Canada: Trouble In Paradise

Last Updated: June 21 2019
Article by John McKeown

A recent decision of the Federal court relates to a dispute between family members concerning the use of their family name in association with paving services particularly in the Avalon Peninsula of Newfoundland and Labrador.

The Facts

C.W. Parsons Ltd. (the "Applicant") is owned by a father and son and was incorporated in 2001. Parsons Paving Ltd. (the "Respondent") is owned by another son of the same father and was incorporated in May 2018. Prior to incorporation, this business was operated as an unincorporated business known as S & L Enterprises or S & L Paving. Both parties offer residential and commercial paving and other construction services in the Avalon Peninsula and both are based in the Town of Paradise.

The Applicant had increased the scope of its paving business in 2010. It used the wordmark "CW Parsons Paving" and the design logo (the "Logo") below developed in 2010.

The Respondent primarily used the name "Parsons Paving" in signage, in the Yellow Pages and for other contact information, but used "Parsons Paving Ltd." on its website, business cards and on job postings.

The Applicant was concerned that the respondents' use of its corporate name was confusing with its wordmark and Logo. But the parties agreed to disagree despite their family ties.

The Application

The Applicant brought an application claiming in substance passing off by the Respondent under subsections 7(b) of the Trade-marks Act. Subsections 7(b) is essentially a codification of the common law claim for passing off but requires that the claimant have a valid common law trademark.

In order to show passing off under subsection 7(b), as at common law, the Applicant must show the existence of goodwill; deception of the public due to misrepresentation; and that it has suffered actual or potential damage.

The judge said that analysis of distinctiveness and goodwill were somewhat repetitive and in this case, one flows easily into the other. Although distinctiveness is not synonymous with goodwill, acquired distinctiveness is one of many possible indicators of goodwill. For the Applicant to enforce its marks, it must establish that marks were distinctive. Distinctiveness is the cardinal requirement of a trademark.

The judge was satisfied that the Applicant had shown that its Logo and wordmark are distinctive enough to be enforceable. The Logo was clearly an inherently distinctive design mark. The wordmark had little inherent distinctiveness as it was the combination of a personal name and a descriptive word. However, the Applicant showed some acquired distinctiveness through the use of its wordmark. In addition, there was some evidence of goodwill.

With respect to the second element the judge said that where there is no intentional deception, the test is whether there is a likelihood of confusion between the marks under subsection 6(5) of the Act. A reasonable likelihood of confusion, where the mark includes the family name, includes a consideration of whether the adoption of the name was intended to increase the risk of confusion – to drive business to the alleged familial infringer. On this issue, the judge was satisfied that the principal of the respondent wanted to, legitimately, associate his name with the paving services provided in the past and to expand on that business.

Subsection 6(5) provides that in determining whether trademarks or tradenames are confusing, the court shall have regard to all the surrounding circumstances including

(a) the inherent distinctiveness of the trademarks or tradenames and the extent to which they have become known;

(b) the length of time the trademarks or tradenames have been in use;

(c) the nature of the goods, services or business;

(d) the nature of the trade; and

(e) the degree of resemblance between the trademarks or tradenames in appearance or sound or in the ideas suggested by them.

The judge was not satisfied that the Applicant had established a case of confusion. For the judge, the absence of any evidence of confusion was determinative. He said that given the acknowledged commonality of the name Parsons in the province and on the Avalon Peninsula, the absence of confusion suggested that consumers in the area seem to have been able to sort out the possible confusion which a non-resident might have not.

It was also found that the Applicant had failed to provide sufficient evidence of actual or potential damage as a result of any alleged confusion between the parties' services.

Comment

It is well established at common law that an individual has a right to use his or her own name and that confusion may occur does not constitute passing off by itself. However, if confusion occurs, which is brought to the attention of that individual, they are under an obligation to take reasonable care to qualify the representation implied in his or her conduct to avoid confusion.

In this case, corporations were involved so this defence is not directly involved but it appears the judge was influenced by this principle in arriving at a similar result. Presumably, this is why emphasis was given to the absence of confusion.

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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