1429539 Ontario Limited c. Café Mirage Inc., 2011 FC 1290 (2011)

Conférencier:The Honourable Mr. Justice Mandamin
Numéro de Registre:T-82-05
Parties:1429539 Ontario Limited c. Café Mirage Inc.
 
EXTRAIT GRATUIT

Federal Court - 1429539 Ontario Limited v. Café Mirage Inc.

Source: http://decisions.fct-cf.gc.ca/en/2011/2011fc1290/2011fc1290.html

Date: 20111109

Docket: T-82-05

Citation: 2011 FC 1290

Ottawa, Ontario , November 9, 2011

PRESENT: The Honourable Mr. Justice Mandamin

BETWEEN:

1429539 ONTARIO LIMITED

Plaintiff

and

CAFÉ MIRAGE INC., BDD SOLUTIONS INC.,

MICHAEL BACHOUR, AND AMY SALAM

Defendants

REASONS FOR JUDGMENT AND JUDGMENT

I. Introduction

[1] The Plaintiff is a business corporation that franchises a restaurant concept named ‘The Symposium Café’. The principals of the Plaintiff are two brothers, Mr. William Argiropoulos and Mr. Terry Argiropoulos, who developed the Symposium Café concept. The Plaintiff holds the registered trade-mark ‘The Symposium Café’ along with other trade-marks related to the concept. By 2003, the Symposium Café had expanded to five restaurants in southern Ontario , with two in Toronto , before encountering financial difficulties following the economic downturn after September 11, 2001.

[2] As a result of the Symposium Café financial difficulties, a creditor, Mr. Jim Kotsos, seized four of the Symposium Cafés for non-payment on a promissory note. The ensuing litigation was resolved by a settlement entered into between the Symposium Café Group and Mr. Kotsos. Under the terms of the Minutes of Settlement, the assets of the Kennedy Symposium Café and the Sheppard Symposium Café were transferred to Mr. Kotsos who was entitled to sell the Sheppard and Kennedy Cafés within or outside the Symposium Café franchise system. Mr. Kotsos operated the Sheppard and Kennedy Cafés during the period of litigation and shortly after the settlement sold the assets of the two restaurants to the Defendant BDD Solutions Inc. on an “as is” basis.

[3] The Plaintiff proposed that the new owner, BDD Solutions Inc. and its principals, Mr. Michael Bachour and Ms. Amy Salam, join the Symposium Café franchise system. They declined. They operated the Sheppard and Kennedy restaurants under the name of Café Mirage while retaining the appearance, trade dress, trade-marks and menus of the Symposium Café.

[4] The Plaintiff commenced this lawsuit suing for infringement of its trade-marks, infringement of copyright of the Symposium Café menus, injunctive relief against the Defendants, damages, and costs.

[5] I conclude that the Plaintiff is entitled to judgment for infringement of its trade-marks and copyright, injunctive relief with respect to infringement and damages for infringement of its trade-marks and copyright. The Plaintiff did not prove the Defendants’ conduct warrants punitive damages. Finally, I dismiss the claim against the Defendant Amy Salam.

II. Background

Symposium Café Group

[6] The Argiropoulos brothers began developing their restaurant concept in 1996. At the time they operated several deli restaurants under a company called Biltermar Restaurants Limited (Biltermar). As part of that venture they started a new restaurant named the Plantation Coffee and Tea Company

[7] In September, 1996, Biltermar filed trade-mark applications for ‘Plantation Coffee and Tea Company Design’ and ‘Plantation Coffee and Tea Company’. When Biltmore was sold in 2000, the Argiropoulos brothers separated the Plantation Coffee and Tea Company venture from Biltermar. Later, they renamed the Plantation Coffee and Tea Company as The Symposium Café and operated under both names during the transition.

[8] This new restaurant venture utilized the “ School of Athens ” fresco by the renaissance artist Raphael. The Symposium Café prominently portrayed a School of Athens fresco as a mural set in an antiqued marble wall pattern and was promoted as a place where people could meet for food, drink and discussion.

[9] In addition to directly operating subordinate restaurants, the Argiropoulos brothers also franchised their restaurant concept under the Plaintiff and a related subordinate Ontario franchisor corporation. They also created separate business corporations to operate each Symposium Café or hold the restaurant leases.

[10] The Argiropoulos brothers are the controlling officers of the Plaintiff Corporation. They were active in establishing separate corporations for the purposes of franchise distribution, restaurant operations, and holding restaurant leases. They have been involved throughout in the development of the Symposium Café concept and assisting franchisees. For convenient reference, I refer to the Argiropoulos brothers and their companies, including the Plaintiff, collectively as the Symposium Café Group.

[11] In 2000, the Plaintiff applied to trade-mark the ‘Symposium Café Design’ in association with the provision of a restaurant and catering service and promotional wares, coffee cups, t-shirts and the like. Two years later, in 2002, the Plaintiff applied to register the trade-mark, ‘The Symposium Café’, for the same range of restaurant services and wares. In 2005, the Plaintiff also applied to register, as trade-marks, a series of expressions, first use claimed as early as 1999, to complement the Symposium Café concept. These trade-marks include:

Second To None

Passport To Pleasure

East Meets West

Escape The Ordinary

Symmetry For The Senses

To Europe And Back In 15 Minutes

Redefining the Café Experience

I will refer to these phrases as the Symposium Café trade-mark expressions.

[12] The Plaintiff also registered as a trade-mark design a three dimensional trade dress representation of the interior of the Symposium Cafés comprising interior walls and columns having the appearance of being made of antique cracked stone, a prominent reproduction of the School of Athens fresco, a circular mahogany bar consisting of two levels functioning as a display area with the lower level functioning as a counter area, and a circular floor tile pattern extending around the circular bar. This trade dress trade-mark design was filed in 2007 and registered in 2008. First use was claimed as 1999, back when the first Plantation Coffee and Tea Company opened. This trade-marked design was used as the principal trade dress for each of the Symposium Cafés.

[13] The Symposium Café Group also developed a common menu and emphasized delivering the same service and café experience across the Symposium franchise system.

Symposium Café Financial Difficulties

[14] In 2001, the Symposium Café Group was experiencing financial difficulty primarily due to going over-budget on renovations for a new restaurant in Kingston , Ontario . The Symposium Café Group borrowed money from Mr. Kotsos, an electrical contractor who had done work for them. The Symposium Café Group was also indebted to Mr. Kotsos for electrical work at the Kingston restaurant, owing in total approximately $512,000.

[15] On August 13, 2001, 1480045 Ontario Limited (the Kennedy Symposium Café) provided Mr. Kotsos with, among other documentation:

• a blanket general security agreement to Mr. Kotsos

• a term promissory note for $437,000 due on demand with Mr. William Argiropoulos guaranteeing payment to Mr. Kotsos.

The events of September 11, 2001 occurred just weeks after the Symposium Café Group signed the loan agreement with Mr. Kotsos. The Symposium Cafés’ business dropped 50 per cent and the Symposium Café Group missed a payment on the promissory note.

[16] Consequently, Mr. Kotsos seized the Kennedy Symposium Café, the Sheppard Symposium Café, and two other Symposium Cafés operating in London, and Waterloo , Ontario . Litigation ensued.

Transfer of Sheppard and Kennedy Cafés

[17] The four Symposium Café corporations applied to the Ontario Superior Court of Justice for relief from Mr. Kotsos’ seizures. Mr. Kotsos counter-applied adding the Argiropoulos brothers and other parties, both individuals and companies of the Symposium Café Group, as counter-respondents. The Court granted an interim interlocutory order on February 26, 2002 restoring possession of the London and Waterloo Symposium Cafés to the Symposium Café Group and possession of the Sheppard and Kennedy Symposium Cafés to Mr. Kotsos until further order of the Court.

[18] On July 21, 2003, the Symposium Café Group and Mr. Kotsos settled. The settlement confirmed two Symposium Café restaurants, London and Waterloo , were retained by the Symposium Café Group. All of the assets of the Sheppard and Kennedy Symposium Cafés were to be transferred to Mr. Kotsos “free and clear of any encumbrances and governance.” The Minutes of Settlement was filed in the Ontario Superior Court of Justice to conclude that litigation.

[19] The settlement provided that Mr. Kotsos was at liberty to sell the Sheppard and Kennedy Symposium Cafés within or outside the Symposium franchise system. If sold outside the Symposium franchise system, Mr. Kotsos agreed the purchase documentation would contain a covenant on the part of the purchasers to remove the Plantation/Symposium signage.

Sale of Kennedy and Sheppard Cafés

[20] On September 18, 2003, Mr. Kotsos sold the assets of both the Sheppard and Kennedy Symposium Cafés to the BDD Solutions Inc., a corporation incorporated by Mr. Michael Bachour and Ms. Amy Salam. The terms of the Bills of Sale provided that Mr. Kotsos sold BDD Solutions Inc. all rights, title and interests in the corporation and the assets of the corporation. The sale agreement provided that the “purchasers [were] purchasing the assets on an ‘as is, where is’ basis”.

[21] The sales agreement between Mr. Kotsos and BDD Solutions Inc....

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