A recent decision of the Federal Court of Appeal
clarifies some basic principles concerning establishing goodwill
and proof of foreign law and jurisdiction.
The Appellant is the owner and publisher of an Indian
Punjabi-language daily newspaper called the "Ajit Daily".
This paper has been published in India since 1955 and is well-known
among the Punjabi population in India. An online version has been
available since 2002.
While only a small number of subscriptions have been sold in
Canada at trial the appellant presented the evidence of a number of
individuals who said they were aware of the Ajit Daily and its
reputation as an important Punjabi paper in India.
The respondent owns and publishes a Canadian Punjabi-language
newspaper called the "Ajit Weekly." The newspaper
has been published in Canada since 1993 and is distributed without
charge at the front of supermarkets and other stores. An online
version has been available since 1998.
The Appellant commenced an action in the Federal Court asserting
claims for copyright infringement and passing off. One of the
issues concerning the copyright claim was the impact of a partial
settlement agreement previously entered into by the parties
relating to litigation between them in the U.S. The agreement
provided that it was to be governed by the laws of New York and
that the New York courts retained jurisdiction over its
interpretation and implementation.
The Trial Decision
After a motion for a summary trial the judge dismissed the
copyright claim on the basis that there was insufficient evidence
of the law of New York as there was no expert evidence concerning
it. In addition it was said that any disputes between the
parties regarding copyright should be determined by a New York
court as the parties had agreed to that court retaining
jurisdiction over any disputes.
To succeed with a claim of passing off the plaintiff must
establish three elements: first, that it possesses goodwill in the
trade-mark; second, that the defendant deceived the public by
misrepresentation; and, third, that the plaintiff suffered actual
or potential damage through the defendant's actions. The trial
judge found that the appellant had failed to establish any of these
The appellant appealed from this decision to the Federal Court
The Copyright Claim
With respect to the lack of expert evidence concerning the law
of New York the Court referred to the well-known principle of
conflicts of laws that when a court is interpreting a contract that
contains a choice of foreign law clause, domestic law applies if
there is no evidence concerning the foreign law.
With respect to the provision of the agreement that provided
that disputes should be determined by a New York court the Court
observed that the parties had submitted to the jurisdiction of the
Federal Court for adjudication of the copyright claim through their
pleadings and had not objected to the Federal Court's
jurisdiction. As a result, the Federal court could not decline
to hear a dispute that otherwise came within its jurisdiction.
The Passing-off Claim
The Court said that the trial judge's conclusion concerning
goodwill was based on a consideration of the existence of goodwill
from the viewpoint of the limited number of Ajit Daily subscribers
in Canada. The Court said this was incorrect as it was well
established in Canada that goodwill within a defendant's market
may be shown to exist by virtue of the reputation of the
plaintiff's trademark in the defendant's market, even where
the plaintiff does not use the trademark in that market. In other
words the plaintiff does not have to be carrying on business in
Canada to establish goodwill in Canada. In addition, the trial
judge failed to consider whether acquired distinctiveness had been
shown in relation to the appellant's trademark when confusion
With respect to the claim for damages the Court observed that
damage can be established through proof of a loss of control over
reputation, image or goodwill. The mistaken conclusion concerning
the absence of goodwill affected the conclusion on damages as
As a result of these problems the appeal was allowed and a new
trial was ordered to take place.
It is significant that the Federal Court of Appeal has applied
the concept that the plaintiff does not have to be carrying on
business in Canada to establish goodwill in Canada for the purposes
of bringing an action for passing-off. The approach
concerning proof of foreign law and jurisdiction are well known but
serve as important reminders.
In our May 2015 comment we discussed the U.K. rule which is to
the opposite effect, as confirmed by the U.K. Supreme Court.
That decision was not mentioned by the Court of Appeal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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