Gurmukh (Gary) Sales Ltd. et al. v. Quality Goods IMD Inc., (2014) 454 F.T.R. 82 (FC)

• Judge: Heneghan, J.
• Court: Federal Court (Canada)
• Case Date: October 08, 2013
• Jurisdiction: Canada (Federal)
• Citations: (2014), 454 F.T.R. 82 (FC);2014 FC 437

Gurmukh Sales v. Quality Goods IMD Inc. (2014), 454 F.T.R. 82 (FC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2014] F.T.R. TBEd. MY.019

Gary Gurmukh Sales Ltd. and Per-Design Inc. (applicants) v. Quality Goods IMD Inc. (respondent)

(T-1609-11)

Quality Goods IMD Inc. (applicant) and Gary Gurmukh Sales Ltd. and Per-Design Inc. (respondents)

(T-999-12; 2014 FC 437; 2014 CF 437)

Indexed As: Gurmukh (Gary) Sales Ltd. et al. v. Quality Goods IMD Inc.

Federal Court

Heneghan, J.

May 7, 2014.

Summary:

Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm". Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks. GGS and Per-Design commenced an application against Quality Goods IMD Inc., alleging that Quality had infringed the trademarks. They also claimed passing off. Quality Goods applied to expunge the trademarks.

The Federal Court held that Quality had committed trademark infringement pursuant to ss. 19 and 20 of the Trade-Marks Act and awarded compensatory damages of $74,764.88 for lost sales, an injunction prohibiting use of the trademarks by Quality, and an order for the delivery up of any infringing products. The court dismissed GGS and Per-Design's claim for passing off. The court dismissed Quality's application.

Damages - Topic 1297

Exemplary or punitive damages - Conditions precedent or when awarded - Per-Design Inc. owned two registered trademarks for use in association with t-shirts, sweatshirts, tank tops, mugs, fridge magnets, aprons, hats and shopping bags - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - Quality Goods IMD Inc. infringed the trademarks contrary to ss. 19 and 20 of the Trade-Marks Act - GGS sought injunctive relief and compensatory damages based on Quality's total revenues from sales of the infringing merchandise - GGS also sought punitive damages on the basis that Quality, despite being aware that the trademarks had been registered, continued to use the trademarks - Quality ignored demand letters from GGS - It persisted in its infringing activities until the notice of application was issued and then only made small changes to its designs in an attempt to avoid infringement - GGS asserted that Quality planned and deliberately breached GGS's rights - The Federal Court held that GGS was entitled to compensatory damages of $74,764.88 for lost sales - Punitive damages were not justified - While Quality was not blameless and should not be commended for its conduct, its behaviour could not be characterized as malicious, oppressive or offensive to the court's sense of decency - Compensatory damages were sufficient to remedy the harm suffered by GGS - The court also granted injunctive relief and an order for the delivery up of infringing goods - See paragraphs 124 to 134.

Damages - Topic 1318.1

Exemplary or punitive damages - Trademark, name or design infringement - [See Damages - Topic 1297 ].

Damages - Topic 4063

Interference with economic relations - Copyright, trademarks, etc. - Considerations - [See Damages - Topic 1297 ].

Injunctions - Topic 6307

Particular matters - Injury to trade - Improper use of trademarks, names or designs - [See Damages - Topic 1297 ].

Practice - Topic 1303.1

Pleadings - General principles - Admissions - Effect of - Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - GGS and Per-Design commenced an application against Quality Goods IMD Inc., alleging that Quality had infringed the trademarks - They also claimed passing off - Quality Goods applied to expunge the trademarks - GGS asserted that since Quality's notice of application in the expungement proceedings stated that Per-Design had not been entitled to secure registration of the trademarks as they were confusing with Quality's wares, Quality had admitted that the trademarks were confusing with Per-Design's trademarks for the purposes of the infringement proceedings - GGS relied on the general rule that an admission in a pleading was binding on the party who made it - The Federal Court stated that it was persuaded that an "admission" of confusion in the expungement proceedings was determinative in the infringement proceedings - See paragraphs 45 to 50.

Trademarks, Names and Designs - Topic 889.1

Trademarks - Registration - Expungement of mark - Grounds - Loss of distinctiveness (incl. non-distinctiveness) - Quality Goods IMD Inc. applied to expunge the trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm", asserting that they were not distinctive - The trademarks were owned by Per-Design Inc. and assigned to Gary Gurmukh Sales Ltd. (GGS) - The Federal Court stated that in order to show that the trademarks were not distinctive, Quality had to show that the trademarks were no longer capable of distinguishing GGS's wares from the wares of others in the marketplace - The proper date for the analysis was at the time that the application for expungement was brought, not the date that the applications for the registration of the trademarks were submitted - Quality's argument was premised on the failure of GGS to adduce evidence that the trademarks distinguished GGS's products - That was insufficient to prove that the trademarks were no longer distinctive - GGS bore no burden to demonstrate the validity of the trademarks - Quality's evidence was only that it had sold merchandise bearing the same or similar trademarks - It presented nothing further to demonstrate that the trademarks had lost distinctiveness - It had failed to rebut the presumption of validity - See paragraphs 55 to 60.

Trademarks, Names and Designs - Topic 889.5

Trademarks - Registration - Expungement of mark - Grounds - Loss of distinctiveness (incl. non-distinctiveness) - Quality Goods IMD Inc. applied to expunge the trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - The trademarks were owned by Per-Design Inc. and assigned to Gary Gurmukh Sales Ltd. (GGS) - Quality asserted that the trademarks were confusing with its common law trademarks which were previously made known by Quality when Per-Design's trademarks were registered in 2008 - Quality presented evidence of merchandise sales bearing the trademarked phrases dating back to 2005 and records from its design department indicating that it had created the two designs in question in 2004 - The Federal Court rejected Quality's argument - The proper date for the analysis was the date that Per-Design's trademarks were first used - There was evidence that GGS first used the trademarks in 2005 - The evidence provided by Quality did not demonstrate that it had used the trademarks or made them known before 2005 - Quality's design records were not helpful - The records contained no dates and it was not possible to ascertain with certainty when the designs were first created - Further, creation of the designs alone was insufficient - The creation or design of the trademarks did not indicate that they were marked on wares when sold - Nor was there evidence of advertising relating to those designs that would have made them known at the relevant time - See paragraphs 66 to 69.

Trademarks, Names and Designs - Topic 890

Trademarks - Registration - Expungement of mark - Evidence and proof - [See Trademarks, Names and Designs - Topic 889.1 and Trademarks, Names and Designs - Topic 889.5 ].

Trademarks, Names and Designs - Topic 1803

Trademarks - Infringement - What constitutes - Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - GGS and Per-Design commenced an application against Quality Goods IMD Inc., alleging that Quality had infringed the trademarks contrary to s. 19 of the Trade-Marks Act - The Federal Court stated that s. 19 prevented competitors from using identical trademarks in association with wares identical to those for which the trademarks were registered for use - The evidence established that Quality sold merchandise bearing the exact phrases that were registered - The trademarks were marked on products in association with which GGS had registered them for use - Quality had infringed the trademarks pursuant to s. 19 - Although Quality sold merchandise marked "Canadian Polar Bear in a Snow Storm" (i.e., the addition of the word "a"), s. 19 allowed for minor differences where the infringing mark took the character or identity of the registered mark - Also, although the trademark as registered was different from the trademark as used by GGS , a trademark could change in minor details and as long as the impression left in the mind of the average consumer remained the same, the registration was valid - See paragraphs 83 to 87.

Trademarks, Names and Designs - Topic 1803

Trademarks - Infringement - What constitutes - Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - GGS and Per-Design commenced an application against Quality Goods IMD Inc., alleging that Quality had infringed the trademarks pursuant to s. 20 of the Trade-Marks Act (i.e., had sold wares in association with a confusing trademark) - GGS asserted that after this application was commenced, Quality intended to continue to use the goodwill generated by the trademarks by producing and selling colourable imitations - GGS asserted that intention was demonstrated by Quality changing "Canadian Fast Food" to "Fast Food Canadian Style" and "Canadian Polar Bear in a Snow Storm" to "Canadian Polar Bear in a Blizzard" - The Federal Court applied the factors set out in s. 6(5) of the Act and concluded that the trademarks as used by Quality were confusing with per-Design's registered trademarks and there was infringement pursuant to s. 20 - See paragraphs 93 to 106.

Trademarks, Names and Designs - Topic 1803

Trademarks - Infringement - What constitutes - Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - GGS and Per-Design commenced an application against Quality Goods IMD Inc., alleging that Quality had infringed the trademarks pursuant to s. 20 of the Trade-Marks Act (i.e., had sold wares in association with a confusing trademark) - GGS referred to Quality substituting the word "Alaskan" for "Canadian" in the marks - The Federal Court stated that it was not satisfied that there was a reasonable likelihood of confusion - Although s. 4(3) of the Act deemed Quality's use of the trademarks to be use in Canada, the substitution of "Alaskan" was sufficient to distinguish the products in the mind of the average consumer - Products marked with the "Alaskan" marks were sold to different consumers in a different marketplace - They were not likely to be confused with Per-Design's trademarks - See paragraphs 107 and 108.

Trademarks, Names and Designs - Topic 1806

Trademarks - Infringement - Test - Confusion with other marks - [See second and third Trademarks, Names and Designs - Topic 1803 ].

Trademarks, Names and Designs -Topic 1816

Trademarks - Infringement - Remedies - Damages - [See Damages - Topic 1297 ].

Trademarks, Names and Designs - Topic 1819

Trademarks - Infringement - Remedies - Injunctions - [See Damages - Topic 1297 ].

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - Per-Design Inc. owned the registered trademarks for "Canadian Fast Food" and "Canadian Polar Bear in Snow Storm" - Gary Gurmukh Sales Ltd. (GGS) was the assignee of the trademarks - Per-Design and GGS commenced an application against Quality Goods IMD Inc., claiming that Quality had committed passing off with respect to the trademarks - The Federal Court stated that the crucial issue was whether GGS had demonstrated goodwill attaching to the trademarks - GGS relied only on the volume of sales of its products to support its argument that goodwill attached to the trademarks - It provided no evidence of advertising, no evidence that the trademarks were associated with a particular level of quality, and no evidence of the degree of recognition among consumers of the trademarks - Sales alone did not establish goodwill - GGS had not established that there was goodwill attached to the trademarks in the minds of consumers - Therefore, the passing off claim was not established - See paragraphs 111 to 115.

Cases Noticed:

Consorzio Del Prosciutto Di Parma v. Maple Leaf Meats Inc. (2001), 205 F.T.R. 176 (T.D.), refd to. [para. 52].

Anne of Green Gables Licensing Authority Inc. v. Avonlea Traditions Inc. (2000), 4 C.P.R.(4th) 289 (Ont. Sup. Ct.), refd to. [para. 54].

Veuve Clicquot Ponsardin v. Boutiques Cliquot ltée et al., [2006] 1 S.C.R. 824; 349 N.R. 111; 2006 SCC 23, refd to. [para. 59].

Habib Bank Ltd. v. Habib Bank AG Zurich (2013), 425 F.T.R. 237; 108 C.P.R.(4th) 83 (F.C.), refd to. [para. 66].

Promafil Canada ltée v. Munsingwear Inc. (1992), 142 N.R. 230 (F.C.A.), refd to. [para. 86].

Tommy Hilfiger Licensing Inc. et al. v. Quality Goods I.M.D. Inc. et al. (2005), 267 F.T.R. 259; 2005 FC 10, refd to. [para. 89].

Toyota Motor Corp. v. Lexus Foods Inc. (2000), 264 N.R. 158 (F.C.A.), refd to. [para. 91].

Mattel Inc. v. 3894207 Canada Inc. et al., [2006] 1 S.C.R. 772; 348 N.R. 340; 2006 SCC 22, refd to. [para. 96].

Patou (Jean) Inc. v. Luxo Laboratories Ltd. (1998), 158 F.T.R. 16 (T.D.), refd to. [para. 97].

Masterpiece Inc. v. Alavida Lifestyles Inc., [2011] 2 S.C.R. 387; 416 N.R. 307; 2011 SCC 27, refd to. [para. 100].

Remo Imports Ltd. v. Jaguar Cars Ltd. et al., [2005] F.T.R. Uned. A28; 41 C.P.R.(4th) 111; 2005 FC 870, refd to. [para. 105].

Louis Vuitton Malletier S.A. et al. v. Singga Enterprises (Canada) Inc. et al., [2013] 1 F.C.R. 413; 392 F.T.R. 258; 2011 FC 776, refd to. [para. 122].

3925928 Manitoba Ltd. et al. v. 101029530 Saskatchewan Ltd. et al., [2005] F.T.R. Uned. 874; 44 C.P.R.(4th) 161; 2005 FC 1465, refd to. [para. 123].

Lee's Food Products Ltd. v. Shafer-Haggart Ltd. et al. (1984), 81 C.P.R. (2d) 204 (Ont. H.C.), refd to. [para. 124].

Ragdoll Productions (UK) Ltd. v. Jane Doe et al. (2002), 223 F.T.R. 112; 2002 FCT 918, refd to. [para. 125].

Statutes Noticed:

Trade-Marks Act, R.S.C. 1985, c. T-13, sect. 19 [para. 84].

Counsel:

Trent Horne, for the applicants/respondents, Gary Gurmukh Sales Ltd. and Per-Design Inc.;

Alexandra Steele, for the respondent/applicant, Quality Goods IMD Inc.

Solicitors of Record:

Bennett Jones LLP, Toronto, Ontario, for the applicants/respondents, Gary Gurmukh Sales Ltd. and Per-Design Inc.;

Robic LLP, Lawyers, Patent and Trademark Agents, Montreal, Quebec, for the respondent/applicant, Quality Goods IMD Inc.

These applications were heard at Ottawa, Ontario, on October 8, 2013, by Heneghan, J., of the Federal Court, who delivered the following reasons for judgment on May 7, 2014.