INTRODUCTION
The judgment rendered in the case of BOULANGERIE ST-MÉTHODE INC. v. BOULANGERIE CANADA BREAD LTÉE, 2012 QCCS 831, rendered on January 19, 2012, is a good illustration of the importance of creating new marks that really differ from the marks already being used in the market.
The facts of this story are simple. Two direct competitors marketed fresh bread through the same commercial channels and the same points of sale, each using a circular "button" that included the same text [Translation] "FAT SUGAR ADDED" but with a diagonal line running through such text to indicate that in fact no fat or sugar had been added. The competitors' respective buttons had a similar visual appearance. The plaintiff had been using such a button for many years, while the defendant had just started using its button when the plaintiff sent it a formal notice demanding that it stop using it.
THE PROCEEDINGS
In its motion to institute proceedings, the plaintiff requested that a permanent injunction be issued to stop the defendant using its above-mentioned button.
For its part, the defendant Canada Bread declared that practically anything can be copied in our world of free competition (paragraph 40 of the judgment). In addition to seeking the dismissal of the request for a permanent injunction, Canada Bread asked the Court to award it $35,000 in damages and, basing itself on article 54.1 of Quebec's Code of Civil Procedure, it also requested that the plaintiff be ordered to reimburse it for its extrajudicial fees and its expenses for expertise.
In paragraph 47 of the judgment, the Court stated:
[Translation] "In this regard, the extrajudicial fees claimed, incurred on a lawyer-client basis, as well as the disbursements for the work done between June 14 and November 24, 2011, amount to, according to the invoices filed by the defendant's lawyers, nothing less than $878,545.32."
In addition, the defendant claimed expenses for expertise with respect to surveys that totalled more than $96,000 (paragraph 49 of the judgment).
THE LAW
The "button" that had been used by the defendant for several years was not the subject of a Canadian trade-mark registration certificate. The plaintiff's recourse was therefore based mainly on the "passing-off" concept. This concept is codified in section 7 of the Trade-marks Act and, although it is inspired to a large extent by the common law, in Quebec it is analyzed in light of the general principles of civil liability as provided for in article 1457 of the Civil Code of Québec (paragraph 53 of the judgment). The Court stated that the three necessary elements of a passing-off action are: 1- the existence of a customer base (goodwill); 2- deception of the public by means of a misleading representation; and 3- actual or potential damages for the plaintiff.
Before analyzing each of these three points in detail, the Court made the following comments in paragraphs 63 and 64 of its judgment:
[Translation]
"[63] The Court understands from the rules that follow from both the law and decisions of the courts that, although freedom to carry on business remains one of the foundations of our law, systematic copying of a distinctive mark of a business cannot be tolerated when it may lead to confusion among consumers and potential damages for the business copied.
[64] In the Kisber case, Justice Rousseau- Houle established the limits on freedom to carry on business as follows: If competition is the weapon of business, the efforts made by a competitor to take away the position occupied by his adversary and attract his clientele must respect the rules of honesty and good faith that are the basis of commercial transactions. When a competitor tries to appropriate, by means of misrepresentation, his adversary's advantage of having a business or product that has a well-established reputation, he is engaging in unfair competition."
The Court then made a lengthy analysis of each of these criteria and arrived at the conclusion that they were well and truly met in this case.
The fact that the plaintiff succeeded in putting into evidence facts showing that the defendant had asked its marketing firm to create a button similar to that of the plaintiff for the purposes of stealing market share from it and taking on its biggest sellers (paragraphs 18 and 19 of the judgment) probably had an impact.
To sum up, the Court concluded that Boulangerie St-Méthode well and truly had a customer base linked to the button described above, that the use by Canada Bread of a button that was for all practical purposes identical to it was likely to create confusion (or to deceive the public), and that there was an ensuing risk of damages being caused to the plaintiff.
Even though it was not necessary to do so, the plaintiff succeeded in proving that the defendant intended to create confusion among the public. Showing this, in particular as evidenced by emails between the defendant and its marketing firm, quoted in paragraphs 129 to 131 of the judgment, greatly influenced the Court. In other words, the defendant did not attempt by the creation of its new mark to distinguish itself from its competitors but well and truly made a deliberate effort to create a mark similar to that of the plaintiff.
THE COUNTERCLAIM
In this case, the defendant made a counterclaim based on article 54.1 of the Code of Civil Procedure which makes it possible to recover extrajudicial fees when a claim or pleading is clearly unfounded, frivolous or dilatory or when conduct is vexatious or quarrelsome. The defendant claimed damages in the amount of $35,000 as well as extrajudicial fees and disbursements totalling approximately one million dollars (paragraph 205 of the judgment). The Court came to the conclusion that it was rather the counterclaim that was abusive and, of course, did not grant the compensation sought in the counterclaim.
CONCLUSIONS
This judgment serves as a dramatic reminder about the importance of creating the most distinctive marks possible. Indeed, the use of a mark that is not distinguishing enough from those of competitors, even if it is made up of different descriptive elements, may nevertheless lead a court to conclude that there is a likelihood of confusion and unpleasant consequences. At best, the use of a mark of this nature puts its user in an uncertain and uncomfortable position.
Footnote
1. The judgment has been appealed.
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.
