A recent British Columbia decision demonstrates the possibility of obtaining interlocutory injunctive relief in a trade-marks case, and challenges the concept that a registered trade-mark is necessarily a perfect defence to a passing off claim.
In Woodpecker Hardwood Floors (2000) Inc. v. Wiston International Trade Co., Ltd., 2013 BCCA 553, the B.C. Court of Appeal dismissed an application for leave to appeal a Supreme Court decision that granted an interlocutory injunction in favour of the plaintiff, the senior user of WOODPECKER as a trade-mark in association with hardwood floors. The claim is based in passing off against the defendant, the registered owner—but junior user—of WOODPECKER.
The decision is potentially important because, contrary to the general position in Federal Court, the B.C. courts recognized the irreparable harm inherent in ongoing business confusion. In addition, the courts held that, contrary to Ontario authority, a registered trade-mark is not necessarily a perfect defence to a passing off action.
The plaintiff, Woodpecker Hardwood Floors, marketed hardwood floors in B.C. using the trade-name "Woodpecker" from at least 2000, but did not register the name as a trade-mark. The defendant, Wiston International Trade Co, a competitor of Woodpecker doing business less than 2 km from Woodpecker, incorporated in 2009 and obtained a trade-mark registration for the word "Woodpecker" in 2013. Woodpecker brought an action against Wiston for passing off and sought an injunction to stop Wiston from using the WOODPECKER trade-mark.
For twenty years, the law in the Canadian Federal Court has made it all but impossible to obtain an interlocutory injunction in trade-mark cases. In its 1994 decision in Centre Ice Ltd. v. National Hockey League (1994), 53 CPR (3d) 34 (FCA), the Federal Court of Appeal held that neither the existence of confusion nor the loss of goodwill are necessarily sufficient to establish irreparable harm, but rather there must be specific evidence that links the confusion to a loss that is not compensable by damages. The Court went on to state that loss of goodwill in the normal course can be fairly compensated for in damages. That decision has been interpreted consistently as setting the bar very high—many would say too high—for the type of specific evidence required to obtain an interlocutory injunction in the Federal Court.
In contrast, the chambers judge in Woodpecker found that:
The chambers judge also found that the plaintiff would be unable to quantify the loss of reputation, consumer confidence and goodwill as a result of confusion in the marketplace. On the leave application, the appellate judge considered the Federal Court position, but in the end concluded that the conflict was better resolved on the merits of the case, not through an interlocutory appeal.
Registration is not a full defense to passing off
The defendant Wiston also argued that its trade-mark registration was a full defense to a claim for passing off, because section 19 of the Trade-marks Act provides that a trade-mark registration gives the owner the exclusive right to use the registered mark throughout Canada. That concept has been more or less unchallenged since the Ontario Court of Appeal's 2002 decision in Molson Canada v. Oland Breweries Ltd. (2002), 19 CPR (4th) 201 (Ont CA.). In 2002, the Ontario Court of Appeal distinguished a long-standing line of English authority, based on a difference in the applicable English and Canadian trade-mark legislation. The Court held that the "sole recourse is to attack the validity of the registration", a concept adopted by the Federal Court of Appeal in its 2007 decision in Remo Imports Ltd. v. Jaguar Cars Ltd., 2007 FCA 258.
At first glance, this sole recourse requires an application to Federal Court, which has exclusive jurisdiction to expunge a registered trade-mark, under s. 57(1) of the Trade-marks Act, in order to challenge use of a trade-mark that is the subject of a registration in Canada. However, the chambers judge in Woodpecker held that the B.C. courts have jurisdiction to entertain an injunction under their inherent jurisdiction and s. 39(1) of the Law and Equity Act.
Furthermore, the judge pointed to section 19 of the Trade-marks Act, which provides the exclusive right for a registered trade-mark "unless shown to be invalid". As the appellate judge noted, the chambers judge distinguished between a mark being "expunged" and "shown to be invalid". The chambers judge concluded, and the appellate judge agreed, that in the context of an interlocutory injunction application, it is not necessary to determine with certainty that the registration is invalid, but only that there is a serious question to be tried.
It remains to be seen how these issues will develop if the litigation moves past the interlocutory stage and onto the merits. In the meantime, these decisions demonstrate the possibility of obtaining interlocutory injunctive relief in British Columbia even against the registered owner of a trade-mark.
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