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[38]
The Defendants are correct that a trade-mark
must be used as a trade-mark in order to give rise to remedies under the Trade-marks
Act. They cite Compagnie Générale des Etablissements Michelin –
Michelin & Cie v National Automobile, Aerospace, Transportation and
General Workers Union of Canada (CAW – Canada) (1996), [1997] 2 FCR 306
(FCTD) [Michelin], in which Michelin argued that CAW violated its
trade-mark in Bibendum (Michelin’s marshmallow-like mascot) by including a
drawing of him in their organizing literature. Justice Teitelbaum found that
this use did not infringe Michelin’s trade-mark because CAW was not using
Bibendum as a trade-mark to distinguish goods or services from those of others.
[39]
I also appreciate that, as is the case with
Stork Market, the stork images used by Hello Pink are an integral part of its
products and services. However, the evidence establishes that, as is the case
with Stork Market, Hello Pink’s images also serve a trade-mark function of
distinguishing its goods and services from those of others. In connection with
Hello Pink’s services, Mr. Primicias’ evidence is that its website is its main
advertising vehicle, on which the New Hello Pink Images appear. It has also
advertised on Kijiji and at a local hospital, employing images of its storks
with information as to how to contact Hello Pink. Indeed, the products
themselves, displaying the New Hello Pink Images, include contact information
for the company. Mr. Primicias confirmed that the lawn signs themselves act as
a form of advertisement.
[40]
Whether Hello Pink regarded its use of the New
Hello Pink Images as fulfilling a trade-mark function is not determinative of
the question whether the images were used as trade-marks. As held by the
Federal Court of Appeal in Tommy Hilfiger Licensing, Inc v International
Clothiers Inc, 2004 FCA 252, at paragraph 40, irrespective of a party’s
intentions, the question is whether a mark was used to denote the origin of a
party’s wares or used in such a way as to serve the purpose of indicating
origin. Based on the evidence referenced above, my conclusion is that the New
Hello Pink Images, while part of the products and services themselves, do also
serve the purpose of indicating the origin of those products and services and
have therefore been used as trade-marks.
C.
Have the Defendants infringed the Plaintiffs’
rights under ss. 19 and 20 of the Trade-marks Act?
[41]
Section 19 of the Trade-marks Act grants
the owner of a registered trade-mark the exclusive right to use the mark
throughout Canada in respect of the goods and services for which the mark is
registered. Section 20 provides that the right of the owner of a registered
trade-mark to its exclusive use is deemed to be infringed by a person who is
not entitled to the use of the trade-mark who sells, distributes or advertises
any goods or services in association with a confusing trade-mark.
[42]
As a preliminary matter, I note that, while Mr.
Fronte is the registered owner of the Fronte Marks, I have found that the marks
were used by Stork Market under an implied oral license from Mr. Fronte. As a
result, both of the Plaintiffs (Mr. Fronte as owner and Stork Market as
licensee) have rights under the Trade-marks Act to claim for
infringement of the Fronte Marks (see Tonka Corp v Toronto Sun Publishing
Corp (1990), 41 FTR 56) although, as noted later in these Reasons, there is
a distinction between the positions of the two Plaintiffs when it comes to
consideration of damages.
[43]
The factors to be considered, when determining
whether trade-marks are confusing, are prescribed as follows by s. 6(5) of the Trade-marks
Act:
|
What to be
considered
|
Éléments d’appréciation
|
|
(5) In
determining whether trade-marks or trade-names are confusing, the court or
the Registrar, as the case may be, shall have regard to all the surrounding
circumstances including
|
(5) En décidant
si des marques de commerce ou des noms commerciaux créent de la confusion, le
tribunal ou le registraire, selon le cas, tient compte de toutes les
circonstances de l’espèce, y compris :
|
|
(a) the inherent distinctiveness of the trade-marks or trade-names
and the extent to which they have become known;
|
a) le caractère
distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure
dans laquelle ils sont devenus connus;
|
|
(b) the length of time the trade-marks or trade-names have been in
use;
|
b) la période
pendant laquelle les marques de commerce ou noms commerciaux ont été en
usage;
|
|
(c) the nature of the goods, services or business;
|
c) le genre de
produits, services ou entreprises;
|
|
(d) the nature
of the trade; and
|
d) la nature du commerce;
|
|
(e) the degree of resemblance between the trade-marks or
trade-names in appearance or sound or in the ideas suggested by them.
|
e) le degré de
ressemblance entre les marques de commerce ou les noms commerciaux dans la
présentation ou le son, ou dans les idées qu’ils suggèrent.
|
(1)
Degree of Resemblance
[44]
As explained by the Supreme Court of Canada in
Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 [Masterpiece],
at paragraph 49, the degree of resemblance is the statutory factor that is
often likely to have the greatest effect on the confusion analysis and has been
suggested to be the factor with which most confusion analyses should start.
Consistent with this approach, Mr. Primicias’ testimony and much of the
Defendants’ cross-examination of the Plaintiffs’ witnesses and the Defendants’
argument focused upon differences between the Stork Market Images and the New
Hello Pink Images. However, as correctly argued by the Plaintiffs, it is
important to bear in mind that the test for confusion has been articulated as a
matter of first impression, not the result of a careful examination of
competing marks or a side-by-side comparison. As expressed by Justice Rothstein
at paragraph 40 of Masterpiece:
[40] At the outset of this confusion
analysis, it is useful to bear in mind the test for confusion under the Trade-marks
Act. In Veuve Clicquot Ponsardin v. Boutiques
Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824,
Binnie J. restated the traditional approach, at para. 20, in the following
words:
The test to be applied is a matter of
first impression in the mind of a casual consumer somewhat in a hurry who sees
the [mark], at a time when he or she has no more than an imperfect recollection
of the [prior] trade-marks, and does not pause to give the matter any detailed consideration
or scrutiny, nor to examine closely the similarities and differences between
the marks.
Binnie J. referred with approval to the
words of Pigeon J. in Benson & Hedges (Canada) Ltd. v. St. Regis Tobacco
Corp., [1969] S.C.R. 192, at p. 202, to contrast with what is not to be
done — a careful examination of competing marks or a side by side comparison.
[45]
Under cross-examination, Mr. Fronte and Mr.
Challenger acknowledged various differences between the Stork Market Images and
the New Hello Pink Images. The stork in the Stork Market Images is not clothed,
other than wearing a delivery hat and a bow tie. The stork in the New Hello
Pink Images is wearing a tuxedo jacket, vest, top hat and bow tie. The stork in
the Stork Market Images has feather-like fingers, while the Hello Pink Stork
has fingers with human traits. The announcement above the stork’s head in the
Stork Market Images is on a banner, surrounded by stars, while the announcement
above the stork in the New Hello Pink Images is on a flag, without any stars.
There are also differences in the babies shown in the images, in that the baby
in the Stork Market Images is covered in a blanket and is held up by the
stork’s wings, while the baby in the New Hello Pink Images is shown from its
head to its feet, cradled in one of the stork’s wings. Also, unlike the Stork
Market Images, the New Hello Pink Images include different possible babies,
distinguishable by their clothing or accessories. The Defendants argue these
differences to demonstrate a low degree of resemblance between the parties’
respective images.
[46]
In contrast, the evidence adduced by the
Plaintiffs focused upon the similarities between the Stork Market Images and
the New Hello Pink Images. The graphic designer hired by Mr. Fronte, Russell
Challenger, testified that Mr. Fronte had directed him to design an image that
would have a particular emotional impact, invoking a sense of celebration. Mr.
Challenger explained the design choices that he made in an effort to achieve
that emotional impact, being the upstretched arms, raising the baby in the air,
the large banner surrounded by stars, and the skinny legs, overall creating a
top-heavy shape akin to a trophy. When asked about his reaction when he was
first shown the New Hello Pink Images, he testified he regarded them as
directly inspired by his work. He referred to the arms reaching up with
feathers coming out, the elevated banner with the announcement, the cartoonish
nature of the character, the baby being displayed in a different manner than the
traditional stork images, the legs in the center of the image, and the grass at
the bottom. The Plaintiffs argue these similarities to demonstrate a high
degree of resemblance between the parties’ respective images.
[47]
In analyzing the degree of resemblance between
the relevant images, I do not consider any of the above evidence, adduced by
either the Plaintiffs or the Defendants, to be particularly probative. As
explained in Masterpiece, the test to be applied is a matter of first
impression in the mind of a casual consumer somewhat in a hurry. I do not
regard the application of this test to be particularly assisted by the evidence
of the parties’ witnesses as to what they regarded the similarities and
differences to be. This observation applies to the evidence of the parties
themselves, as well as to that of Mr. Challenger, notwithstanding his expertise
as a designer. While I recognize that there was no effort to formally qualify
Mr. Challenger as an expert, I am conscious of the explanation at paragraphs 75
to 77 of Masterpiece that expert opinion evidence is admissible to
assist with the confusion analysis only if it provides information which is
likely to be outside the experience and knowledge of the Court. I raise this
because it underlines the point that it is the Court which must assess the
degree of resemblance between the relevant marks, employing the principles
derived from the applicable jurisprudence. However, in doing so, I have
considered the parties’ arguments in support of their respective positions on
degree of resemblance.
[48]
Applying the jurisprudence, the degree of
resemblance must be assessed through the eyes of the casual observer who sees
the mark at a time when he or she has no more than an imperfect recollection of
the prior mark and does not pause to give the matter any detailed consideration
or scrutiny or to examine closely the similarities and differences between the
marks. The test does not involve performing a careful examination of competing
marks or a side by side comparison. While I do not fault the Defendants for
pointing out the differences between the Stork Market Images and the New Hello
Pink Images, I find that those differences only become apparent through the
sort of careful examination that the case law discourages.
[49]
Rather, as noted at paragraph 64 of Masterpiece,
albeit in the context of analysing a word mark, it is appropriate to consider
whether there is an aspect of the mark that is particularly striking or unique.
Particularly when the Fronte Marks are considered in the context of the
numerous traditional stork images that were introduced as evidence (which will
be further referenced below in the analysis of distinctiveness), I find
compelling the Plaintiffs’ argument that the striking and unique aspects of the
Fronte Marks are found in the overall configuration and pose of the stork,
facing forward with thin splayed legs and raised feathered wings and banner
above its head. The New Hello Pink Images contain those same striking and
unique aspects. I find a strong degree of resemblance between the Fronte Marks
and the New Hello Pink Images.
(2)
Inherent and Acquired Distinctiveness
[50]
In analysing the inherent distinctiveness of the
Fronte Marks, I am conscious that they are not unique in their association of
an image of a stork with a celebration of the birth of a child or similar event.
The agreed documents introduced into evidence by the parties include over 100
different examples of lawn storks. Mr. Fronte described these images as
representing the typical sort of lawn stork that is rented not just in Canada
but throughout North America. As explained by Mr. Fronte, the typical image
depicts a stork standing on one leg, with a bag in its mouth and the baby’s
information written on the bag, sometimes accompanied by the message “It’s a boy” or “It’s a girl”.
Mr. Primicias similarly referred to these images as “traditional”
storks, where the baby is being carried in the stork’s beak. In reviewing these
images in the agreed documents, I note that there is considerable variation in
how the character of the stork itself is depicted. However, they almost all
depict a stork facing sideways, often on one leg, holding a bag or a baby in a
bag in its beak. They contrast significantly with the Stork Market Images
which, as canvassed above, are composed of a stork facing forward, standing on
2 feet, with raised feathered arms and an announcement banner and baby. I agree
with the Plaintiffs’ position that the Fronte Marks have inherent
distinctiveness.
[51]
I also agree with the Plaintiffs that the extent
to which Fronte Marks have become known, i.e. their acquired distinctiveness,
favours a finding of confusion. As previously explained, Mr. Fronte testified
that Stork Market has used the Stork Market Images as branding on its website
and a variety of other promotional materials. These included business cards,
miniature frames with business cards which were distributed to between 500 and
1000 people at a number of Welcome Wagon shows, 20,000 pamphlets distributed at
trade shows, flyers distributed to thousands of businesses throughout the GTA,
posters employed in connection with hand sanitizers in 6 or 7 hospitals and, at
one stage in the company’s operations, a vehicle with the Stork Market Images
applied as decals to the sides.
[52]
Mr. Fronte also gave evidence as to the rapid
success of Stork Market’s business. Mr. Fronte’s expectation was that Stork
Market would represent a part-time job to generate a couple of hundred dollars
a week. However, after its marketing began in November 2009, customer response
was very positive, and by May 2010 Mr. Fronte was in a position to quit his
previous employment, as Stork Market was generating income equal or greater to
that of his previous job. In the first year of its operations, Stork Market
rented approximately 400 lawn signs, in the second year 700, and in the third
year over 900. In the following years, business declined somewhat, which Mr.
Fronte suggests may have been due to competition from the New Hello Pink
Images. However, it is clear from the rapid growth of Stork Market’s business,
and its annual business volumes, that the Stork Market Images and therefore the
Fronte Marks have become well-known in the parties’ market.
[53]
This can be contrasted with Hello Pink’s lower
volumes from the rental of lawn storks, which the Defendants’ compilation of
Hello Pink’s sales invoices demonstrates to have been 63 rentals in 2010 (36 of
which were the New Hello Pink Images), 74 rentals in 2011 (40 of which were the
New Hello Pink Images), and 96 rentals in 2012 (56 of which were the New Hello
Pink Images). It should also be noted that lawn storks are only one of many
rental products offered by Hello Pink. Mr. Primicias testified that, within
five years of his commencement of the business in July 2006, he had amassed
over 100 signs, related not just to births but to anniversaries, graduations,
promotions and other events.
[54]
It is therefore my conclusion that both the
inherent distinctiveness of the Fronte Marks and their acquired distinctiveness
in the market favour a finding of confusion.
(3)
Length of Time the Trade-marks have been in Use
[55]
The Fronte Marks were first used by the
Plaintiffs in November 2009. Mr. Primicas testified that the signs with the New
Hello Pink Images were first used in June 2010. As such, the length of time the
marks have been in use does not significantly favour either party but does
marginally favour the Plaintiffs.
(4)
Nature of the Goods, Services or Business /
Nature of the Trade
[56]
These factors favour a finding of confusion. While
Hello Pink’s lawn signs extend to special occasions beyond births, the parties are
selling directly competing products to an identical customer base. The
potential for confusion is therefore much higher than if the New Hello Pink
Images were used to sell unrelated products to a different customer base.
(5)
Surrounding Circumstances
[57]
In performing the confusion analysis, the Court
is required to consider all surrounding circumstances, not just those expressly
prescribed by s. 6(5). As further surrounding circumstances, the Plaintiffs
rely on the evidence of one of Stork Market’s customers, Wendy Pitblado. Ms.
Pitblado testified that she saw one of Stork Market’s signs while driving and
regarded it as a spectacular design. As her brother and his wife were expecting
a baby, she recorded the phone number on the sign and called Stork Market to
inquire whether they delivered to the relevant area. She did not order the sign
at that time, because the baby had not yet been born. After the birth, Ms.
Pitblado did not remember Stork Market’s name. So she went online and searched
for “stork sign”. The first image she saw was
one of the New Hello Pink Images. She almost ordered that sign, thinking it was
the sign she had previously seen and inquired about. However, realizing that it
didn’t invoke quite the same feeling as the one she had seen while driving, she
did further research and identified Stork Market as the source from which she
wished to order.
[58]
After Stork Market had completed Ms. Pitblado’s
order, she wrote to Mr. Fronte to thank him and advised that she had trouble
finding him on the internet and had gotten confused, because his design
appeared on Hello Pink’s website. She stated that she had almost ordered from
Hello Pink in error but figured it out before it was too late.
[59]
While testifying in direct examination, Ms.
Pitblado was referred to one of the New Hello Pink Images and asked what
elements in that image had at first reminded her of the sign she had seen while
driving. She stated that it was the stork’s wings and the banner across the top
of the image. The Defendants respond to this evidence by pointing out that
ultimately Ms. Pitblado was able to distinguish between the Stork Market Images
and the New Hello Pink Images to correct her initial error and determine which
product she wished to order. However, as argued by the Plaintiffs, Masterpiece
explained at paragraphs 70 to 74 that the likelihood of confusion must be
analyzed based on the first impression of consumers when they encounter the
marks in question, not based on the position the consumer may be in after
conducting subsequent research. While this point was made in Masterpiece
in the context of a considering a proposed distinction between the purchase of
expensive and inexpensive wares and services, the point reinforces the fact
that the test to be applied in the confusion analysis is a matter of first
impression in the mind of a casual consumer somewhat in a hurry.
[60]
Ms. Pitblado has no relationship with the
Plaintiffs other than ordering from Stork Market on this one occasion. She
explained that she would not recognize Mr. Fronte even if he was in the
courtroom while she was testifying. I consider her evidence to be probative of
the question the Court is required to answer, as she represents the sort of
consumer the Court is required to contemplate when applying the prescribed
test. Ms. Pitblado’s evidence supports a finding of confusion.
(6)
Liability for Infringement under the Trade-marks
Act
[61]
Based on the above analysis, I find that Hello
Pink’s use of the New Hello Pink Images does infringe the Plaintiffs’ rights
under s. 20 of the Trade-marks Act. However, the Plaintiffs ask that I
also extend the infringement finding to Mr. Primicias. They refer to his
evidence, introduced through transcripts of his discovery examination, which confirms
that he is currently the sole officer, director and shareholder of Hello Pink. He
is the sole person who runs the company and makes all the decisions with
respect to Hello Pink. When the company was started, his sister, who lives in
Chicago, was the President, but her involvement in the company ceased by around
2011. There is no evidence of his sister’s involvement in the activities that
give rise to the infringement. Mr. Primicias testified that he had the idea to
develop a new stork design to incorporate a customizable baby. He identified a
designer through a website and, following communications back and forth between
him and the designer, the New Hello Pink Images were produced.
[62]
It was also Mr. Primicias who was the recipient
of Mr. Fronte’s call, requesting that Hello Pink cease using the New Hello Pink
Images, and the “cease-and-desist”
correspondence from the Plaintiffs’ legal counsel on August 15, 2011 and August
29, 2011, to which Mr. Primicias did not respond.
[63]
The question is whether this level of involvement
by Mr. Primicias, in the company and the activities that give rise to the
infringement, support a finding that he is personally liable for the
infringement by Hello Pink. I find that it does not. The Plaintiffs rely on the
decision of the Federal Court of Appeal in Mentmore Manufacturing Co v
National Merchandise Manufacturing Co (1978), 89 DLR (3d) 195 (FCA) [Mentmore],
submitting that this case stands for the principle that, for an officer or
director to be personally liable for the actions of a corporation, it is
sufficient to demonstrate deliberate, wilful and knowing pursuit of conduct
that was likely to constitute infringement or reflected an indifference to the
risk of it. It is useful to consider the context surrounding the Federal Court
of Appeal’s expression of this principle at pages 204-205 of Mentmore:
I do not think we should go so far as to
hold that the director or officer must know or have reason to know that the
acts which he directs or procures constitute infringement. That would be to
impose a condition of liability that does not exist for patent infringement
generally. I note such knowledge has been held in the United States not to be
material where the question is the personal liability of directors or officers:
see Deller’s Walker on Patents, 2nd ed. (1972). vol. 7, pp. 117-8. But
in my opinion 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.
[64]
Mentmore involved
a claim for infringement of a patent relating to a retracting mechanism for
ballpoint pens. In upholding the decision of the trial judge that the
individual defendant was not personally liable for the infringement by the
closely held company of which he was the president, the Federal Court of Appeal
noted that the company was legitimately engaged in the business of assembling and
selling retractable pens before the question of possible patent infringement
arose and that there was considerable uncertainty as to the scope and application
of the relevant patent claims. Moreover, the trial judge refused to find that
the company had copied the plaintiff’s parts. The Court distinguished that case
from precedent in which the managing director of the defendant company had
acquired his familiarity with the patented process in his former capacity as
technical director of the plaintiff company, and in which there was a finding
that the defendant company had in effect copied the process of the plaintiff
company.
[65]
While I agree with the Plaintiffs that Mr.
Primicias was personally involved in the activities that give rise to Hello
Pink’s infringement, I find the circumstances of his involvement similar to
those in Mentmore. Hello Pink was legitimately engaged in the lawn sign
business and, since the issue was first raised with him by Mr. Fronte, Mr.
Primicias has consistently maintained that that the New Hello Pink Images do
not infringe the Plaintiffs’ rights. While I have made a finding of
infringement, I do not consider the conclusion that the parties’ respective
marks were confusing to have been so inescapable as to take Mr. Primicias’
involvement outside the role of directing the company’s activities in the ordinary
course of his relationship to it.
[66]
In cross-examination of Mr. Primicias, the Plaintiffs
sought to procure from him an admission that, after seeing a lawn sign with one
of the Stork Market Images and then researching Stork Market on the Internet,
he designed the New Hello Pink Images to compete with Stork Market. Mr.
Primicas denied this suggestion. His evidence was that he developed a new stork
design to accommodate his idea of a customizable baby and that the similarities
with the Plaintiffs’ stork design were a function of this idea.
[67]
If I were to find that Mr. Primicias had
deliberately copied the Stork Market Images, this would support a conclusion
that he engaged in 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, so as to support a finding of personal liability on his
part. However, I decline to reach such a conclusion. While the evidence
establishes that he was aware of Stork Market as a competitor, that he had seen
the Stork Market Images, and that he regarded them as impressive, my view is
that the Plaintiffs have provided the Court with no basis to challenge the
credibility of Mr. Primicias’ testimony as to how the idea of including a
customizable baby resulted in the design choices underlying the development of
the New Hello Pink Images.
[68]
It is therefore my conclusion that Hello Pink
has infringed the Plaintiffs’ marks but that Mr. Primicias is not personally
liable for that infringement.
D.
Did the Defendants Violate s. 7(b) of the
Trade-marks Act?
[69]
I make similar findings in relation to this
issue.
[70]
As submitted by the Plaintiffs, s. 7(b) of the Trade-marks
Act is essentially a codification of the common law tort of passing off, arising
where a defendant is misrepresenting its goods, services or business as the
plaintiff’s goods, services or business, typically through the use of trading
indicia in a manner likely to be confusing with that of the plaintiff. The
three elements necessary to a passing off action are: (a) the existence of
goodwill; (b) deception of the public due to a misrepresentation; and (c)
actual or potential damage to the plaintiff (see Ciba-Geigy Canada Ltd v
Apotex Inc, [1992] 3 S.C.R. 120 at 132).
[71]
I find that Stork Market has established the
elements of this tort. The evidence I have previously canvassed, surrounding
Stork Market’s advertising initiatives and the rapid success and growth of its
business, establishes the reputation and goodwill required to support a claim
for passing off. I also refer to my previous analysis supporting the finding
that the New Hello Pink Images are confusing in relation to the Stork Market
Images, and I would add that Hello Pink uses its confusing mark in the same
geographic area where Stork Market has built up goodwill around the Stork
Market Images. I accept Stork Market’s argument that this creation of confusion
in the marketplace constitutes a misrepresentation to the public and meets the
second element of the tort.
[72]
In relation to actual or potential damage to
Stork Market, I note Mr. Fronte’s evidence that its business declined somewhat
after its first three years of operations, which Mr. Fronte suggests may have
been due to competition from the New Hello Pink Images. The Plaintiffs
acknowledged in argument that they cannot be certain of the cause of this
decline. However, given that Stork Market and Hello Pink are in direct
competition for the same customers, both offering birth announcement lawn signs
in the same geographic area, I am prepared to make a finding of actual or at
least potential damage to Stork Market resulting from the confusion in the
marketplace.
[73]
I note that the above findings relate only to
the corporate Plaintiff, Stork Market, not to Mr. Fronte, as it is the company
which has established the reputation and goodwill and the requisite damage to
sustain the claim under s. 7(b) of the Trade-marks Act. My conclusion is
that this claim by Stork Market is well-founded as against Hello Pink. I
decline to find in favour of Mr. Fronte under the passing off claim and, based
on the same analysis as applied to the claim for trade-mark infringement, I
decline to find Mr. Primicias personally liable for this claim.
E.
Are the Stork Market Images Subject to Copyright
Owned by Mr. Fronte?
[74]
The Plaintiffs confirmed in argument at the
trial that it is Mr. Fronte who asserts ownership of the copyright in the Stork
Market Images and therefore the copyright claim.
[75]
Section 5 of the Copyright Act, RSC 1985,
c C-42 provides that copyright subsists in Canada in every original literary,
dramatic, musical and artistic work if certain conditions are met, including if
the author of the work was at the date of making the work a citizen of, subject
of, or person ordinarily resident in a treaty country such as Canada. An “original” work, for purposes of the Copyright Act,
is one that originates from an author and is not copied from another work but
rather is the product of the author’s exercise of skill and judgment (see CCH
Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13 at paras 16 and
25). Mr. Fronte and Mr. Challenger testified as to the former’s engagement of
the latter’s talents as a designer to develop these images. In the Copyright
Assignment, which is addressed further below, Mr. Challenger is identified as
having an address in Toronto. Moreover, there was no particular argument from
the Defendants at trial to the effect that the Stork Market Images do not
constitute original works or otherwise meet the requirements for protection
under the Copyright Act. Mr. Challenger appears to be a resident of
Canada and, given the evidence as to how the Stork Market Images were developed
by him, I have no difficulty concluding that they constitute original works attracting
copyright protection.
[76]
In his testimony, Mr. Challenger identified the
Copyright Assignment as the document by which he assigned ownership of the
copyright in the Stork Market Images to Mr. Fronte, effective as of the time of
the works’ creation. I note that, in Marcus v The Quaker Oats Company of
Canada Ltd (1988), 20 CPR (3d) 46, the Federal Court of Appeal raised
concerns as to the effectiveness of an assignment nunc pro tunc, i.e. an
assignment that purports to be effective as of a time before it was executed,
in the absence of evidence of such intent at that time. However, as neither of
the parties raised this issue before the Court and given that, as explained
below, my decision is to dismiss the Plaintiffs’ copyright claim for reasons
unrelated to the effectiveness of the Copyright Assignment, my analysis is
premised on the Copyright Assignment serving to convey to Mr. Fronte copyright
in the Stork Market Images as of the time of their creation.
F.
Did the Defendants Infringe this Copyright?
[77]
Section 3 of the Copyright Act provides
in part that 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. Under s. 27(1) of the Copyright Act, it is in an infringement
of copyright for any person to do, without the consent of the owner of the
copyright, anything that by that statute only the owner of the copyright has
the right to do.
[78]
The question for the Court is whether the Defendants
or either of them has infringed Mr. Fronte’s copyright by reproducing the Stork
Market Images or any substantial part thereof through their production of the
New Hello Pink Images. The Plaintiffs rely on the decision in U&R Tax
Services Ltd v H&R Block Canada Inc (1995), 62 CPR (3d) 257 (FCTD) [U&R
Tax Services], in which this Court stated at page 268 that, in order to
find copyright infringement, a plaintiff must prove copying of the work or a
substantial part thereof and access to the copyright protected work. The Court explained
the nature of the inquiry by reference to the following excerpt from Hughes G
Richard, “Concept of Infringement in the Copyright Act”
in Gordon F Henderson, ed, Copyright in Confidential Information Law of
Canada (Toronto: Carswell, 1994) 201 at 209-210:
A striking similarity between two works,
alone, is insufficient to prove plagiarism. While it is recognized that
copyright infringement may result from unconscious copying, there must be
evidence of access to the copied work or a connection between the two works for
a court to find that infringement has occurred. Evidence of access alone will
not suffice; evidence of copying of a substantial part of a protected work also
has to be proved.
When the common source can be shown and the
allegedly infringing work is a result of independent creation, there is no
infringement. Plagiarism is a question of fact and can be proven by any means:
direct evidence or presumptions. The Court should closely scrutinize and
compare the works submitted to its appreciation. Since “resemblance” between
two works can result from the limited range of expressions particular to a
field of endeavor, or from use of a common source, a court must be convinced on
a balance of probabilities that a defendant has actually taken the plaintiff’s
work to produce his own, before finding the defendant liable for infringement.
Thus, evidence of independent creation or
use of a common source will serve to establish non-infringement. On the other
hand, reproduction of mistakes found in the original work may constitute proof
of copying.
[79]
My conclusion, that the Defendants have not
infringed Mr. Fronte’s copyright, turns on the same evidence that resulted in
my finding that Mr. Primicias is not personally liable for infringement of the
Plaintiffs’ trade-marks. Mr. Primicias testified that he designed the New Hello
Pink Images to accommodate the inclusion of a customizable baby, and that this
objective prompted the design choices in those images. These included a clothed
baby positioned on the stork’s shoulder rather than in the traditional position
wrapped in a bag or blanket held in the stork’s beak. The use of customizable
clothing for the baby meant that the baby’s information could not be positioned
on the baby itself and was therefore placed on a sign hung around the stork’s
neck. This in turn resulted in placement of the “It’s a
Girl/Boy” announcement above the stork’s head, with the wings raised
above the stork’s head to hold the announcement.
[80]
The evidence establishes that the Defendants had
access to the Stork Market Images before designing the New Hello Pink Images.
Applying the presumption explained in U&R Tax Services could
therefore result in a finding of infringement. However, as explained in that
case, the question the Court is required to determine is one of fact. The Court
must be convinced on a balance of probabilities that the Defendants have
actually taken Mr. Fronte’s work to produce their own before finding them
liable for infringement. As explained earlier in these Reasons, the Plaintiffs
have provided the Court with no basis to challenge the credibility of Mr.
Primicias’ testimony as to how the idea of including a customizable baby
resulted in the design choices underlying the development of the New Hello Pink
Images. While the degree of resemblance between the parties’ stork images is
sufficient to support my earlier finding of trade-mark infringement, I do not regard
the similarities between the images to be so substantial as to cause me to
reject Mr. Primicias’ evidence or otherwise to support a finding of copyright
infringement.
G.
To Which Remedies are the Plaintiffs Entitled?
(1)
Damages Under the Trade-marks Act
[81]
The Plaintiffs have established their cause of
action for trade-mark infringement, and Stork Market has established its
passing off claim. The Plaintiffs advised in argument at trial that the damages
they claim for these causes of action under the Trade-marks Act are
concurrent, in the amount of $30,000.
[82]
The Plaintiffs argue that the sales records
produced by the Defendants in this litigation are incomplete and nearly
impossible to decipher. They rely on this Court’s decision in Ragdoll
Productions (UK ) Ltd v Jane Doe, 2002 FCT 91 at paragraphs 37, 42 and 45.
In that case, Justice Pelletier explained that it is always open to a defendant
to prove the extent of its infringing trade and to seek to have damages
assessed on the basis of its actual sales. But where it keeps no records, the
defendant is not in a position to say that the plaintiff has no evidence with
which to prove its damages. In cases where damages are understood to have
occurred but proof of the amount of the damages is lacking, nominal damages are
sometimes awarded. However, where a plaintiff has proven infringement and that
damages have occurred, it is entitled to the Court’s best estimate of those
damages without necessarily being limited to nominal damages.
[83]
In the present case, the Defendants have
produced, and the parties have introduced into evidence through their agreed
Joint Book of Documents, certain sales records for 2010, 2011 and 2012, as well
as calculations based on those records as to the total revenues from rental of
the New Hello Pink Images in each of those years. Mr. Primicias also spoke to
these records in his testimony. The Plaintiffs rely on these records and
calculations for purposes of their proposed damages calculations. My only
hesitation in accepting these calculations is derived from Mr. Primicias’
evidence that the figures are HST-inclusive amounts and, while the parties did
not speak to this issue, I would expect that damages based on Hello Pink’s
revenues from the infringing images would be calculated employing HST-exclusive
figures. However, I will address this concern later in my analysis.
[84]
The evidence before the Court does not include
revenue figures for the years following 2012. I have no particular evidence as
to the extent to which production of this information was pursued during pretrial
processes and therefore do not base my damages analysis on any conclusion that
the Defendants have been delinquent in meeting their production obligations.
Rather, I note Mr. Primicias’ testimony that Hello Pink’s rental figures
increased following 2012 until 2015 and then went back down again. This
represents far from perfect information but is sufficient to allow the Court to
consider the Plaintiffs’ proposed damages calculation.
[85]
The Plaintiffs offer two extrapolated
calculations of rental revenues from the New Hello Pink Images from 2013 to the
time of trial in mid-2017, based on the figures of $3442.40 in 2010, $4243.10
in 2011, and $5579.00 in 2012. The first extrapolation calculates an average of
the figures from 2010, 2011 and 2012, after first extrapolating the figure of
$3442.40 (which relates to sales from June 2010, when the New Hello Pink Images
were first used, to December 2010) to $5901.26 for 2010. The resulting annual
average is $5241.12. Employing this figure for each of 2013 to 2016, prorating
it over the first six months of 2017, and adding the known figures for 2010 to
2012 results in a total from June 2010 to June 2017 of $36,849.54.
[86]
The Plaintiffs’ second extrapolation
conservatively identifies the figure of $4243.10 for 2011 rentals, as the
lowest annual figure among the three years for which rental revenues are
available, and employs that figure for each of 2013 to 2017 (again prorating it
over the first six months of 2017). Adding the known figures for 2010 to 2012
then results in a total from June 2010 to June 2017 of $32,358.45.
[87]
As each of the Plaintiffs’ extrapolated amounts exceeds
their proposed compensatory damages figure of $30,000, the Plaintiffs argue
that their proposed quantification is conservative, particularly as it does not
take into account Mr. Primicias’ evidence that rentals from the New Hello Pink
Images increased between 2012 and 2015. I agree with the Plaintiffs’ position
and am prepared to adopt the figure of $30,000 as an appropriate quantification
of compensatory damages. In so doing, I return to the above point that the
figures provided by the Defendants, and therefore the Plaintiffs’ calculations
based thereon, are all HST-inclusive. However, backing 13% HST out of the two
extrapolated calculations would result in figures of $32,610.21 and $28,635.80
respectively. These figures still hover around the $30,000 range, again without
taking into account any escalation in the annual revenues in 2013, 2014 and
2015 which the evidence would appear to support.
[88]
I therefore award damages, for trade-mark
infringement and passing off, in the amount of $30,000. However, while I have
found that each of the Plaintiffs has established a cause of action for
trade-mark infringement, my conclusion is that the resulting damages were
suffered solely by Stork Market, as it is the company, and not Mr. Fronte
personally, which has suffered the lost rental revenues as a result of Hello
Pink’s rental of the infringing lawn signs. As such, my Judgment will award
damages of $30,000 payable by Hello Pink to Stork Market.
(2)
Damages under the Copyright Act
[89]
The Plaintiffs seek statutory damages for
copyright infringement under s. 38.1(1)(a) of the Copyright Act. They
note that this statutory provision allows for an award between $500 and $20,000
and argue that such damages should be quantified in the maximum amount of
$20,000. As I have found no infringement of Mr. Fronte’s copyright, no damages
will be awarded under the Copyright Act.
(3)
Injunctive and Other Relief
[90]
The Plaintiffs seek a permanent injunction
restraining the Defendants from infringing the Plaintiffs’ rights in the Fronte
Marks and directing public attention to the Defendants’ wares, services or
business in such a way as to cause or be likely to cause confusion between the
Defendants’ wares, services or business and those of the Plaintiffs. The
Plaintiffs also seek an Order directing the Defendants to deliver up, or
destroy on oath, offending materials such as lawn signs, signage, goods,
labels, packaging, advertising materials, printed matter, and material for
producing or printing such items.
[91]
These forms of relief are authorized by s. 53.2
of the Trade-marks Act as remedies for contravention of that statute.
Having found such contraventions, my conclusion is that the Plaintiffs are entitled
to injunctive relief and an appropriate form of Order for destruction or
delivery up. However, in oral Argument, the Plaintiffs’ counsel noted that the
Plaintiffs are not seeking an injunction extending to the baby that forms part
of the New Hello Pink Images, which I take to be recognition of the fact that
the idea of the customizable baby is that of the Defendants and is not alleged
to infringe the Plaintiffs’ rights. Before issuing an Order for injunctive
relief and destruction and/or delivery up, the Court would benefit from
submissions from the parties as to the form of this Order, such that it is
responsive to the contraventions identified in these Reasons but is not broader
than necessary. My Judgment at the conclusion of these Reasons will prescribe a
process and timing for the receipt of such submissions.
(4)
Interest and Cost
[92]
The Plaintiffs have claimed pre-judgement and
post-judgment interest and costs, and the Defendants have claimed costs.
Neither party provided any submissions in support of either interest or costs
at trial. The parties agreed that submissions on costs should be provided to
the Court following receipt of the Court’s decision on the merits of the claims
and counterclaims. The parties have met with divided success in the assertion
of their respective positions. With the benefit of this outcome now known, my
Judgment will direct that the parties consult in an effort to reach agreement
on the disposition of costs in this proceeding, as well as the calculation or
treatment of interest, failing which the Court will receive submissions on same
in accordance with the process and timing prescribed in the Judgement.
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