Kirkbi AG et al. v. Ritvik Holdings Inc. et al., (2003) 308 N.R. 1 (FCA)

• Judge: Rothstein, Sexton and Pelletier, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: July 14, 2003
• Jurisdiction: Canada (Federal)
• Citations: (2003), 308 N.R. 1 (FCA);2003 FCA 297

Kirkbi AG v. Ritvik Holdings Inc. (2003), 308 N.R. 1 (FCA)

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Temp. Cite: [2003] N.R. TBEd. JL.027

Kirkbi AG and Lego Canada Inc. (appellants/plaintiffs) v. Ritvik Holdings Inc. - Gestions Ritvik Inc. (now operating as Mega Bloks Inc.) (respondent/defendant)

(A-395-02; 2003 FCA 297; 2003 CAF 297)

Indexed As: Kirkbi AG et al. v. Ritvik Holdings Inc. et al.

Federal Court of Appeal

Rothstein, Sexton and Pelletier, JJ.A.

July 14, 2003.

Summary:

The plaintiffs, members of the LEGO Group of companies which manufactured and sold toy building blocks, commenced a passing off action under s. 7(b) of the Trade-marks Act against the defendant corporation, operating as Mega Bloks Inc.

The Federal Court of Canada, Trial Divi­sion, in a decision reported 220 F.T.R. 161, dismissed the action. The court held that the unregistered Lego indicia trademark in issue was not a valid trademark due to the doc­trine of functionality. The plaintiffs ap­pealed, the issue being whether a trade­mark which was primarily functional in nature could sustain an action for passing off under s. 7(b) of the Act.

The Federal Court of Appeal, Pelletier, J.A., dissenting, dismissed the appeal. The court held that a trademark that was primar­ily functional was not a valid trademark within the meaning of the Act and therefore could not support a passing off action. The court agreed that the Lego indicia trade­mark was primarily functional and therefore invalid. The plaintiffs were attempting to extend their expired patent protection through the guise of a trademark, which was contrary to the policy underlying the doctrine of functionality. In reaching its decision, the court rejected the arguments that the func­tionality doctrine was abolished by s. 13(2) of the Trade-marks Act and that the doctrine applied only to registered as op­posed to unregistered trademarks.

Practice - Topic 8800

Appeals - General principles - Duty of ap­pellate court regard­ing findings of fact - The plaintiffs sued the de­fendant for pas­sing off (Trade-marks Act, s. 7(b)) - The trial judge dismissed the action, holding that the plaintiffs' trade­mark was invalid due to the doctrine of functionality - The plaintiffs appealed - The Federal Court of Appeal held that the determina­tion of whether the plaintiffs' trademark was primarily func­tional was a plain find­ing of fact and thus the standard of review of palpable and overriding error must apply - However, the question of whether a trade­mark was valid when it was primar­ily functional was a question of law and, therefore, the standard of review on that issue was that of correct­ness - See para­graphs 24 to 28.

Practice - Topic 8800.2

Appeals - General principles - Duty of appellate court regarding findings of law [See Practice - Topic 8800 ].

Statutes - Topic 2453

Interpretation - Interpretation of words and phrases - Interpretation and definition clauses - Effect of definition clause - [See Trademarks, Names and Designs - Topic 4 ].

Trademarks, Names and Designs - Topic 4

Trademarks - General - Trade-marks Act - Interpre­tation - The plaintiffs sued the de­fen­dant for passing off (Trade-marks Act, s. 7(b)) - The trial judge dismissed the plaintiffs' action because the trademark was invalid based on the doctrine of func­tionality - In reaching this decision, the judge held that the terms "distinguishing guise" and "trade­mark" were defined in s. 2 of the Act, but neither term appeared in s. 7(b) of the Act - The judge therefore adopted the common law definition of "distinguishing guise" for purposes of the s. 7(b) analysis rather than the statutory definition in s. 2 -The Feder­al Court of Appeal, in dismiss­ing an appeal, stated that this separation of s. 7(b) from the rest of the trademarks statu­tory scheme was an incorrect statutory in­ter­pre­tation - The definitions in s. 2 of the Act were integral to any trademark pass­ing off action under s. 7(b) - The court noted however that this error of law did not affect the outcome of the case.

Trademarks, Names and Designs - Topic 18

Trademarks - General - Unregistered trade­marks - [See third Trademarks, Names and Designs - Topic 264.1 ].

Trademarks, Names and Designs - Topic 253

Trademarks - What trademarks registrable - Distinguishing guise - [See Trademarks, Names and Designs - Topic 4 and second Trademarks, Names and Designs - Topic 264.1 ].

Trademarks, Names and Designs - Topic 264.1

Trademarks - What trademarks registrable - Prohibition - Functional trademarks - The Federal Court of Appeal stated that to be a valid trademark within the Trade-marks Act, the trademark must not be primarily functional - The court stated that "the purpose or policy behind applying this doctrine of functionality is to ensure that no one indirectly achieves the status of patent holder through the guise of a trade­mark [i.e., evergreening]. If the mark has a primarily functional use and is granted trademark protection, which can be perpet­ual, then it is providing something which a patent for the same product could not provide because patent protection cannot be perpetual. The protection of function and design is what a patent does. It would be abusive and unfair to the public and to competitors to allow a person to gain the benefits of a patent and a monopoly when merely holding a trademark, especially when the person otherwise could not obtain a patent or when the person merely holds a patent that has expired. A person could achieve this patent-like monopoly because a trademark gives to its holder the right of exclusive use in association with the wares in order to highlight the source of those wares ..." - See paragraphs 40 and 41 - The court discussed the purpose of the doctrine of functionality in detail - See paragraphs 42 to 80.

Trademarks, Names and Designs - Topic 264.1

Trademarks - What trademarks registrable - Prohibition - Functional trademarks - The plaintiff LEGO companies sued the defen­dant, Mega Bloks Inc., for passing off (Trade-marks Act, s. 7(b)) - The plaintiffs claimed that the shaping of the stud con­figuration of their LEGO toy building blocks (i.e., the LEGO indicia) constituted a "distinguishing guise" and thus a trade­mark under s. 2 of the Trade-marks Act - This trademark was not registered - The plaintiffs' patents had expired - The Feder­al Court of Appeal affirmed the dismissal of the plaintiffs' action, holding that the Lego indicia trademark was not a valid trademark because it was primarily func­tional - The court stated that if the plain­tiffs were to acquire a trademark for the LEGO indicia they would acquire a perpet­ual patent-like monopoly, even though their patents had expired, over that indicia which consisted of a functional LEGO brick - This was contrary to the policy underlying the doctrine of functionality which prohibited the extension of patent protection through the guise of a trademark - See paragraphs 1 to 94.

Trademarks, Names and Designs - Topic 264.1

Trademarks - What trademarks registrable - Prohibition - Functional trademarks - The Federal Court of Appeal rejected the argu­ment that the functionality doctrine was abolished by s. 13(2) of the Trade-marks Act - The court also rejected the argument that the doctrine applied only to registered as opposed to unregistered trademarks - The court discussed extensively the rights of unregistered trademark owners in Canada - See paragraphs 61 to 81.

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - The Federal Court of Appeal stated that "... the thing that distinguishes the common law action of passing-off from a passing-off action under s. 7(b) of the [Trade-marks] Act is that in the common law action a litigant need not rely on a trademark to make use of the action. To bring a passing-off action under the Act, one must have a valid trademark within the meaning of the Act" - See paragraph 38.

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - [See Trademarks, Names and Designs - Topic 4 and second Trade­marks, Names and Designs - Topic 264.1 ].

Cases Noticed:

Remington Rand Corp. et al. v. Philips Electronics N.V. (1995), 191 N.R. 204; 64 C.P.R.(3d) 467 (F.C.A.), leave to appeal refused (1996), 204 N.R. 394; 67 C.P.R.(3d) vi (S.C.C.), refd to. [paras. 16, 158].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 211 D.L.R.(4th) 577 (S.C.C.), refd to. [paras. 24, 176].

Baker Petrolite Corp. et al. v. Canwell Enviro-Industries Ltd. et al. (2002), 288 N.R. 201; 17 C.P.R.(4th) 478 (F.C.A.), refd to. [para. 27].

Canada's Royal Gold Pinetree Manufactur­ing Co. v. Samann (1986), 65 N.R. 385; 9 C.P.R.(3d) 223 (F.C.A.), dist. [paras. 34, 153].

Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. et al., [1987] 3 F.C. 544; 80 N.R. 9; 14 C.P.R.(3d) 314 (F.C.A.), refd to. [paras. 38, 98].

Canadian Shredded Wheat Co. v. Kellogg Co., [1938] 1 All E.R. 618; [1938] 2 D.L.R. 145 (P.C.), refd to. [para. 42].

Parke Davis & Co. v. Empire Laboratories Ltd., [1964] S.C.R. 351, refd to. [para. 42].

Whirlpool Corp. et al. v. Camco Inc. et al., [2000] 2 S.C.R. 1067; 263 N.R. 88, refd to. [para. 43].

Seiko Time Canada Ltd. v. Consumers Distributing Co., [1984] 1 S.C.R. 583; 54 N.R. 161, refd to. [paras. 44, 179].

Thomas & Betts Ltd. v. Panduit Corp. et al. (2000), 252 N.R. 371; 4 C.P.R.(4th) 498 (F.C.A.), refd to. [paras. 45, 117].

Imperial Tobacco Co. v. Registrar of Trademarks, [1939] Ex. C.R. 141; [1939] 2 D.L.R. 65 (Ex. Ct.), refd to. [paras. 46, 137].

Parke, Davis & Co. v. Empire Laboratories Ltd. (1963), 41 C.P.R. 121 (Ex. Ct.), affd. [1964] S.C.R. 351; 43 C.P.R. 1, refd to. [paras. 47, 140].

TrafFix Devices Inc. v. Marketing Displays Inc. (2001), 532 U.S. 23; 121 S. Ct. 1255, refd to. [para. 49].

Elgin Handles Ltd. v. Welland Vale Manufacturing Co., [1965] Ex. C.R. 3; (1964), 43 C.P.R. 20 (Ex. Ct.), refd to. [paras. 50, 151].

Pizza Pizza Ltd. v. Canada (Registrar of Trade Marks) (1989), 26 C.P.R.(3d) 355 (F.C.A.), refd to. [paras. 52, 155].

Singer Manufacturing Co. v. Loog (1880), 18 Ch. D. 395 (C.A.), affd. (1882), 8 App. Cas. 15 (H.L.), refd to. [paras. 65, 104].

Eye Masters Ltd. v. Shopper's Optical, [1992] 3 F.C. 625; 56 F.T.R. 274; 44 C.P.R.(3d) 459 (T.D.), refd to. [para. 70].

Eye Masters Ltd. v. Ross King Holdings Ltd. - see Eye Masters Ltd. v. Shopper's Optical.

Future Shop Ltd. v. A.&B. Sound Ltd., [1994] B.C.J. No. 851 (S.C.), refd to. [para. 71].

Courtaulds, Re, The Times 14 February 1994, approved [1995] E.W.J. No. 4681 (C.A.), refd to. [para. 73].

Royal Doulton Tableware Ltd. v. Cassidy's Ltée, [1986] 1 F.C. 357 (T.D.), refd to. [para. 84].

Copperhead Brewing Co. v. Labatt (John) Ltd., [1995] F.C.J. No. 668 (T.D.), refd to. [para. 84].

Aluminum Co. of Canada v. Tisco Home Building Products (Ontario) Ltd., [1977] F.C.J. No. 112 (T.D.), refd to. [para. 85].

Baslow v. Fabri Trak Canada Ltd., [1980] 2 F.C. 238 (T.D.), refd to. [para. 86].

Uniwell Corp. v. Uniwell North America Inc., [1996] F.C.J. No. 336 (T.D.), refd to. [para. 87].

Wilhelm Layher GmbH v. Anthes Industries Inc., [1986] F.C.J. No. 60 (F.C.T.D.), refd to. [para. 87].

Tyco Indus. v. Lego Systems Inc. (1987), 5 U.S.P.Q.2d 1023 (D.N.J.), affd. (1988), 853 F.2d 921 (3rd Cir.), cert. denied (1988), 488 U.S. 955, refd to. [para. 90].

Interlego A.G. v. Tyco Industries Inc. et al., [1989] 1 A.C. 217; 87 N.R. 346 (P.C.), refd to. [para. 90].

Interlego A.G.'s Trademark Applications, [1998] R.P.C. 69 (Ch. Div.), refd to. [para. 90].

Interlego A.G. v. Alex Folley (Vic) Proprietary Ltd., [1987] F.S.R. 283, refd to. [para. 91].

Gramophone Company's Application, Re, [1910] 2 Ch. 423, refd to. [para. 114].

CIBA-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120; 143 N.R. 241; 58 O.A.C. 321; 95 D.L.R.(4th) 385, refd to. [para. 117].

Burberrys v. Cording (J.C.) & Co. (1909), 26 R.P.C. 693, refd to. [para. 118].

Payton & Co. v. Snelling, Lampard & Co., [1901] A.C. 308, refd to. [para. 118].

Moore Dry Kiln Co. of Canada Ltd. v. U.S. Natural Resources Inc. (1976), 12 N.R. 361; 30 C.P.R.(2d) 40 (F.C.A.), refd to. [para. 174].

Reckitt and Colman Products Ltd. v. Borden Inc. et al., [1990] R.P.C. 341; 107 N.R. 161; [1990] 1 All E.R. 873 (H.L.), refd to. [para. 181].

Statutes Noticed:

Trade-marks Act, R.S.C. 1985, c. T-13, sect. 2 [paras. 23, 123], sect. 4(1), sect. 6 [para. 23]; sect. 7(b), sect. 13 [paras. 23, 123]; sect. 19 [paras. 101, 123]; sect. 53.2 [para. 23].

Authors and Works Noticed:

Adams, Frank Mantell, A Treatise on the Law of Trademarks (1874), pp. 1, 11 [para. 72].

Canada, Secretary of State, Report of the Trademark Law Revision Committee to the Secretary of State of Canada (Fox Report) (1953), generally [para. 124]; pp. 7 [para. 124]; 8 [para. 125]; 9 [para. 126]; 10 [paras. 127, 128]; 12 [para. 129].

Clarke, David E., On Trademarks be­com­ing Invalid in Henderson, Gordon, F., Trademarks Law of Canada (1993), pp. 296, 297 [para. 134].

Fox, Harold G., The Canadian Law of Trademarks and Unfair Competition (3rd Ed. 1972), pp. 1 [paras. 74, 75]; 2 [para. 75]; 49 [para. 77]; 323, 324 [para. 102].

Fox, The Canadian Law of Trademarks and Unfair Competition (4th Ed. 2002), pp. 3-10 [para. 76]; 3-16 [para. 136]; 5-4 [para. 77].

Fox Report - see Canada, Secretary of State, Report of the Trademark Law Revision Committee to the Secretary of State of Canada (Fox Report).

Henderson, Gordon F., Trademarks Law of Canada (1993), pp. 296, 297 [para. 134].

Hughes on Trademarks (2003), pp. 371 [paras. 78, 80]; 372 [para. 80].

Hughes on Trademarks (2003) (Release 18), art. 58 [para. 116].

Philips, J., An Empire Built of Brick: A Brief Appraisal, [1987] 12 E.I.P.R. 363, p. 366 [para. 92].

Prosser, The Law of Torts (4th Ed.), pp. 957, 958 [para. 180].

Wadlow, C., The Law of Passing-Off (2nd Ed. 1995), p. 181 [para. 118].

Zimmerman, Colleen Spring, "I came, I saw, I registered" in Trademarks (1999), generally [para. 83].

Counsel:

Robert H.C. MacFarlane, Michael Charles and Christine M. Pallota, for the appel­lants;

Ronald E. Dimock, Dino P. Clarizio, and Henry Lue, for the respondent.

Solicitors of Record:

Bereskin & Parr, Toronto, Ontario, for the appellants;

Dimock Stratton Clarizio, LLP, Toronto, Ontario, for the respondent.

This appeal was heard at Toronto, Ontario, on March 5 and 6, 2003, before Rothstein, Sexton and Pelletier, JJ.A., of the Federal Court of Appeal. On July 14, 2003, the following decision was delivered and the following opinions were filed:

Sexton, J.A. (Rothstein, J.A., concurring) - see paragraphs 1 to 95;

Pelletier, J.A., dissenting - see para­graphs 96 to 185.