Canada: "Passing Off" A Trademark: A Discussion Of Common Law, Statutory Codification, And Civil Law

Last Updated: July 4 2018
Article by Anna Loparco and Jaclin Cassios

I. Overview: Common law and statute

Canadian trademark law offers protection to registered and unregistered trademarks, trade names, and other business indicia under the common law action of passing off.1 The common law action for passing off has been statutorily codified in Canada's Trade-marks Act2 (Act) in section 7(b) through (d). The relevant section reads as follows:

7. No person shall

(b) direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another;

(c) pass off other goods or services as and for those ordered or requested;

(d) make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to

(i)the character, quality, quantity or composition,

(ii)the geographical origin, or

(iii)the mode of manufacture, production or performance of the wares or services.

II. Reputation

A successful passing off claim requires a plaintiff owner or licensee to demonstrate that it has acquired a commercial reputation in the geographical area where it seeks to enforce its rights through use of its particular indicium or mark, such as a registered or unregistered trademark, or trade name.3 A reputation is acquired if the mark has become publicly known, and goodwill exists with respect to the mark (namely, the benefits and advantages of the good name and connection of a business that attracts customers).4

The length of time an owner has used the mark in question to identify its goods, services or business in the market will factor into the extent of the reputation of that mark. The amount of time necessary to prove a reputation is dependent upon, among other things, the inherent distinctiveness of the mark. The greater the distinctiveness of a particular mark, the broader the scope of protection afforded, and, hence, the greater the likelihood of confusion when similar indicia are used within that scope of protection.

Further evidence that a mark has acquired a reputation is significant advertising and marketing utilizing the mark. The existence of significant sales is an additional factor to be considered when establishing the reputation of a mark.5

Once the plaintiff owner has satisfied the court that its particular mark has acquired a reputation, proof of the extent of the reputation can impact the ambit of protection afforded to the mark by defining the extent of the reputation geographically.6 An owner can only enjoy protection against passing off in the particular geographic region where its mark has a reputation.7

If a plaintiff owner of an unregistered right is able to demonstrate it had established a reputation in the relevant geographical area by the date applicable to the particular dispute, the owner must then demonstrate there has been a misrepresentation by the defendant, which has resulted in a likelihood of confusion.8

III. Misrepresentation

Misrepresentation will occur if there is use of a confusingly similar mark or name, likely to result in consumer confusion or mistake, whereby the average consumer confuses the goods and/or services of the owner with those of the alleged infringer, or the average consumer improperly concludes there is an affiliation with the owner's goods and/or services and those of the alleged infringer.9

An example of an actionable misrepresentation is when a consumer requests the goods or services of one business, but receives the goods or services of another business. The most successful form of misrepresentation is to "employ enough points of similarity to confuse the public with enough points of difference to confuse the courts."10

IV. Damage

Additionally, to succeed in a common law action for passing off, the owner must be able to prove actual or potential damage, such as lost profits, customer or market sharing, loss of control of a trademark or trade name.11

V. Use

Notably, no rights can be asserted unless there is "use" as defined in the Act by both the owner and the alleged infringer.12

Legislation

Section 4 of the Act reads as follows:

When deemed to be used

4 (1) A trademark 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. Idem (2)A trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

Idem

A trademark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

Examples of use in case law

Goods

The application of stickers on products or packaging may be sufficient to establish use in association with goods. If the trademark is not affixed to the goods or the packaging directly, use can still be achieved if the trademark is associated with the goods by giving the purchaser notice of the association between the trademark and the goods at the time of transfer. Such "use" can include coupons, brochures, advertisements and/or invoices.13

In BMW Canada Inc. v. Nissan Canada Inc.,14the Federal Court of Appealdiscussed the requirement of use, before finding that use was not established in this particular case. The appellant, Nissan Canada Inc. (Nissan), and respondent, BMW Canada Inc. (BMW), were each in the trade of manufacturing, selling and promoting automobiles and related accessories. BMW used various trademarks beginning with the letter "M" and ending with numbers or BMW's trademarked logo. Nissan used the unregistered marks "M" and "M6" in relation to its relevant products. BMW brought an action for passing off. The action was allowed and Nissan appealed.

The appeal in BMW Canada was allowed on the basis that passing off is established by use, and use must occur "at the time of transfer of the property in or possession" of the goods.15 BMW was unable to establish use of "M" or "M6" marks at the time of transfer or possession of its goods, as there was no evidence that "M" or "M6" were marked on BMW's goods or on the packages in which the goods were distributed. Further the M and M6 marks were not so associated with BMW's goods that notice of the association was given to the person to whom the property or possession was transferred.16 The Court of Appeal in BMW Canada concluded that, absent satisfactory proof of use, BMW could not succeed in the action.

Services

Use of a mark in association with services has been found in a variety of situations. For example, by the owner of a mark conducting its transportation business, and utilizing trucks and trailers bearing its trademark,17 or by the owner of a mark delivering restaurant services with signage displaying the mark at a food court operated by the owner.18 Evidence of use of a trademarked service may also be found in the registrant's invoices and correspondence, as well as evidence of a single sale in the registrant's business.19

An example where a mark was not deemed to be used in association with its relevant service is found in Ridout & Maybee LLP v. Residential Income Fund L.P.,20 where a mark was associated with a number of services, including an incentive and awards program for real estate professionals. An awards program for real estate professionals existed, where the owner of the mark had apparently bestowed awards upon recipients continuously for approximately 30 years; however, the mark was not used or displayed in that program. The only evidence of display of the relevant mark was on websites which referenced real estate services. The websites did not reference an awards program. Display of the mark in this manner did not constitute use or display in association with the service of providing an incentive and awards program to real estate professionals.

VI. Civil Code of Québec

As Québec's provincial laws are based on French civil law, rather than the English common law,. the common law action for passing off does not exist in Québec. Nevertheless, the statutory form of passing off under section 7 of the Act is available in Québec. Further, the Civil Code of Québec provides for an action similar to passing off under section 7 of the Act.

Article 1457 of the Civil Code of Québec21 reads:

1457. Every person has a duty to abide by the rules of conduct which lie upon him, according to the circumstances, usage or law, so as not to cause injury to another.

Where he is endowed with reason and fails in this duty, he is responsible for any injury he causes to another person and is liable to reparation for the injury, whether it be bodily, moral or material in nature.

He is also liable, in certain cases, to reparation for injury caused to another by the act or fault of another person or by the act of things in his custody.

These principles of civil responsibility act as a functional equivalent to the common-law action for passing off.

The Québec Superior Court in Sport Maska Inc. v. Canstar Sports Group Inc.22 considered passing off of the get-up of hockey helmets, and interpreted Article 1457. The court found that the plaintiff's claim was based on acts of confusion, which corresponds to the common law of passing off as codified in section 7 of the Act.23 Accordingly, Article 1457 of the Civil Code of Québec encompasses the same type of passing off action available under the common law governing the other Canadian provinces and territories.

Footnotes

1 Kelly Gill, Fox on Canadian Law of Trade-marks and Unfair Competition, online (WestLaw) [Gill] at 4.1.

2 RSC 1985, c T-13.

3 Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 SCR 120 [Apotex] at para 33. See also BMW Canada Inc. v. Nissan Canada Inc., 2007 FCA 255 [BMW Canada] at para 30.

4 Canadian Business School Inc. v. Sunrise Academy Inc. (2002), 23 CPR (4th) 220 (FCTD). See also Gill, supra note 1 at 4.4.

5 Gill, ibid.

6 Ibid.

7 Ibid.

8 Ibid at 4.5.

9 Apotex, supra note 3 at para 35.

10 Orion Corp. v. Cross Vetpharm Group Ltd., 2017 TMOB 27 citing Perrier S.A. v. Canada Dry Ltd., 1982 64 CPR (2d) 116 (Ont. HC) at 121.

11 Apotex, supra note 3 at para 33. See also BMW Canada, supra note 3 at para 30.

12 BMW Canada, supra note 3 at paras 16, 17, 28.

13 Canadian Encyclopedic Digest, Trade Marks and Industrial Designs, online (WestLaw) at IV.3 citing, inter alia, Labatt Brewing Co. v. Molson Breweries, A Partnership (1996), 68 CPR (3d) 216 (Fed. TD), Clairol International Corp. v. Thomas Supply & Equipment Co. (1968), 55 CPR 176 (Can. Ex. Ct.), Gordon A. MacEachern Ltd. v. National Rubber Co. (1963), 41 CPR 149 (Can. Ex. Ct.), Osler, Hoskin & Harcourt LLP v. SGS Sports Inc. (2015), 2015 CarswellNat 2813 (T.M. Opp. Bd.).

14 BMW Canada, supra note 3.

15 Ibid at paras 19, 22.

16 Ibid at paras 20-23.

17 Mantha & Associés/Associates v. Central Transport Inc., [1995] FCJ No. 154 (FCA).

18 Borden & Elliott v. Cara Operations Ltd., (1997) 82 CPR (3d) 115.

19 Société Nationale des Chemins de Fer Français Sncf v. Venic Simplon-Orient-Express Inc., 2000 CanLII 16547 (FC).

20 2015 CarswellNat 5894 (T.M. Opp. Bd.)

21 CQLR c CCQ-1991.

22 (1994), 57 CPR (3d) 323 (Que. S.C.), cited in Gill, supra note 1 at 4.2.

23 Ibid at para 54.

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