Trademark Cases

Court Grants Motion for Summary Judgment, including Solicitor and Client Costs for “Willful Blindness” in Ongoing Infringement
The Driving Alternative Inc. v. Keyz Thankz Inc.,
2014 FC 559

This was a motion for summary judgment by the Plaintiff, who sought relief for trademark infringement, passing off, depreciation of goodwill, and likelihood of confusion. The Defendants filed no material in response to this motion.

The Plaintiff owned two registered trademarks, KEYS PLEASE and THE DRIVING ALTERNATIVE, for use in association with (among other things) driving services. The Plaintiff has operated business out of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario. For a brief time, the Defendants were licensed to operate a franchise using the Plaintiff’s trademarks in Ontario. The license was terminated by the Plaintiff for non-payment of royalties. However, subsequent to the termination of the license, the Defendants continued to operate a driving service under the mark KEYZ PLEAZE. The Plaintiff became aware of this, and demanded that the Defendants cease and desist using all confusing marks. In response, the Defendants signed an undertaking to “cease using… all use of any trademarks causing or potentially causing confusion” with the Plaintiff’s trademarks, as well as the marks KEYZ PLEAZE and KEYS PLEZE. However, after signing the undertaking, the Defendants incorporated the corporate Defendant KEYZ THANKZ and operated a driving service in Ontario under that name. The Plaintiff once again sent the Defendants a cease and desist letter, to which the Defendants refused to comply.

There was some dispute over the applicable limitation period: the Defendants argued it was 2 years (under the Limitations Act of Ontario), while the Plaintiff submitted it was 6 years (under the Federal Courts Act). The Court agreed with the Plaintiff, since the cause of action in this proceeding did not arise exclusively within the province of Ontario, and since the Defendants caused damage to the Plaintiff beyond Ontario. The Court stated that “it seems unjust to bar, by way of a provincial statute of limitations, national trademarks rights of the Plaintiff.”

The Court found that the Plaintiff established its cause of action under each claimed ground, including trademark infringement, likelihood of confusion, passing off and depreciation of goodwill. The Court also found one of the personal Defendants liable (in addition to the corporate Defendant) since, on discovery, he stated “I am the company” and “I oversee everything”.

With respect to damages, the Plaintiff claimed $350,000, a figure that it argued would have been payable to it, as royalties, by the Defendant during the relevant period. The Defendants argued that any award of damages should be mitigated by the fact that the Plaintiff failed to exercise its rights for approximately 5 years, and since the Plaintiff had no franchise in Ontario since 2005. The Court accepted that these factors weighed against the amount of damages sought by the Plaintiff. However, since the Defendants did not cross-examine any of the Plaintiff’s affiants, nor file any rebuttal evidence, the Court drew an adverse inference in this regard against the Defendants. Therefore, the Court accepted the Plaintiff’s estimate and awarded damages in the amount of $25,000 for each of the years of infringement, for a total damage award of $225,000. In addition, due to the Defendants’ “lack of regard” for the Court’s process resulting in “unduly lengthened proceedings”, and their “willful blindness to their ongoing infringement”, the Court awarded solicitor and client costs to the Plaintiff.

Expungement and Permanent Injunction Ordered in Respect of the Trademark THE ATHLETIC CLUB & DESIGN
Ottawa Athletic Club Inc. v. The Athletic Club Group Inc. et al., 2014 FC 672

The Ottawa Athletic Club (“OAC”) brought an application under s. 57 of the Trade-marks Act (the “Act”) to expunge the trademark THE ATHLETIC CLUB & DESIGN (the “Trademark”) from the Register. The OAC has operated a fitness facility in Ottawa since at least 1976. The Athletic Club first opened in London, Ontario in 1997, then opened facilities in a number of other cities including Ottawa in 2010 and 2011. The Trademark was applied for in 2003 and registered in 2005. The Registration disclaimed the right to the exclusive use of the words ATHLETIC CLUB. The OAC sought to strike the Trademark on a number of grounds, and also sought a permanent injunction against the Athletic Club.

The OAC alleged that the Athletic Club was not entitled to register the Trademark as a result of section 16(1) (a) and (c) of the Act. However, it was noted by the Court that five year limitation period in section 17 had passed. The OAC thus argued that section 17(2) applied in that the person who adopted the Trademark did so with the knowledge of the OAC. The Court found that the OAC did not establish this knowledge on the part of the Athletic Club after considering a number of arguments, including whether an adverse inference should be drawn by the Court because the two individuals who adopted the Trademark did not provide affidavits. The Court declined to draw an adverse inference, concluding that “the authorities  are clear in my view that while an adverse inference can strengthen weak evidence or turn a prima facie case into a conclusive one, it cannot enable the party bearing the burden of proof to overcome a complete lack of evidence on the point at issue. There must be a case to answer before the Respondent is required to introduce the best evidence or risk an inference that it does not favour their position.” The Court found that the OAC did not present a case for the Athletic Club to answer in respect of their knowledge of the OAC. The Court also considered whether to impute knowledge as a result of the solicitor’s knowledge, but decided that there was not sufficient evidence to establish that the information was material to the incorporation of the Athletic Club in London or that a duty to inform arose. As a result, the OAC’s arguments pursuant to section 16(1)(a) and (c) failed.

The OAC also alleged that the Trademark was not registrable at the date of registration pursuant to section 12(1)(b) of the Act. The Court found that the Trademark, when sounded, is clearly descriptive of the wares and services with which it is associated. In defence, the Athletic Club argued acquired distinctiveness. The Court found that the evidence did not establish distinctiveness. As a result, the Court found that the Trademark should be expunged. The Court also found that the OAC has shown that the Trademark contravened section 12(1)(c) of the Act and was therefore not registrable.

With respect to the OAC’s arguments in accordance with section 10 of the Act, the Court concluded that the evidence was sufficient to establish that the term “athletic club” had been used extensively in Canada had a well-understood meaning within the industry. The Court found that the OAC established that the Trademark is prohibited under section 10, as well as 11 and 12(1)(e). The Court ordered the expungement of the Trademark as well as a permanent injunction on the basis that “a mark that offends s. 10 is one that “no person shall adopt” (s. 10) and “[n]o person shall use in connection with a business” (s. 11).”

Appeal Dismissed: No Passing Off, No Violation of Official Mark Provisions for Incorporating Acronym and Official Mark into Domain Names
Insurance Corporation of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296

ICBC adopted a number of official marks, including the acronym “ICBC”. Stainton Ventures Ltd. (Stainton) operates a commercial website called “ICBCadvice.com” and owns the domain names <icbcadvice.com> and <icbcadvice.ca>. ICBC believed Stainton was using its official mark without authorization, and commenced an action in the Supreme Court of British Columbia seeking a declaration to that effect and various orders, including one requiring transfer of the domain names to it. Following a summary trial, the Court dismissed the majority of ICBC’s claims (decision here). In particular, the Court refused to grant an injunction, or to require the transfer of the domain names. It is from those refusals that ICBC appealed.

ICBC argued that the trial judge erred by failing to apply the correct tests for determining breaches with respect to passing-off. It further argued that the judge erred in finding the use of the websites did not violate the Trade-marks Act or amount to passing off.

The Court of Appeal held that “even if there is some resemblance between ‘ICBCadvice.com’ and ICBC’s family of marks, the average Internet user with an imperfect recollection of ICBC’s marks would not likely be mistaken by the domain name.” The Court of Appeal also held that it would be understood that a domain name which, in part, contains the name  of a business or its acronym will not necessarily be affiliated with or endorsed by that business. In the Court of Appeal’s view, the most that person would conclude is that the website likely had something to do with the corporation. Therefore, the Court of Appeal agreed with the trial judge that the websites did not contravene sections 9 and 11 of the Trade-marks Act. For similar reasons, the Court of Appeal also rejected ICBC’s arguments with respect to passing-off. The appeal was dismissed.

Application for a registration based on proposed use, then amended on basis of prior registration in USA, not a ground for expungement
Coors Brewing Company and Molson Canada 2005 v. Anheuser-Busch, LLC, 2014 FC 716

Coors has argued that a recent decision of the Federal Court (The Thymes, LLC v Reitmans Canada Limited, 2013 FC 127) means Anheuser could not apply for a registration in Canada based on intended use and then amend the application to rely on a USA application. The Federal Court disagreed, and dismissed the application for expungement.

As background, the Court found that Anheuser had  filed a trademark application in the USA for GRAB SOME BUDS, based on intended use. Anheuser commenced use in the USA on September 24, 2010, and received registration on March 8, 2011. In Canada, Anheuser filed on September 14, 2010, based on  its intent to use the mark in Canada. On February 9, 2011, before the application was advertised, Anheuser amended its application to withdraw the proposed use in Canada as the basis for registration and substituted the prior registration or application for registration in the USA as the basis.

The Court distinguished the earlier Thymes decision, holding that the bases for expungement under section 57 are narrower than those which might give rise to a successful opposition under section 38. The Court further found that none of the four statutory grounds for invalidating a registration were present here, and there were no misstatements made that can form the basis of a ground of invalidity.

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Authors

Chantal Saunders 
CSaunders@blg.com
613.369.4783

Adrian J. Howard 
AJHoward@blg.com
613.787.3557

Beverley Moore 
BMoore@blg.com
613.369.4784

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