The Superior Court of Quebec recently granted an interim
injunction preventing the continued sale of Husqvarna Corp.
(Husqvarna) outdoor power tools by a former authorized dealer whose
authorization had been revoked. Although the manufacturer's
motion for the injunction included grounds based on the federal
Trade-marks Act, the Court granted the injunction on the
sole basis of Quebec principles of civil responsibility, namely
article 1452 of the Civil Code of Quebec (CCQ), which
article acts as a functional equivalent to the common-law tort of
Husqvarna had authorized the defendants to sell, distribute and
provide after-sale services for Husqvarna products between 1998 and
2004. After this agreement ended, the defendants continued to sell
products bearing the Husqvarna trademarks and logos, but they
obtained such products either through the Internet or from other
distributors. The products sold by the defendants did not benefit
from Husqvarna's guarantee, nor from Husqvarna's after-sale
In order to obtain an interlocutory injunction against the
defendants, Husqvarna had to establish three things: (1) that there
was a serious issue to be tried (in other words, that the case was
not a frivolous or vexatious one), (2) that the injunction was
required to prevent serious or irreparable harm, and (3) that the
balance of convenience favoured granting the injunction.
In support of its argument that there was a serious case to be
tried, Husqvarna cited not only sections 20(1) and 7(b) of the
Trade-marks Act, but also alleged a contravention of
article 1457 of the CCQ. Section 20(1) of the Trade-marks
Act prohibits trademark infringement by a person selling,
distributing or advertising wares or services in association with a
mark that can be confused with another person's registered
trademark. Section 7(b) of the Trade-marks Act is a
codification of the common law tort of passing off. It prohibits
directing public attention to wares, services or business so as to
cause confusion between those wares, services or business and those
of another. As noted by the Superior Court, the civil law's
equivalent to passing off is the delict of confusion, part of a
broader category of unfair competition and breach of confidence,
all of which fall within the regime of civil responsibility
established by article 1457 of the CCQ.
Without considering whether the case raised any serious issue
under the Trade-marks Act, the Court found that there was
such an issue raised under article 1457 of the CCQ. The Court noted
that Husqvarna appeared to have the right to prevent a party from
selling Husqvarna products, displaying them on the store shelves
and thus benefiting from the goodwill attached to the Husqvarna
trademarks, without being an authorized dealer and without being
able to offer the same guarantee and after-sales services offered
by Husqvarna. In doing so, the defendants permitted the public to
believe, falsely, that the products they were selling possessed all
the attributes normally associated with Husqvarna products.
In considering whether there was a risk of serious and
irreparable harm, the Court accepted that it was not necessary to
prove that actual harm had occurred. Instead, it accepted that,
since there was no question that the reliability and quality of the
Husqvarna products, as well as the guarantees associated with them,
were well-known, there was sufficient harm implicit in misleading
consumers to believe that the defendants were authorized by the
manufacturer when they were not, in fact, so authorized.
Finally, the Court found that the balance of convenience
favoured Husqvarna, since the defendants had admitted that only ten
to fifteen per cent of their annual revenue derived from product
sales, without indicating of what portion of these represented
sales of the Husqvarna products.
This case highlights the applicability of article 1452 of the
CCQ to unfair competition and intellectual property disputes in
Quebec, as well as the close connection between the analysis of
common-law passing off and the civil-law delict of confusion.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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