2004 FC 1747
Henkel Canada Corporation (Plaintiff)
Conros Corporation (Defendant)
Indexed as: Henkel Canada Corp. v. Conros Corp. (F.C.)
Federal Court, Hugessen J.--Toronto, December 3; Ottawa, December 17, 2004.
Practice -- Judgments and Orders -- Summary, Judgment -- Trade-marks infringement action -- Federal Courts Rules, 1998, r. 216(3) (Court may grant summary judgment even though genuine issue if can determine facts necessary to decide questions of fact, law) in effect repealed by F.C.A. judgments in MacNeil Estate v. Canada (Department of Indian and Northern Affairs); Trojan Technologies, Inc. v. Suntec Environmental Inc. -- Judgments contrary to Rules Committee's intention not to adopt restrictive Ontario rule -- Not open to Court to reverse legislative choice -- Opinion of F.C.A., that traditional trial only adequate fact-finding mechanism disagreed with, especially where expert witnesses involved -- Motion denied as F.C. bound by F.C.A. case law.
Judges and Courts -- Recent F.C.A. judgments in effect repealing Federal Court rule regarding granting of summary judgment -- Judgments repudiating express wording of provision, intention of Rules Committee not to adopt restrictive Ontario rule of practice -- Courts not free to reverse legislative choice -- Even so, F.C. bound to follow F.C.A. decisions and to deny motion for summary judgment in trade-marks infringement case.
Trade-Marks -- Infringement -- Relief sought: permanent injunction, delivery up -- Motion for summary judgment -- Confusion -- Opinion evidence of defendant's expert witness rejected as based on anecdotal, impressionistic foundations -- Court would have granted application but prevented from so doing by recent F.C.A. decisions in effect repealing Federal Courts Rules, 1998, r. 216(3).
This was an action for trade-mark infringement, depreciating the value of goodwill and passing off. The plaintiff contended that the defendant's use of the "Lepage" trade-mark was confusing with the plaintiff's business and wares and sought a permanent injunction and an order for delivery up. The name Lepage has, for more than a century, been known in Canada in association with adhesive products. Defendant has rights to the "Lepage" trade-mark in the U.S.A., having purchased the assets of LePage Inc., a bankrupt company. The law is clear that rights in the American mark created no right, as against the plaintiff, to use the mark in Canada. Defendant commenced selling clear adhesive tape in Canada, the packaging proclaiming "Proudly made in Canada by Lepage's USA" together with a circled "R".
Held, the motion for summary judgment should be dismissed without costs.
The packaging statement was incorrect and misleading although it was true that defendant's wares are made in Canada. But, on the evidence before the Court, summary judgment could not be granted under section 19 (registration gives to the trade-mark owner the exclusive right to the use throughout Canada of the mark). The description of the wares covered by the plaintiff's trade-mark registration TMDA 08810 does not extend to the tapes sold by defendant. As for TMA168,676, while the mark used by defendant is identical to the registration, there was no evidence that clear adhesive tape is a chemical or chemical composition and it was doubtful whether such tape could properly be described as an adhesive, the word used as a noun in the registration.
Turning to Trade-marks Act, sections 20 and 7, confusion is a question of fact and section 6 provides detailed directions as to the circumstances in which the Court may conclude that there is confusion. The defendant adduced expert opinion evidence that the adhesive products market is fragmented between stationery and hardware products as well as between professional and domestic consumers. The defendant's use of the mark was said to be limited to the stationery and domestic sectors, in which the plaintiff is either not involved or sells products under other names. But the Court was not prepared to accept this expert's opinion, based as it was on anecdotal and impressionistic foundations.
Subsection 216(3) of the Federal Courts Rules provides that where, on a summary judgment motion, the Court concludes that there is a genuine issue, it may still grant summary judgment if able, on the whole of the evidence, to determine the facts necessary to decide the questions of fact and law. But the Federal Court of Appeal has, in two of its recent judgments, in effect repealed this subsection. It has held that once there is a genuine issue for trial, a judge commits an error if he grants summary judgment and does not send the matter on for trial. These judgments, MacNeil Estate v. Canada (Department of Indian and Northern Affairs), and Trojan Technologies, Inc. v. Suntec Environmental Inc., appear to run counter to both the express wording of the subsection and the documented intention of the Rules Committee, which made a conscious choice against the adoption of the restrictive Ontario rule, preferring the rule in force in certain of the western provinces. This was a legislative, not judicial choice and not one that a court is free to reverse. Nor could the opinion of the Federal Court of Appeal, that a full, traditional trial is the only adequate fact-finding mechanism, be agreed with. A Court's fact-finding capacity, especially where expert witnesses are involved, rarely depends upon the appearances of witnesses in the box for it is not the ability of a witness to "sell" a particular thesis that matters, but rather the reasonableness and cogency of the thesis advanced when viewed in the light of all the evidence.
Evidence given by witnesses for the defence that defendant was not using "Lepage's" as a trade-mark notwithstanding its use of this word accompanied by the symbol of a circled "R" was not believed.
The Lepage mark is inherently distinctive and is used, other than by the parties in this proceeding, only in the unrelated business of real estate brokerage, in which trade the mark is well known. Plaintiff's mark has been used in Canada since the 1880's; defendant's use began in 2002. Plaintiff uses its mark on a variety of adhesive products but not on transparent tape; defendant uses the mark only on such tape. Both parties are in the stationery and consumer market segments; their goods can appear in the same retail outlets. The mark used by defendant is virtually identical to plaintiff's. But the Court was precluded from granting relief under section 20 by the previously mentioned Federal Court of Appeal judgments by which it is bound.
statutes and regulations judicially
Federal Courts Rules, SOR/98-106 (as am. by SOR/2004-283, s. 2), r. 216(3).
Trade-marks Act, R.S.C., 1985, c. T-13, ss. 6, 7, 19 (as am. by S.C. 1993, c. 15, s. 60), 20 (as am. by S.C. 1994, c. 47, s. 196), 22.
cases judicially considered
MacNeil Estate v. Canada (Department of Indian and Northern Affairs),  3 F.C.R. 3; (2004), 316 N.R. 349; 2004 FCA 50; Trojan Technologies, Inc. v. Suntec Environmental Inc. (2004), 239 D.L.R. (4th) 536; 31 C.P.R. (4th) 241; 320 N.R. 322; 2004 FCA 140.
Federal Court of Canada. Rules Revision Project. Working Paper No. 5. Disposition Without Trial. Ottawa: The Court, October, 1993.
MOTION for summary judgment on certain portions of an action for trade-mark infringement, depreciating the value of goodwill and passing off, all contrary to the Trade-Marks Act. Motion denied.
James H. Buchan and Kenneth Clark for plaintiff.
Stephen Lamont for defendant.
solicitors of record:
Gowling Lafleur Henderson LLP, Toronto, for plaintiff.
Morrison, Brown, Sosnovitch LLP, Toronto, for defendant.
The following are the reasons for order and order rendered in English by
Hugessen J.: This is an action for trade-mark infringement contrary to sections 19 [as am. by S.C. 1993, c. 15, s. 60] and 20 [as am. by S.C. 1994, c. 47, s. 196] of the Trade-marks Act [R.S.C., 1985, c. T-13], depreciating the value of goodwill associated with registered trade-marks contrary to section 22 of the Act and passing off contrary to paragraphs 7(b) and (c) of the Act.
 The relevant statutory provisions are as follows:
7. No person shall
. . .
(b) direct public attention to his wares, 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 wares, services or business and the wares, services or business of another;
(c) pass off other wares or services as and for those ordered or requested;
. . .
19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services.
20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name, but no registration of a trade-mark prevents a person from making
(a) any bona fide use of his personal name as a trade-name, or
(b) any bona fide use, other than as a trade-mark,
(i) of the geographical name of his place of business, or
(ii) of any accurate description of the character or quality of his wares or services,
in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark.
. . .
22. (1) No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.
The plaintiff contends that the defendant's use of the "Lepage" trade-mark is confusing with the business and wares of the plaintiff. The plaintiff claims a permanent injunction restraining the defendant from using that trade-mark and an order requiring the defendant to deliver up all products bearing it.
The plaintiff owns and uses the "Lepage" trade-mark and trade-name in Canada. It had bought the business and goodwill of LePage Limited in 1995. The name Lepage in one form or another has been used in Canada as a trade-mark in the promotion of adhesive products for well over 100 years.
Plaintiff and defendant have been competitors since at least 1989. Defendant has rights in the "Lepage" trade-mark in the United States through the purchase in 2000 by an associated American company of the assets of LePage Inc., a bankrupt company in the U.S. The purchase was not of the business as a going concern; LePage Inc. continues as a separate entity in the United States. When the U.S. marks were acquired LePage Inc. (the U.S. company) was not related to LePage Limited (the Canadian company). It is trite law, and the defendant does not dispute, that rights in the U.S. mark create no right, as against plaintiff, to use the mark in Canada.
In April 2002, the defendant began selling clear adhesive tape in Canada with its own trade-marks and name on the packaging and, in addition, the words "Proudly made in Canada by Lepage's USA" accompanied by a circled R. This statement is incorrect and misleading although it is a fact that the defendant's wares are made in Canada.
 The plaintiff now moves for summary judgment on those parts of its claim based on sections 19, 20 and 7 of the Act. A claim for summary judgment on section 22 was not pursued at the hearing.
While there are a number of "Lepage" marks registered in plaintiff's name, the relevant registrations relied on together with dates and descriptions of wares, are as follows:
"LEPAGE'S" TMDA08810 March 19, 1903
Adhesive substances namely cements and glues
[Note: the quotation marks appear in the certificate as part of the registered mark.]
LEPAGE'S TMA168,676 April 23, 1970
1. Chemical and chemical compositions being adhesives, cements, glues and fillers.
2. Household and industrial cleaning compositions and solvents.
3. Chemicals and chemical compositions being coatings namely, preservatives, stains and finishes.
LEPAGE TMA210,104 October 17, 1975
Adhesives, sealants and chemicals and chemical compositions being coatings namely, preservatives, stains and finishes.
LEPAGE'S DESIGN TMA216,365 October 01, 1976
Adhesives, sealants, fillers and chemicals and chemical compositions being coatings namely, preservatives, stains and finishes.
Clearly, on the evidence presently before me, no summary judgment relief can be obtained by plaintiff under section 19 alone. That section in its terms deals only with the "exclusive right to the use throughout Canada of a registered trade-mark in respect of those wares or services" for which it is registered. The evidence shows use by defendant only of the mark "Lepage's" (without quotation marks) in respect of clear adhesive tape. In TMDA08810 the word is in quotation marks but, even assuming the latter not to be a substantive part of the registration, the description of the wares clearly does not extend to the tapes sold by defendant.
As for TMA168,676, while the mark used by defendant is identical to the registration, there is no evidence that clear adhesive tape is a chemical or chemical composition and I very much doubt that, despite a casual reference to this effect by defendant's expert witness, such tapes can properly be described by the word "adhesives" which is clearly used as a noun in the registration.
Dealing with TMA210,104 and TMA216,365 in neither case is the mark used by defendant, which includes the possessive apostrophe but omits any design feature, the exact same mark for which plaintiff holds these registrations.
That leaves the plaintiff's claim to obtain summary judgment under sections 20 and 7. Both of those sections extend protection to the trade-mark owner against the use of marks which are confusingly similar. Confusion is largely a question of fact and section 6 contains detailed directions to the Court:
6. (1) For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section.
(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(4) The use of a trade-name causes confusion with a trade-mark if the use of both the trade-name and trade-mark in the same area would be likely to lead to the inference that the wares or services associated with the business carried on under the trade-name and those associated with the trade-mark are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.
The defendant has tendered expert opinion evidence to the effect that the marks here in question are not confusing. That opinion is based largely on the expert's view that the market for adhesive products is fragmented as between stationery and hardware products and also as between professional and domestic consumers. The defendant's use of the Lepage's mark is said to be limited to the stationery and domestic sectors where plaintiff either is not present at all or sells under other names and does not use its Lepage marks.
The plaintiff attacks this evidence both on the basis of the witness' lack of proper qualifications and on the basis of her credibility, particularly her failure to base her opinions on any recognized methodology such as surveys or market studies.
In fact, although I accept that she is qualified in the technical sense to give opinion evidence, I simply cannot accept the evidence given by defendant's expert and her opinion, based as it is, almost entirely on anecdotal and impressionistic foundations. While confusion is virtually always a serious issue in any trade-mark infringement case I would in other circumstances have applied the provisions of subsection 216(3) [of the Federal Courts Rules, SOR/98-106 (as am. by SOR/2004-283, s. 2)]:
216. . . .
(3) Where on a motion for summary judgment the Court decides that there is a genuine issue with respect to a claim or defence, the Court may nevertheless grant summary judgment in favour of any party, either on an issue or generally, if the Court is able on the whole of the evidence to find the facts necessary to decide the questions of fact and law.
In my view the text of that rule clearly directs me to ask myself whether, on the state of this record, I could fairly determine the question on the basis of the affidavit evidence and transcripts of cross-examinations which are before me. It now appears that I am mistaken. In two recent judgments the Federal Court of Appeal has in effect repealed subsection 216(3) of the Rules, deciding that once there is a genuine issue for trial a judge commits an error if he grants summary judgment and does not send the matter on to trial. No assessment of credibility may be made by the judge at this stage. (See: MacNeil Estate v. Canada (Department of Indian and Northern Affairs),  3 F.C.R. 3 (F.C.A.); Trojan Technologies, Inc. v. Suntec Environmental Inc. (2004), 239 D.L.R. (4th) 536 (F.C.A.).)
These decisions cause me difficulty. They appear to run counter not only to the express words of subsection 216(3) but also to the documented intention of the Rules Committee1 which, when it recommended the rule to the Governor in Council for adoption, made a conscious choice against adopting the restrictive Ontario rule and preferred the more robust versions in force in other provinces, notably British Columbia and Manitoba. That was a legislative, not judicial, choice and whether or not it was well-advised it does not seem to me to be one which a court is at liberty to reverse. I am also uncomfortable with the Court's apparent view that only a full trial in the traditional sense is an adequate fact-finding mechanism; both this Court and the Federal Court of Appeal exercise a very large part of their original jurisdiction in matters of judicial review which frequently raise disputed and critical questions of fact which are routinely decided on the basis of affidavits and the cross-examinations thereon. While this Court has the possibility of converting an application into an action, that option is not open to the Federal Court of Appeal and I am not aware of any case in which it has exercised its related power to order the trial of an issue on the ground that it cannot fairly find the facts on the basis of affidavits and cross-examination. In my experience a Court's fact-finding capacity, especially where experts are involved, is rarely if ever dependent upon the opportunity of seeing and hearing witnesses in the box. It is not the witness' ability to "sell" a particular thesis but rather the reasonableness and cogency of that thesis viewed in the light of all the evidence which leads to a favourable or unfavourable finding of credibility.
If I were free to do so I would have no difficulty in finding that the plaintiff's evidence of actual confusion (not merely the likelihood thereof) and of the various enumerated elements listed in section 6 is strong and compelling while that tendered by the defendant is not persuasive. I find particularly unbelievable the egregious assertion by defendant's witnesses, both lay and expert, that "Lepage's" is not being used by defendant as a trade-mark notwithstanding its accompanying symbol of a circled "R". To his credit, defendant's counsel did not seek to rely on this part of the evidence.
A consideration of each of the matters mentioned in the various paragraphs of subsection 6(5) gives the following result:
(a) the mark Lepage is inherently distinctive and, on the evidence, is only used as a trade-name by persons other than the parties hereto in a wholly unrelated trade or business, namely real estate brokerage, where, like the plaintiff's mark, it is well known.
(b) the plaintiff's mark has been used in Canada since the 1880's; the defendant's use started in 2002.
(c) the plaintiff uses its mark on a variety of adhesive products but not on transparent adhesive tape; the defendant only uses the mark on the latter.
(d) despite the alleged fragmentation of the adhesives market, both parties are in the stationery and consumer segments of that market and their products can appear in the same retail outlets and be bought by the same consumers.
(e) the mark used by defendant is virtually identical to the plaintiff's mark.
In short, had I felt free to do so, I would have granted summary judgment and given appropriate relief on the section 20 claim. I would not have granted separate or additional relief on the section 7 claims.
All that said, however, I am bound by the cited decisions and, unless I am subsequently told by the Federal Court of Appeal that I have misunderstood them, I have no alternative but to dismiss the motion for summary judgment on the basis that I have no right to find that on the only serious issue raised by the present case the defendant's evidence is unworthy of belief. I will accordingly dismiss the motion but without costs.
The motion is dismissed without costs.
1 Federal Court of Canada. Rules Revision Project. Working Paper No. 5. Disposition Without Trial, October 1993.